Summits Yellow

Where Are The Brands? – AGCS

Alex Spencer

Justin Campbell, CEO and founder of AGCS, takes a look at the obstacles holding back mobile advertising in Europe when it comes to attracting big brand budgets, and how the industry can overcome them.

Despite smart devices being such an integral part of our daily lives – and, in my opinion, the best way to reach consumers anytime, anywhere – mobile advertising is still struggling to attract the attention of brands. This is taking place on three different fronts.

Overcoming the block
First, consumers are reacting negatively to the development of ‘open web’ advertising technology – traditional display ads, as opposed to closed platforms like social and search – and are installing ad blockers at an alarming rate. Some reports suggest blocker usage saw a 90–100 per cent rise in 2015. The IAB admitted this growth was a result of the industry’s own mistakes, saying in a statement: “We messed up … As technologists, tasked with delivering content and services to users, we lost track of the user experience.”

Thankfully, ad tech players and the rest of the ad industry are starting to understand why users are so intent on blocking ads, and small steps are being taken to change the way we present ads on mobile. Ad formats like the ever-popular ‘interscroller’ or ‘parallax ad’ are engaging without being annoying. Publishers need to push these kinds of formats across the board in order to stop the rot.

Budget crunch
Second, and most importantly, brands aren’t investing their media spend in mobile. There are not enough big budgets from brands going into mobile open web, plain and simple.

In countries like Germany and the Netherlands, investment in mobile branding is still very low, and this is stunting growth and innovation. It is not unusual to see a media plan for €100k with only €10K dedicated to mobile, while a much larger amount goes to desktop – with the mobile budget allocated purely to performance banners.

Too much focus on performance is also stifling the sector. Many advertisers see mobile as a performance channel, synonymous with app downloads, gaming or affiliate traffic. In fact, most independent mobile players that are doing well gain the most revenue from performance marketing of some kind.

In Germany, larger publishing houses have concentrated their energies on desktop delivery and left mobile behind completely, filling inventory with frankly terrible performance banners. A cross-platform approach is looking more favourable in the German market, but that does mean mobile-only players (like mobile networks and DSPs) will need to be acquired by or merge with other publishers or tech players.

The mobile duopoly
Third, it’s worth remembering that all the numbers claiming that mobile ad spend has increased by a massive amount year-on-year are highly misleading.

Essentially, Facebook is now a mobile media giant – in many countries over 90 per cent of Facebook traffic is mobile – and a huge chunk of mobile advertising spend goes towards Google search. These two companies are now effectively the world’s largest publishers.

Some people wrongly perceive Google and Facebook as being ad tech companies. Actually, only a small (relatively speaking) part of Google’s revenues comes from Double Click for Publishers, their ad serving division, and Facebook has recently shrugged off the Atlas ad server it acquired from Microsoft in 2013.

It’s not all doom and gloom, however. There are many ways that mobile advertising can still attract big brand budgets and evolve as an advertising medium.

Goodbye banner
Mobile video is hugely exciting for brands, for example, and a cost-effective way of advertising to boot. Consumers are less likely to want to block video content if it isn’t invasive, and creating video ads has become much easier and cheaper in the last few years. Rich media companies are now becoming video enablers, and standard networks are repositioning as video networks.

Location-based advertising is a great example of using data to improve the accuracy and attractiveness of an advertisement for a consumer, but this cannot be a matter of simply showing banner ads based on location. Some companies are combining a cross-platform play with location, including digital out-of-home, and that story is likely to make brands take mobile more seriously.

Finally, non-invasive and native ad placements will win over the hearts and minds of marketing managers within companies across Europe. No one likes pop-up banners, or similarly annoying ad formats, on smaller screens, so as an industry we really need to stop promoting them.

When you see a great-looking advertisement that is relevant to you, you’ll be more than happy to engage with it. Retargeting companies have proved that relevant advertising does engage users – now let’s do the same on mobile.