Hitmetrix - User behavior analytics & recording

Mobile ads hit maturity—now pay up, please

Consumers want mobile content for free. Mobile content providers would like to make some money. That’s why the industry needs mobile solutions that work for everyone, says Victor Milligan, CMO of mobile ad exchange Nexage.

The issue stems from the fact that mobile was premised on the free model, Milligan says. While mobile consumers pay a monthly usage bill without thinking about it, they expect the applications they download and the content they read to seamlessly appear on their devices, both beautifully designed and free of charge.

It’s why there’s such an enormous proliferation of apps and mobile games and it’s why there’s been such meteoric growth in the industry.

That said, something’s gotta give. I mean, game developers and mobile content providers need to eat, too. Monetization of that engagement is a vital piece of the puzzle, and that generally defaults to ad-supported mobile, Milligan says, who acknowledges the difficulties built into that revenue stream. Of the overall consumer base engaging on mobile, less than 10% are actually paying for anything.

So, how can brands or developers bring in the dough? They can put their content behind a pay wall or institute a subscription model. They can also try selling virtual goods, like the coins or points you might need to progress within a game. Those are all options. But mobile ads are probably your best bet. Mobile as a market is established enough to support rich media and video ads that meet industry standards and engage users from a storytelling perspective. Mobile may have been a nascent industry before, but it’s normalized now, and growing.

Just look at the numbers. Milligan says Nexage itself supports somewhere between 13 and 20 billion impressions a month, and that 22% of the ad units in the company’s exchange are rich media- or video-enabled. He expects that number to top 50% in the next 12 months.

“Our goal is to make the market as frictionless, as liquid, and as vibrant as possible so publishers can make the money they need, brands can engage the consumers they want, and the financial transactions we support are happening in the easiest way possible,” Milligan says.

I asked Milligan what he thought about a concept I’ve heard bandied about quite a lot recently—that 2012 is “the year of mobile.” While summing something up as neatly as that is tempting, Milligan says he thinks 2012 has been less the year of mobile than the past 10 years have been “a decade of significant transition.”

“Mobile ads by definition need sufficient scale of smartphones and tablets in place to make it really work, and now that’s in place, so we have the right level [of saturation] to be able to deliver unique value,” Milligan says. “It’s a maturing market.”

Related Posts