Mobile Diary: successful online ads and other imaginary creatures

If you’re looking for an enjoyable read, I recommend The Ad Contrarian, a blog about all things advertising from ad industry veteran Bob Hoffman. This is a great place to read contrarian opinions about online and mobile advertising, and the tendency of advertisers and other marketing types to focus on “youth” markets instead of other demographics (who may have more money to spend).

Here’s a recent post about the lack of real data about any aspect of online advertising. I thought about this after checking out a new feature in Facebook that claims to allow you to opt out of some targeted ads on that service. FB links you to a service (still in beta) that lets you see which companies use behavioral techniques to target ads to you, and opt out of those services.

The fun part for me, especially in the context of the above article (and the related Slate piece it quotes) was visiting the web sites of a bunch of behavioral advertising companies, and seeing how they spin their services and technologies. There seem to be an awful lot of smart (or at least well-educated) people out there applying all sorts of sophisticated computer models to delivering the right ad to you at the right time, all in hopes of increasing click-through rates from negligible to almost-negligible (as I remember, one company trumpeted its success in increasing CTR to 0.42%).

I suppose that as an advertiser, you have to spend your budget on something, but it’s amazing to see how little benefit seems to come from all that analysis.

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Mobile Diary: Who’s failing whom?

The word from the ad biz: Facebook is not your friend. Forrester reports that “Facebook is still failing marketers“, referring to a piece on Digiday that interviews disgruntled ad agency execs about the “failure” of Facebook to give them the reach and results they want.

One quote seemed odd, from James Del, head of Gawker’s content studio:

“Facebook may be pulling off one of the most lucrative grifts of all time; first, they convinced brands they needed to purchase all their fans and likes — even though everyone knows you can’t buy love; then, Facebook continues to charge those same brands money to speak to the fans they just bought.”

Hold on: if “everyone knows” you can’t buy love, why did a bunch of brands buy fans and likes in the first place? Sure, Facebook wanted them to do that, but why would experienced marketing and advertising professionals believe a bunch of kids from northern California?

Mobile class consciousness

More evidence of the class, or at least income, divide in the smartphone world in this article about the big difference in mobile ad revenue between Android and iOS devices. The data, based on numbers from Facebook ads purchased by Nanigans, show that “(f)or the first three quarters of 2013, RPC [revenue per click] on iOS averaged 6.1 times higher than Android and ROI [return on investment] on iOS averaged 17.9 times higher than Android.”

Even though Android accounts for over half of US smartphone market, those numbers do not appear to be an advantage for advertisers, if one can generalize from this study. One uncomfortable conclusion from these data, noted in the article, is that “iPhone owners simply tend to both make more money and spend more money than Android owners.”

Should this be a cause for concern?

 

Instagram, Flickr, and the price of free

The changes that Instagram announced to its terms of service a couple of weeks ago provided an excellent reminder of the real cost of “free” online services and the need for us as users of those services to be realistic about our expectations. The brilliant xkcd explained this in case we missed it:

The new terms that Instagram announced in early December were so extreme that some tech writers recommended the old-fashioned notion of paying for software and services. The most prominent of these paid alternatives is flickr (still my favorite photo sharing service), which has been quietly going on for years, despite the negative press it attracts from the digerati.

Even though Instagram backtracked on the most extreme clauses in their new contract, I think it’s still worth considering flickr or other paid options as a safe place to store and share your images and videos on line. Here’s one important reason why. Instagram may have backed off from using your name and photos in ads without asking, but they still require that you grant them “non-exclusive, fully paid and royalty-free, transferable, sub-licensable, worldwide license to use the Content that you post on or through the Service.”

As a Pro (paid) member of Flickr, on the other hand, Yahoo! also requires a similar license, but “solely for the purpose for which such Content was submitted or made available.” Now IANAL, but I think this is a more restrictive set of terms as far as what they can do with your stuff. Furthermore, you can choose to impose terms on the use of your content by others. You can go the “all rights reserved” route, or choose from a selection of Creative Commons licenses that encourage sharing and reuse within defined limits.

These more robust terms are one reason, I think, why flickr partnered with Getty Images, a top stock photo agency, to offer a commercial licensing option to select flickr users.

Even if you’re not interested in possibly making a couple of bucks from your photos, I think the paid and (more) protected option is still worth considering.

Dear Facebook: show me the money!

The cover story in the latest Technology Review, “What Facebook Knows,” provides a glimpse into the work of Facebook’s “Data Science Team,” a crack group of software and social science experts who are mining the enormous pool of data that the service has collected, in search of “insights that they hope will advance Facebook’s business and social science at large.” Even though the article focuses on the science side of Facebook, it can’t escape the business side, returning at the end to the challenge the company faces to generate “new sources of income to meet investors’ expectations.”

If current analyses are correct, Facebook won’t be able to generate the profits it needs from advertising alone. The ad business is constrained by members using Facebook from mobile devices. They have less patience to be interrupted by ads and less space on which to see them. The business may also be constrained by regulators (and members) who see Facebook’s need for more personal data as an invasion of privacy.

The Tech Review article, however, hints at another business model that could offer a way around these constraints:

[Greylock Partners scientist DJ] Patil points out that Facebook could become a data source in its own right, selling access to information compiled from the actions of its users. Such information, he says, could be the basis for almost any kind of business, such as online dating or charts of popular music. Assuming Facebook can take this step without upsetting users and regulators, it could be lucrative.

Traditional consumer surveys are expensive, and as the Pew Research Center found, becoming more difficult to conduct, leading to even more expense and less accurate results. It makes perfect sense for Facebook to offer their data as a better (and cheaper?) alternative to telephone polls and other traditional methods.

But what to do about the users and regulators? Here’s a suggestion: if you want to sell my data, give me a piece of the action. Facebook already treats its members as “the product being sold,” so why not take the next logical step and include us in the value chain? Facebook annoys members and regulators, I think, because of its secrecy and unclear policies, and not the data collection and sharing itself. Here’s a chance for Facebook to come clean, and present a clear commercial proposition to members: you give us permission to sell your info, and we’ll give you cash.

This idea is not really new. Consumer research companies already pay people in the US and other industrialized countries to participate in focus groups and other studies. Jana recruits thousands of consumers with mobile phones in developing countries to participate in surveys and marketing campaigns, in exchange for mobile minutes and coupons. Why should Facebook be any different?

What do you think? Would you agree to share more on Facebook and get paid for it? Or could this turn you off to the service completely?

Can’t resist writing about Facebook: Mobile is as mobile does

Alongside all of the media excitement about today’s Facebook IPO, there is plenty of concern about the company’s ability to deliver profits that will justify its new valuation, especially as more of its eyeballs are coming from mobile devices instead of desktop computers. Facebook itself identified this risk in its SEC filing, noting that its mobile software currently generates no “meaningful revenue.”

The challenge of mobile devices to the Facebook revenue model is clear. At the simplest level, mobile device screens are just smaller than desktop screens, which means it’s harder to show ads to users on a web site without blocking their view of their friends’ updates. In addition, the Facebook mobile app for iPhone, according to Bloomberg’s Tech Blog, doesn’t show any ads at all, meaning even less money for Mr. Zuckerberg and his new eager shareholders.

I don’t think this is a case of Facebook not “getting” mobile, as Nick Bilton from the New York Times recently concluded. Facebook clearly “gets” mobile technology, and has famously developed a flexible and efficient strategy for delivering the Facebook experience on the web to almost every mobile device on the planet. What they (and many other companies) haven’t “got” yet is how to make money from mobile technology.

As we learned in the last tech bubble, it’s surprisingly hard to turn eyeballs into cash. For example, there’s this suggestion from ReadWriteMobile, for “location-aware push notification based on your interest graph”:

For instance, I like sports, I am passing a sports bar that is offering happy-hour specials, I get a push notification. Facebook makes money, the location makes money, I get beer. Everyone is happy. 

Of course (as someone close to me has observed), the sports bar could just put a sign in the window advertising the happy hour. Much simpler (and probably cheaper).

Whatever the logic of this sort of solution, I expect to see lots of experiments like this from Zuckerberg & co. in the weeks and months to come. Should be interesting…

Mobile Monday DC: post-game wrapup

We had another informative Mobile Monday DC meeting on Feb. 6, this time a session titled “Touchscreens and Touchdowns,” covering the intersection of sports and mobile technology and marketing. Thanks to our sponsors, IMRE Sports and the Georgetown U department of Sports Industry Management, we were able to use a beautiful room at Georgetown, and welcomed a good-sized crowd of GU students studying sports business.

For me, the key insight of the night was the panel’s take on the convergence of mobile, PC, and TV. I’ve always thought of convergence primarily as the availability of the same services on any screen: TV on your phone, email on your TV, etc. As panel moderator Marty Conway from IMRE described it, however, the real meaning of convergence in practice is people using multiple devices at the same time. He quoted data showing that 70% of Americans watch TV and browse the Internet at the same time (I’m certainly in that group). In the sports context, IMRE calls this converged consumer a “spectweeter,”  a fan watching the game while sharing the experience on her phone or tablet.

Joe Dupriest from the Washington Capitals described how the “spectweeter” is coming to live sports events as well, as major teams roll out WiFi networks in their arena and deliver new apps and services to fans’ mobile devices when they’re at the game.

From a mobile strategy and mobile marketing perspective, I think this presents yet another challenge to developers and marketeers when designing mobile apps and services. Not only do you need to design for limited screen space, but also for limited attention spans. That suggests a need for simpler, faster interfaces, even on devices like tablets where screen size is less of an issue.

For advertisers and those who want to monetize through advertising, “spectweeters” seem to be a very challenging customer base, who may not want to take the time to click through your ad or other attraction to see your message.

Following on what we learned this week, this is yet another thing for Mr. Zuckerberg and his pals to think about as they figure out Facebook’s mobile revenue strategy.

[Note: I’m working on a more in-depth analysis of the impact of screen size and attention time on mobile solution design. Watch this space for more info.]

photo by Monica’s Dad from flickr