In-app ads next frontier for mobile marketers: ad:tech panel

By Dan Butcher

November 7, 2008

Initiative Media chimes in on application advertising

NEW YORK -- While the in-application advertising market is still nascent, it is poised to offer a variety of lucrative opportunities for marketers -- especially given the ascendance of iPhone, BlackBerry and the G1 Android phones.

In world of ever-growing connectivity, vast amounts of non-browser ad inventory will get created by software companies competing against free ad-funded Web applications, and both consumers and marketers stand to benefit. That's according to the ad:tech New York panel "The Next Frontier: Advertising in Applications."

"The reason why we're talking about it today is that application advertising is a whole phenomenon everyone's obsessed with, and we see apps playing a critical role it the marketing process to accentuate campaigns or turning a core aspect of the brand into a service, for example a 'Deal of the Day' widget," said Bant Breen, worldwide digital solutions director for Interpublic Group of Companies' Initiative Media, New York.

"There's a lot of work going on in the mobile space, general messaging campaigns integrated with location-based services, and there are lots of examples, but the reality is that it's very early," he said. "There's a lot of excitement, and right now there's a tremendous focus on development side -- the number of iPhone application developers in Silicon Valley is staggering."

"From a media perspective, the investment is there, while from a marketing perspective application advertising is seeping into the mix, but it's not a huge area just yet."

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Initiative Media's clients include Continental, BMW, Honda, Hyundai, Kia, Daihatsu and Chrysler, and a few of those brands have dabbled in mobile.

For example, BMW is running a mobile campaign on the Nokia Media Network to promote some of its popular luxury vehicles to consumers in Spain (see story).

However, few brands have dipped their toe into mobile in-application advertising, although the fascination is definitely there.

"To date, from advertising perspective, [advertising on smartphone applications] is fairly limited, as it's still the early days," Mr. Breen said. "Android is still so nascent that it's impossible to make a call.

"There's no doubt the iPhone's functionality opens up a whole other world to think about," he said. "At my son's basketball practice, I saw a mom playing a driving game on her iPhone, so mobile games are especially getting a lot of exposure.

"The ease of downloading iPhone apps and the utility is great."

There are a wide range of possibilities for advertising within applications and widgets of all types, to dedicated applications created specifically for a specific brand.

"There are many specific ways advertising might be embedded into an existing application, adding ads as a sponsor, but that's less interesting to clients," Mr. Breen said. "They're more interested in applications that are associated with their brand positioning and woven into their campaign efforts.

"The actually want a situation where the app is the advertising and plays a fundamental role in the awareness effort to drive people in-store, as opposed to an app with advertising in it," he said.

Applications can be used to encourage everything from commerce to viral branding.

"We've been embedding applications into rich- media banners, letting consumers book hotel rooms directly from the hotel's display ad," Mr. Breen said. "We've launched widget on social networks giving people video functionality, for example, one for Sprite's 'Be Yourself, Don't Lie' campaign."

Applications on social networks -- both online and mobile -- are a potentially lucrative untapped resource for marketers to take advantage of.

"We're integrating brands into social interactions on Facebook, letting consumers watch and comment on a brand's video from their Facebook homepage, leading to viral distribution," said Chris Pan, head of brand solutions for Facebook, Palo Alto, CA. "Consumers can also give your product as a virtual gift to their friends.

"Facebook users are coming with the question 'What's going on with my friends?' and if a marketing message is coming from brands, that's ok, but it's much more effective if it's coming directly from your friends," he said. "That leads to more engagement, because messages are more trustworthy when they're funneled through a social network."

As more and more consumers become familiar with the concepts of applications and widgets, there will be more user engagement and the scale will follow.

"Advertisers want attention and they want credibility, especially in this day and age when people are so distrustful of advertising," Mr. Pan said. "Our value proposition is letting people interact with a brand and encouraging them to share it with friends and family, which is challenging, because brands are still thinking in terms of traditional campaigns.

"Brands should take advantage of the unique properties social media can offer to make people want to interact with the brand and share it with their friends," he said. "It's important to provide endless constant content to continue to be relevant and not think of it as just a one-off.

"If it's good app with robust functionality, you can get traction and continue to build a community of consumers."

As with any other type of mobile campaign, follow-up is key for application-oriented campaigns.

"Applications can be relevant across the board, and we're engaged with a lot of clients in the process of a shift with online activities to engagement, the time consumers are engaged," Mr. Breen said. "The impact on brand recognition, brand perception, is more direct than typical online metrics, which measure driving traffic, driving sales, although that will get woven in, too.

"In the dot-com days, people would build a Web site and say they're done, but the reality is clear that you haven't created campaign element, you've created a communications effort as a company," he said. "The application has the potential to become a powerful relationship tool, and you have to follow an evolutionary pathway -- how does it evolve what do we do with it, and how can we use it to develop a better relationship with your clients?

"A whole new paradigm and challenge is, if we develop an application that becomes incredibly successful, how do you actually evolve and enhance that?"