Top mobile advertising opportunities in apps, texting, product placement, experts say

Mobile advertising revenue is expected to shift to texting, applications, and a more effective integrated format in the next few years, experts say. “In general, I think mobile has really come of age,” IAB Canada president Paula Gignac said in an interview. “People are understanding the usage, so there’s the penetration of mobile phones in the first place. But the penetration of smart phones in the second place is growing both globally around the world and in Canada.” IAB Canada reported last month that in 2009 mobile advertising revenues in Canada grew by 169 per cent over 2008, reaching $31.9 million and exceeding the budgeted expectations of $18 million. IAB said mobile ad placement alone grew from $6.5 million to $27.8 million, a rise of 325 per cent. The report also showed that the second highest advertising medium was the Internet at revenues of $1,822,000 or 14 per cent of all advertising revenues. Mark Suster, an industry expert and a partner at GRP Partners in Los Angeles, Calif., wrote on the Techcrunch.com blog on April 29 that the future of mobile advertising lies in “integrated advertising,” or paying to place products in films, television programs, games, and mobile applications. Suster referred to the new Rio version of mobile game Angry Birds. Angry Birds, a staple on many smartphones since its release, now has a new version with integrated advertising for the animated film Rio. “I believe that integrated advertising is one of the more effective types of advertising out there,” Suster wrote. “You have to find a way to get your audience to engage with the content.” Suster also noted that both U.S.-based in-text advertising firms Vibrant Media and Kontera Technologies Inc. have built large and fast-growing businesses around text-based advertising. Vibrant has a reach of 250 million users, making it the 12th largest ad-focused property online, Suster wrote. Third-party studies have suggested up to a 50 per cent increase in brand lift following launch of the company’s in-text ads, he added. “Text is shown to deliver higher CTRs than banners,” Suster said. “Text is what we’re reading. It’s integrated.” Gignac also noted a rise in SMS text messaging advertising, where, for example, a user may text a specific number to obtain a coupon from a company. “There’s more and more ad networks being developed,” Gignac said. “There’s more and more companies who have expertise of content and applications, so those companies are out there making waves talking to agencies and advertisers.” Duncan Stewart, director of research at Deloitte Canada, said in an interview that he expects the text-based ad market to continue to grow. “It’s interesting because you would have thought texting—a communications technology that’s a decade old at this point—would go to zero, and everything would be done on the web,” Stewart said. “But that’s not quite true. There’s still a significant text base and some say that 20 to 30 per cent of all mobile ads will be text-based even in the future.” But the rise of the mobile app also appears to be an inevitable platform for advertising. Stewart said that, within the next five years, a significant percentage of the mobile market will be dominated by apps that are also infomercials. The apps will be integrated with advertising in such a way that something will be offered to the user leading them to watch what is essentially an infomercial. But Stewart suggested that apps may not serve as the be-all-end-all to mobile advertisers. Apps with integrated advertising are not always as successful as advertisers hope, he said. “In-game advertisements and in-game product placement—it kind of doesn’t work so well,” said Stewart. “When you’re in there fighting zombies and splattering blood all over the place, your brain really isn’t in a receptive mood for Oreo advertisements, for example.” Industry experts say that for an ad or app to be truly effective, it must be both eye-catching and useful. “On Angry Birds, they do advertising and the like,” Andrew Osis, CEO of Poynt Corp., said in an interview. “But that information doesn’t seem to be contextually relevant or location relevant.” Calgary company Poynt has experienced significant success with its search application for smartphones, which combines the user’s location with search query terms to generate targeted ads. Last September, the search app counted 3,913,728 users in Canada, the U.S. and Europe. Osis said in an interview that the app has now reached nearly 7.25 million users across eight countries, being used in five languages and on six different platforms. He said the app will soon be on seven platforms following the anticipated launch of one in India. “I think the remainder of this year and into the next, there’s going to be a huge change in both the amount, the kind, and the overall value of mobile. In particular, local advertising on mobile,” Osis said. The Poynt CEO said any slowdown now in the mobile ad market is “just a lull before a the complete hurricane.” Stewart also predicted that the biggest portion of the mobile ad market will be comprised of apps coming from traditional media sources such as local, national, or international news agencies. “It will be an app, and as a part of that app, there will be customized mobile advertising content,” Stewart said. He added that mobile advertising will continue to grow, perhaps at a slightly slower rate than previous years, but will likely hit a total market value of $10 billion by the end of 2012. dgrenier@thewirereport.ca

Top mobile advertising opportunities in apps, texting, product placement, experts say

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