Mobile Advertising : Industry Outlook Report
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- Annis Harrison
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1 4. The Advertising & Marketing Ecosystem The mobile advertising ecosystem has experienced rapid growth since The market is fast maturing and the fragmented nature of mobile platforms is giving rise to a complex and diverse mobile advertising market. A number of players have emerged which are quickly replacing traditional advertising giants in the industry. Advertising networks and ad exchange servers are business models borrowed from the internet and which adapt well to the mobile advertising business model. An overview of the mobile advertising value chain is shown in Figure 4.1 Figure 4.1 Advertising Value Chain Page 90
2 Ad networks and especially ad optimisers play a key role in maintaining the efficiency of the mobile advertising marketplace. Media agencies and brand representatives need inventories of publishers. Within the non-premium segment, agencies mostly interact with intermediaries like ad networks. The role of ad networks within the ecosystem is to aggregate and connect advertisers who want to buy advertising space to publishers who offer inventory. Publishers often are not able to monetise their ad inventory efficiently by being integrated to only one ad network due to regional specialisations and difficulties in managing traffic routes to the ad source with the highest pricing points. Advertising optimisers offer a solution by optimising the advertising distribution among ad networks and publishers. The key competence of mobile advertising optimisation platforms is to provide a technology that automatically routes the ad request to the highest paying ad network for a given ad unit, based on historic performance for a given targeting set. Major ad networks will cater to advertisers and publishers, while more specialised ones will orient their services to serve predominantly one group, such as publisher or operators. Certain ad networks are integrated into larger platforms. For example, OTT and OEMs such as Google and Apple have themselves acquired mobile ad networks and are staking a claim in this dynamic market. 4.1 OEMs & OTT Content and Service Providers Google s strong revenue growth in mobile search advertising is mainly due to its solid market position in the online segment. Google currently controls 59% of the US mobile advertising market. It consolidated its position with the acquisition of one of the largest mobile ad networks in 2009, AdMob. In January 2010, Apple acquired mobile ad network Quattro Wireless for $275 million and introduced its iad platform in July It currently holds 8.4% of the mobile advertising market. Millennial Media is third with 6.8% of the market share. Both Yahoo and Microsoft lost market share in Yahoo is down from 7% in 2009 to 5.6% in 2010, while Microsoft slipped from 6.3% to 5.4% in the same period (see Chart 4.1). Page 91
3 Chart 4.1 US Advertising Market Share % 5.60% 8.40% Google Apple Millenia Media Yahoo 59% Google Google has managed to successfully leverage its current experience and expertise in online advertising to the mobile platform. The company stated in October 2010 that its mobile ad business was generating revenue at an annualised run rate of more than $1 billion. Google has managed to accomplish this by proposing an appealing mobile ad strategy. Google has developed a set of tools for both advertisers wishing to have their ads appear in search results and publishers who can derive income from allowing ads to be displayed on their web pages. Google has optimised its existing online advertising tools, AdWords and AdSense for the mobile marketing platform. In addition, it has invested in the strategic acquisition of a mobile advertising company, AdMob, which has enabled it to further develop its expertise in mobile advertising services (see Figure 4.2). Page 92
4 Figure 4.2 Google Ads Solutions Google Ads Advertisers & Agencies Publishers & Developers Serach Ads Display Ads Apps Content AdWords AdMob AdMob AdSense Search Advertising with AdWords This type of advertising is based on the AdWords system. AdWords is Google's main advertising product and chief source of revenue. It offers pay-per-click (PPC) advertising, CPM advertising, and site-targeted advertising for text, banner, and rich-media ads. The AdWords program includes local, national and international distribution. Google's text advertisements are short, consisting of one headline and two additional text lines and are usually designated by a sponsored links or ads notice just under the search box at the top of a results page. Advertisers may choose to have these ads work on either smartphones or feature phones. The advertiser has the possibility of sending users who have clicked on the ad to a different mobile version of their website depending upon the type of mobile device. AdWords for mobile search display is not radically different from the online format. For search-targeted campaigns advertisers are limited to text ads. For content network-targeted campaigns, advertisers can run both image ads and text ads. In Page 93
5 addition, Google allows for different formats for feature phones and smartphones so that ads can work effectively on either model. Google allows advertisers to choose the phone model as well, in order to allow more targeted advertising. For example, an advertiser selling cases for only a certain brand of phone can choose to have their ads appear only on searches carried out by phones of that particular brand. This type of service is extremely appealing to advertisers who can tailor their campaigns to their specific product. ad extensions enable advertisers to add value to their campaign. They can expand a standard text ad with product images as well as one or more lines that provide additional information such as: Phone number (click-to-call and call metrics); More page links (ad sitelinks); and Address (local extensions) Click-to-Call and Call Metrics Google introduced click-to-call for mobile devices in January Click-to-call is an extended feature of content network ads which includes an advertiser s phone number. Click-to-call ads can also appear within apps running on smartphones. Users who access those ads via their mobile phone browsers or on a mobile app will then be able to click or tap on the phone number and call the advertiser directly (see Figure 4.3). The charge per call is the same amount as the charge for a click. This capability allows Google to increase the reach of ads across the mobile web. The ads can run on both Androidpowered handsets and iphones. Google had previously proposed this service in 2006 for Google Maps but this had been discontinued in 2007 because the market was not mature. Smartphones were not in circulation yet aside from BlackBerry phones, which were mainly restricted to the business sector. Using click-to-call from a desktop was not practical and did not necessarily confer any type of advantage to the user. However, with the boom of smartphones, click-to-call on mobile searches is a pertinent and useful tool which Google can now exploit to its full potential. Page 94
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