Mobile Commerce Daily is now Retail Dive: Mobile Commerce! Click here to learn more!

Uptick in mobile ads gives rise to exchange-traded media: panel

In this discussion, leading industry players discuss mobile trends, advertiser attitudes toward mobile media buying and privacy issues. The panel, organized earlier this month in New York’s Bowery Hotel, included Miha Mikek, CEO of Celtra; Jim Payne, CEO of MoPub; Phil Miano, vice president of sales and marketing at Collider Media; and Brian Decker, managing director at Mindshare. Lara Mehanna, general manager of mobile at DataXu, moderated.

“Advertisers are definitely keen on rich media as a way to engage and delight users. This working on exchanges just opens up the opportunity to spend more money, create more engagement, and reach more user,” Ms. Mehanna told the audience of mobile marketers.

Excerpts from the discussion in which Ms. Mehanna asked the questions:

If 2012 is the year for mobile, why now? What is different today than previous years? What opportunities do see that are different?

Lara Mehanna: 2012 is big for mobile because all the challenges from the last couple of years are coming to a head.

Privacy around UDIDs has become extremely important from a policy perspective and Apple is now denigrating the ID, forcing everything to think more creatively about how we can identify user intentions in the aggregate and figure ways out to be more safe and secure with information sharing, as in online.

Because of this, the volumes of data and real-time decisioning capabilities to improve advertiser ROI that exchanges are bringing to the market are increasing the value of mobile media and opening doors for mobile as an extension of what people are doing online with their PCs and TVs.

This is what will make this year different and open up more brand dollars into a channel that has produced proven ROI, but can now do it through the most cost-effective means possible.

Advertisers are definitely keen on rich media as a way to engage and delight users. This working on exchanges just opens up the opportunity to spend more money, create more engagement, and reach more users.

The auto and finance verticals are already doing a lot in mobile and I expect other verticals to follow their lead, using rich media, data overlays/intenders, and as much pricing pressure as possible to deliver the most engagement.

Jim Payne: Penetration and engagement are at an all-time high.

Facebook revealed in their S-1 filing that they now have over 425 million monthly average users using Facebook mobile, which represents about a 25 percent growth from the previous quarter when that figure was 350 million.

Not only are these primarily smartphone app users, but they’re an increasingly more diverse and engaged audience that is looking to mobile as their primary source of social connectivity, news and entertainment.

The recent creation of the rich media standard Mobile Rich Media Ad Interface Definitions (MRAID) also opens the door to new opportunities for brand and performance advertisers.

This standard means that advertisers can now effectively catch up with the app experience through rich media creatives, without the previous pain of creating separate versions for every device, platform or app.

Let’s start with the basics: What is a mobile exchange? How does it work? Jim?

Jim Payne: A mobile exchange is essentially like a trading floor for ad impressions, which is actually why we named ours MoPub Marketplace.

When a user interacts with an app, the app publisher has the opportunity to serve an ad in that instant that can come from a variety of sources, including brands they have direct relationships with, and ad network, or an exchange.

Exchanges offer a real-time bidding environment where demand side platforms (DSPs), agency trading desks representing brands, and some independent publishers can algorithmically analyze the value of each impression based on app, location, behavioral or many other data types to determine how much they want to bid for that impression.

Publishers can see exactly how much they’re making and restrict certain ad types, while DSPs and advertisers get more transparency and a better ROI on their ad dollars.

What is unique to mobile exchanges are the challenges of having no cookies, as well as scale and fragmentation – in everything from the device to the version of the operating system.

Miha, you have 60 seconds to explain exchange traded rich media to your grandmother. Go.

Miha Mikek: Reaching highly targeted audiences most effectively with engaging HTML5 ad experiences.

And data? Phil, how does data apply?

Phil Miano: Given the personal and persistent nature of mobile use, the better a marketer knows the personal characteristics of the user receiving their message, the more relevant the message can be.

This benefits the user by reducing marketing which does not apply to them and the marketer by reducing wasted impressions and improving ROI.

Jim, there’s NASDAQ and NYSE. Why are there so many exchanges? Is there really that much differentiation? Any data to support increasing yield?

Jim Payne: It’s very similar in many ways. The reason there are different stocks sold on the NYSE and NASDAQ is largely because of each exchange’s different style of market-making.

These disparate approaches to selling and buying mean that each exchange also attracts different parties, much as our approach to our real-time bidding exchange MoPub Marketplace makes us attractive to different publishers.

While the buyers are largely the same, our approach of incorporating a publisher’s ad network revenue and data into their marketplace price means that we attract a unique supply to our platform.

The difference then becomes one of quality and scale.

We’ve made our bet on smartphone app inventory from high quality publishers that require a technically flexible platform.

It’s actually quite challenging to efficiently run an exchange, and we’ve spent a lot of time assessing the many factors that are needed to drive the liquidity and value that our publishers and demand partners would like to achieve.

How about rich media – is this truly a viable exchange platform solution available to advertisers? How do you see rich media impacting how consumers relate to brand in mobile?

Miha Mikek: Yes, absolutely. Rich media ads can today be delivered through exchange platforms.

Jim Payne: Yes, arguably rich media campaigns are even more effective on exchange platforms than ad networks or directly sold ad campaigns.

There’s a great example for how consumers will interact with brands going forward in the application called The Thrillist in an ad campaign from JackThread.

As the user reads articles about latest local hot spot, the advertiser actually introduces a three-question, self-selecting style survey that asks about personal style – for example, are you Ryan Gosling? – and eventually drives the user to an in-app purchase.

Rich media is what makes this kind of interaction possible.

Data. Phil, imagine a world where the Congress has made it illegal to use any cookie data at all. Imagine Europe next year. What does that do to digital? Does mobile benefit? Is there anything you can address to ease the concerns of the folks in our audience?

Phil Miano: The mobile industry needs to police itself to ensure that governmental legislation is not required.

Using cookies or cookie equivalents is a needed functionality in mobile for better targeting, for frequency capping and more.

The concern with mobile is that the device is not only personal and linked to an individual, but is also on their person wherever they may be.

This raises the bar on privacy much more so than online privacy and the need to safeguard personally identifiable information is paramount.

UDID and device fingerprinting are two methods which offer a technical solution to tracking individual devices, but which are potential red flags that could invite governmental scrutiny and litigation.

The industry needs a data management platform which can safely handle first-party to third-party data management on behalf of mobile publishers and advertisers.

This would allow most of the benefits which online cookie-based targeting enjoys, but in an environment which is safe for mobile.

What is the one thing you want a publisher, advertiser, rich media company, to walk away with today?

Jim Payne: Publishers should develop a true mobile monetization strategy that maximizes their revenue without compromising their user experience.

We’re seeing both sides of the mobile supply and demand equation getting smarter about investment and diversification.

We know that advertisers and DSPs would like to better reach audiences and that publishers would like improve their monetization sources.

And, we believe that many, if not the majority, of publishers will want a single solution that enables them to sell ads to their direct partners who are often online or print partners, leverage a few select ad networks, and participate in mobile traded exchanges.

As data becomes more readily available and smartphone penetration continues to rise, the ad revenue potential from real-time bidding is only going to take off even faster.