With Facebook’s purchase of mobile messaging service WhatsApp for a colossal $19bn announced this week, it’s clear that mobile is crucial to any ad-funded business.

However, as the digital economy enters the ‘post-PC era’ in full thrust, ad spend on the medium continues to lag consumer behaviour, despite this unprecedented shift in media consumption.

ExchangeWire speaks with programmatic players in the sector to uncover key issues it must address to win over its fair share of media budgets.

Official ad spend figures from the IAB suggest that mobile ad spend accounted for 14% of the £3bn spent on digital advertising in the UK in the first six months of last year. The same study also claims that it accounted for 20% of total display ad spend.

Latent demand

The cost of mobile inventory has historically been much smaller than desktop prices; this has largely been the result of there not being enough eyeballs to justify large amounts of spend on mobile (among many others).

The most recent IAB agency snapshot study also shows that “lack of client understanding” is the biggest barrier to increasing adspend on mobile, with 65% of respondents citing it as the main reason for its lack of prominence on their media plans. Add to this the intricacies of programmatic and the barriers to unlocking mobile programmatic spend are clear.

However, with 55% of the lucrative 18-30 year-old bracket using their smartphone if there is a “lull in conversation”, according to IAB research, and the same age bracket twice as likely than the average smartphone user to use their devices to research a purchase, the opportunities are equally apparent.

Challenges and solutions

Headaches for programmatic players looking to expand into the mobile sector include difficulties around targeting smartphone users via cookies (for instance Apple’s Safari browser blocks third-party cookies by default).

This, as well as fragmentation in the smartphone operating system market, adds further layers of complication for advertisers looking to expand their strategies to take in both smartphones and tablets.
ExchangeWire itself also performed a straw poll of what media buyers want from mobile programmatic, with Matt Champion, director of media services at mobile specialist agency Fetch, claims that future investment in programmatic will rely on the robustness of post-campaign data, especially in an environment where cookie data is largely absent.

Equally, James Chandler, head of mobile at Group M’s Mindshare, claims issues around ad viewability areimportant to tackle.

However, moves are afoot to address such market demands, a big indicator of the trend has been U.S. heavy weights Google, Microsoft Advertising joining the likes of Weve, Adbrain, Nexage and StrikeAd to form the IAB’s Mobile Programmatic Working Group in the UK.

Essentially this group aims to act as a bridge that can share skills and best practice between traditional mobile practitioners that want to know more about programmatic, and vice versa.

Gavin Stirrat, StrikeAd VP and general manager, international, and serving member on the group, acknowledges the issues to both increase the prominence of mobile on brands’ media plans. But he also argues the scale of the challenge ahead – around issues such as targeting, tracking and ad viewability, are not as insurmountable as many make out.

He adds; “There are some challenges with mobile, but there are solutions out there that address most of these.

“There are great ad serving end-to-end solutions out there from the likes of s4m, and very established performance tracking solutions from companies like Ad-X and rich media ad servers from companies like Celtra.

“The same challenges exist within mobile that exist across digital in terms of measuring brand metrics, but companies like Comscore offer very comparable solutions on mobile to desktop. Cross-device is definitely a challenge that exists across all media, but it is from the mobile space that some of the more innovative solutions are appearing.”

Meanwhile Ollie Clamp, Millennial Media, head of global monetisation services, EMEA, maintains much of the growth of the growth for mobile programmatic will be fuelled by the long tail of mobile app developers eager to monetise their inventory.

He says: “As part of a recent survey, we found that developers and publishers were bullish for the year ahead [about mobile programmatic], with over half (56%) expecting to see their percentage of revenue from in-app advertising rise in the coming year.

“A big part of this growth will come from mobile programmatic. By automating and optimising the selling of their media space, suppliers can sell their impressions to the highest bidder and access thousands of new advertisers. Transparency, however, is key for publishers looking to monetise their inventory, as it reassures advertisers they are operating in a safe environment.”

Safety first

Concerns over brand safety and buying ads via programmatic channels are hardly unique to the mobile sector, but the aforementioned fragmentation of the sector only adds to the complexity (and hence risk) of potentially embarrassing and risk to brand equity.

So much so, that mobile ad exchange specialist Nexage (a company that also forms part of the IAB Mobile Programmatic Working Group) this week unveiled a closed beta launch of Nexage Protect.

The suite of tools consists of a number of services to provide media buyers with transparency at the impression level so they can determine how well the site, app, or page aligns with the advertiser’s brand. Also included are “block lists” that preclude specific buyers, advertisers, and ad placements, as well as malware detection which identifies fraudulent ads and misdirects.

Ernie Cormier, CEO and president of Nexage, says: “Premium publishers, buyers, and advertisers – our customers – expect that they can grow their business and protect their brands; it is simply becoming table stakes for any programmatic market.”

Data + Data + Data = Bigger budgets

Similarly, mobile specialist firm Adbrain has persuaded media buyers including M&C Saatchi Mobile, Fetch and Somo, as well as trading desks Annalect (part of Omnicom Media Group Europe) and The Exchange Lab, to participate in a beta trial that lets buyers layer their first-party data, with second- and third-party data to enhance efficiencies in their media budgets.

Both StrikeAd’s Stirrat and Millennial Media’s Clamp, agree that further unlocking of data will unlock the potential of both premium advertising inventory benefitting both advertisers and publishers – an issue recently discussed by ExchangeWire here.

Stirrat says: “Key to monetising the inventory is having a solid understanding of the user behind each bid request – whether this be something we can infer from the type of device they are using, their browsing habits, or location, it’s this additional level of understanding which is critical to unlocking the value of mobile supply.

“Knowing that you are bidding on a gamer versus an in-market car buyer is critical and is only possible with a strong understanding of all the available data, whether that be within the bid request, proprietary data, or third-party”

Clamp adds: “By automating and optimising the selling of their media space, suppliers can sell their impressions to the highest bidder and access thousands of new advertisers.

“In turn that data helps sellers to identify demand and what is working, ensuring the best return possible for publishers and developers for their inventory.”