Mobile advertising has long been trumpeted as the next big thing, with analysts touting a new global channel of smartphones and tablets now ready to push more-relevant targeted ads to happy consumers. The problem, according to a new Forrester survey, is that consumers just don’t like mobile ads: “Two-thirds of respondents found them annoying, higher than the percentage of respondents who said they are annoyed by TV and web-based advertising.” Simply put, advertising is still intrusive no matter what media or device it’s served on.
One of the takeaways from the “Mobile Advertising Sucks” panel at the Mobile Loco Conference in San Francisco on Tuesday was the concept that consumers’ receptivity to a mobile ad will be based on their relationship with the media or application delivering the message. We can categorize the consumer relationship with mobile advertising in four ways:
1) Banner placements that seem to appear randomly within a mobile screen are terrible because they are banner ads. National and local advertisers buy ads on the basis of user demographics. The 0.6% click-through rate on mobile banner ads is higher than the desktop rate of 0.07%, but that is likely due to the relatively bigger and more prominent position of the ad on a mobile screen.
2) In-app contextual ad placements are essentially banner ads disguised as content posts served to users perusing their timelines or feeds. Facebook is in a league of its own because it owns the world’s biggest online personal data asset — the open graph — to customize ad placement to their users. According to Nanigans, a Facebook ad network and developer partner, these ads receive 12 times more click-throughs than desktop ones due to better profiling and ad targeting.
3) Location-aware ads served based on a user’s location are compelling, but it’s even more important that they be relevant at the moment of delivery. At Mobile Loco, Foursquare business development chief Holger Luedorf said it’s important that users who never check in to coffee shops not be presented with ads for coffee shops simply because these places are nearby. The problem, though, is that lacking some statement of intent the apps and their ad networks can only guess at what local services a consumer desires. And if the placement doesn’t fulfill any timely need, it will be dismissed as simply another ad.
A second hurdle is that the consumer’s relationship with the app may be too shallow to deliver enough information for relevant ad targeting. For example, Foursquare has habitually been used as a check-in vehicle, largely oriented toward food and drink venues. So its Explore tab usually defaults to bars and restaurants, the arena where Foursquare has collected the most consumer data. It becomes harder for Foursquare to sell ads to accountants when it is not positioned as a consumer service used to find accountants.
4) So it follows that location-aware ads based on immediate consumer need are optimally suited for ad delivery. Consumer review apps like Yelp, local search engines, and instant deal purveyors like Scoutmob are relied on by consumers to find nearby businesses in real time, and offers can be targeted to the inquiry. On the Mobile Loco panel, Yelp VP of business development Mike Ghaffary stressed the concept that mobile ads aren’t terrible if the media relationship between app and consumer fulfills a need, like providing local recommendations. Yelp serves higher- visibility sponsored ads based on user inquiries.
Panelist Jeremy Geiger of Retailigence mentioned one future goal of mobile advertising is to “delight” consumers with timely location-aware offers. To reach this ideal, apps will need to read the consumer mind by accessing and dissecting a lot more open graph data like personal to-do lists and brand preferences so as to succinctly make these “perfect” offers. Otherwise, the downside to this vision is retailer ad bombardment as one walks down the sidewalk, an annoyance not unlike today’s hourly notification stream from Groupon and Living Social (something I turned off on my iPhone long ago).
Mobile advertising works best when it’s not in the form of a banner ad. Serving interesting content formatted to smartphones and tablets as a part of a contextual marketing strategy is the direction that Mobile Loco’s creative participants all agreed upon. The more an advertisement looks like a mobile app, the more consumer acceptance it will garner.