EMARKETER ROUNDUP: OPTIMIZING MOBILE ADVERTISING

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1 April 2016 EMARKETER ROUNDUP: OPTIMIZING MOBILE ADVERTISING This year, in the US, advertisers will spend $28.72 billion to reach their targets on mobile devices, emarketer estimates. But as is common with so many digital advertising channels that offer the promise of measurability and everincreasing efficacy performance measurement is still a challenge. emarketer has curated a Roundup of articles, trends and insights to help marketers understand the current state of mobile advertising. presented by

2 EMARKETER ROUNDUP: OPTIMIZING MOBILE ADVERTISING Overview In 2015, in the US, advertisers will have spent $31.59 billion to reach their targets on mobile devices, emarketer estimates, an increase of 65.0% over 2014 spending levels. This year, in the US, advertisers will spend $28.72 billion to reach their targets on mobile devices, emarketer estimates, an increase of 50.0% over 2014 spending levels. But as is common with so many digital advertising channels that offer the promise of measurability and ever-increasing efficacy performance measurement is still a challenge. An April 2015 Millward Brown Digital survey asked US marketers about which media channels they would increase spending in if they could track return on investment (ROI) better. Nearly eight in 10 said mobile, more than any other choice, including traditional media, typically considered less measurable than digital. Respondents to a March 2015 Signal survey were significantly less likely to say they could collect and integrate data from mobile with other digital channels. Worldwide, 66% of marketers said they could do this with mobile web data far below the 88% who said the same of web data or the 76% who said the same of and an even smaller 37% agreed when it came to mobile app data. Of course, that doesn t mean marketers aren t measuring on mobile or trying to calculate ROI. Among agencies surveyed worldwide by Econsultancy in February 2015, 38% said mobile marketing had excellent or good ROI; 35% of client-side marketers said the same. In January, US marketers polled by the Direct Marketing Association and Demand Metric reported a median 12% to 14% ROI for mobile. Mobile marketers report using a variety of metrics to track their efforts. Client-side marketers worldwide surveyed by Econsultancy in March about mobile app success most commonly reported using number of downloads (76%), followed by recurrent usage (48%), time spent (41%) and Metrics Used to Measure Mobile App Success According to Client-Side Marketers Worldwide, March 2015 % of respondents Number of downloads 76% Recurrent usage 48% Time spent 41% Revenues/leads generated 40% Conversion rate 38% Custom metrics (e.g., social shares) 22% External metrics (e.g., reduced cost in customer service due to fewer phone calls) 16% None of the above 7% Note: n=526 Source: Econsultancy, "Quarterly Digital Intelligence Briefing: The Quest for Mobile Excellence" in association with Adobe, April 29, Metrics Used to Measure the Effectiveness of Mobile Native Advertising According to Marketers Worldwide, 2015 % of respondents Clickthrough rate (CTR) 56% Engagement rate 51% Conversion rate 45% Cost per conversion 40% Number of interactions 33% Brand lift 26% Number of shares 25% Brand recall 22% Dwell time 19% 18% Message association Note: n=209 who understand mobile native and use in campaigns or know how to but have yet to do so Source: InMobi, "Marketer and Publisher Perceptions: Native Advertising on Mobile," April 6, emarketer Roundup: Optimizing Mobile Advertising Copyright 2016 emarketer, Inc. All rights reserved. 2

3 revenues or leads generated (40%) research by InMobi about how marketers measured mobile native ad effectiveness found an emphasis on clickthrough rates (56% of respondents worldwide), engagement rate (51%), conversion rate (45%) and cost per conversion (40%). Among business-to-business marketers surveyed worldwide by Regalix in May, 79% tracked web traffic, 71% social media sharing, and 64% clickthrough rates on their mobile marketing efforts. And according to comscore, last year brand lift metrics for mobile ads ranged from a low of 2.5% lift in aided awareness to a high of 4.3% lift in both likelihood to recommend and purchase intent. Despite all this, and despite the fact that most clientside marketers surveyed by Econsultancy in March said they knew what share of their traffic was coming from mobile, and what types of devices their customers were using, being able to track customers across devices and understanding the differences between smartphone and tablet behaviors were lacking. Completion Rate for US Digital Pre-Roll and Mid-Roll Video Ads, by Device, Q among ads served by FreeWheel Tablet Smartphone Desktop Pre-roll Mid-roll 72% 79% 77% 94% 93% 94% Note: represents activity on FreeWheel's platform, broader industry metrics may vary Source: FreeWheel, "Video Monetization Report: Q1 2015," May 20, Many metrics across a range of mobile marketing types suggest that the ROI is there. Adobe Digital Index reported that in Q1 2015, there were more digital video ad starts per video start worldwide on tablets (2.8) and smartphones (2.4) than on the desktop (2.0). Similarly, FreeWheel reported that pre-roll video ads in the US were more likely to be viewed to completion on tablets and smartphones than on the desktop (though mid-roll ads performed slightly worse on smartphones). Viewability measurement on mobile has some issues, but according to Sizmek, again for Q1 2015, while Flash display ads worldwide were more viewable on the desktop, HTML5 display ads were more viewable on mobile. When it comes to , despite consumers high propensity to check their on mobile devices, clicking and converting is another question. While Yesmail reported Q click-to-open rates in the US were higher on mobile than the desktop for the insurance, consumer services and technology industries, for example, all other verticals had the opposite experience. emarketer Roundup: Optimizing Mobile Advertising Copyright 2016 emarketer, Inc. All rights reserved. 3

4 Marketers Face Mobile Advertising Challenges Smartphones are hard to monetize Mobile accounted for more than half of digital ad spending in 2015, and marketers continue to see increased value in mobile advertising. While there are benefits, there are challenges too, according to Q research. According to AdRoll, 41% of US marketers said the lack of attribution transparency was one of the biggest challenges of mobile advertising. Additionally, more than a third of respondents said that users or consumers not converting on mobile is another challenge. Lack of analytics tools and the inability to connect mobile and desktop users were also some of the biggest challenges of mobile advertising, according to marketers. Mobile devices smartphones in particular are not the easiest screens to monetize. In fact, the smallest screen is the one that cause the most trouble, according to September 2015 research from AdMonsters. Biggest Challenges of Mobile Advertising According to US Marketers, Q % of respondents Lack of attribution transparency Users/consumers don't convert on mobile Lack of analytics tools 24% Inability to connect mobile and desktop users 15% Inability to integrate mobile into other digital campaigns 9% Other 1% 41% 37% Source: AdRoll, "State of the Industry: A Close Look at Retargeting, Programmatic Advertising, and Performance Marketing: United States 2016" conducted by Qualtrics, Jan 21, Type of Screen that Causes the Most Monetization Trouble According to US Publishing Professionals*, Sep 2015 % of respondents Two-thirds of US publishing professionals said that smartphones caused the most monetization trouble. Tablets and over-the-top (OTT) and TV screens also caused issues for a fair number of respondents, but were not as much of an inconvenience as smartphones were. Tablet 14.5% OTT/TV 13.0% Desktop 5.8% Smartphone 66.7% Note: n=138; *focused on publisher ad operations on a daily basis Source: AdMonsters, "State of Ad Ops 2015" sponsored by Sizmek, Nov 16, emarketer Roundup: Optimizing Mobile Advertising Copyright 2016 emarketer, Inc. All rights reserved. 4

5 Native Mobile Video Lifts Upper- and Lower-Funnel Metrics In-feed mobile video ads lift recall, purchase intent Mobile video is a fast-growing ad format, and many brands are rushing specifically to create video ads for native mobile environments like Facebook or Instagram feeds. Research suggests that viewing such ads improves a variety of metrics, from recall to purchase internet. In a study conducted by Opera Mediaworks and comscore, a group of US mobile users was shown a mobile native video ad the kind of ad created specifically for a mobile feed environment. Advertisers hope to develop creative that s a thumbstopper, convincing people to stop scrolling long enough to let the sound and motion begin. After viewing such an ad, the mobile users took a survey about the relevant brand or product. When compared to a control group that hadn t seen the ad, the mobile users who watched a mobile native video ad were 5 percentage points more likely to want to buy the product. The ads produced a 4-point boost in favorability, a 7-point increase in likelihood to recommend, and a 6-point increase in mobile ad recall. Performance Metrics for Mobile Native Video Ads Among US Mobile Users, June 2015 % of respondents Ad uniqueness Aided awareness Favorability Likelihood to recommend Purchase intent Mobile ad recall Test (viewed ad) 25% 24% 30% 30% 38% 47% 43% 43% 61% 52% 52% 52% Control (did not view ad) Source: Opera Mediaworks and comscore Inc., "The Impact of Native Mobile Video Advertising on Brand Metrics," Sep 10, Video ads on Facebook have proved popular with marketers, and not only on mobile. emarketer estimates that US advertisers will spend $2.78 billion this year on mobile video ads on all platforms. US spending on mobile video ads will more than double by emarketer Roundup: Optimizing Mobile Advertising Copyright 2016 emarketer, Inc. All rights reserved. 5

6 Mobile Coupons Effective Way to Link Mobile Ad to In-Store Purchase In-store beacons also help While mobile advertising can be an effective way for companies to reach consumers, being able to actually link a mobile ad to an in-store purchase is important. An October 2015 survey found that mobile coupons can help. According to research by Marchex and Digiday, almost two-thirds of US marketers said mobile coupons were the most effective method for attributing in-store purchases to mobile ads. Indeed, mobile coupons are valuable. In 2015, 40.5% of US companies with more than a hundred employees will use mobile coupons for marketing purposes, emarketer estimates. By 2017, that number will grow by 7.5 percentage points. Furthermore, eight in 10 US adult mobile coupon users will redeem a coupon or code via their mobile device for online or offline shopping in And, in 2017, more than nine in 10 adults will do so. Most Effective Methods for Attributing In-Store Purchases to Mobile Ads According to US Marketers, Oct 2015 % of respondents Mobile coupons Using mobile phone as in-store point of purchase 36.1% SMS text offers 26.8% Attribution vendor 25.8% In-store beacons 22.7% Promotions in shopping apps 22.7% Other 3.1% 62.9% Source: Marchex and Digiday, "State of the Industry: How Mobile Is Changing Marketing," Oct 27, Like mobile coupons, in-store beacons which retailers are beginning to use more of are another effective method for attributing in-store purchases to mobile ads, Marchex and Digiday found. In fact, 22.7% of US marketers indicated so, even though beacons are still in relatively limited use at retail. Beacons also help influence in-store sales. A February 2015 forecast by BI Intelligence estimated that this year, $4.1 billion in in-store retail sales among the top 100 US retail locations would be influenced by beacon-triggered messages. By 2016, that value will grow to $44.4 billion. emarketer Roundup: Optimizing Mobile Advertising Copyright 2016 emarketer, Inc. All rights reserved. 6

7 Mobile Video Ads Drive Brand Awareness, Engagement Digital video ad spending is growing Mobile video advertising brings a lot of value to marketers, primarily increasing brand awareness. It also helps with lead generation and better engagement, according to a December 2015 survey. Leading Benefits of Mobile Video Ads According to US Media Decision-Makers, Dec 2015 % of respondents Increases brand awareness Better engagement/interaction 34% Suited to mobile consumption behaviors 31% Better user experience 29% More authentic brand voice 23% Better quality of those who engage/click through 21% Lead generation 20% Higher clickthrough than desktop 20% Less intrusive 15% None of the above 6% Trusted Media Brands (TMB) and Advertiser Perceptions asked US media decision-makers to choose their top three benefits of mobile video ads whether or not they currently use them. Almost half of respondents (47%) said that increasing brand awareness was one of their primary benefits and a little over a third said that better engagement and interaction was. 47% Note: respondents chose their top 3; whether or not they currently use mobile video ads Source: Trusted Media Brands (TMB), "Can Video & Native Formats Rule Mobile Advertising?" conducted by Advertiser Perceptions, Jan 6, Additionally, nearly one-third of respondents said that mobile video ads were suited to mobile consumption behaviors. That mobile video ads get higher clickthrough than desktop-based ads and are less intrusive also appealed to media decision-makers, but lower on the list. Mobile video ad spending is growing faster than any other digital advertising format in the US, according to emarketer estimates. Spending on mobile video advertising will grow more than 70% to reach $2.62 billion in 2015 over one-third of the estimated $7.77 billion to be spent on digital video ads. By 2019, emarketer estimates, mobile s share of total digital video ad dollars will reach 47.7%. US Digital Video Ad Spending, by Device, billions and % change $3.82 $0.72 $ Desktop* 18.3% 37.8% 20.6% 9.8% 9.0% 11.3% 9.6% Mobile** 166.5% 113.0% Total 32.2% $5.81 $1.54 $ % $7.77 $2.62 $ % 33.8% $9.59 $3.94 $ % 23.4% $11.25 $5.09 $ % 17.3% $12.82 $5.96 $ % 13.9% $14.38 $6.86 $ % 12.1% Note: includes in-banner, in-stream and in-text; *includes advertising that appears on desktop and laptop computers; **includes mobile phones and tablets Source: emarketer, March emarketer Roundup: Optimizing Mobile Advertising Copyright 2016 emarketer, Inc. All rights reserved. 7

8 Mobile Programmatic Display Ad Spend to Eclipse Desktop as Automation Grows Moving past the experimental stage Programmatic advertising, the use of technology to automate the buying, selling or fulfillment of ads, is becoming the standard for marketers looking to simplify the media buying process. The new emarketer report, Mobile Programmatic Advertising: Grabbing the Vast Majority of US Display Ad Dollars by 2017, explores that while programmatic was originally used to effectively buy desktop banners, the process has naturally expanded to mobile. Moreover, emarketer forecasts US mobile programmatic ad spending will reach $9.33 billion this year and account for 60.5% of total US programmatic display ad spending. Mobile might be newer to the programmatic game, but marketers have high expectations for it. A February 2015 survey conducted by RBC Capital Markets and Advertising Age found that the biggest portion of US marketers cited mobile as the channel or format expected to have the most opportunity for programmatic buying. And with many of the other cited areas such as social, video and native increasingly intertwined with mobile, such an opportunity is only growing. A year ago, clients were only doing science experiments in mobile programmatic, said Craig Palli, chief strategy officer at mobile marketing firm Fiksu. They were checking test mobile off of their to-do list. This year, we re seeing the larger brands come in with millions of dollars, because they now realize that if they re not reaching their consumers on mobile, they re ripe for disruption for competitors. Facebook is playing a substantial role in mobile s programmatic growth. With Facebook considered a largely programmatic platform and its US mobile revenues expected to total $5.89 billion this year and reach $10.32 billion by 2017, its direct contribution to total US mobile programmatic digital display ad spending will be significant. However, emarketer also anticipates that Facebook will play a secondary role in fueling the growth of mobile programmatic ad spending as both mobile web and app publishers increasingly look to redesign their sites in the style of Facebook s popular in-feed units. Another key aspect to mobile programmatic s advancement is video, which will exhibit swift growth over the next 24 months, albeit starting from a small base of just $1.14 billion, or 12.2% of total US mobile programmatic display ad spending. By 2017, that number will reach $3.79 billion, but its share will still remain small, at 18.5%. Though these numbers may seem extremely conservative to the many who are bullish on mobile video growth, it s important to note that emarketer s definition of digital video only includes in-stream video ads (pre-, mid- or post-roll) and does not include many of the fast-growing a types often lumped into the digital video ad category, such as native video or in-feed video. US Programmatic Digital Display Ad Spending, by Device, billions, % change and % of total programmatic digital display ad spending Mobile* % change % of total programmatic digital display ad spending Desktop/laptop % change % of total programmatic 2014 $ % 43.0% $ % 57.0% 2015 $ % 60.5% $ % 39.5% 2016 $ % 69.1% $ % 30.9% 2017 $ % 76.3% $ % 23.7% digital display ad spending Note: digital display ads transacted via an API, including everything from publisher-erected APIs to more standardized RTB technology; includes native ads and ads on social networks like Facebook and Twitter; *ad spending on tablets is included Source: emarketer, Oct emarketer Roundup: Optimizing Mobile Advertising Copyright 2016 emarketer, Inc. All rights reserved. 8

9 UK Marketers Switch on to Mobile Programmatic Over half of mobile marketers already get programmatic A recent study from the Internet Advertising Bureau UK (IAB UK) indicated that 50% of UK marketers use programmatic for buying smartphone inventory. However, the research, which was conducted in December 2015 by Circle Research, also found that among those that advertise on mobile, 44% didn t have good knowledge of the practice. Another way of looking at those figures, though, would be to concede that 66% of UK mobile marketers professed to having either good or expert knowledge about programmatic advertising on smartphones. If the wider programmatic market is anything to go by, these proportions are likely to be even more heavily weighted toward those that are clued in to the programmatic proposition in the coming years. In emarketer s September 2015 report UK Programmatic Advertising Forecast: Automated Trading on Track to Dominate Digital Display Ad Spending, Steve Chester, director of data industry programs at the IAB UK indicated that the education phase for programmatic trading at large had largely passed. There s a lot more confidence in the market than there was say two or three years ago when programmatic was really starting to take off in the UK, he said. Mobile marketers were slightly later to the programmatic party, but with mobile taking an ever-larger chunk of programmatic ad spend, the education phase is likely to accelerate quickly. emarketer estimated that mobile accounted for just 35.1% of programmatic digital display ad spending in the UK in However, by 2016, that proportion is forecast to reach 58.7%. Although UK mobile marketers are relatively well-versed in trading smartphone inventory programmatically, it s apparent that more need to get up to speed. Level of Knowledge About Programmatic Advertising on Smartphones According to UK Mobile Marketers, Dec 2015 % of respondents No knowledge 12% Little knowledge 32% Expert 12% Good knowledge 44% Note: n=301 who advertise on smartphones Source: Internet Advertising Bureau UK (IAB UK), "Mobile Advertiser Snapshot Study 2015" conducted by Circle Research as cited in Marketing Week, Jan 13, UK Programmatic Digital Display Ad Spending, by Device, millions of, % change and % of total programmatic digital display ad spending Mobile* % change % of total programmatic digital display ad spending Desktop/laptop % change % of total programmatic % 35.1% % 64.9% % 49.7% % 50.3% , % 56.1% % 43.9% , % 58.7% 1, % 41.3% digital display ad spending Note: digital display ads transacted via an API, including everything from publisher-erected APIs to more standardized RTB technology; *ad spending on tablets is included Source: emarketer, Sep emarketer Roundup: Optimizing Mobile Advertising Copyright 2016 emarketer, Inc. All rights reserved. 9

10 New Data Will Help Advertisers Get More from Mobile Programmatic Beth Gilmore Head of Global Demand MoPub New and improved data that s becoming available this year will allow advertisers to better target their most desirable audiences via mobile programmatic, according to Beth Gilmore, head of global demand for Twitter-owned mobile ad server and exchange MoPub. emarketer s Tricia Carr spoke with Gilmore, whose focus is the mobile in-app inventories within MoPub s programmatic exchange, about what mobile advertisers should focus on in emarketer: What opportunities in mobile in-app advertising are important to marketers overall digital advertising strategy? Beth Gilmore: One is desired audiences and users that are available in mobile. There is a misconception that desirable users and inventories are only in labeled premium content for example, I can only find Joe Wall Street Banker on The Wall Street Journal. But Joe who reads The Wall Street Journal also plays games and uses utility and entertainment apps. You can find your desirable audience and users across all different types of app verticals. You can find your desirable audience and users across all different types of app verticals. In mobile, data has been fragmented. Most brands just know the cookie, and all of the buyers that they ve worked with give them user profiles or audiences based on the cookie. But data is going to be the new term for mobile programmatic this year. It s going to be easier for brands to target their desirable audiences on mobile because of the advancement of data. emarketer: How will ad targeting improve this year? Gilmore: Data is going to be huge this year. Publishers are getting smarter about what they want to do with their data and how they want to transact their data to advertisers, especially in a programmatic setting. New data is going to be available. It s up to the exchanges and platforms that are supplying this data to make sense of it so that it transacts across channels. emarketer: What s the level of interest in location targeting? Gilmore: Location has become the most desirable firstparty data that an advertiser can get from mobile. That s what makes mobile unique you can find your user wherever they are. Brands should know that they ll have to pay a premium for it as it becomes more desirable and differentiates mobile against desktop, TV and all of the other platforms. Location has become the most desirable first-party data that an advertiser can get from mobile. This year is also going to be all about verification with thirdparty data providers making sure that location is accurate and standardizing what location looks like in mobile. It can come through many different data points, like IP address or DMA [designated market area], so marketers have to standardize what it is that they re looking for. emarketer: Is the added expense of buying ad placements with location data worth it? Gilmore: The expense is worth it if you re a brand advertiser that s looking to focus on that user at that location at that moment. Publishers are getting smarter about the data that they re dipping and what they want for a premium. Advertisers might not understand how cheap mobile is right now it s much cheaper than desktop and there s still more supply than demand at this point. This is their emarketer Roundup: Optimizing Mobile Advertising Copyright 2016 emarketer, Inc. All rights reserved. 10

11 opportunity to get in and take advantage of location, and mobile advertising in general, before it becomes more expensive. emarketer: What metrics are most important when measuring mobile programmatic? Gilmore: Over the past few years, we ve seen brand advertisers in mobile not knowing what convergence they wanted. All they focused on was pushing impressions. Performance marketers were the complete opposite they just tried to drive that app install. They just tried to find the lifetime value of the user and only target users that they knew would spend money within the app. Now we re seeing a switch. Performance marketers think of themselves more as brands. They have TV commercials, they want to make sure that their ads are high-quality and the view is just as important as the install. Brands are trying to drive performance metrics like clicks, installs and lifetime value. It s been interesting to see that transition, but you need all of the above. You can t just run campaigns that are going to drive installs or views. Campaigns should have clear metrics and run the gamut. How Personal Capital Optimizes User Acquisition, Conversion Across Channels Mark Goines CMO Personal Capital Mobile is vital for user acquisition and customer engagement at Personal Capital, the creator of digital wealth management tools where users can aggregate their financial accounts, determine their net worth and engage with financial advisors. CMO Mark Goines spoke with emarketer s Bryan Yeager about how the firm uses marketing technology to optimize crosschannel acquisition and conversion and how it s finding scale beyond digital channels. emarketer: How do you track the path from user acquisition through customer conversion across various channels and touchpoints? Mark Goines: We have a robust implementation of tracking against lead source. We originally used and still largely rely on a last-click attribution model to a conversion event. We have a dozen conversion events that we monitor. We look to optimize against those conversion events, and they re different based on channel. For example, an application install is a different conversion event than a registration from that install that occurs on the device. There s also a different event that occurs when that person downloads our app and then registers it, not on the phone but on the web. We have to be multichannel-capable in our tracking and therefore align our tag management system in a way that allows us to track that user through their journey not necessarily the journey that one specific vendor has in mind for an install that becomes a registered item on the phone. We use multiple technologies. We then integrate all that data into a single view of the user s journey and try to do attribution from that. We also use the multistage influence model. In other words, we might talk to somebody seven or eight times before they register. We want to track their journey to those different touches through various integration to tag management systems so that we can then say, This is the ninth time, and finally they registered with us. How did we get them there? emarketer Roundup: Optimizing Mobile Advertising Copyright 2016 emarketer, Inc. All rights reserved. 11

12 We want to track their journey to those different touches through various integration to tag management systems so that we can then say, This is the ninth time, and finally they registered with us. How did we get them there? emarketer: What influence do the likes of Facebook, Google and Twitter have on how your company approaches marketing technology? Goines: At the top of the funnel, they re very influential and frankly, they give us heartburn about being able to do multichannel tracking. There are certain rules. Facebook won t let you put customized tags in URL listings. Apple requires a generic landing page. They all have their particular rulesets that ostensibly are focused on protecting personally identifiable information. For us, that s a barrier to efficient multichannel marketing that we have to solve for. emarketer: How do you overcome those challenges? Goines: We continue to find new technologies, new platforms and new permissions with those partners that allow us to execute our multichannel marketing strategy efficiently. Goines: One of the challenging things about the direct digital channel particularly when we narrow our audience targeting to identify highly qualified users is that we hit scale and there s not much more capacity. We began aggressive testing of direct mail and television. These are scalable mediums if you can solve for the same audiencetargeting puzzle. You have to be a certain scale of company to use those efficiently, because you have to spend a lot of money doing creative packages, buying lists, building the television commercials those are not low-cost endeavors. We ve reached a scale now where those are in the realm of possibility for us. emarketer: How successful have these efforts been? Since we began experimenting, we ve seen positive results directly from them. They ve also had a positive effect on our other channels this cross-channel impact that occurs when you start building brands, if you will. Even though we focus on a direct-response model, we ask people to come and visit our site and register. We measure the effectiveness of each of those programs by the amount of direct response they create, but it seems that those mass media are helping to lift all boats for us. Facebook and Twitter are helpful in terms of where we can do better audience targeting. Facebook, for example, gives more insights into the profiles of users in a way that allows us to create lookalike modeling based upon successes we ve had. That allows us to refine our targeting into their customer base. Of course, they charge more for that. It s gotten more expensive to market on their platforms with that improved targeting. As a marketer, you look for the opportunities, the crevices, the creases the things somebody else hasn t found. Facebook and Google have bidding systems. You re competing with everybody else for the same insights that you might get, so they tend to be fleeting. Improved targeting turns into higher pricing. That s fair, that s their business. We have to be smart about how we use it. emarketer: Is there a place for TV and other traditional advertising methods in your media mix? emarketer Roundup: Optimizing Mobile Advertising Copyright 2016 emarketer, Inc. All rights reserved. 12

13 Private Marketplace Investment Rises as Brands Buy in on Mobile Programmatic Mark Connon Executive Vice President, Platform Millennial Media As the executive vice president of platform at mobile ad network and exchange Millennial Media, Mark Connon is responsible for managing all demand-side partnerships with the company s mobile ad exchange. Connon recently spoke with emarketer s Lauren Fisher about some of the biggest programmatic trends Millennial Media is seeing, including the rapid adoption of private marketplaces and the importance of crossdevice advertising. emarketer: What are some programmatic trends you re seeing play out in the mobile space? Mark Connon: One is the rapid move toward Deal ID and programmatic direct. That has a lot to do with the evolution of the OpenRTB standard to include Deal ID. We now have the bulk of our programmatic buyers using the current RTB standard, which enables Deal ID, and that s been a rapid evolution over the last six to nine months. It allows most of the players in our world to transact via these private marketplaces. It s the next phase of evolution for programmatic capabilities. emarketer: What s driving this mass adoption of more private-type programmatic setups? Connon: The foundation of mobile advertising has been the app download space, more pure direct response and cost-per-install or cost-per-action dollars, which is still the vast majority of spend in display. But the shift that we have seen and will continue to see is driven by consumers the amount of time and usage of smartphone and tablets. That s always been an indicator of where brand spend will be. Brand spend is going to come in through the more sophisticated agency trading desks transitioning from the display world, or in some cases, the mobile pureplays developing solutions for these types of brand buyers. Brands want to come into an environment they re comfortable and familiar with. They want transparency, brand safety and audience guarantees, as well as a direct relationship with a publisher. The wide-scale availability of that from a technology or capability standpoint is here. Brands that are shifting some of their spend toward programmatic are making those asks. emarketer: What type of inventory are brand advertisers looking to acquire through these more private transaction methods? Connon: It runs the gamut. Sometimes they are custom ad units, other times [the inventory] is driven by data and key attributes like location, audience segment or device ID where the buy side is using their own data management platform [DMP] to target their particular audience. Brand spend is going to come in through the more sophisticated agency trading desks transitioning from the display world, or in some cases, the mobile pure-plays developing solutions for these types of brand buyers. In terms of formats, video is growing rapidly. It s an effective format for mobile. If done well, it can be incredibly engaging and drive interactions in a way that drives significantly higher prices. Advertisers are more than happy to pay those costs because they are engaging with their audience in a unique way. emarketer: With something like native programmatic, one has to imagine that programmatic creative would be a necessity to execute these placements with the greatest relevancy. emarketer Roundup: Optimizing Mobile Advertising Copyright 2016 emarketer, Inc. All rights reserved. 13

14 Connon: The native spec included in the OpenRTB 2.3 standard is essentially a form of dynamic creative, but it s not necessarily based on consumer targeting as much as it is on with assimilating the ad unit with the look and feel of the site. Coming at it from the targeting lens, on the desktop, you have the third-party cookie, which is a deterministic solution on which to match a browser to a user. But with cross-screen, it s not that deterministic yet. You do see some focusing on cross-screen to be able to capture that data and target a user based on what they ve seen and what they ve done. The next logical solution or step from that is to dynamically do the creative as well. But that s not something that s prevalent through our exchange yet. It s not yet a part of everyday conversation. emarketer Roundup: Optimizing Mobile Advertising Copyright 2016 emarketer, Inc. All rights reserved. 14

15 Performance Matters Light Reaction is a programmatic performance media company. We use proprietary technologies and premium supply to deliver premium outcomes across any device or platform. We price all of our programs on a performance basis and guarantee our outcomes. Visit us at LightReaction.com for more information

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