Sponsor Pay’s value-exchange platformBrandEngage allows advertisers and developers to offer free premium content for interacting with an ad in a mobile game. It’s a concept other companies such as Tapjoy have been successful at.
Inside Mobile Apps: Rich media ads and video ads seem to be preforming the best on mobile but ad spend still isn’t there compared to other media formats like TV and web. What is it going to take to bring higher ad spend to mobile?
Janis Zech, Sponsor Pay chief revenue officer (pictured right): It depends on the “ad buckets” you look at. Whether you look at the ad world or the performance world, what we’re seeing right now is that the brand world is definitely under represented when you think about the rich audience and time spent on mobile devices and the app ecosystem. That’s due to the fact that media agencies in general are very risk averse and try to move slower than the response world which jumps on everything which gives them a good prize for acquiring users, so we’ve seen that with games in the first place but also with travel and finance and commerce categories. These players move faster into this potential customer acquisition. What it takes for these ad dollars to be spent on mobile is just time. And performance. Video and rich-video ads are not there yet from a traffic perceptive. In 2013, it will probably grow. The potential of tablets and TV being part of the whole ecosystem is also something which is already on its way but not yet on a broad or mass media scale. It’s just going to get better. That’s a good thing. The industry will continue to grow rapidly until we reach the tipping point.
IMA: Specifically for Sponsor Pay, what kind of ads are the most successful?
Zech: It depends on platform. On iOS, we see that video is the most successful. What we basically do is we help app developers acquire users by running app trailer campaigns, and optionally, you can install the application if you like it. Then we also have branded video and engagement ads where you watch a video. For example, a movie trailer and add it to your calendar, or interact with it somehow to deepen engagement. On Android we’re seeing cross-player installs, cross-play engagement and distribution campaigns working the best right now.
IMA: You mainly focus on game apps. Do you thing Brand Engage could work with other apps besides games?
Zech: Yeah. Around 80 percent of our traffic comes from games, communication apps and social networking apps that also use this kind of specific advertising model. And long term I believe that if you think about the situation with big media companies introducing paywalls, you’ll see a huge drop-off rate that will change the advertising model to let users access premium content. The same with music, if you think about the Pandoras and Spotifys of the world, there’s no reason why users shouldn’t engage with advertising and in return receive a free day, or something like that. I think everywhere you have premium content this model is applicable. Is it there yet? Not really, but we’re seeing really good signs that it goes beyond games.
IMA: Smartphones are personalized devices but ads are often not personalized. What can be done to remedy something like that?
Zech: That’s one of the very big challenges and it has to do with data and what kind of data you can supply to ad platforms. Currently the mobile advertising system is missing some data points when you look at demographic targeting. We’ve found that for direct response there are other ways of targeting that work much better like loyal-user targeting, where you take into consideration the behavior of users instead of the demographic. One of the big pushes we’re doing right now is solving this demographic challenge and what we’re seeing is that there are certain categories of apps which can aggregate and build your own demographic channels, either by interest or by demographic. But that’s not yet as exact as you can do it on the online side. It’s also something that the big data providers of the world will build an infrastructure to make that happen.
IMA: What are your thoughts on location-based ads?
Zech: I haven’t seen anyone mastering it yet but it will get there in five years. Will there be an incentive component with it that is real-time and based on the interest of the people? I’m pretty sure. I think Groupon and Google, having the merchant relations already, could pull it off, but it’s still to be seen if they’ll succeed.
IMA: Which platform is performing better for you, iOS or Android?
Zech: Currently we’re more successful on Android. From a user behavior standpoint the differences are not large from what we see.
IMA: What new kind of native app formats for mobile will emerge in 2013?
Zech: Videos are becoming much bigger than they are today. Specific brand engagement ads and location ads will be bigger.
IMA: What are your prediction regarding mobile advertising in 2013?
Zech: One of the biggest challenges right now is solving discovery and user acquisition for the app ecosystem and doing it on an ROI positive performance advertising model. A little bit like you have online for e-commerce with Google AdWords being very successful in translating users buying behavior. I think we’re seeing app developers being much more conscious of how they spend their budgets and how they achieve what they want to achieve in terms of performance. The other big trend is the whole ecosystem will get more automated. Real time bidding and ad exchanges will take off next year. They haven’t taken off but next year you’ll see much more automatization and efficiency in the system. Eventually it will help the performance change, and next year brands will wake up and capitalize and take advantage of mobile.