Although very young, the mobile advertising ecosystem is already overflowing with ways for brands to advertise themselves to mobile audiences. Understanding the value that each option brings to the table in terms of the lifetime value of a new user, the cost of acquiring each user and the potential scale available is key to developing a top-notch mobile strategy.
Rankings, developed after careful evaluation and hundreds of discussions with advertisers of all shapes and sizes, are below. My advice? Stick to the top three or four.
1) Organic & Paid Search: Major search engines, such as Google and Bing.
Users enter a keyword search for a product and are served with an organic result or search ad that is relevant to their query.
Organic & Paid Search PROS: Market leading performance.
It simply doesn’t get better than search. You’re able to reach users who, by searching for keywords relevant to your product, have expressed interest in learning more and potentially making a purchase. This is a very tried and true channel online, and perfectly applicable on mobile.
Organic & Paid Search CONS: Limited scale. Expensive.
Before people can search for your brand or product name specifically, they need to first know it exists. The number of people that know about your product is finite, so there is a “paid search ceiling” that limits your scale. Additionally, paid search can become expensive depending on how competitive your vertical and target keywords are.
This is where developing and grooming other mobile advertising channels plays a big role in your company’s continued mobile growth. The stronger your other channels are, the higher your search ceiling will be.
2) Facebook Mobile Ads: App Installs, Sponsored Stories, ‘Promoted Page Posts’, etc.
Facebook has various ad types, and the company is often testing new formats. All Facebook ad formats are native, appearing as posts in the mobile newsfeed of their users.
Facebook’s targeting is called inferential or behavioral targeting. The targeting is based on the user-submitted demographic data and on Facebook ‘Likes’ and ‘Interests’.
Facebook Mobile Ad PROS: Very good performance. Good cost.
Facebook ads perform very well on both the front and back-end and they’re not expensive. The targeting capabilities are great and the ads are attractive and blend with the layout of the surrounding content, appearing—visually speaking—more as ‘valuable content’ than as ads.
The effectiveness of this channel is no secret. In Q2 of 2013 alone, over 8,400 different advertisers purchased Facebook mobile app install ads. This was a 121% increase vs. the previous quarter.
Facebook Mobile Ad CONS: Limited available volume. Diminishing performance over time.
The more targeted and granular your desired demographic, the less relevant volume will be available. Performance also tends to diminish with each successive campaign. Diminishing performance mostly occurs because Facebook behaves very similarly to a direct mailing list (albeit a very big one!). Unfortunately, the relevant audience on Facebook that fits within your target is probably a lot smaller than what you might initially expect. Besides, you can only “hit the list” so many times before you experience ad fatigue or, in other words, before you saturate your audience and experience lower conversion at higher prices.
To continue to scale on Facebook over time, you are then forced to ‘loosen up’ the granularity of the demographic you were targeting. This, of course, will hinder your performance. Your first Facebook campaign will usually drive the best performance of any channel you test, but do not expect the level of your initial success to hold without rigorous management.
*Note… Insider Murmurings: A source very close to this arena recently told me that, due to the resoundingly negative feedback that Facebook has received from its users regarding the very large and very frequent mobile ads they’re exposed to—along with the imminent launch of Facebook video ads that will need to be mixed into an already oversaturated rotation—mobile ads will become smaller and less frequent. What this means for you: smaller ads will lead to decreased performance, and lower ad frequency will limit available volume. “Get it while you still can” is the message I’m hearing from insiders.
3) Native Mobile Ads: Ads placed directly within mobile content.
The industry classifies native ads on mobile as ads that match both the format and style of the surrounding page. Typically, targeting is contextual. Contextual targeting means ads are only shown when they are relevant to the content being displayed on the mobile device (e.g. an ad for Expedia on a travel article).
Native Mobile Ad PROS: Potential scale. Users react positively.
These are attractive ads that appeal to mobile users. There is potential for scale, depending on how many mobile sites relevant to your product adopt native mobile ad formats. Performance for native ads is also very good as a result of the contextually relevant targeting.
Native Mobile Ad CONS: Expensive. Limited scale.
More expensive than mobile banner ads (see below) and other options. This is to be expected, given that premium users come at premium costs. Not every relevant site will have native mobile ad formats available, so scale is currently limited.
4) Mobile Banner Ads: Desktop banner ad concept applied to mobile devices.
Mobile Banner Ad PROS: Campaigns go live quickly. Low cost. High volume.
It’s comparably fast and easy to take mobile banner ads live. A high percentage of mobile sites have adopted this format, mainly due to the similarity to desktop display ads, and costs are low. Additionally, there are lots of vendors that have access to a wide reach of mobile sites and can thus help you increase scale quickly.
Mobile Banner Ad CONS: Irrelevant targeting. Users react negatively to ads.
The targeting in mobile banner ads tends to be irrelevant. In other words, content and/or audience has little relevance to your product. With the limited screen real estate available on mobile, formats tend to be very ‘in-your-face’, to which users react negatively. It’s easy to get campaigns started, but much of this is due to the plug-and-play nature by which the same ad is re-used in multiple websites—irrespective of how unpleasing it looks in relation to the unique design of each site. Ultimately, this format lends itself to a “spray and pray“ approach through which you turn it on and hope for the best.
Unappealing ads, combined with poor targeting, and worsened by a negative reaction from users = poor performance.
5) In-App Ads: Desktop display ads applied to mobile apps.
Same concept and design as desktop display/banner ads, appearing inside mobile apps. Often emerge as a pop-up banner while the user is interacting with the app.
In-App Ad PROS: Highly scalable.
Advertisers can scale quickly with in-app ads. There is a lot of available volume in this channel because a high percentage of mobile apps are still exploring the best ways to monetize their growing user bases.
In-App Ad CONS: Poor targeting. Low lifetime value of new users.
New users driven by the in-app ad format have a low lifetime value. Typically, targeting is poor. In-app ads are often placed alongside entirely irrelevant content and conversions result from “passerby-shoppers”, likely outside of the optimal target audience. Due to the pop-up nature of this ad format, a Harris Interactive Survey reported that slightly over 60% of clicks on in-app ads are accidental.
As a consequence, performance is plagued in this channel. Due to the negative impact of accidental clicks, costs go up as conversion rates go down.
6) Incentivized Ads: Similar to in-app ads. Users are rewarded in some way when they click on an ad and perform an action.
Also found in-app, this format offers users a reward in exchange for installing an advertised app (e.g. credit towards downloading a song, or a key of some sort for unlocking a new level in a game). Typically, advertisers use this channel as a strategy to very quickly boost their app store ranking.
Incentivized Ad PROS: Very cheap installs.
Pricing options for the incentivized ad format are unrivaled because of how cheap it is.
Incentivized Ad CONS: Very little, if any, retention.
The value of a new user acquired from the incentivized ad format is essentially zero. Studies show that 97% of people who install apps via incentivized channels end up abandoning the app shortly thereafter. In fact, 62% of ‘new users’ acquired this way never actually use the app. From our experience, the lifetime value of users acquired in this way is minimal, if not almost non-existent.
With so many options before you, it may feel like a daunting task to determine what should and should not be part of your mobile ad strategy. Keep it simple by focusing your ad dollars on channels that bring valuable new clients, and drive the most-intent based users to your door. Growing your brand through cheap clicks and incentivized mediums is a failed premise and a thing of the past.
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