Ernie Cormier is the CEO and president of Nexage, the leading mobile advertising exchange. You can follow Nexage on Twitter @Nexage and read Nexage's blog here.
Mobile advertising is coming of age. In many ways, it has been driven by the sheer force of the consumer's insatiable appetite for all things mobile. More to the point, mobile is becoming a substantially more capable vehicle for driving brand awareness, affinity and purchases.
Advertisers see this pattern taking shape, but there is still a disconnect between the avid mobile consumer and potential advertising dollars. This is caused by several factors, including the sufficient difference between mobile and standard web. Similar to the relationship between offline and online, it simply takes time to adjust to a new market, and credibly, there have been gaps in the mobile ad ecosystem that one can expect in any earlier stage market.
But this distance is rapidly narrowing as advertisers and publishers employ the building blocks that will expand mobile advertising effectiveness in 2012.
Mobile Advertising in 2012
1. Demand and Liquidity Is Increasing
Although advertisers are concerned that total ad revenue (including digital) may decrease, mobile advertising is growing rapidly. Two factors are driving the change: First, more buyers are coming to the market and growing their purchase volumes, and second, there is a heavier focus on executing mobile-native campaigns that translate to better consumer engagement and improved ROI.
2. Location-Based Advertising Is Taking Flight
Mobile-driven, location-based services are becoming a staple in nearly all parts of our lives, including mobile advertising. Advertisers are using local and hyperlocal campaigns to promote events and drive in-store sales, and an ever-increasing number of consumers respond to deal-, coupon- and event-based advertising. Mobile Media's SMART Report stated that "49% of all targeted audience campaigns used local market audience targeting, as advertisers are often turning to mobile as an effective way to reach local consumers."
3. Real-Time Bidding (RTB) Creates Powerful Mutual Value for Buyers and Sellers
RTB provides real-time auctions that enable buyers to compete for and buy individual impressions that best serve their campaigns. The value is shared by buyers and sellers alike — buyers purchase only the impressions they want, and publishers and developers benefit from a higher price and increased demand for their ad spaces. The resulting powerful and mutual value pushes RTB onto center stage as the strategic foundation for mobile advertising.
4. Rich Media Is Dramatically Enhancing Ad Quality and Consumer Engagement
The ads themselves have held back mobile advertising. Banner ads were uninspiring, or in some cases, dull. Rich media ads — including video ad units and interstitials — are more artistic and animated, which fit better within today's highly visual games, apps and mobile web content. In 2010 banner ads saw a 0.09% click-through rate, while rich media ads saw 1.1% CTR, a significant difference.
5. Mobile Private Exchange Is Catalyzing Premium Publishers and Developers
Premium publishers see the immense value in mobile advertising, but they also must avoid price erosion that has been attributed to automated markets. This friction has previously limited the financial value for the publisher; it has also limited the high-value audience available to advertisers.
Mobile private exchange changes that equation, enabling premium publishers to create exclusive markets in which they select only those buyers they want to sell to, and prescribe the terms of how they sell. This can be particularly important for premium publishers who need to consider how to combine the liquidity of automated markets with brand sponsorships and their direct sales forces. With private exchange and the associated pricing and brand controls, publishers are able to shift from avoiding channel conflict to managing integrated (and productive) channels.
Brands, ad agencies and publishers are allocating more time and money to mobile advertising; even with all of its imperfections, the sheer scale and energy of this market is unavoidably persuasive. And in 2012, building blocks are now in place to marry extraordinary opportunity with real capability, and to translate market confidence into revenue and ROI.
Images courtesy of Flickr, samgranleese, iStockphoto, DamirK
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