ARCHIVES: This is legacy content from before Marketing Dive acquired Mobile Marketer in early 2017. Some information, such as publication dates, may not have migrated over. Check out the new Marketing Dive site for the latest marketing news.

Recent Apple, Yahoo, Millennial moves prove race is on for mobile advertising

Last week saw several mobile advertising players do some housekeeping as they try to look their best and take advantage of what is expected to be significant growth in mobile advertising this year. 

Apple hired a new head of its iAd mobile advertising business last week while cross-platform advertising network Millennial Media filed for an initial public offering of its stock. These two pieces of news followed the announcement that Yahoo hired away the president of PayPal to be its new CEO, with all three pointing to the recognition that mobile advertising is poised for significant growth this year, a which these companies do not want to miss out on.

?The mobile ad landscape is being defined be the incredibly rapid adoption of smartphones and tablets,? said Dave Martin, senior vice president at agency Ignited, El Segundo, CA.

?After this past holiday season, all of the players in the mobile ad category have realized that the race is on to see who can grab the biggest audiences with the best advertising technologies on the newest devices,? he said.

?There?s no clear winner at this point.?

The Millennial generation
With the penetration of smartphones expected to surpass 50 percent of all U.S. citizens this year, growth in mobile advertising is expected to grow as well.

Millennial Media, which is currently the second- largest mobile-advertising company in the United States, filed for a $75 million initial public offering last week to provide it with the funding so it can grow along with mobile.

?Millennial is likely realizing that their first-mover advantage might go away if they don?t do something soon, hence the announcement about their IPO,? Mr. Martin said.

?Millennial has a nice head start on reach, but with the explosive growth we?re seeing, there is plenty of room for other players with superior mobile ad serving technology, like AdColony, to build a big footprint very quickly,? he said.

?Millennial?s three biggest challenges will be to maintain access to the best data, to stay ahead of, or at least keep up with, mobile advertising technology and to make sure their clients are seeing results.?

Another challenge Millennial will face is maintaining growth at a level that meets the expectations of shareholders once it is a publicly held company.

The $75 million IPO, while a nice drop in the bucket, could pale in comparison to Facebook?s expected IPO later this year. 

?You have a great disparity in the market with some giants like Google, which brings a lot of strengths to advertising with its scale and then you have a lot of smaller players,? said Noah Elkin, principal analyst at eMarketer, New York.

?Millennial, with its decision to file to go public, is trying to move into the middle,? he said. ?It won?t have the same scale as Google but it could be larger than some of the smaller independent entities or the entities that have been acquired by larger agencies or ad networks.?

?The continued growth of mobile is both an opportunity and a challenge.?

Rebuilding relationships
Also last week, Apple reportedly installed Todd Teresi, vice president of media solutions at Adobe, as the new head of its iAd business, filling a spot that had been empty since August when Andy Miller left the company.

The move could help iAd improve its reputation with advertisers, who have not been overly impressed by iAd?s high prices and limited reach.

IAd initially required a $1 million commitment from advertisers but Apple has since lowered the price.
One of iAd?s major points of differentiation has been the data that Apple can provide, giving advertisers the ability to target ads based on iTunes registration.

?IAds have needed new leadership for some time,? Ignited?s Mr. Martin said. ?Even now as they continue to reduce their price point, they?ve lost a lot of ground to their competitors, like Millennial and Greystripe who can essentially replicate their technology. 

?It will be up to Todd to re-build relationships with advertisers who?ve already made their minds up about iAds as well as build a new story around their true unique selling proposition: their data,? he said.

Mr. Teresi could help reinvigorate iAd as it appears that he has necessary background in building relationships with agencies.

Mr. Teresi joined Adobe last year and previously worked at Yahoo! Inc. where he as in charge of the company?s publishing network and was involved with worldwide sales.

?I think someone with a lot of agency experience and someone with a lot more exposure to the business side of advertising and with a clear ROI focus might be the type of person that could help reinvigorate iAd and help build relationships with agencies and brands alike,? eMarketer?s Mr. Elkin said.

ROI is key
Once a dominant search provider and leader in display advertising, Yahoo has been facing declining sales and market share.

Mr. Thompson, who led PayPal during a period when it significantly increased its presence in mobile payments and became eBay?s fastest growing business, will look to drive a turnaround with mobile playing an important role.

One of the biggest challenges all mobile advertising companies will face in 2012 will be proving mobile?s ability to deliver results as marketers weigh committing larger budgets to mobile. 

?With mobile as we?ve seen in the social media realm, there will be an increased demand for ways to demonstrate the ROI from both a direct response and a branding perspective that advertisers are getting from mobile efforts,? Mr. Elkin said.

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York