Advertising Gets Smarter

The pace at which the mobile advertising industry has exploded is staggering. In a few short years, the industry has gone from simply offering a new batch of inventory to plaster with banners, to a brave new world where a heady mix of data and the very smartest technologies can deliver real returns for advertisers.

Nobody knows this better than the people behind leading ad buying platform Adfonic. In an industry overrun with networks acting as middlemen and selling the same inventory, Adfonic aims to cut through the complexity, says Victor Malachard, CEO and co-founder.

“The mobile space is very fragmented and can be confusing for advertisers,” he says. “Our technology platform simplifies the buying process for advertisers and agencies by removing the middle man and providing access to the actual sources of inventory.”

Global business
Adfonic is a global business. It has around 100 employees and offices in seven major cities around the world, recently adding Munich and Singapore to its list of bases. There are close to 6,000 campaigns running on Adfonic that get access to over 100bn impressions each month.

But it’s not just about volumes – Adfonic wants to drive the mobile industry towards the kind of sophistication that brings real ROI for advertisers. “Our investment is into getting plugged into all the supply services on a global basis, and we’re very advanced there and providing real access,” says Malachard. “We’re offering algorithms that ultimately enable us to, on behalf of advertisers, serve the right ad to the right person on the right device at the right time.”

“It is about finding the pockets of value that mean ROI for advertisers,” says Adfonic CTO and fellow co-founder Wes Biggs. “The idea is that you’ve got this mountain of access; you then bring to that a mountain of data. Then you can really find where ads can be effective and start to value every impression on the mobile device according to who, where, what, when, and why.”

As an industry, mobile has been craving standards to make data and delivery easier, and through executive positions on the IAB and the MMA, Adfonic has helped drive the MRAID framework for rich media. This was essential in turning rich media into a genuine global opportunity for advertisers.

“Rich media has achieved that critical mass,” says Paul Childs, Adfonic’s CMO and co-founder. “Rich media inventory is now in the billions across Europe, and is supported across all major ad networks.”

Clickthrough rates
And, says Childs, while rich media campaigns can be measured with hard metrics such as clickthrough rates, intelligent use of rich media advertising can bring a level of consumer engagement that is unique to mobile.

“Automotive campaigns seem to be the ones really pushing innovation here,” says Childs. “They are using rich media to showcase their products in 3D and allowing them to be customised by consumers on the fly. In other words, they’re getting a consumer down a sales funnel, through a click, to the point where they’re actually customising what their desired custom, high-end luxury car would look like. That’s engagement a depth further than even where TV is.”

Of course, it is the penetration of smartphone devices that has allowed rich media advertising to thrive. But this has presented a challenge to the industry when it comes to identifying users. In the absence of the cookies that are used on the desktop internet, advertisers turned to the UDID – a unique ID number built into every iOS device (and the Android Device ID on that platform). However, this was flagged as a privacy concern, rightly, according to Biggs.

“The industry is still looking for standardised ways of anonymously identifying users and tracking post-click actions,” he says. “We need to establish an effective contract with mobile consumers. The question concerns how to strike the right balance between the value that’s created by advertising in terms of powering free app marketplaces, and the value of data protection on the consumer side.”

Malachard says he is confident regulators will get it right, noting that Apple is expected to present an alternative to the UDID when it unveils the next iPhone and iOS 6. “Ultimately, advertisers need to be able to categorise consumers by audience and by vertical, and it’s about not targeting an individual based on data that is available about them, but targeting them as part of a group. That’s where regulation needs to go.”

Step change
Adfonic believes privacy regulation is all part of the step change in mobile – and getting it right will continue to allow the company’s smarter buying platform to deliver for advertisers. Part of this increased sophistication is the shift away from CPC and CPM models to CPA – campaigns priced on a cost per acquisition basis.

On a macro level, online budgets are typically allocated on a CPA basis – and mobile is shifting in the same direction, says Childs. “Advertisers associate a value with every customer,” he says. “We’re seeing money come from major players and traditional digital or bricks-and-mortar companies looking for leads. So it’s about how we better align how marketers are looking to grow their businesses – and giving them options and models that help them do that.”

“When it comes to CPA, our machine learning algorithms get a chance to really flex their muscles,” says Biggs. “Achieving a digital marketer’s acquisition goals is paramount these days – it may be a reflection of the economic situation, but it’s also a reflection of the sophistication of marketing techniques available.”

Smarter technology
Sophisticated marketing techniques are facilitated by sophisticated buying platforms, and Adfonic believes the real-time bidding (RTB) model delivers the best deal for advertisers and publishers alike.

Real-time bidding is a head-spinning concept, but in simple terms it is an automated marketplace where advertisers pay for impressions based on factors that determine how valuable that impression is – where it’s taking place, for example, or whether there is any data attached to it.

A value-based pricing model has clear benefits to advertisers, and also allows publishers to more effectively allocate their traffic, and get the best return for every impression.

“It’s a true marketplace in the same way that eBay is a true marketplace,” says Biggs. “You are really dealing with supply- and demand-driven pricing, based on the quality of the goods on offer, which in this case is the data attached to the impression. So you get an ecosystem that reflects the true value of that impression and that enables a smarter buying platform like Adfonic to find the real value for advertisers – with the cream rising to the top.”

Adfonic’s RTB algorithms are self-learning and self-evolving, creating a fully automated marketplace that reflects real value and ROI. Malachard says it’s just one example of the sophistication that will be necessary to survive in the increasingly competitive mobile advertising space. “This is where the mobile space is going,” he says. “You have to have sophisticated technology, and invest in algorithms and data in order to make best use of these opportunities.”

Victor Malachard is CEO of Adfonic