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3 things that need to happen for mobile ad spending to increase

By Tan Tmangraksat

Though still early in its development, mobile is emerging as the most imbalanced medium in terms of ad spending versus share of time spent, at 1 percent versus 10 percent, per recent data from eMarketer.

This is not new. Web publishers have always struggled with the fact that the amount of ad spending devoted online falls short of the share of time consumers spend on the medium, 22 percent versus 26 percent – especially when compared to print, which eMarketer estimates is at 15 percent of spend versus only 4 percent share of time spent for newspapers, and magazines, which are at 10 percent versus 3 percent.

With mobile, much of the disparity has to do with the sheer speed of its growth, which, while a good problem to have, brings about some challenges for the application and advertising economies that are growing along with it.

While mobile ad spend is expected to reach $2.6 billion in 2012, according to eMarketer’s January predictions, many are concerned about this young medium’s apparent growing pains.

Here are three things that need to happen for mobile ad spending to begin to bridge the divide in time spent versus ad dollars spent:

1. Uniform standards
Right now, there are not any uniform measurement standards in the mobile ad industry to track true effectiveness with things such as engagement, which is really what this medium is all about.

While industry groups such as the Interactive Advertising Bureau are currently working on a set of uniform standards, efforts are not moving fast enough for a medium whose growth is compounding by the minute.

Without this deep uniformity in data sets, it is going to be hard to convince brands to pull money from television and traditional online display advertising in favor of mobile experimentation. This also makes it hard for advertisers to decide which mobile platform or service is working best for them.

Advertisers need killer analytics that tell them how well their campaigns did. Period. Uniform measurement standards will make this much easier on everyone involved.

2. Publishers need to think like advertisers
The easiest way to convince an advertiser that your audience is worth advertising to is to show them their value.

Part of improving this will stem from the uniform standards put in place from point #1. But part of it will also be reliant on publishers really latching onto an advertiser mindset, and being able to identify the characteristics of an audience that matter most to brands.

Scale is one of the most fundamental elements that an advertiser is looking for to ensure it is reaching a wide audience.

Quality of this audience is the next factor. Understanding the demographics, geographic breakdown and any other relevant details would significantly increase the value of your inventory.

In addition to knowing a bit about your audience – without breaking any privacy laws – publishers will need to show performance is on par with advertisers’ expectations.

As a rule of thumb, publishers should aim for a click-through rate of 1 percent or higher. If publishers can continue to show value through scale, quality and performance, marketers will continue to increase their spend to reach that audience.

3. Think beyond the display banner
Mobile display offers smaller real estate than we are used to – much smaller. And mobile devices are also gaining traction in what is commonly referred to as the second-screen experience; i.e., many people use them in conjunction with other devices such as the TV, laptop and tablet.

What few advertisers may realize is that this creates a new and very unique opportunity to think differently about their campaigns.

Because mobile phones are such personal devices, engagement comes down to the creative. Rich media creative generally attain higher engagement with end users.

We have actually seen in most cases that ads with rich media creative are more effective and have a higher click-through rate in mobile than on the Web. This is an important distinction that advertisers will need to carry through in their campaigns. Rich media matters now more than ever.

Successful mobile advertising means really tackling the engagement by thinking about the experience beyond the traditional display banner.

Mobile devices have become so ubiquitous in such a short period of time, fundamentally changing how most of us spend our time.

The most effective advertising will have foundations in user engagement to the point that ads might actually be welcomed. Once again, quality of the creative and how it is delivered to the user is the driving force behind increased revenue.

Many aspects of the mobile economy have not caught up to this yet, but with billions of ad dollars at stake, we can be sure that the industry is working feverishly to grow up just as fast.

Tan Tmangraksat is San Francisco-based director of exchange operations for Velti, a technology provider of mobile and advertising services. Reach him at [email protected].