Marketers Want Smarter Ads for Smartphones

Shoppers look at their smartphones while walking together outside a mall in Bangkok, March 19. (NICOLAS ASFOURI/AFP/Getty Images)

Mobile advertising grant companies personal access to their targeted audience, but the majority of marketers have not yet realized the full potential of mobile advertising strategies.

“[Mobile advertising is] going to change very quickly this coming year,” said Gabriel Cheng, media director at M&C Saatchi Mobile.

Mobile ad revenues almost doubled from $4.84 billion in 2011 to nearly $9 billion in 2012, and there are few companies who haven’t tried putting themselves onto mobile platforms.

But more often than not, an ad that pops up while a user is browsing the web or using an application on their smartphone will only be met with annoyance. Smartphones aren’t just a personal and intimate device, but they are vehicles for immediate information, said Jeremy Lockhorn, vice president of emerging media at Razorfish. And users want to see advertising with the same degree of personalization.

Too Many Choices
Over two-thirds of the 400 marketers surveyed by Neustar and the Mobile Marketing Association plan to invest more in mobile infrastructure in 2014.

Currently, only about a third of marketers have the needed infrastructure and knowledge to effectively utilize mobile, another third are trying, and about one-third have yet to be convinced of its usefulness—and will be left behind, said Lisa Peterson, director of marketing and business development for Neustar’s carrier services.

“I think that one of the biggest barriers is that we have a lot of tools,” said Craig Weinberg, mobile practice lead at advertising agency Mindshare. The biggest question on most brands’ minds is, “How do I even know where to test?”

Digital ad spending will account for 22.7 percent, or $117.6 billion, of worldwide ad investments next year, according to eMarketer and Starcom Media Vest Group. Mobile only accounts for a portion of that, but eMarketer projects mobile ad spend to increase four fold over by 2017.

However, the majority of that spending will go towards search or display ads, which has yet to be as creative as consumers have come to expect.

Companies unsatisfied with their mobile campaign results typically only used the more conventional tactics such as paid search, display ads, and brand application. Yet marketers who used a wider variety or different tactics such as rich media, mobile coupons, passbooks, location-targeted advertising, push alerts, or mobile audio said they had “extremely impactful results.”

“It’s figuring out what the best thing to do is for your brand, and the tools will come along with it,” Weinberg said. “Most of the stuff is there already. The technology’s there, and if it’s not there it’ll be there soon.”

Personalization and Localization
What users really want is a highly personalized experience, according to Martine Reardon, chief marketing officer of department store chain Macy’s Inc.

“Mobile is becoming 12-15 percent of the traffic and only 3 percent of the spend, and we think about that all the time,” Reardon said at Advertising Week in New York.

Last year, Macy’s launched the “My Macy’s” campaign which attempts to localize the merchandising, marketing, and customer care for the individual shopper. Most of this is done through mobile. In fact, all of Macy’s TV, web, and other marketing campaigns always relate back to mobile, Reardon said.

Mobile advertising spending by the retail industry grew 413% in the second quarter compared to last year, according to Millennial Media research. Retail outpaced every other sector tracked by the firm.

Most retailers are focusing on location-based advertising. Retailers know that they can determine where a customer is with mobile, and want to use that to increase store traffic.

“We now have the ability to prove that a mobile device does complete a transaction,” Reardon said.

Retail growth in the United States has stalled this year, but Macy’s has reported a 21.2 percent increase in return on invested capital in 2012 and plans to invest even more in its omni-channel and personalization strategy in future years.

Mobile users are multi-taskers, Reardon said, and will turn to their phone for information after seeing a TV commercial. This omni-channel strategy “brought a whole new customer group to macys.com,” Reardon said, adding 30 percent of their new customers were omni-channel users.

Using Data
Brands want to better understand their audiences, and for that, they need a lot of data.

“It [data] fuels everything that we do, all of our solutions in mobile, and you really don’t do one thing without the other if you’re truly going to maximize the potential in mobile,” Peterson said.

Companies like Verizon Communications Inc., which has the nation’s largest wireless carrier provider, amass unparalleled amounts of data from its customers.

“Data’s not new, but what’s new on the table is that there is a lot of it. Right now we’re generating 200 exabytes of data a year, and—think about it, the Library of Congress is 5 exabytes of data. That’s over 40 times the size of the Library of Congress that we’ve generated every year,” said Michael Becker of Somo Global.

But while third-party data is a useful supplement, marketers want to see this data coming from their clients directly. More data doesn’t mean good data.

“It’s stuff that’s technically free,” Cheng said. “You should be able to get all that information.”

The current problem is, many companies are still in the infancy stages of data mining—they don’t know how or can’t yet provide this data to marketers.

“We’re getting better at, before we start working with certain publishers, making sure they can deliver data or reporting that way, and we’re starting to do that more and more,” Cheng said.

Beyond Location
Location-based advertising tends to be a natural fit for retailers, and it’s pretty low hanging fruit, Lockhorn said. “We’re going to continue to see growth here, as well as with other sensors.”

Location goes beyond pinpointing the user’s physical location—it’s putting that location into context.

Brands usually already have or can easily obtain this information, such as physical location, time of day, day of week, what device where the user has gone, and where the user lives. It sounds simple to gather, but it’s not happening yet, Cheng said.

Because mobile can often be a user’s first experience with a brand, unwanted or unhelpful advertising can instead drive away potential customers.

“You can really build those models up and then really understand what type of mobile user they are and target them and deliver the right message to the right person, and also at the right time based on the location based behaviors,” Cheng said. For example, a notification for taxi or car share services during heavy rain is shown—based on the user’s calendar and weather, should they choose to share that information.

Currently, many advertisers will only look at certain parts of their data, and determining in a very general way what operating system or device they should target. This should and will evolve, according to Cheng.

For example, Android smartphone users may comprise of a very low percentage of a brand’s buyers. But looking at all the information available, marketers can determine which Android buyers are high value customers, and build a reliable profile for the segment.

It’s about delivering “the right experience to the right audience,” Cheng said.