The Future Of Mobile Advertising Will Be Shaped By Two Trends

The Platform is a regular column by mobile editor Dan Rowinski. Ubiquitous computing, ambient intelligence and pervasive networks are changing the way humans interact with everything.

Don Draper and his Mad Men would’ve looked at today’s technology and gawked.

“You mean I can reach anybody and everybody, anywhere and everywhere, with advertisements straight to their pockets?!” they would’ve asked. “Imagine the creative we can throw at that!”

The mobile revolution makes several promises, the first being that a powerful, connected computer will always be within arm’s reach nearly all the time. Mobile also promises instant access to information and the ability to communicate with just about anybody in any part of the world at a moment’s notice. It also promises a wealth of data about the people that use smartphones, and serve that information on a level that has no precedent. 

Quick Thoughts

Microsoft executive VP of devices Stephen Elop on Monday said the Android-based Nokia X would not be discontinued by Microsoft after the acquisition of Nokia was finalized. Elop, who was CEO of Nokia prior to the acquisition, said in a question-and-answer session on the Microsoft “Conversations” blog that the Nokia X is here to stay.

“Microsoft acquired the mobile phones business, inclusive of Nokia X, to help connect the next billion people to Microsoft’s services,” Elop wrote. “Nokia X uses the MSFT cloud, not Google’s. This is a great opportunity to connect new customers to Skype, outlook.com and Onedrive for the first time. We’ve already seen tens of thousands of new subscribers on MSFT services.”

Elop is reiterating what we have heard from both Nokia and Microsoft executives since the Nokia X was launched at Mobile World Congress in February. As ReadWrite predicted, the Nokia X is a vehicle for Microsoft to add more users to its cloud products and features, and the new “one” Microsoft sees value in the potential volume the Nokia X could bring. 

It’s no wonder why advertisers and marketers have been drooling over the concept of smartphones and ubiquitous computing for years. The opportunity to connect brands with consumers in a real-time, real-world environment seems like it should be an ample recipe to print money, just like Google did with Internet advertising more than a decade ago.

“We are still in the second inning,” said Ernie Cormier, CEO and president of mobile advertising exchange network Nexage. Cormier was talking about the process of building relevant advertising for mobile during a panel at a Massachusetts Innovation Technology Exchange last week.

The good news for Cormier is that he is part of two particular trends that are starting to define what mobile advertising and marketing is evolving into. Between programmatic advertising and contextual networks, the near-term future of mobile ads is beginning to take shape.

The Long Slog Fraught With Challenges

One of the reasons advertisers and marketers are having trouble creating the next big bang is because, from an advertising perspective, mobile is much different than the Web. Ubiquitous browser cookies are not available to follow people around and learn what they may or may not like. User attention is short, but frequent and spread between apps and browsers, maps and messaging; smartphone users check their phones up to 150 times per day, but often for seconds at a time.

The audience is fragmented and difficult to reach and no technology has yet been developed as a one-size-fits-all solution.

“Some of the basic assumptions need to be re-thought,” said Jeff Peden, founder and CEO of Crave Labs, a Boston-based mobile advertising startup. “There millions of applications across iOS and Android and many more mobile sites, so building a white-list of brand-approved apps and sites (which has been the norm in desktop display) and doing direct advertiser-publisher deals can be extremely limiting.  Today, we need to think about audience in terms of context: known or intuited characteristics about the consumer such as location, gender, interests and other demographic or psychograhic profiles.”

Dual Trend: Programmatic & Contextual

Advertisers are learning to build mobile campaigns based on two trends that fit well into the mobile marketplace: programmatic buying and selling of ads mixed with contextual, data-aware delivery. 

Programmatic ad buying is the use of software to automate the buying and selling of advertising inventory and is usually done through a network or platform like an exchange. On the Web, programmatic ad buying has long been associated with Google and real-time bidding networks where keywords are auctioned to the highest bidder through software. Programmatic advertising can also defined by the buying of impressions on apps or websites, known as “programmatic direct.” Buying can be triggered automatically through a predefined set of conditions in much the same way that stock trading is done.

Quote Of The Day: “Man is not the only animal who labors; but he is the only one who improves his workmanship.” ~Abraham Lincoln

Contextual computing is easier to define, but harder to implement from a marketing and advertising point of view. Smartphones generate loads of data about their users—where they like to go, what they search for, who their friends are, what apps they use and what kinds of content they like to consume. For instance, my smartphone probably could’ve told you that I was in Washington, D.C. this weekend drinking a lot of wine and visiting museums and the zoo with a friend.

Together, contextual awareness and programmatic buying of ads will help companies target users on mobile apps and websites. For example, I could set up a campaign to target all smartphones in a certain geographic area that have certain demographic traits (like women 25-34 years old etc.) and deliver push notifications or advertisements to their devices and apps. The challenge is to bring marketing and advertising awareness down to the level of the street, in people’s pockets. Solving this problem is what mobile advertisers are tackling right now.

Companies like Nexage, PubMatic, OpenX and Twitter’s MoPub are providing the programmatic exchanges advertisers are beginning to flock to, while companies like Adelphic Mobile (the foundation of Apple’s iAd platform), Crave Labs, Celtra, Tapjoy, InMobi and Velti are providing the context and advertising to power those exchanges.

All of these companies have to battle the kings and queens of programmatic and context as Twitter, Google, Apple, Amazon and Microsoft chew up giant slices of the advertising pie. Dozens more companies worldwide are tackling the same issues, proving early Facebook employee Jeff Hammerbacher right when he said, “The best minds of my generation are thinking about how to make people click ads.”

“We’re in the early days of maturation, still, for mobile advertising,” Peden said. “For the first time, we’re beginning to see broader adoption of mobile advertising channels from brands—moving beyond the basic app—distribution ads that made up a majority of the market in the first years of mobile advertising.”

Top image courtesy of Shutterstock

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