Advertisers Refine Mobile Pitches for Phones and Tablets

And just like that, Google made money. That icon was a so-called click-to-call ad, and the hotel paid Google for it when you called.

As more of us have access to the Internet and apps through our cellphones and tablets, advertisers are looking for new ways to reach us there.

Some mobile ads remain just miniature versions of ads on Web sites, an echo of the early days of the Internet, when advertisers essentially slapped print ads online. But increasingly, advertisers are tailoring ads to phones by taking advantage of elements like their ability to track location, make a call, show maps with directions and add calendar alerts.

The stakes are significant for an industry that is still finding its way in the mobile world. Advertisers will spend a relatively small amount of money on ads on phones and tablets this year — $2.6 billion, according to eMarketer, less than 2 percent of the amount they will spend over all. Yet that is more than triple what they spent in 2010.

“An ever-growing percentage of our ad buy is mobile because that’s where the consumer is,” said Chris McCann, president of 1-800-Flowers.com, which has run mobile ads urging people to call or walk into a nearby store. “It’s the future for us.”

Coming up with ads that exploit the smaller mobile screen requires inventiveness from many parties — advertisers; digital publishers like Google, Apple and Facebook that sell ad space; and mobile ad networks like Millennial Media.

“What we’re trying to do is think about the on-the-go user,” said Jason Spero, leader of global mobile sales and strategy at Google, which dominates advertising online and is far and away the leader in mobile advertising. “What does that user want when she’s sitting in a cafe or walking down the street?”

A big challenge for the tech companies is that advertisers pay less for mobile ads than for those online, largely because consumers are less likely to make a purchase on their phones. Though people click on mobile ads more than on desktop ads, advertisers wonder whether that is because of what they call the “fat finger effect” — accidental clicks on tiny touch screens.

And while users’ actions can be tracked across Web sites online, it is hard to know whether someone sees a cellphone ad for an offline business and then walks in — so it is difficult for advertisers to judge how effectively they are spending their money.

As Google sells more mobile ads, the average amount it earns from each ad has dived. Facebook’s value on Wall Street was halved on fears that it was not making enough money on its mobile users. Apple’s mobile ad network, iAd, has been slow to gain traction.

Despite the problems, though, there is evidence that mobile advertising is becoming a meaningful business, and in some cases a bigger business than online advertising.

Facebook executives said last week that in the third quarter, the company earned $150 million from mobile ads, 14 percent of its total revenue. Pandora reported that in the second quarter that ended in July 58 percent of its revenue, or $59 million, came from mobile ads. Twitter executives have said that on certain days, the social network earns a majority of its daily revenue from mobile ads.

Mobile ad networks, which show ads across mobile apps and Web sites, have created new and thriving businesses. The biggest are Millennial Media, Google’s AdMob and Apple’s iAd.

Google earns 56 percent of all mobile ad dollars and 96 percent of mobile search ad dollars, according to eMarketer. The company said it is on track to earn $8 billion in the coming year from mobile sales, which includes ads as well as apps, music and movies it sells in its Google Play store. But the vast majority of that money comes from ads, it said.

“Whoever does mobile best, they’re going to be the next Google, so people are asking, ‘Is Google going to be the next Google?’ ” said Chris Winfield, co-founder of BlueGlass Interactive, a digital advertising agency. “It still is Google’s to lose.”

Article source: http://www.nytimes.com/2012/10/29/technology/advertisers-refine-mobile-pitches-for-phones-and-tablets.html?partner=rss&emc=rss