CPA Advertising on Mobile

[Below was part of a post I had written for VisionMobile, a great group of awesome mobile analysts!]

Many point to Apple’s 2000M+ cached credit cards as being their most valuable asset. Why is it valuable, you may ask? Well, cached credit cards means one-click purchasing which is fantastic for all sorts of commerce (eg purchasing apps, physical goods and so forth). One less obvious benefit for cached CCs is how it enables CPA (Cost per action) advertising – let me explain. CPA ads typically require the user to complete some sort of form (eg completing a web form to trial some new product).The typical workflow requires providing billing and other details meaning numerous steps and clicks. However, if your billing details are cached, than the CPA workflow could be reduced to a few clicks!

Let’s walk thru an example of subscribing to Netflix. First, the user would click a text or banner ad for a Netflix trial subscription and is then taken to a landing page with specific product information about the service. The landing page is basically the sell page where you are going to make or break (convert) the CPA. Assuming you do a good job convincing your potential customer to sign-up for the trial, the user will complete a web form with his personal details (eg name, address etc) and billing information. The CPA has converted and the publisher serving the Netflix CPA ad just made his $25 bounty!

The challenge with the traditional CPA workflow on a mobile device is that your teaser page needs to be very concise given the limited real estate of a mobile screen. In addition the web application form needs to be easy to complete; we all know how difficult it is to type via a mobile keyboard.

One potential solution is the mobile wallet. If your billing details are cached, the web form could be auto-completed along with personal details resulting in almost a one-click CPA process and thus demonstrating the value of cached credit cards.

In the interim, clever stop-gap solutions have emerged. Instead of making the user complete a complex web form resulting in a poor CPA conversion, the user clicks-to-call a phone number from the teaser page. The call leads to a rep employed by the ad network who completes the web form for you (presumably at their PC). Companies like Moolah Media have demonstrated this workflow at great success and thus one solution enabling CPA advertising on mobile!

Update: I talked about a number of things we may see in the coming year at SXSW. Mike Merrill detailed some of my talk at his blog – thx Mike!

Mobile 2.0 Advertising Notes

Yes, I’m way late with this post. I recently moderated a panel on mobile advertising at the wonderful Mobile 2.0 conference – some interesting tidbits:

Where should I focus my mobile ad spend?
As expected, the panel answered “…test, test, test…”. With all the different combinations of ad networks and ad units etc, the easiest approach to see what is working is to test – $5K still continues to be the average “good” test budget.

Has the mobile web advertising market gotten more efficient?
In some ways, this was sort of a trick question. In an efficient market, you have less variance (ie mediation engines tend to focus more on ad unit types and placement on the page as opposed to the benefits of culling from multiple ad networks). Efficiency also means that CPMs have normalized meaning that the 50 cent eCPMs we see now in mobile may not ever get back to $1+ (or at least until the network is large enough that it can take advantage of a new parameter such as granular location). Obviously during recessionary times, a greater piece of the ad spend is in direct-response (ie performance-based) as opposed to brand advertising, so this doesn’t help either. So yes, the panelists did agree that the market was getting more efficient.

Is ad mediation necessary?
Not surprisingly, all of the panelists agreed that we need mediation but it ultimately comes down to testing. Mediation is a funny thing and in many ways reminds me of the SMS aggregator business. Yes, there are services like AdMarvel and TapJoy that are direct-to-consumer facing mobile ad mediation services but it’s not like every other mobile ad network isn’t pulling ads from other partners as well – they are just not exposing it as a D2C service. It’s like in the old days of SMS before everyone had “direct-connects” – you send an SMS to Verizon through MX Telecom and they then send it through their competitor, Verisign – funny how that works.

Does the mobile ad spend have a ceiling as a percentage of the total ad budget?
It was not in the panelists best interest to say yes but everyone agreed that there is a ceiling for digital and then a ceiling for mobile within digital. More interesting was the panelists agreement that mobile is now just a piece of selling digital as opposed to necessarily being called-out in the media buy. This is a remarkable state since this implies that the industry has matured and mobile has moved out of the traditional “innovation ad spend”!

Is there an iPhone bias when selling to the brands?
Mixed answers here – some agreed that when selling mobile, it implied iPhone. Others said, it wasn’t called-out by device. Regardless, a chunk of the mobile advertising industry has morphed into in-application advertising, essentially PPD (pay per download). The beauty of this, is that for the first time, the advertiser can calculate a real ROI (ie I buy an ad and does it result in a purchase of my app in the app store – this is much akin to the biggest ecommerce advertisers on the web measuring purchase conversion).

IAB Mobile and MMA convergence?
We hope so 🙂 We definitely need fewer ad units to target – some brands are definitely already beginning to complain about how much they have to spend on creative.

Are we ready for behavioral advertising in mobile?
Unanimous consensus was no and not for a long time – the network is barely able to target on granular location, it’s going to take a long time before we have ad servers that can ingest behavioral data as well as networks that can consistently fill against this data.

Is PPC (pay per call) picking-up?
ATT Interactive (with Yellow Pages and Ingenio ownership) obviously said yes, but agreed that it’s still a long ways out. Solving the hyper-local problem is difficult, there is a reason, I get a Pizza Hut ad as opposed to the mom-and-pop shop. On a separate note, probably another blog topic, I’ve heard that PPC performance is varying significantly by carrier – not certain yet, but it seems bad coverage means worse performing PPC!

Is lead-gen on the horizon?
Everyone was in absolute agreement here – mobile Offerpal was on it’s way! Onthe contrary, video ad units was definitely not in the horizon. There were some tests in the past but there is just not enough interest for mobile video ads yet, mostly because the experience isn’t there yet.

Will the top 10 advertisers on the PC become the top 10 advertisers on mobile?
Not much response from the panel here, after some thought, some of them said yes. This answer validates a few assumptions. One, that mobile and PC ad networks are converging (ad units will of course remain different). Two, that the mobile will become as effective of a transaction platform as is the PC (ie credit card payments for Amazon products on mobile would have to be seamless). Three, the browsing behavior on mobile would ultimately converge with the PC – with better browsers, we are starting to see that kind of convergence where for example, Skyfire’s top 100 visited sites closely mimics the Alexa 100.

Will platform providers, specifically Android, introduce their own advertising APIs for in-application? How do you compete?
The panel absolutely agreed that this was coming and as expected, they said it’s about testing with as many partners as you can and seeing what performs for you the best. Interestingly, there is definitely a trend of carriers and/or OEMs introducing or partnering with ad networks and analytics companies (ie T-Mobile US has partnered with Flurry for analytics and 3 ad networks for mobile; Motorola has partnered with Amobee) – interesting to see how this all plays out.

Those were the interesting tidbits, feel free to ping me offline if you want more. BTW, the panel was composed of Ali Diab at Admob, Michael Rubin at ATT Interactive, Ragner Kruse at Smaato, Paul Cheng at Velti and David Katz at Yahoo.