Independent mobile ad networks cast around for survival net
February 7, 2014
Mobile ad networks expand, consolidate to keep up
With brands and agencies increasingly interested in specialized and hyperlocal mobile advertising, independent ad networks are getting squeezed to either sell marketers on promised end-to-end services or scale down their focus to one specific type of tactic.
Recent moves from InMobi, Millennial Media and Mocean all highlight the evolving role of mobile ad networks to invest in areas outside of traditional mobile display buying and selling. However, the extent that independent mobile ad networks will be able to extend their businesses into specialized services is still up for debate.
“Unless you have a niche, unless you can say you really own a certain area, it’s going to be really tough to compete,” said Dave Martin, senior vice president of media at Ignited, El Segundo, CA.
“[Ways that the mobile ad networks will evolve include] better use of location data, better use of the native data that comes out of a device,” he said. ”Innovative ways to use data for better targeting is what’s coming next.”
Rise in niche-based targeting
The fact that some of the bigger mobile ad networks are now looking to build out more all-encompassing ad units points to the growth of the smaller ad networks that are built around granular levels of targeting.
With both Facebook and Twitter seeing significant amounts of revenue coming from mobile, both companies are looking to cozy up more to brands and agencies directly through their own mobile ad networks that could potentially cut out the independent mobile ad network as the middleman to generate higher profit returns and more control.
The location-based ad networks are also an area of growing importance for marketers in honing in and segmenting specific groups of consumers.
Verve, xAd, PlaceIQ and JiWire all specialize in serving hyper-targeted ads to consumers based on where they are.
There are also a number of different mobile video companies. However, independent mobile ad networks want to establish their own expertise in mobile video to tap into the growing amount of content that is consumed via a smartphone or tablet.
Although this may not completely eliminate the need of a mobile ad network, there are more options for brands and agencies to work with, which does push mobile spend across different companies.
At the same time, these specialized ad networks lack the scale of the bigger ad networks that advertisers are interested in.
“When you have all these different tactics that you’re trying to deploy to help an overall campaign work on both cylinders, there are different things that we would utilize in different ways,” said Jeff Malmad, head of mobile at Mindshare, New York.
“We like to spread it out and surround the consumer in different ways with the most relevant message,” he said.
Building out mobile capabilities
Millennial’s acquisition of Jumptap last year highlights a growing number of acquisitions that mobile ad networks are likely to make in the coming years to help grow their businesses.
The Jumptap acquisition gives Millennial the technology to build out better targeting options.
At the same time, Millennial is making a hard push to sell marketers on bigger ad formats that include video and rich media (see story).
“We’re at a point in our industry’s evolution where one-trick mobile ad networks can no longer survive,” said Mollie Spilman, executive vice president of global sales and marketing at Millennial Media, Baltimore, MD.
“Advertisers want fewer partners who can do more,” she said. “The most successful mobile ad platforms must excel at programmatic, understand audiences and reach them across screens and be able to tie impressions back to the cash register. It’s a constant race between platforms, advertisers and consumers.”
Examples of Millennial's ads
Last week, Paul Palmieri, CEO/cofounder of Millennial stepped down from the company and was replaced by Michael Barrett. Mr. Barrett was formerly chief revenue officer at Yahoo and brings some experience in programmatic advertising to his role at Millennial.
According to Ms. Spilman, the company’s initiatives for 2014 include better targeting, deepening audience data, focusing on cross-screen and beefing up its real-time bidding capabilities.
To accomplish all of this, it is not impossible to imagine that Millennial may continue to acquire smaller companies.
However, this approach can be risky with too many ongoing initiatives and ad offerings that claim to do everything.
“We did see this same kind of thing happen with ad networks five or six years ago,” Ignited’s Mr. Martin said.
“I think consolidation is kind of what has to happen because there’s only so many ad dollars to go around,” he said. “Granted, we are a steep part of the curve, meaning that mobile is going to grow really fast, which means that there might be room for all of these guys to continue to exist and thrive, but at the end of the day, the ones that are delivering the most value to their clients will survive, and the ones that are kind of struggling will not.”
At the same time that Millennial is going through new leadership, both Mocean Mobile and InMobi are also looking to grow their presence around new products and offerings that break out of basic display ads and traditional buying.
Mocean Mobile — previously split up into Mojiva and Mocean— and Yahoo launched a mobile ad-serving platform this week that is powered by the Yahoo Ad Exchange.
Under the deal, Mocean’s publishing partners will now be able to leverage Yahoo’s recently launched Yahoo Ad Exchange for better targeting and programmatic buying.
The new initiative fits into a bigger effort from Mocean to transition into programmatic.
“I think that the mobile ad networks are going through a similar transition as the display ad networks – [there is] a level of value, it’s very curated, but I think we’re seeing a significant migration to RTB and programmatic as a very efficient way to being able to tie those together,” said Graham Mosley, senior vice president of business development at Mocean, New York.
The growth in native mobile ads over the past year is also spurring mobile ad networks to develop new products.
For example, InMobi recently launched a new unit that places a mobile ad into a native ad that resembles a piece of content.
“While traditional ad formats have been effective in delivering revenues to publishers and conversions/engagement to advertisers, they have not necessarily delivered the intended user experience,” said Krishnendu Majumdar, head of products at InMobi, Singapore.
“With InMobi Native Ads, we can deliver rich native-user experiences that drive greater engagement and revenues for our partners,” he said.
The new native ads
InMobi’s new native ads are built on top of the company’s ad network.
However, switching directions from display to native ads could be a challenge for mobile ad networks since Facebook, Twitter and others’ revenue-generating mobile strategies have been built for native while mobile ad networks are building in native capabilities to existent products.
“I think the challenge [with native], particularly for the mobile ad networks, is what their native capability is and how much they can really support in terms of richness within the native piece,” said Azher Ahmed, senior vice president and director of digital operations at DDB Chicago.
Growing connected devices
As more marketers think beyond smartphones and tablets for their mobile initiatives, mobile ad networks could have an interesting opportunity to extend their ties with big brands onto new platforms.
Ford, Sherwin Williams and Domino’s Pizza are only a few big brands that are betting on connected devices as the next big iteration of mobile.
Take television, for example.
Despite the fact that there are more connected TVs and an increase in portable devices and game consoles, marketers still pour money into big TV advertising.
“If what we’re hearing might become a reality in terms of an Apple TV starting to now offer apps, or Android obviously has a couple of different gaming devices that have been out there and the hope is that they can take another stab at a Google TV-like product, I do think that these mobile ad networks are uniquely positioned because they’re already working with these platforms to extend to these newer technologies,” Mr. Ahmed said.
“Whoever gets there quickly and with the scale that our clients want are probably the ones that will end up winning and probably getting acquired by some of the larger fish in terms of just overall giving a package that these advertisers can ultimately buy,” he said.
Lauren Johnson is associate reporter on Mobile Marketer, New York
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