NEW YORK – Payment models and measurement metrics are still evolving for mobile advertising, according to panelists at the Mobile Marketing and Media 2010 conference.

Traditional metrics such as click-through ratehave limited value in understanding the success of mobile campaigns, according to Paul Kultgen, director of mobile media and marketing at Nielsen, New York. He said that the next generation of mobile advertising metrics would be emerging in the coming year.

“It’s a time of transition,” Mr. Kultgen said. “The next generation of mobile metrics is coming within 12 months.

“You will have a much higher level of metrics than now,” he said. “Technological hurdles are being resolved.

“Soon the ability to do direct measurements is going to happen.”

Which business model is the right fit?
The declaration came during a panel discussion titled, “Paid subscriptions, micropayments, metered reading or advertising-supported — which strategy is likely to succeed for mobile media?”

The panel was moderated by Dan Butcher, staff reporter at Mobile Marketer and Mobile Commerce Daily.

Mr. Butcher began the discussion by asking panelists how publishers and content providers should be choosing the right business model.

While dominant strategies are starting to emerge for mobile advertising, marketers should not expect a one-size-fits-all strategy for content monetization, he said.

Variables like the type of content offered, who the target audience is and what kinds of devices consumers are using will impact the monetization decisions.

“When a publisher is trying to decide on tactics for monetization in the mobile channel, it’s not as easy as free or paid. There are lots of different flavors,” Mr. Butcher said.

He said that models open to publishers monetizing their content include:

• Free, ad-supported content
• A “free-mium”  model where users are brought in with free content and then converted to paid, premium content.
• Pay per download
• Subscription
• Micropayments

“It’s an evolving question,” said David Buckley, global director of advertising sales at The Associated Press, New York. “We are completely ad-driven – our news apps are free and ad-supported.

“[But] the kind of journalism we create cannot be supported on an ad-only model,” he said. “Back when it was a print-only product, the model was always a combination of newsstand and subscription payments.

“Eventually you’ve got to move to a model which could change, like Free-mium – we don’t know where that’s going to end up.”

The panelists all emphasized that there was no easy, pre-packaged approach to monetization, and that publishers need to understand who their audiences is and what the content is worth to them.

While some content is better suited to an ad-supported model, other types might merit subscription or micropayments or other models.

It all depends on context.

 “There’s got to be some understanding of what your target is,” Mr. Kultgen said.

 “It depends on the audience,” Mr. Buckley said. “Consumers in the United States are more likely to adopt micropayments.

“If I’m going after a younger target I might do micropayments,” Mr Kultgen said.

Younger audiences are more comfortable with micropayments, using the example of young people buying ringtones on their handsets, he said.

“Usually [younger audiences] don’t have the money to commit to long-term payments,” he said. “More upscale consumers might be more open to subscription”

Mr. Kultgen also said that the “freemium” model showed potential, and that Nielsen is seeing a 35 percent conversion rate from free users to paying users in mobile applications using that model.

“A portion [of deciding on a model] is looking at your audience and what that audience is used to and willing to do,” said Marci Weisler, digital business director at Time Out North America. “What can you drive through the advertising?

“What is the market for the specific content?” she said.

Mr. Buckley emphasized that the personalized nature of mobile marketing means that monetization tactics can be much more precise.

 “You can segment on an individual level,” he said. “Offer consumers the ability to pay money and bypass ads, if they want to pay 100 percent for a subscription.

“Tailor the experience to the individual.”

Is mobile advertising effective?
“We’re seeing really great things happening, especially in rich media,” Mr. Buckley said.

He emphasized that advertisers need to stop viewing the success of campaigns solely through the lens of the CPM metric.

“The biggest worry some have is that people don’t rush to click through,” he said. “[Advertisers] default to it, and it’s easy to understand.

“But that metric can’t be the all-and-all,” he said. “There are amazing opportunities beyond just clicking.

“We need to make sure the industry doesn’t run to a horrible metric like online did.”

Ms. Weisler said that because Time Out publications run a large number of cross-channel campaigns – across print, Web and mobile channels – metrics like CPM, CPA and click-through rate can undervalue the impact of a campaign.

One example she gave involved one of Time Out’s applications, which sponsors can now use as a platform for branding.

“In the month of July, the app is going free because it will be brought by a sponsor,” Ms. Weisler said. “The sponsor will be the sole advertiser in the app for a month.”

“It says to consumers, ‘download now because you don’t have to pay,’ and that is associated with the advertiser,” she said. “It will be cross-promoted through all different channels, whether Web or print or email, to give an association factor that’s valuable – if not directly trackable on a click-through basis.”

Mr. Kultgen agreed that the value of mobile advertising cannot be measured with a cut-and-dry approach to metrics, but he cautioned that the best practice for judging a campaign’s effectiveness still has not been pinned down.

“The value of advertising is figuring out how it helps across all media touch points,” he said. “Be careful if you measure it in isolation you might be under-leveraging the value.

“There is an obsession with having same abilities in online as in mobile,” he said. “There is a lot of worrying about value metrics.

“It is not as important as usage metrics – what are you creating and how are you delivering the value proposition?”

Educating advertisers
The panelists agreed that advertisers need to be educated when they create campaigns in the mobile space.

“It is really about understanding what they need,” Mr. Buckley said. “It is taking a consultative approach, not just saying ‘yes’ to the order.”

He mentioned one advertiser who wanted to buy large amounts of pre-roll inventory, but had the objective of driving clickthrough – which pre-roll is not an effective tool for.

Instead, AP took the advertiser’s print creative and converted it into mobile advertising, focusing on interstitial ads.

“They had phenomenal results,” Mr. Buckley said.

Mr. Kultgen posed a question to advertisers:

“What’s your objective for mobile?” he said. “Ask advertisers that – it takes teasing it out of them.”

“[Focus on] understanding their objectives, their targets. Look at where they are going on mobile Web.

“Make it much  more strategic.”

At the conclusion of the panel, Mobile Marketer’s Peter Finocchiaro interviewed Mr. Kultgen. Here is a video:

Here are some pictures of the panel: