monetizing mobile advertising

Monetizing  Advertising  (Mobile)

Prepared by: A.Altaimani, I.Manandhar, J.Loo, J.Gan

Edited & Presented by: J. Gan

Agenda •  Problem/Challenge •  Porter’s Five Forces •  Recommendations •  Our Solution •  Challenges Ahead •  Questions

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Problem  At  Stake •  New media requires new methods of advertising •  Important to recognize the medium in which

effective advertising can be utilized to continue this lucrative business

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Advertising  Trends •  How technology and content is shifting consumers’

experience? •  How do publishers hope to harness/capitalize on

those experiences?

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Why  Mobile  Advertising? •  Over 120,000,000 active smartphones in the US

alone •  Over 87% of smartphone users access internet or

email on their device – 4.7 of 6 billion mobile users •  Over 48% of organizations have a mobile version of

their organization’s official website •  Over 75% of consumers appreciate and prefer the

simplified mobile version •  In essence, companies are increasingly mobile

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Strategic  Issues  To  Be  Analyzed

•  Media affects on advertising strategies and consumer behavior: Ø Advertising built on through interruption, repetition, and

brute ubiquity is increasingly ineffective Ø Consumers seeking escape from it by installing pop-ups

blocker on their browsers

•  Opt-out of banner ads •  Pay content providers like Pandora to be

advertisement-free

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Opportunities  For  Mobile  Advertising?

•  Industry experts predict that mobile will grow far bigger than desktop

•  Continuous advancement to video content o  Allow advertisers to provide more engaging content

•  “Freemium” model for apps has flourished o  Rely on micro transactions / in-app purchases o  Creates avenue for advertisers to capitalize o  Proven successful over time

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Porter’s  Five  Forces

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Image  Source:  Harvard  Business  Review,  January  2008

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Rivalry  Among  Existing  Competitors

•  Lack of branding loyalty •  Customer acquisition & retention •  Businesses and advertisers new strategies to make

campaigns successful •  Conclusion

ü  Rivalry Among Existing Competitors is Medium to High

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Threat  of  New  Entrants •  Entry Barriers

ü  Ads viewed as an ‘annoying factor’ ü  Fragmentation of devices and wireless carriers ü  Lack of solid strategy to engage the customers ü  Government policy – consumer privacy ü  Trends to mobile advertising lean toward location based

advertising ü  Learning customer behavior and search history ü  Customer might be biased due to brand identity

•  Conclusion ü  Threat of New Entrants is Low

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Threat  of  Substitutes •  Power of social media Twitter and Facebook (UGC) •  Growth of mobile devices exceeding PC •  Rise of mobile websites for businesses •  More mobile purchase decisions vs. in store •  Technology allows new channels for forward

integration with low switching costs •  Conclusion

ü  Threat of Substitutes is High

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Power  of  Suppliers •  No threat to raise prices or reduce quality by

suppliers as supply of ad campaign content strategies are less compared to the demands

•  The advertisers can switch to different content provider/supplier with a very low switching costs as this emergent industry has more channels

•  Conclusion ü  Bargaining Power of Suppliers is Low

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Bargaining  Power  of  Customers

•  Customer’s have more control over viewing a mobile ad or skipping it

•  Consumer acceptance is scarce due to ‘annoying factor’

•  A few to no switching costs unless they are willing to pay for a premium content

•  Agreement between customer and mobile carrier can affect location based advertising or search history

•  Conclusion ü  Bargaining Power of Customers is High

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Recommendations

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Mobile  Website  vs.  Mobile  App

•  Mobile websites are not as marketable •  82% of users mobile minutes are spent on app

o  As opposed to 18% spent on mobile web browser •  “There’s an app for that” •  Example:

o  Amazon

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Example:  Amazon

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Challenges  At  Stake •  No solid / de facto model for advertisers •  Still at “trial & error” phase •  Consumers deemed mobile advertisement as

“annoying” •  “Fat Finger Effect”

o  90% of accessed mobile advertisement are accidental due to limited real estate

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On  the  Bright  Side… •  Fastest growing sector

o  Continuously expanding as the industry mature

•  Even without a proven ROI, mobile marketing budget continues to increase o  Over 61% of organizations believe it is important for growth

and future success

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Expected  Mobile  Ad  Spending

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Main  Challenge •  Remove stigma of mobile ads being “annoying”

o  Research on mobile ads trend show that consumer love being rewarded for their effort

•  Found in research o  Hulu: View full length ads before content viewing to avoid

interruption o  93% consumer said having opportunity to choose a

“reward” in exchange for their time was important

•  Example model: Mobile gaming industry o  Monopoly Hotel

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Where  Do  We  Fit?

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“Reward-­‐‑Centric” •  Real tangible reward OR gifts of virtual currency •  Take Monopoly Hotel as an example

o  Separation of gold and cash •  Cash can be obtained easily through persistence •  Gold requires in-app purchase

o  Options to acquire gold to purchase nicer/better rooms •  Real $$$ for in game gold •  Watch ads for rewards

o  i.e.: 5 gold for a full length Toyota Camry ads

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Example  #2

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Example  #3

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“Reward-­‐‑Centric”  cont… •  Extracting this model could be applicable to all

apps •  Connecting users with some form of rewards

o  Real tangible rewards or gifts of virtual currency o  Creates trust between users and advertisers o  Take away “annoying” feeling

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Our  Solution

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THE  Model •  “Peace cannot be kept by force; it can only be

achieved by understanding.” – Albert Einstein •  Our solution?

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THE  Model  cont. •  Use pop-up format

o  Provide options to skip – engage user’s input

•  Video format for rich-content •  Provide some form of “reward” upon completion of

full-length ad viewing •  Powered by location-based technology

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Operations  In  Real-­‐‑Time

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Example

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Imagine  This… •  A Walgreens ad appear advertising Popchips •  User choose to view full-length advertisement •  Reward: $0.50 digital coupon for Popchips at

participating Walgreens •  Provide a reason for consumer to purchase/try

Popchips •  Consumer making a trip to Walgreens will purchase

other items as well

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Advertising  Central

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What  Sets  Us  Apart? •  Raise: buy and sell gift cards •  Groupon: buying coupons •  Belly: loyalty program •  Kiip: virtual achievement – only gamers •  Tapjoy: tedious, long steps, junk mails

•  Us: bringing sexy back to video commercial o  Let us help you reward your user through rich media

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Why  We  Think  We  Stand  A  Chance?

•  Commercial continue to be a very lucrative market o  Superbowl ads is a living testimony

•  Marriage between emerging with existing •  People love video contents because it’s captivating

o  Youtube, Hulu, Dailymotion, Youku

•  Create lasting impressions o  Virality through the spread of social media

•  Quick and easy way to reward users

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Challenges  Ahead •  What is the real advantage for advertisers? •  How to regulate competitors advertisement through

location based technology? •  There are no tangible promises for clients •  Who is the ultimate gainer anyways?

o  Walgreens or Popchips?

•  How to convince app developer to commit?

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Developer’s  End •  Seamless integration of the model to apps •  Require powerful bidding tools for local businesses

o  Smarter ads optimization

•  Advance reports to measure ROI o  How many people are really utilizing these rewards?

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Conclusion •  Good advertising yields positive shift in demand for

products and services and advertising elasticity of demand. Based on our model, we think that Mobile Advertising can make this positive shift happen

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Questions?

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