What Madison Avenue Needs to Know About Mobile Advertising

Cross-posted from my Forbes.com blog The New Persuaders:

Still struggling to figure out how to participate in Facebook and the rest of the social Web, marketers now face a brand-new set of challenges and opportunities to their established way of doing business: mobile advertising. As more people abandon their personal computers to do everything on their iPhones and iPads, advertisers need to figure out how they can continue to reach them on a tiny screen, often in the social context of Facebook and other social networks people use on their mobile devices.

A group of mobile and advertising startups took a crack today at educating the marketers and agencies they want to sell to during a panel at AlwaysOn’s OnMobile conference in Redwood City, Calif. On the panel are host Bill Cleary, founder of Cleary & Partners; Ragnar Kruse, CEO of Smaato, which represents 50,000 mobile publishers on ad networks; Lucy Jacobs, COO of Facebook ad firm Spruce Media; Are Traasdahl, founder and CEO of Tapad, which offers cross-platform ads; and Lon Otremba, CEO of mobile social gaming platform Tylted. Here’s what they had to tell Madison Avenue folks about how they can tap into the emerging mobile opportunities:

Q: How do you deal with the cynicism of Madison Avenue about Facebook and mobile?

Otremba: It’s the same scenario we saw when the Web came around. There’s as much fear as anything. They know their clients are going to beat the hell out of them if they don’t figure it out soon.

Read the rest of the post at The New Persuaders.

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How Facebook–and Its Advertisers–Can Make Money From Mobile

Cross-posted from my Forbes.com blog The New Persuaders:

If there’s one thing that gave investors pause about Facebook’s underwhelming initial public offering last month–besides Nasdaq’s royal screwup–it was that the social network has been AWOL from the hottest trend in tech today: mobile. Facebook admitted shortly before its IPO that it wasn’t making any money on mobile advertising even as its users increasingly access the service from their smartphones and tablets.

But it’s also quite early in the opportunities associated with skyrocketing use of mobile devices, whether it’s games or advertising or payments. Lucy Jacobs, COO at Spruce Media, a company that helps brands do performance advertising on Facebook, offered a brief perspective on what Facebook and brands hoping to use it for marketing can do to make money from all the people ditching their PCs for iPhones, iPads, and Android devices. Here’s what she had to say during a talk at AlwaysOn’s OnMobile conference in Redwood City, Calif.:

Only about 32% of the world has a mobile phone so far, she says, and most of them aren’t smartphones, so there’s plenty of opportunity. We’re currently monetizing only 1% of all ad impressions even though 10% of time is spent on mobile devices. Result: Ad rates are five times lower on mobile devices vs. desktops.

Facebook is well-positioned to monetize mobile, Jacobs says. Why? Very rapid user growth, large number of innovative developers, broad base of advertisers, highly engaged consumers, and apps that are essential utilities.

Facebook now has four formats, or locations, for mobile ads–in the news feed on the home page, in the news feed in mobile, on the right-hand side, and on the log-out page. And last week, it announced the ability to run just mobile ads instead of having to do desktop and mobile ads simultaneously.

The mobile newsfeed ads have really high engagement and good results, Jacobs says. Click-through rates are 1% to 5%, or 10 times higher than on standard Facebook ads. That suggests that mobile has a huge upside for Facebook, since clicks on its other ads are way lower than the average display ad.

However, conversion rates, or the rate at which people buy something, fill out a form, or the like, are one-third lower. She doesn’t say why. Other marketers and agencies have suggested that it’s likely people using their devices on the go, such as in or near stores, simply buy the product in the store, but that purchase doesn’t get attributed to the Facebook ad.

Jacobs offers several tips and tricks for brands using mobile ads on Facebook:

Read the complete post at The New Persuaders.

What’s the Next Breakout Mobile Startup? Here’s What VCs Think

Cross-posted from my Forbes.com blog The New Persuaders.

Mobile computing is arguably the most disruptive force in tech right now. Just look at what it did to Zynga’s stock today. Or what it has already done to Facebook’s and Google’s shares.

Today, a group of venture capitalists laid out what they think is coming for mobile investment this year–in other words, who’s going to disrupt whom next. On a panel at the AlwaysOn OnMobile conference in Redwood City (Calif.) were host Mihir Jobalia, managing Director at KPMG; Rob Coneybeer, cofounder and managing director at Shasta Ventures; Paul Santinelli, a partner at North Bridge Venture Partners; Sling cofounder Jason Krikorian, now general partner at DCM and the Android Investment Fund; Navin Chaddha, managing director at Mayfield Fund; and Aydin Senkut, founder and president of Felicis Ventures.

Here’s what they had to say:

Q: What are the opportunities and challenges in Apple’s iOS vs. Google’s Android?

Chaddha: With Android, even though it’s open, not having control is a big issue. If developers have an app, they go to iOS first, then they look at Android, but there are so many choices, phones. It’s just hard. In the iOS, iPad and iPhone are all the same–life is easy.

Senkut: iOS’s big advantage is monetization. If you want growth and high numbers, it’s difficult without Android.

Coneybeer: It’s a stable duopoly. You need to do both. But nobody’s talking about any other platform now. For developers, you’re looking at a five-year-plus duopoly.

Santinelli: In a few years, you’ll be able to do all development in HTML5. It will solve a lot of those fragmentation problems.

Q: Where are the most interesting growth opportunities in the next five years?

Read the full post at The New Persuaders.

Google AdWords System Goes Mobile

Cross-posted from my Forbes.com blog The New Persuaders:

The more than 1 million advertisers using Google’s signature AdWords system now can run ad campaigns on the 300,000 apps running on 350 million mobile devices in its AdMob network.

The move, announced this morning, means that Google advertisers can run mobile campaigns from their AdWords dashboard, running them alone or in conjunction with their Web ads. They can target ads to specific smartphone or tablet models, specific app categories, or even particular apps. “This is the latest chapter in our ongoing efforts not only to bring AdMob’s and Google’s tools together, but to mobilize all of our ads products and services,” Jonathan Alferness, Google’s director of product management for mobile ads, said in a blog post.

It’s also a way for Google’s mainstream, often smallish advertisers to give mobile ads a shot much more easily. That could help close the well-known gap between the increasing amount of time people spend on mobile devices and the relatively small amount of ad revenue they’re generating.

Google bought AdMob in late 2009 for $750 million. Today’s announcement builds on Google’s attempt to integrate its many ad products into a coherent whole. On June 5, it announced a revamped display-ad system that brings together myriad display products for marketers and ad agencies. The same day, Facebook also announced the ability for marketers to buy mobile-only ads.

Read the full post at The New Persuaders.

Facebook Launches First Mobile-Only Ads–Right in Your News Feed

Image: AFP/Getty Images via @daylife

Cross-posted from my Forbes blog The New Persuaders:

Facebook took a first step toward addressing one of the shortcomings that led to its disappointing IPO and today’s dismal stock price. Today, it introduced the ability for marketers and agencies to buy only its mobile ads, without having to buy desktop ads as well. Previously, introduced at its fMC event in February, ads could be bought only for both mobile and desktop distribution together.

The ads in question are Sponsored Stories, Facebook’s name for posts from one’s friends that marketers pay to highlight, and they will appear directly in people’s news feeds, not just on the right side of the page where most ads reside. Those ads may prove more effective than standard display ads.

While the move was expected, and mobile ads of this sort have already been running, the new move could prove to be a big deal for marketers and agencies, largely because they can be bought more efficiently through Facebook’s self-service tools rather than through a Facebook sales person.

“It’s mobile ads for the masses,” says Simon Mansell, CEO of Facebook marketing firm TBG Digital. “Any mobile apps where you’re logged into Facebook, you can run Sponsored Stories” related to those apps, he says. The ads also will be especially appealing to local businesses such as restaurants that appeal to people on the go.

James Borow, CEO of social media marketing software firm GraphEffect, says advertisers will now be able to determine the impact of their mobile ads separately from desktop Facebook ads, which they couldn’t do before. As a result, he says, “Overnight, they are going to be the largest mobile ad network in the world.”

Because ads appearing in people’s news feeds, the main way they use Facebook, are new, it’s not yet clear how well they will work. It’s also not clear how well they will be received–as welcome, relevant news or spam. That question may prove especially acute on small smartphone screens where people increasingly are accessing Facebook.

Read the rest of the post at The New Persuaders.

Why Would Anyone Want to Buy a ‘Facebook Phone’?

Visit the original post at my Forbes blog The New Persuaders.

So Facebook wants to make a smartphone. Not just a nice app that it sorely lacks right now, but a piece of hardware that it supposedly will design, with the help of a half-dozen former iPhone and iPad software and hardware engineers it has hired.

As farfetched and even crazy as this may sound to those of us rubes who like to do more than just check in on Facebook with their smartphones, it’s apparently a longstanding obsession of the company. That obsession was recently heightened by an initial public offering that went less than swimmingly partly because investors were worried about the company’s lack of a strategy to make money from users on mobile devices. The idea, it seems, is that Facebook needs a clean mobile slate to fulfill its vision of socially infused advertising, so the only way to do that without interference from Apple, Google, carriers, or simply status-quo thinking by phone makers is to do its own.

But little of this rampant speculation makes much sense on its face. Mainly, the idea that Facebook needs to do this to ensure that it can run ads more easily ignores the fact that users–who ultimately would make a decision whether to buy a new phone–aren’t clamoring for ads from Facebook on their devices. A design that essentially makes the smartphone safe for Facebook ads seems unlikely to appeal to Facebook users. Maybe they won’t mind ads on their phones as much as some people might think, if they’re relevant to the activity at hand, but Facebook would have to offer very much more than that to get people to part with their existing phone.

Here’s the thing: Every smartphone is a Facebook phone. Every phone is a Google phone. The essence of the smartphone, like the computer, is that it’s programmable–you can, and people do, make it their own personal phone. Anything that limits that flexibility, even in the name of making it easier to use the most popular Web service on the planet, will be a nonstarter with the masses.

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What’s Coming in Internet Advertising: 12 Predictions for 2012

I did my annual predictions first on my Forbes blog, The New Persuaders, since they’re focused largely on the Internet media and advertising I cover there. On that blog, they’re done as separate posts, but I wanted to gather them up in one place here, as I’ve done in previous years. So here’s what I think will happen (or in some cases, not happen) this year in my corner of the technology and startup world:

Facebook goes public, but won’t start an IPO landslide: Facebook will make the signature stock offering of the decade, one that reportedly will value the social network at up to $100 billion. But it won’t launch a thousand IPOs as a gazillion venture capitalists and angel investors hope.

Of course, the first part of that prediction is a gimme. But I can’t go without mentioning it because the Facebook IPO will be one of the biggest stories of 2012. Assuming Goldman Sachs or Morgan Stanley don’t stumble in pricing and selling the offering, Facebook’s IPO will be every bit as important as Google’s in 2004. It will be a sign that Facebook is a real, sustainable company (if there was any doubt left by now), but also a sign that social networking is getting woven into the fabric of our entire online experience.

The second part of the prediction depends less on how the Facebook IPO goes than on how (or whether) the economy recovers. If the recover remains slow to nonexistent and the stock market reflects that, IPOs will be sparse. If we get the slow but growing economic improvement we seem to be seeing now, more companies will go public but not a gusher. But the point is that Facebook is such a singular success that it’s not going to set the tone for lesser (often far lesser) Internet companies.

Facebook’s ad business booms–but not at Google’s expense: Facebook’s social advertising looks promising, but won’t come close to challenging Google’s huge success in search ads this year–maybe ever.

Obviously, Facebook is having no problem raking in the bucks from advertisers eager to reach its 800 million-plus audience–or more specifically, the millions of people in whatever target markets they choose. EMarketer reckons the company will gross nearly $6 billion in ad revenues this year, up from $4 billion in 2011. And that’s before we know anything about Facebook’s likely plans for mobile ads or an ad network a la Google’s AdSense that would spread its ads around the Web.

From reading a lot of articlesyou’d think Facebook is stealing all that money directly from Google. That’s not mainly the case, given Google’s own considerable growth in display advertising, though Facebook’s success may well blunt that growth in the future. Instead, Facebook currently is eating Yahoo’s and AOL’s lunches, and those of many ad networks that, until Facebook ramped up its ad business, were the main alternative for advertisers looking to target sizable audiences.

What would make Facebook a huge Google-scale company is the theft of an entirely different meal: television advertising. After all, Facebook shows much more promise as a brand advertising medium than a direct-marketing medium like Google. It needs only to draw a small fraction of the $60 billion or so spent on television advertising, the biggest brand medium, to be enormously successful. But even then, it’s not mainly a Facebook vs. Google contest.

Facebook still needs to answer a big question, however. That’s whether its “social ads,” which incorporate people’s friends in ads in a 21st century version of word-of-mouth marketing, will have nearly the effectiveness in driving attention and ultimately sales as search ads, which appear in direct response to related queries, often involving products people are looking to buy. The potential is intriguing, and there are some nice examples of how well social advertising can work.

But despite Facebook’s considerable work in providing new kinds of metrics on marketing and advertising impact on its users, marketers and agencies aren’t yet universally convinced they need to spend a lot of money on Facebook ads. After all, they can get a lot of mileage out of their free Facebook Pages and Like buttons around the Web. (Not to mention, it remains to be seen whether these ultra-personal ads will cross what blogger Robert Scoble calls the Facebook freaky line.)

Bottom line: If Facebook is to be the Google of the this decade, its advertising has to at least approach the engagement of search ads, especially as Google itself moves to become more of a brand advertising platform with YouTube and continues its push into display ads. While Facebook is building what seems likely to become a great business on anew vision of advertising that could change many decades of tradition,2012 won’t be the year it closes that deal.

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