Advertising has become an increasingly important revenue source for the multi-billion-dollar app economy, as consumers become less inclined to pay for the mobile apps they download. That’s left advertisers with two options: build your their own standalone app, or advertise within an app that people already use.
Increasingly they’ve learned that starting from scratch with their developers and their own place on app stores doesn’t always work, delegates said at the Mobile Media Summit in San Francisco on Tuesday, and advertisers instead need to focus on creating a rich, in-app experience that uses tools like location-targeting to show the most relevant ads to consumers.
Yet advertisers still face an uphill struggle. First, the location-tracking technology they want to use is still being proven out. “Clients get excited about access to this new data,” said Sarah Bachman of ad agency Horizon Media, who spoke on a panel about location-based marketing on mobile phones. Still, with a wide variety of location-tracking technology out there, advertisers apparently face plenty of smoke and mirrors from the technology firms and startups pitching to them.
Perhaps an even bigger challenge is in how the public reacts to location-based ads showing up on their smartphones via technology platforms like Apple’s iBeacon. The method is still in its nascent phases, and Jesse Wolfersberger of marketing consultancy GroupM Next warned that consumers could be disturbed in the long-run by new, location-based ads if they’re not rolled out carefully.
“One aspect I want to see is restraint. The first round of digital ads [on the desktop web] put a bad taste in people’s mouths,” he said, referring to pop-ups and spam. “Now we’re entering a new phase where you’re going to walk into your store and see, ‘This shampoo is 50% off.’ For a big percentage of the population they’re going to say it’s creepy, and they don’t want it. So let’s not bombard them.”
Wolfersberger advised agencies at the conference to spend the the next year or two giving consumers “freebies,” via location-based ads, “not just generic messages. If we turn this next round [of consumers] off, we’ll be fighting that perception for another five years.”
The big challenge for mobile advertisers is finding a balance between using the tracking tools available to them through iBeacon, GPS or app analytics tools that help make their ads “relevant,” and which increasingly target certain types of people, while avoiding the act of being so overtly accurate that it unnerves potential customers.
Mobile ad network TapJoy says it is upfront about being an opt-out model for consumers, and wants to go from “being an advertiser to a sponsor of the content,” said Peter Dille, TapJoy’s chief marketing officers.
The very words “consumer” and “user” evoke the passive ingestion of someone else’s ideas, but Dille says the future will see people increasingly interact with ads who sponsor a useful service. It’s not good enough to make a clever ad anymore, he added.
Advertisers need to become useful services if they want to be effective, delegates said, or make any sort of headway in the app economy.
“The majority of money being made in mobile is not ad related,” said Sean Muzzy, CEO of digital ad agency Neo@Ogilvy. “Companies in gaming categories, like Candy Crush, are pulling in $6oo,000 to $900,000 a day. That’s where most of the money is. But advertisers can make themselves effective by making sure [they're] engaging users in the right way.”