Q1 Update: Mobile RTB Expands With Tablets, Rich Media And Location

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Mobile UpdateAfter a strong 2012 holiday season for mobile advertising, marketers took a step back in the beginning of 2013, then charged ahead again toward the end of the first quarter. In AdExchanger's third quarterly mobile roundup, mobile ad networks and companies found that rich media, targeting and the rise of tablets drove expansion in the mobile RTB space.

Mobile ad exchange MoPub saw ad spend increase significantly in March after a slow January and February, with several days during March Madness exceeding the daily peak of Q4 2012.

"We exited Q1 with more momentum than we had in Q4, due to the adoption of more impactful, effective ad units," said Paul Gelb, head of strategy.

As overall mobile advertising grows, mobile real-time bidding is also picking up steam.

Matevz Klanjsek, chief product officer and co-founder of mobile advertising company Celtra, told AdExchanger that the size of the RTB market in mobile is about 10%, but that it is expected to reach 30% in 2013, especially as more brands advertise via mobile RTB.

Mobile advertising company Millennial Media is also moving more into the mobile RTB space, having acquired mobile RTB platform Metaresolver in February. In its Q1 earnings call on Tuesday, Paul J. Palmieri, CEO, co-founder and chairman of Millennial Media, said that the company is "determined to be a major player in premium programmatic media. We have made some aggressive moves in Q1 to move in that direction, and we intend to invest and make more moves in the coming quarters."

Humor and entertainment website theCHIVE, part of Resignation Media, works with MoPub; Eric Spielman, VP of mobile, told AdExchanger that about 30% of its mobile inventory goes to RTB yield.

"As a small publisher, you want create demand to help drive your prices up," Spielman explained. "Real-time bidding has helped to drive up the demand for what we have. In Q1, we expected a big step down from Q4 but it was not nearly as bad, and RTB was a big reason why."

Adam Soroca, chief product officer and GM of Jumptap, which works as an ad network and RTB buyer, said that about 20% of its revenue is spent on RTB-enabled inventory.

MoPub also analyzed the impact of rich media on performance in the mobile space in its Marketplace Report Q1 2013. The company has propagated MRAID-enabled impressions across its network. And both CPMs and CTRs were higher for rich media ads than for those without MRAID-enabled impressions. In March 2013, CPMs were 68.6% higher and CTRs were 50.6% higher.

MoPub Rich Media"Some of that has to be related to the fact that budgets have increased," Gelb added. "A larger ad spend budget allows you to allocate for more creative."

Celtra's Klanjsek also focused on the increasing importance of creative ideas in mobile advertising: "Technology will not be enough. You need great creative and great ideas, working together with great technology."

Tablets, with their larger size, are also starting to show their dominance in the digital advertising space. An IDC report from April found that shipments of desktops and laptops fell 14% in the first quarter of 2013, compared to a year earlier, much of that due to the rise in tablet and smartphone usage.

In the first quarter of 2013, RTB firm Accordant Media reported that 46% of all mobile RTB impressions came through tablet devices, compared to 54% from smartphones.

In its AdSnap report on tablets, Adfonic found that tablet ads saw higher CTRs than smartphone ads in general during the December 2012 timeframe, with several categories showing major differences, including style and fashion, lifestyle and health, and entertainment and media.

Adfonic Tablet"Tablets are seen as more of a leisure accessory," said Adfonic CTO and co-founder Wes Biggs. "You can really take the time to engage with content, and obviously the screen size helps that. The higher click-through rate corresponds with having larger ad units and more opportunity to engage the user from that perspective."

One-off events also contributed to the growth of mobile RTB in the first quarter, specifically the Super Bowl on February 3. Nexage, in its Q1 Nexage Analytics Report, found that on Super Bowl Sunday 2013, there was a 180% lift in mobile ad spending on the network compared to the previous week. In 2012, that lift was only 18%.

Nexage CMO Victor Milligan said that big events like the Super Bowl have provided brands with an easy way to experiment with and get more involved in mobile RTB.

"That’s where they really believe that they can either complement their TV and online ad campaigns, or work exclusively through mobile; they’re going to take advantage of those events," he added.

MoPub's Gelb agreed: "One of the valuable parts of buying on an exchange and in a real-time process is that you can rapidly ramp up or shift spend based on factors in real-time."

Using mobile advertising around events is one form of targeting — and one that is easier to leverage — but other forms, including location and third-party data offerings, have been a challenge.

"The biggest difference between the desktop and mobile advertising world tends to be the lack of a data economy," said Adfonic's Biggs. "You can simplify that to say cookies don’t work the same way. We see RTB as a great step forward in that, with the demographic details that we see coming through the exchanges."

Verve Mobile and xAd, both location-focused mobile advertising companies, released reports showing how location-targeting can improve ad performance. Looking at the 2,500 campaigns on the Verve platform in 2012, 14% were geo-aware, 22% used geo-fencing, 30% used DMA, 24% leveraged location-based audience targeting, including third-party data, while 4% targeted based on city and 6% on zip code.

According to Verve, CTRs for location-targeted ads were higher than the industry average of 0.4%, with geo-aware targeted ads on its platform reaching a 1.0% CTR on average.

Verve CTROn xAd, 58% of campaigns used geo-precision targeting, including geo-fencing and geo-behavioral targeting, while 40% leveraged standard geo such as zip, city and DMA. This use of geo-precision targeting was up from the 27% of campaigns that used geo-precision targeting in Q1 2012, but down from the 81% in Q4, when advertisers leveraged location to support their Black Friday and holiday shopping-specific targeting.

"Obviously the holy grail of targeting is being able to track unique users, and unique user tracking is still a big deal, a big question," said Celtra's Klanjsek. "There are solutions out there that can do that through fingerprinting, and fingerprinting works well. But it has certain privacy issues and other challenges."

Looking at operating systems, Opera Mediaworks found that 44.5% of ad impressions came through iOS and 31.3% came through Android, including the 11% that came just from Samsung Galaxy S III. As for mobile ad revenue, 49.2% of revenue came through iOS devices and 26.72% came through Android devices. The iPad specifically accounted for 6.5% of impressions and 12.6% of revenue on the Opera platform.

Opera Operating SystemBeyond mobile advertising and RTB, mobile players like location analytics company Placed are providing mobile app developers with other ways besides advertising to monetize their mobile applications and platforms.

"In 2011, early 2012 mobile was more of a hobby; it wasn't a revenue source. It was a nice add-on," said Nexage's Milligan. "Now, the business leaders of these publishers realize that mobile is a strategic revenue source. Not just mobile ads, but mobile in general. Mobile advertising is a key part of that, but these other [monetization strategies] will exist and also be important going forward.”

Looking forward, mobile RTB and mobile advertising overall will continue to grow with more rich media and video ads, additional and more refined targeting capabilities, and the growth of tablet advertising, which earns more engagement from consumers.

"There’s huge demand for video inventory," said MoPub's Gelb. "There’s more investment in that ad format. We've seen rich media ads get widely adopted and integrated into exchange space. With the Facebook Exchange and its native advertising options, clearly there is an opportunity for those two to intercept."

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