mobile-media-salesman.jpgA New Twist on a Familiar Tale.

Agencies are often confronted with a common challenge when drafting a mobile advertising plan: Should they go to the mobile ad networks, or should they attempt negotiate directly with the individual mobile publishers? Both have significant advantages and limitations that Agencies would be wise to keep in mind when planning and executing their mobile marketing plans.


Mobile Ad Networks. As mobile often commands a relatively small percentage of an advertising budget, most agencies do not usually have the internal resources to plan and negotiate sophisticated mobile advertising plans on a publisher by publisher basis. This challenge is compounded by the relative inefficiency of the mobile advertising marketplace. Overwhelming manual, most mobile RFP processes are just beginning to become formalized – and even when established, usually require the agency to juggle multiple phone calls and emails to each individual publisher in a plan.

That said agencies look to mobile ad networks, such as AOL’s Third Screen Media, Ringleader Digital, AdMob or Millennial Media to streamline this process. By aggregating and bringing to market large tracts of mobile ad inventory, Mobile ad networks play a highly important role in the mobile advertising ecosystem. However, while these networks greatly simplify the process of mobile advertising planning and buying for the agency, Media Buyers cannot rely on the networks alone to provide objective media planning services, as the two often have conflicting interests.

This is because while both ad networks and individual publishers share the goal of extracting the highest price for their advertising inventory that the market will bear, ad networks are also faced with the daunting task of satisfying a large network of highly dissimilar mobile publishers. The networks risk losing publishers to rival networks should they fail to sell a certain percentage of each publisher’s inventory. This creates a potential conflict of interest between the network recommending the most targeted and effective inventory, versus recommending inventory solely on the basis of appeasing their publisher base.

Buying Direct. While more time consuming, Agencies negotiating media plans directly with individual mobile publishers can also reap tremendous dividends for their clients. As is the case with online media planning, individual mobile publishers such as The Weather Channel, ESPN and The New York Times often provide a much higher level of integration than that offered the ad networks, including access to exclusive editorial content, custom promotional programs, as well as highly integrated, cross media campaigns.

It should be noted that a common misperception is that “buying direct” from individual publishers automatically results in huge price advantages (versus purchasing mobile ad inventory through an intermediary such as a mobile ad network). In fact there is should be no price advantage in either model, as publishers must “sell” their advertising inventory to ad networks (for resale) at significantly discounted rates versus those found on the open market. Furthermore, considerable market pressures encourage mobile publishers to establish identical price floors for both their internal sales forces as well as any external sales channels, such as mobile ad networks and other resellers.

Recommendations. Obviously both the Mobile Ad Networks and the Individual Mobile Publishers play important yet highly differentiated roles in the mobile advertising value chain – with the networks providing the broadest reach, while the individual publishers providing increased promotional and mobile content integration.

Clearly then, best practices dictate that agencies should utilize both Mobile Ad Networks and individual mobile publishers in the planning and execution of mobile advertising plans. Agencies must cultivate relationships with key mobile portals if they are to bring innovative integrated mobile advertising opportunities to their clients. Additionally, Agencies should also look to Mobile Ad Networks in order for their mobile campaigns to achieve desired levels of scale and reach.

That said, Agencies need to take the time to scrutinize each site recommended by the networks by respectfully requesting a rationale its inclusion. At a minimum, mobile ad networks sites should be able to provide agencies with an aggregated site demographic or content target data as justification for inclusion in a plan.

cbs-loopt-logo-lockup-mobilestance-copy.jpgCBS Mobile will begin incorporating GPS and other cell tower-based location data supplied by Loopt, a location-aware mobile social networking service, as a targeting parameter for advertisers purchasing banner ads on its suite of mobile websites, such as CBS Sportsline Mobile (http://cbs.volantis.net/sportsline/) and CBS Mobile News (wap.cbsnews.com/news), this according to The New York Times. Loopt has stated that their deal with CBS is not exclusive, opening the door for other mobile publishers and ad networks to follow in CBS’s lead.

While the move is notable in that CBS Mobile becomes the first North American publisher to bring location-based mobile web adverting inventory to market, it should also be noted that Loopt is currently only available to Sprint Wireless (and Boost) subscribers on a limited number of handsets. Loopt, a Silicone Valley startup, recently raised $12MM in Series B funding.

Eagerly awaited by some, the concept of true, location-based mobile advertising has, overnight, moved from the realm of the hypothetical to the desert of the real. For years, it seems, we have all been nibbling at the margins of the issue, exploring and debating from a safe distance. Now, as this once academic curiosity becomes cold reality, we are forced to examine the issue from a more practical perspective.

  • Privacy. It seems that the idea of Location-Aware Mobile Advertising cannot be explored without first discussing privacy. But while previously the focus was on generic privacy issues such as transparency and security, we are now free to explore the issue in the most concrete of terms: Has Sprint / Boost / Loopt specifically secured user permission to pass (or sell) their personal location data to third parties (such as CBS or their ad server) , or is a more dubious, “opt-out” mechanism being employed? Who will be held responsible if an unthinkable security breech occurs, such as a the “hijacking” of a user’s GPS data for malevolent or even criminal purposes? Clearly none of CBS’s major brand advertisers are eager to chart this new territory themselves, as it has been reported that (as of press time) none have purchased any of CBS’s GPS-targeted mobile advertising inventory.
  • Scalability. Privacy issues aside, there will be plenty of local, regional and national advertisers saying, “Great! Where can I get some of this?” This will be good news for CBS, as their mobile inventory is likely not flying off the shelves (this assumption is based on the fact that the network currently feels the need to augment its national sales force with four mobile ad networks – Third Screen Media /AOL, Millenial Media, AdMob and Rhythm New Media – in order to begin to fill its mobile inventory). How then, will advertisers purchase the GPS inventory? How will the local ad inventory be parsed, tracked and forecasted (this, across all of CBS’s five individual sales channels no less, most if not all utilizing different (if not incompatible) ad serving platforms!).
  • Economy. From the media buyer in me: How much of a price multiple does one place on GPS targeting? Will it follow current media targeting models, and increase based on the granularity of the location-targeting? Surly some areas (say – 5th ave, between Central Park South and 46th St) should cost more than say, the outskirts of Palm Desert… but how much more? Sure, we can all agree to “let the market” decide – but this is the same market that has settled on $45 on deck CPM’s and an estimated 16% monthly inventory fill situation (sources confidential)… not exactly a trustworthy market to be sure. Where’s the self-service, auction-based play on this one? (AdMob, are you listening?)

Analysis: While on its face the Loopt / CBS deal represents a minuscule number in terms of actual audience reach (not to mention reach potential… with Loopt users probably representing less than 1% of the US pop), the marketplace affects cannot be easily overstated. We’ve finally gotten beyond relatively simple questions of if or even when a major US carrier will start utilizing GPS data to target mobile ads, and into the much more interesting realm of real world applications.

Amobee Media Systems has selected Winstar, known primarily as a niche online advertising and production firm, to rep their mobile advertising inventory (release). You may recall that that Vodaphone and Telefonica both made strategic minority investments in Amobee a few weeks ago, announcing that Amobee would be rolling out ad services for the carriers’ inventory in Greece, Czech Republic and Spain markets.

Amobee’s play has always been to go after carrier deals, as that’s where the bulk of the mobile ad inventory is at present, and it also allows the company to offer integrated ad packages across most mobile touch points (MMS, SMS, WEB) – a level of integration that’s rare in today’s marketplace. The challenge Winstar (and therefore Amobee) will face is that (so far) the most difficult part in the mobile advertising value chain has not been procuring the inventory… it’s been selling it. Both EnPocket (now Nokia) and Third Screen Media (now AOL) enjoyed early successes in securing large swaths of carrier inventory, only to run into problems on the sell-side. Tales of <20% sell thru on any given month were not uncommon.

Of course neither of these two scenarios involved the type of “integrated mobile ad packages” that Amobee brings to the table with their “carrier-grade technology.” That being said, my hunch is that Winstar has bitten off far more than it can chew, and that Amobee took an unnecessary risk in going with a small player… a larger online ad network could obviously do a better job repping the mobile inventory, but would give Amobee a smaller cut of the revenue.

Amobee seems to be following the same business model as their carrier partners: tie up smaller players and take a bigger piece of the pie… forgoing (short and mid term) gross revenues for larger (long term) revenue shares.

Of course if Winstar really under performs I’m sure Amobee will be free to find additional partners to help sell the inventory.