Gartner’s recent predictions for the growth of mobile commerce over the next 24 months should come as no surprise – mobile commerce revenue is expected to more than double over the next two years ultimately accounting for 1 out of every 2 dollars spent in digital commerce.
As consumer spending habits shift sharply to mobile, so too are advertising budgets with the rapid growth in mobile advertising today reminiscent of the same trajectory we witnessed in display advertising after the RTB protocol was introduced seven years ago. Put simply: mobile (and mobile native) advertising represents an opportunity that is about to fast eclipse that of display.
The challenge for those seeking to capitalize on the perfect storm of powerful data-based insights for targeting mobile consumers and rapidly accelerating spend on mobile will be to develop marketing strategies that unlock the full potential of mobile consumer engagement. This opportunity has highlighted the clear and immediate need for uniform industry standards to help unlock the full potential of mobile and mobile native advertising-for both the advertiser as well as for the publishers and application developers.
The lack of standardization is probably the number one reason that buyers and sellers are unable to connect effectively when it comes to mobile native advertising and this creates a huge amount of friction.
The second reason is the inefficiency with direct ad buying in mobile. Advertisers can go directly to an app developer and buy inventory on a single app or across a family of apps, but this is time intensive. In order to reach the scale advertisers now demand for their campaign objectives, they would need to make dozens, if not hundreds of deals with separate publishers and app developers located around the world. This is simply not a viable option for large scale consumer campaigns. And to makes matter worse for direct advertisers, many large and successful app developers don’t operate large sales teams (or sales teams at all!) making it nearly impossible for advertisers to secure inventory directly on many successful apps.
Thirdly, relying on mobile ad networks – while streamlining the process for the advertiser – has led to crippling and unintended consequences for publishers and app developers. With each ad network integration the app developer is required to insert a unique ad network code – a Software Development Kit (SDK). As more and more SDKs are inserted, rendering quality of the app is negatively impacted. In speaking with many app developers I have heard time and again that the integration of these SDKs has been identified as the #1 cause for application crashes, consequentially proving a poor user experience which drives down usage, stickiness, and ultimately depresses potential monetization.
The good news for both buyers and sellers is that the industry has been focused on addressing these issues and just completed an 8-month review process to develop a common, programmatic language to drive efficiency in mobile native advertising. This extension to the OpenRTB offers advertisers a better way to access millions of applications and will help establish integration processes that will complement the user experience.
The IAB’s publication of this standards-track specification signals a game-changing advancement for the advertising industry with benefits seen across the entire ecosystem, including:
- A new and better revenue stream for app developers. Currently, app developers make the majority of their revenue through paid downloads. By standardizing the mobile native transaction process, a previously unavailable revenue stream will be delivered to the market fueled by allowing developers to make money from engaging and lucrative native ads appearing within their apps.
- Increased supply of premium mobile native inventory. With the new potential for revenue, more app developers will enter the market and existing app developers will now make their inventory available more easily to advertisers. The core “network” effects of advertising technology – more sellers attracting more buyers – will be further unleashed.
- Acceleration of scale within mobile native. By standardizing mobile native advertising, brand advertisers and agencies will now have access to larger amount of inventory making it easier for them to achieve their campaign objectives.
- Improved user experience. By standardizing the process and removing the need for multiple SDK integrations, mobile apps will render more quickly and will be less likely to crash, thus delivering an optimal user experience.
The adoption of a standard means of buying and selling mobile native ad placements is a win for publishers and developers seeking greater avenues for monetization, and will create better, more varied ad experiences for mobile users. Enabling brands with deeper opportunities to reach and engage key audiences will be crucial in mobile advertising’s continued growth.
