Mobile proves to be the next big frontier for the online advertising business as a whole and the programmatic sector will be no exception, but the opportunity comes with its challenges. ExchangeWire spoke to some of the industry’s leading mobile specialists to assess what’s needed to spur the next wave of growth.

The last four weeks alone have seen a wave of activity suggesting mobile programmatic will be one of the key developments of both sectors in 2014.

Arguably, the foremost announcement in the sector has been the launch of Weve's mobile display offering, which involves three of the country’s biggest mobile operators collectively bid to monetise the vast swathes of data they hold on 22 million mobile phone subscribers.

David Sear, Weve’s CEO, is confident the joint venture’s ability to offer advertisers the ability to target mobile users - both in-app and on the mobile web - will succeed in attracting larger ad budgets traditionally reserved for brand campaigns on other platforms.

Mobile campaigns have traditionally been allocated performance budgets, and subsequently assessed against these metrics, meaning a smaller yield for publishers. But Sear is eager to point out that Weve’s proposition can help advertisers target mobile users (anonymously) on both Wi-Fi and cellular networks using its base of first-party data. This will prove a key game-changer he maintains.

He told ExchangeWire: “I’d say it’s a bit of a misnomer that mobile has not attracted significant amount of spend so far [but it has yet to reach the scale of its potential].

“But the ability to target [mobile] users [anonymously] as well as track what they do [after clicking on an ad] with the Weve proposition will help advertisers realise its potential.”

Add to this the UK launch of Xaxis’ Brand Suite – a big part of which was its refined ability to target mobile users – as well as Criteo’s performance-led mobile app solution, and this week’s announcement of OpenX pairing with Airpush to a launch mobile ad exchange, and the anticipation is palpable.

ExchangeWire spoke to some of the leading mobile specialist media buyers to gauge what they want from ad tech providers to bolster the amount of mobile budgets channelled via programmatic channels.

All agreed that programmatic proved an exciting prospect for unlocking further client budget. But with a number of hurdles for the industry to realise the true scale of the potential, (not least the issue of tracking in a cookie-less world and even Google coming to terms with lower yields from mobile audiences) much work is yet to be done.

Matt Champion, director of media services at mobile specialist agency Fetch, explains that much of his agency’s efforts in the programmatic sector have been in the app-install space for clients including eBay and Hotels.com.

To accommodate the emerging sector, Fetch has created a team to achieve app installs using both paid social media and using real-time bidding – a team that he expects to double over the course of 2014.

He says: “One of the big emerging sectors of 2013 [and on into 2014] has been programmatic… But it is a minefield out there, there’s a lot of acronyms and a real need to simplify the space, from the auction process to the data layer.

“From a buyer's perspective, it can be quite hard to put all the providers into boxes [so clients can understand programmatic and then sign off on it].”

Champion also maintains that future investment in programmatic will rely on the robustness of post-campaign data, especially in an environment where cookie data is largely absent.

He says: “[At present] We have to rely on a lot of third-party data… But with better post-campaign analytics we can improve attribution [and therefore invest more in programmatic].”

Andrew French, global trading director at fellow mobile specialist agency Somo, agrees there is clear potential for mobile programmatic to provide value for advertisers, but he adds the sector is still in its infancy.

He says: “If you look at the M&A activity in 2013 [such as Experian’s acquisition of AdTruth] there’s a lot of excitement about the mobile programmatic space and people [not least media buyers] want it to happen.”

However, he agrees the lack of targeting and tracking capability on mobile – compared to desktop – is currently a barrier.

French adds: “In the desktop programmatic space you have a perfect world where you have a lot of [cookie-based] information you can use to retarget users [which is not available at scale in the mobile sector at present].

“This is really important when it comes to mobile and how it will/won't change the sector. The Reason being, in desktop, an advertiser knows what audiences have searched for, and when/whether they have been on the advertiser's site before, plus what they do on Facebook, etc.

"In addition, they may also tie in user information to the cookie too, such as their Experian Mosaic, demographic or socio-economic profile.”

But without all of this unified rich data on mobile advertisers are simply not going to pay a premium for impressions on smartphones, meaning mobile is likely to remain the realm of performance-led budgets.

French adds: “What we [the industry] are trying to do is build a common currency to trade with, but with mobile a lot of the data is currently in silos.”

Although, French is positive that changes in how emerging methodologies in both the targeting and tracking of mobile users such as fingerprinting, and the unified customer view services being offered by the likes of Google and Facebook, progress is on the horizon.

He concludes: “In the short term it is unlikely to transform mobile because the expectation of what it can, and does do online will never be achieved on mobile.

“In the mid, long term – four-to-five years – with some of the tech barriers and tracking barriers being broken down it will help to improve the quality of advertising but will never be a silver bullet for success.”

Meanwhile, James Chandler, head of mobile at Group M's Mindshare, points out that a lack of quality inventory and the issue of viewability are also issues for the industry to tackle.

He says: "Premium inventory is still really important – especially when trying to tell [brand] stories on mobile using rich media."

Chandler adds the emergence of private exchanges selling premium publisher inventory will aid this. He adds: "The want from agencies is for a greater number of publishers to embrace this new buying model. Lots are already there – but some a still resisting.

Somo's French agrees that a lot of publishers are resisting demand to sell programmatically, despite agency demand.

But both agree that the days of the 'black box ad networks' are ultimately numbered. Those that can provide technical solutions to meet agency needs in both the short and long term will help crack the quandry of demand (i.e. mobile audiences) outstripping supply (advertisers willing to pay to be there).