Mobile Advertising Is Still Struggling

Advertising is the science and art of placing the right message in front of the right person at the right time.

The web was a huge boon to companies that leveraged highly interactive ad creative and mined a world of new data to develop ongoing dialogs with consumers, rather than chasing simple impressions. In theory, mobile devices should provide even greater opportunities for engagement than the Internet did. Touchscreens, user locations, a variety of contact channels, and almost constant proximity to the user should have made mobile devices the new advertising frontier.

This is far from the case. The migration from computers to mobile devices for interacting with web content has left Facebook and Google hurting, and ad revenues are down across the industry. So what’s the problem? There are many. Here are three of the most common:

Real estate: Even in the 1990s, web advertisers could count on having at least 800 pixels at their disposal. The web provides an enormous canvas for advertisers, with room for a mixture of ad types. A search results page could contain 10 text ads, several ad banners, and a sponsored video.

On a mobile screen, which can be as small as three inches, the advertiser gets one shot, typically in a very small banner ad or a full-page interstitial. To make matters worse, tabbed and multi-window browsing is much more complicated on smartphones than on a PC, so clicking ads generally removes a user from an app. This frustrates search engines accustomed to PC-type response rates, and threatens app makers that worry about losing their customers with in-app ads.

Limited inventory: Web creative is often overwrought, but at least it catches your eye. Advertising needs to take users somewhere, and mobile destinations have been comparatively clunky.  One reason is screen size, as mentioned above. Another is platform incompatibility. For years, the go-to format for interactive web advertising has been Flash, which doesn’t work on iOS and was recently discontinued on Android. At the same time, HTML5 remains quirky, spottily supported, and unfamiliar to a lot of developers. As a result, we’re left with ugly HTML ads that wouldn’t be compelling on a 24-inch monitor, let alone a four-inch screen.

Horrible targeting. Developers churn out mobile apps at breakneck speeds. They don’t have time to develop sophisticated ad targeting solutions. If they did, they wouldn’t have the sales staff to sell ads. As a result, many developers use third-party ad networks with limited visibility into the user’s behavior, which limits the amount of ad inventory that’s actually relevant to a particular user. If you’ve ever played an action game on your smartphone and been served an ad for Barbie, you know what we’re talking about.

The solutions won’t come all at once, but things will gradually get better. HTML 5 may still be a moving target, but it’s the new standard for ad creative, and it works across platforms. Expect to see some fantastic, engaging sites and promotional HTML5 applications in 2013 that will raise the standard for mobile advertising.

We’ll also see an increase in device-awareness in ad targeting. A four-inch smartphone and a 10-inch tablet offer fundamentally different viewing experiences, even if they share an operating system. The advertisements serving those form factors should be different. This will allow advertisers such as Google to return to a middle ground between yesterday’s advertising free-for-all and today’s all-or-nothing approach.

The truly unique, “only-on-mobile” advertising opportunities will come later in 2013 and beyond. As users become more comfortable sharing location-based data with applications, targeting will improve.

Augmented reality (AR) also has huge potential, as it can literally hang a context-sensitive price tag or link on every object in the world. For example, imagine an AR game in which a user scans the streets of New York City through a phone camera, searching for some sort of object or enemy. The application could place virtual “power-up” signs over the windows of retail establishments that sell game cards, adjusting prices as time runs out.

Finally, technologies such as near field communication (NFC) will eventually allow stores and devices to “push” ads for nearby products and services to mobile devices.

There’s no getting around a near-term downturn in mobile advertising as the industry evolves. But technology — and an understanding of how to use it — will help advertisers turn a corner.