This past week I attended Mobile Monday Silicon Valley’s monthly speaker event (www.mobilemonday.us). This month’s presentation was an excellent panel discussion about “Monetization Perspectives” in the mobile industry with moderator Tom Tunguz from Redpoint Ventures and panelists Michael Bayle, VP Monetization & Marketing at Amobee; Daniel Cheng, Director of Business Development at Greystripe; Patrick Mork, VP Marketing at GetJar; and Ted Burns, VP Product Management at 4INFO.
The speakers opened the discussion with a focus on monetizing mobile through mobile advertising opportunities. Some of the statistics the panel presented:
– Mobile advertising revenue in the U.S. in 2009 is $400 million of which 75% is generated from SMS ads.
– Mobile ad revenue estimates for 2010 expect to grow to more than $700 million.
First and foremost, the panel stressed the importance of having reliable advertising metrics and the types of metrics that are available for tracking the success of mobile advertising. The panel consensus was that the old order of CPM and CPC metrics are no longer sufficient, nor compelling, for measuring the success of mobile advertising programs. In fact, Cost Per Acquisition (CPA) is a far better metric for determining success because it measures the actual customer acquisition or product sale and not just impressions or click-through rates. And where CPM and CPC can be ineffective and thus costly, CPA is more effective and immediately relates to ROI.
The panelists think that mobile advertising is still a test bed for the majority of brands and many are still not aware of how to take advantage of the opportunities that are available to them through mobile advertising. A large portion of marketing and advertising budgets are still being allocated to broadcast advertising with digital budgets making up less than 10% of most brands’ advertising budgets. One of the challenges with budget allocation and management is that broadcast advertising is usually planned and purchased up to a year in advance whereas digital advertising can be planned and is usually purchased in shorter time periods.
The panelists discussed some of the new opportunities that are coming to the forefront through mobile TV, which is trying to make a dent in the mobile advertising market. Ted Burns from 4INFO indicated that the NBA mobile TV application is considering adding advertising to their mobile experience.
Another important tool for monetization in the mobile channel is offering m-payment (mobile payment) functionality in mobile apps. M-payment applications are growing rapidly and are being offered by start-ups such as Zong, Boku and others, but thus far they have only been selling virtual digital goods. M-payment applications have had considerable success in parts of Europe and Asia but they have still yet to be adopted in the U.S. The panel also discussed the role of payment via carrier billing with agreement amongst them that this method still needs to be reevaluated.
During the panel discussion, the speakers highlighted for me just how far we have come with mobile advertising in a short span of time. A few years ago advertising was primarily SMS-based but slowly this trend is changing. The panelists reinforced the importance of CPA metrics for advertising and that the industry is moving in this direction which will drive more advertising revenue.
For application developers seeking ways to monetize their efforts, advertising and m-payment are the two primary options (in addition, of course, to selling their apps directly through app stores). These two methods have existed for quite some time and are just now being redefined and refined to make them more attractive to advertisers and companies seeking ecommerce functionality through mobile devices. As mobile advertising becomes more attractive to advertisers by offering CPA metrics, and brands realize the value of m-payment systems, developers will have more opportunities to integrate these into their applications and open new doors for monetization.
