October 13, 2011
Premium or Commodity: The 1st Battleground for Brand Mobile Ad Spend

So here’s an interesting and, ultimately, positive development. Digiday reports that many leading US publishers are resisting turning over their mobile inventory to ad networks and selling it directly.

The main reasons seem to be understandable distaste at sharing mobile ad revenue and the fight to protect price premium against a commoditization of inventory.

Networks, blind or partially blind networks especially, fuel a race to bottom in inventory pricing. Whether through CPM or CPC/CPA models, theirs is a volume business. The most inventory sold wins and winning that game means offering the lowest, still viable, price. 

Because there’s currently an over-supply of mobile inventory (read: advertisers aren’t keeping up with consumers) networks often fail to deliver on promises to spike publisher fill rates because they sign up as many partners as they can and need to spread the love around. 

The other problem for premium publishers is that many of those network advertisers are smaller app shops or other commodity mobile content advertisers that lack the brand cache that “premium” publishers like to see on their sites & apps. 

The article goes on to point out a couple things that I agree are legitimate challenges for the mobile advertising space:

  • Mobile needs to be easier to buy. 
  • Agencies like networks for the single-source execution.

Now there are many reasons that’s true. Some of which are addressed below and others include the dynamics of media buying (and that’s a whole other complicated discussion).

There’s some other things to consider as well:

  • Mobile, though rapidly growing, still needs to address questions or reach & scale. The audience is clearly attractive to advertisers but it just doesn’t offer the same reach as proven + established channels such as online, email, broadcast etc…This goes back to the appeal of single source buys.
  • Measurement is still evolving so lower prices and bigger reach allow brands and agencies to justify “trial” spends without having to deliver as rigorous reports.

The ability of publishers to protect price premiums and nurture further big brand spend depends on a couple of things:

  • Advancing audience reporting & targeting, inventory targeting and campaign measurement. All are in their infancy and  inconsistent at best currently.
  • Providing high touch ad experiences such as the ability to do custom and highly engaging rich media experiences.  For us in Canada, this often  involves providing some level of production support. 
  • Establishing and uniformly adopting standards for ad units. 
  • Continuing to educate about campaign and creative best practices and becoming a valuable resource to agency/brand partners vs. just an order taker. 

This is a topic I’m invested in daily. I expect I’ll be back to each of these items soon and regularly. 

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