Mobile Ad Spending Doubles in 2012’s First Half

From my Forbes.com blog The New Persuaders:

Mobile ads drove a 14% rise in online advertising revenues, to $17 billion, in the first half of 2012, according to a report out this morning from the Interactive Advertising Bureau and PricewaterhouseCoopers.

According to the IAB’s latest half-year report (full pdf here), mobile ad revenue jumped 95%, to $1.2 billion, or or 7% of total online ad revenues. That’s up from 4% a year ago. The reason is fairly obvious, and something every company from Facebook to Google is struggling with: People are increasingly accessing online service through smartphones and tablets, thanks to the popularity of the iPhone, the iPad, and Android devices, and advertisers are following them there.

The 14% rise pales next to a 23% rise a year ago, though the IAB attributes last year’s jump to a recovery from the recession. Online ad spending continues to far outpace overall advertising spending, which rose less than 1%, according to both Nielsen and Kantar Media. Television remains the one relatively bright spot in traditional media, though its growth also remains far behind digital. Cable saw a 4% increase, to $10.9 billion, and broadcast rose 3.3%, to $11.1 billion.

Performance-based ads, those seeking to elicit an immediate purchase or other action, remain dominant, and even gained ground over more brand-oriented ads. Chief among these ads are search ads, which despite their 48% share of overall online ad revenues continued to gain as a category in the first half, rising 19% to reach $8.1 billion. That means search giant Google, which reports its third-quarter earnings a week from today, still reigns supreme in online ads.

Display ads rose only 4%, to $5.6 billion, reducing its share of overall online ads from 36% to 33%. Although the IAB didn’t mention it, no doubt part of the relatively slow growth is due to the rise of more efficient (that is, lower-priced) banner ads placed via real-time bidding through ad exchanges.

“Brand dollars are moving online, but at a slightly slower pace than the last two half-year reports,” Sherrill Mane, the IAB’s senior VP research analytics and measurement, said in a conference call this morning. That’s a problem, indeed perhaps evidence of a problem, for companies such as Facebook that are depending on brand marketers moving television and magazine ads online. …

Read the complete post at The New Persuaders.

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Google: Here’s How Well Mobile Ads Can Work

From my Forbes.com blog The New Persuaders:

The big rap on mobile advertising from marketers is that all they get is a tiny piece of a tiny screen to tell their stories–nothing like TV spots, print ads, or even Web banner ads. That’s one reason spending on mobile ads remains so small that it’s worrying investors in every online company from Google to Facebook to the New York Times, all of whose audiences are using their services more and more via mobile phones and tablets.

The other reason the year of the mobile ad always seems to get pushed out to next year? Marketers aren’t sure how to measure their impact. Measure only clicks on the buy button, without tracking how mobile ads lead customers to physical stores as they surely do, and it doesn’t look like many mobile ads pencil out as well as Web ads. It’s no wonder that a new survey out this morning by the Chief Marketing Officer Council shows only 14% of CMOs are satisfied with their mobile efforts, and 43% definitely aren’t.

Google, for one, is pushing hard to change this situation, especially since both these concerns have emerged front and center among marketers in the six months since Google launched its Mobile Playbook intended to help brands do more effective mobile marketing. With a new update to its own mobile marketing vehicle announced this morning, Google is aiming to answer those concerns using a raft of real-world examples.

First, several examples of mobile campaigns illustrate that the main problem isn’t lack of screen space, but lack of imagination by marketers. “Mobile is a great canvas for brand-building,” says Jason Spero, Google’s head of global mobile sales and strategy. “It’s going to produce some of the greatest campaigns in digital. But it’s shocking how far behind the [consumer] consensus the broad base of companies are.”

But some are managing to use the distinctive features of mobile devices to vault ahead of that laggard pack. Google points to several award-winning mobile campaigns from this year’s Cannes Lions Festival that showcases creative advertising. They look nothing like standard banner ads and, for better or worse, nothing like the “native” ads that are nearly hidden inside the news feeds of Facebook and Twitter.

That General Motors ad at the top, for instance, was a Game Time app that blatantly hijacked people’s attention from the game itself and, as the video says, “distracted them from watching our competitors’ ads.” Other mobile ads by Korean retailer eMart, Brazilian financial services firm Bradesco, Toyota, and others used smartphones’ cameras, touchscreens, GPS location data, and accelerometers to provide experiences not possible on the desktop, from back-seat driving games to QR codes that provide deals only at noon local time to attract lunchtime shoppers.

Second, Google’s calling out examples of how to measure the impact of mobile campaigns beyond the click, which may have even less meaning on mobile phones than on the Web. Adidas, for instance, with its agency partner iProspect, determined that including the real value of a click on a store locator button, which it had identified from store data, proved that mobile ads were paying off in in-store sales. “Mobile is driving behavior in the real world,” says Spero, and cases such as Adidas’ are starting to prove it.

Apple’s New iOS 6 Ad Tracking Feature Is ‘Broken,’ Says One Source

From my Forbes.com blog The New Persuaders:

With the new iOS 6 operating software released with the launch of the iPhone 5 last Friday, Apple introduced a new version of a feature that allows advertisers to track phones to serve targeted ads. But it seems that for people who updated their iPhones via wireless networks, Apple’s new Advertising Identifier is not working.

That’s a big deal for advertisers, for which iPhones and iPads are a rich channel for mobile marketing. Without being able to identify users–or more accurately, their phones–they can’t track whether those ads produced a sale or other “conversion” such as an app installation. And they may not to spend a lot on iOS ads until they can do that again. “It’s crucial for the advertising market,” says Ravi Kamran, CEO of the apps marketing platform Trademob, which discovered the problem. “It drives the whole ecosystem.”

Apple’s new Advertising Identifier, which replaced a Unique Device Identifier widely seen as flawed from a privacy perspective, shows numerical IDs that are entirely zeroes instead of the usual unique sequence of numbers. In an interview, Kamran said the problem affects only those phones updated via WiFi, not via iTunes on a computer or via Xcode that Apple software developers use, but that’s a lot of people.

For the time being, advertisers will have to depend on third-party identifiers such as Open Device Identification Number, Kamran says. IPhone and iPad users who don’t like being tracked may be perfectly happy the Advertising Identifier doesn’t work. But the new identifier also offered a way to opt out of tracking, so ultimately a working Apple identifier is probably desirable for all concerned.

I’ve contacted Apple on whether it’s aware of the issue and what it may do about it and will update this post if and when I hear back.

Google Research: No Mobile Site = Lost Customers

From my Forbes.com blog The New Persuaders:

Google has increasingly pushed its advertising customers to create special mobile websites because, as we know all too well, most conventional websites look awful on a smartphone. Now, Google’s providing more research to back up its advice.

The search ad giant is hoping, of course, that the better mobile experience people have, the more they will use Google search to find sites and products. A poor mobile experience reflects badly not only on the sites but on Google searches that sent them there. That’s especially worrisome today as Facebook, to name one rival, and Twitter, to name another, double down on mobile advertising. And it happens that Google has some relatively new mobile ads to hawk as well.

So in a survey of about 1,100 U.S. adult smartphone users (not tablets, in this study) conducted by  market research firms Sterling Research and SmithGeiger and released this morning, Google offers advertising folks ammunition to get their laggard information-technology and marketing chiefs moving. A few of the highlights (or, in some cases, low points):

* Two-thirds of smartphone users say a mobile-friendly site makes them more likely to buy a company’s product or service, and 74% say they’re more likely to return to the site later. “Mobile is creating massive opportunity,” says Jason Spero, head of Google’s global mobile sales and strategy.

* 61% says that if they don’t find what they’re looking for (probably within about five seconds), they’ll click away to another site. Half say that even if they like a business, they’ll use its site less often if it doesn’t work well on their smartphone. “This is a wakeup call,” says Spero. “You will lose customers at the moments that matter” without a site specifically made for mobile devices.

* 72% of users say a mobile-friendly site is important to them, but a nearly unanimous 96% have visited sites that aren’t. “When you offer users a desktop experience on mobile,” Spero notes, “it’s kind of crap.”

Google’s advice: Create a fast mobile site with big buttons and text, keep steps to complete tasks to a minimum, and–you knew this was coming–promote the site with Google mobile ads for the two-thirds of people who use search to find a site. That last may be self-serving–though one Google mobile advertiser, online discount perfume merchant FragranceNet.com, told me that the ads were a significant factor in a 48% jump in mobile sales following its creation of a mobile site. But it’s hard to argue with the rest.

Apple’s iPhone 5 Sales ‘Shortfall’ Means Precisely Nothing

Eager buyers crowd Apple’s Palo Alto store shortly after Sept. 21 opening

From my Forbes.com blog The New Persuaders:

Only one company could see its stock fall when it sells 5 million of its newest product in a single weekend: Apple.

Apple said today it sold 5 million iPhone 5s the past three days, and its shares promptly fell $9.30, or about 1.3% on the day. The reason: Analysts had forecast it would sell up to 10 million. Now they’re scrambling to explain what happened.

The correct answer: Nothing. Let’s get real. First of all, it’s not clear that Apple really fell short of any reasonable expectation. As one person noted today, the supposedly disappointing 5 million in iPhone 5 sales in a weekend is more than Nokia sold of its latest Lumia smartphones in an entire quarter. So Apple is hardly losing much ground to competitors.

Second, that 5 million–actually, as Apple put it, “more than 5 million”–doesn’t count people who preordered but haven’t yet received their iPhone 5s. It’s unclear how many that would be, but one analyst estimates it could be 1 million or more, even assuming Apple was correct when it previously said most customers who preordered would get their iPhone 5 last Friday.

Third, while Apple no doubt would like to sell as many iPhone 5s as possible, it so routinely runs short of demand on new products that you have to wonder if that’s part of its marketing plan. Scarcity, at least for a product generally well-reviewed and certainly highly anticipated, suggests to potential buyers on the fence that this is the device they’ve got to have. It’s hard to imagine that Apple, of all companies, doesn’t have the means to fulfill that pent-up demand over the coming weeks and months. …

Read the complete post at The New Persuaders.

Another Funny Samsung Ad Ridicules Apple iPhone Fans

From my Forbes.com blog The New Persuaders:

Samsung is an old hand at poking fun at iPhone fans.

It ran an ad last November for its Galaxy S II smartphone that portrayed Apple fanboys and girls as blindly obedient doofuses. It ran another for the S II in January during the Super Bowl that portrayed Apple fanboys and girls as blindly obedient doofuses.

And now it’s running a new one that extols the cutting-edge virtues of the Galaxy S III that and portrays Apple fanboys and girls as–you guessed it–blindly obedient doofuses. Give Samsung points for consistency–and some real humor.

“I heard you have to have an adapter to use the dock on the new one,” says one guy standing in a line in front of a building in Chicago that heavily suggests an Apple store. “Yeah yeah, but they make the coolest adapters,” another line-waiter earnestly replies. “This year,” says another young man, “we’re finally getting everything that we didn’t get last year.”

Later, a guy in line using a Galaxy turns out to be holding a place for someone else. His parents. Zing!

The initial numbers for iPhone 5 pre-sales suggest the ads may fall on deaf ears, or at least ears plugged by Apple headphones. But the spots last January may have had an impact. BrandIndex said the campaign helped Samsung edge past Apple in brand perception, at least for awhile.

It looks like the iPhone 5 will do just fine. And if Samsung’s predictions are any indication, the S III will do well this year, too.

But Samsung, along with Google, maker of the Android software running on the devices, clearly hope to steal some of the iPhone 5’s thunder, as well as siphon off some of its sales. Will these ads do it?

Why You Shouldn’t Buy Apple’s New iPhone 5

From my Forbes.com blog The New Persuaders:

We’re just hours away from what will certainly be one of the most massive hypefests of the year: the introduction of Apple’s newest iPhone. Even without the benefit of Steve Jobs to add that extra touch of magic reality distortion to the proceedings in San Francisco, the entire tech world will see a plunge in productivity for several hours starting at 10 a.m. Pacific while they watch and chew over the launch of what is all but now confirmed to be called the iPhone 5.

* Update: Catch Forbes’ liveblog of the event here. And here’s Apple’s own announcement.

No doubt Apple will sell a ton of the new iPhones. Indeed, though I find this hard to believe, iPhone sales could even add a big boost to this year’s Gross Domestic Product. Diehard Apple fans, and there are millions upon millions of them, won’t be able to resist lining up at Apple stores the night before they become available to be among the first to buy the latest and greatest iPhone.

But you shouldn’t be one of them. Here’s why I think most of you–not all, but most–would be better off not buying the new iPhone:

* It probably won’t be revolutionary. I know–blasphemy! The many leaks of what the new one will look like and the way it will work indicate the new iPhone will, of course, be thinner and faster and sport a bigger screen. So what else is new?

And think about the last time. The iPhone 4S had Siri, the voice assistant that was supposed to revolutionize the way we interact with devices and, oh, by the way, kill Google search. It did neither (though ask me again in a few years, as Siri no doubt steadily improves).

Anyway, let’s face it, smartphones in their current incarnation may not get much better fundamentally. As Steve Shankland at CNET recently pointed out, we’re in an era of incremental refinement more than revolutionary change. At some point, Apple may well come up with yet another product that actually resets the standard for computing and communication devices. But by all reports, the new iPhone isn’t that product. Simply put, you don’t need to own this phone.

* There’s always a risk that something won’t work quite right on the new model, leaving you with buyer’s remorse. Apple’s better than most at avoiding this sort of thing. But remember that faulty antenna in the iPhone 4 two years ago? Update: One word: Maps.

* The older iPhones are still great. Even though some reviewers criticized Apple for touting a machine that didn’t provide many advances, such as a larger screen, the iPhone 4S last year still was widely seen as the best iPhone yet, and still the best overall on the market.

* You will get several of the benefits of the new iPhone just by installing iOS 6–for free. No big screen, no fast LTE data, of course–two biggies, to be sure. But you won’t be left with lagging services like you do with many Android phones that can’t upgrade to the latest OS.

* The older iPhones are also cheap–or free! For one thing, used iPhones are flooding the market as people get ready to buy the new one. Last month, Sprint Nextel and even Apple itself discounted the iPhone 4S, and it doesn’t stretch the imagination to think that when the new model appears, prices for older iPhones will fall across the board. When the iPhone 4S came out, the iPhone 4’s price fell to just $100 and the 3G model was (and still is) free with at AT&T contract. If the pattern holds, doesn’t a free iPhone 4 sound pretty sweet?

* Update: Yes, it does sound sweet. The new iPhones will cost from $199 to $399 depending on the amount of memory, but the 4S will fall to $99. And the 4? With a two-year contract, it will indeed be free.

* If you go with an older model, you can also save bigtime on service plan costs. If you go with a prepaid carrier such as Virgin Mobile or Cricket, you have to pay more for the phone, but over a couple of years, their lower-cost data plans save hundreds of dollars. It’s not clear whether similar deals will be offered with the new iPhone, but it appears unlikely at the outset–so your only way to get those savings is to go with an older model.

* You may have fewer unlimited-data plan options with the new iPhone. Verizon and AT&T have ended their unlimited-data plans, so that’s not new. But on existing phones and contracts, they’re grandfathered in, a significant reason to think twice about an iPhone purchase that would require you to switch carriers. Sprint may offer an unlimited-data plan, but that means switching carriers if you’re not already on it.

* There are–yes–other smartphones out there. Android phones such as Samsung’s Galaxy S III, and even some Windows 8 phones such as Nokia’s Lumia 920, get rave reviews. …

Read the complete, Apple fanboy-inciting post at The New Persuaders.

Facebook CEO Mark Zuckerberg: We Burned Two Years Betting On Mobile Web Vs. Apps

English: Mark Zuckerberg, Founder & CEO of Fac...

Photo: Wikipedia

From my Forbes.com blog The New Persuaders:

Facebook CEO Mark Zuckerberg hasn’t said much, if anything, publicly since the No. 1 social network went public in May. But oh, how much has changed since that day. Not only did the IPO fall flat, but Facebook is now dogged by slower growth perhaps partly due to its late start on mobile advertising.

Today, Zuckerberg went public himself at the TechCrunch Disrupt conference in San Francisco. Clearly the big “get” for the conference, Zuckerberg was in his element at the conference, which is aimed at tech startups and the software developers creating them. In a wide-ranging and surprisingly revealing interview with TechCrunch founder Mike Arrington, who has since become a venture capitalist, Zuckerberg said Facebook lost two years betting on mobile Web technology instead of native iPhone apps but said he thinks mobile will be even bigger than the Web for Facebook in terms of advertising.

Investors liked what they heard. Facebook shares rose 3.6% in after-hours trading, breaking $20 a share, on top of a 3.3% rise on Tuesday before his talk.

Here’s the interview, edited slightly for clarity and my inability to catch every single word the fast-talking Zuckerberg utters:

Q: You went public on May 18 and the stock has lost roughly half its value.

A: Just get right into it!

Q: Would you have done anything differently on the IPO?

A: The performance of the stock has obviously been disappointing. But the commitment we made was to fulfill this mission to make the world more open and connected.

The key will be how we do with mobile. A lot of stuff has changed in six months since we’ve been in the quiet period.

Literally six months ago, we didn’t run a single ad on mobile. So people can underestimate how good mobile can be for us. It’s the main thing that’s fundamentally misunderstood. For one, there’s just more mobile users–5 billion people have cellphones in the world. Second, they’re spending more time on it. We’re already seeing people more likely to be daily active users on mobile. And those stats are before the new iOS app. And third, we can have better advertising on mobile, make more money.

Q: You make money to build great services rather than build services to make money. Do you really mean that?

A: We are a mission-driven company. In order to do this, we have to build a great team. And in order to do that, you need people to know they can make a bunch of money. So we need a business model to make a lot of money.

Building a mission and building a business go hand in hand. The primary thing that excites me is the mission. But we have always had a healthy understanding that we need to do both.

Q: What about the stock causing morale problems?

A: Well, it doesn’t help. But first, Facebook has not been an uncontroversial company in the past. So people are fairly used to the press saying good things about us and bad things about us.

What really motivates people at Facebook is building something that’s worthwhile, that they’re going to be proud to show to friends and family.

We also haven’t done much on equity to incentivize people. The way we do compensation is we translate the amount of compensation we give you into shares. [So employees get more shares if the stock price is down, thus similar compensation, thus the stock price doesn't mean as much as it might appear.]

Q: I’ve been rough on the company on mobile products.

A: We were very self-critical too.

Q: Is mobile a strength or weakness for Facebook?

A: There are more users, they spend more time on Facebook, and we’re going to make more money on mobile ads. There are huge things we can do to move the needle. Mobile is a lot closer to TV than [to] the desktop. We’ve had right-hand-column ads and it’s been great, a multi-billion-dollar business.

But on mobile, we can’t do that. It’s clearly going to have to be different. We’re seeing some great mobile ad products being developed. There’s a huge opportunity. The question is getting there.

Clearly we’ve had a bunch of missteps there. The biggest mistake we made as a company was betting too much on HTML5, because it’s just not there yet. We went for this approach, an internal framework called Faceweb. We just couldn’t translate it to mobile with the quality we wanted.

We had to start over and rewrite everything to be native. We burned two years. It may turn out it was one of the biggest if not the biggest strategic mistake we made.

Two years ago, we decided to bet completely on HTML5. We believed that because it used the same technology as the desktop, we thought it could improve. But it wasn’t good enough. We realized the only way we could get there was to go native.

Q: Did you realize the previous Facebook mobile app sucked?

A: Yeah, it was not where we wanted it to be. We just decided to ship the same features as before, but faster. But in parallel, other teams have been building new features. Over the coming weeks and months, we can expect to see a lot of the cool stuff. …

Read the complete post at The New Persuaders.

Benchmark VC Matt Cohler: Mobile Ads Will Be Even Better Than Web Ads

Image representing Matt Cohler as depicted in ...

Image by Facebook via CrunchBase

From my Forbes.com blog The New Persuaders:

Despite rising doubts about whether mobile advertising will ever amount to much, Benchmark Capital partner Matt Cohler says he’s more jazzed than ever about the prospects.

In an interview with TechCrunch founder Mike Arrington at the TechCrunch Disrupt conference this morning in San Francisco, the former vice president of product management at Facebook said he has made zero investments this year, though he wasn’t entirely clear why except to say he made more than the usual number last year. But he said he’s looking actively for opportunities in “mobile marketplaces,” as well as products and services that use the smartphone as a “remote control for your life.” Here’s what else he had to say, in edited form:

Q: You haven’t made any investments lately. Why?

A: I haven’t made any investments this year. Last year I made more than a typical venture investor would.

It wasn’t a single specific decision. We’re at an interesting moment in time where aspects of various platforms are starting to shift. But I’ll do it if the time is right.

Q: Do you regret not making some investments?

A: I’m sure I passed on some things that will probably be successful.

Q: You criticized Groupon awhile ago when it was hot. That looks pretty smart two years later. But you have invested in a deals site in Brazil.

A: I think daily deals are a good idea. Any ad people view as content is a good ad, and that’s true for daily-deal ads too. But I’m not sure it’s smart to build a company around that one thing. Groupon has some interesting assets. The question is what can it do with them? …

Read the complete post at The New Persuaders.

The Early Bird Gets The Worm: Twitter Beats Facebook In Mobile Ad Sales–For Now

Twitter is stomping Facebook when it comes to selling ads on mobile devices, according to a new study out this morning.

According to eMarketer, Twitter grossed $129.7 million in mobile ad sales in the U.S. vs. Facebook’s $72.7 million. To some extent, that’s not saying much, since Google and even Pandora, each selling mobile ads for at least a couple of years now, beat both of those companies. In particular, Google dominates thanks to its mobile search ads, which constitute more than half of all mobile ads, though for display ads alone, Google is just barely ahead of Pandora.

Overall, according to eMarketer’s crystal ball, mobile ad sales will total $2.61 billion this year, rising to $12 billion by 2016 (though you’d do well not to put too much stock in forecasts that far out). These are net revenues after paying distribution partners. This year’s tally is still only about 1% of overall online ad sales.

eMarketer’s capsule analysis of Facebook’s and Twitter’s mobile results and prospects indicates the latter company won’t keep its lead for long. …

Read the complete post at The New Persuaders.

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