Over the past few months, Apple has been cracking down on apps that use iPhone owners' UDID (Unique Device Identifier, the code that marks each individual device and its location) as an ad tracking tool. The company has hinted at a replacement and an announcement is expected by next month.
As advertisers look to increase mobile ad spending -- spending on mobile internet advertising in the U.S. will top all other countries in the world for the first time this year with $2.3 billion, a 96.6 percent gain from 2011, eMarketer said this week -- it seemed a good time to take check with Tom MacIsaac, CEO of location-based ad targeter Verve Wireless.
AdExchanger: We wanted to follow up on Verve VP of Engineering Eric Johnston's piece for AdExchanger a few weeks ago, which discussed the controversy over the use of Apple’s UDID as a consumer tracking tool. What's your sense of what Apple can and should do in replacing the UDID as an ad targeting function?
Tom MacIsaac: The AdExchanger piece addresses the “can and should” of the equation... Apple has come up with a solution that is still under NDA with developers. It's difficult to talk specifics since Apple didn't address this feature during their WWDC keynote, but several articles in the business press hinted strongly at what those changes entail. From what’s been written, it looks like the proposed solution is more than the advertising industry had hoped for and is on par with Android's cross-app tracking mechanism – and pretty much what Eric had advocated.
Android mobile web is somewhat closer to the "desktop web" with respect to the usefulness of cookies. Within apps, there are suitable alternatives to cookies for identifying unique users so the real challenge is that cookies are not terribly helpful for maintaining profile or delivery history information for a user since cookies are siloed per app.
With respect to cookies generally on the mobile web, Verve has a big advantage in its position as both a publishing platform and ad platform: in many instances, we are setting the first party cookies since we are the white-label publishing and ad platform for so many content publishers.
For other companies, retargeting and other such delivery strategies that depend on third party cookies simply aren't scalable on the mobile web. We've also had to build custom analytics technologies built into our creative in order to achieve the same level of reporting that agencies are used to from the desktop.
With so many different devices, can marketers seamlessly navigate through the cookie-less Apple iOS system to Google's more third-party friendly Android system?
Is it complicated? It can be if you want to dig down into OS or device specifics. But that’s part of the value Verve’s technology platform provides to publishers and advertisers – we bring scale and seamless execution to a complicated landscape. And, again, location stands out as a consistent attribute in a fragmented world.
What's the value proposition of the Local Marketplace that you released last month to marketers and publishers?
We provide a turn-key mobile publishing and advertising solution to many of the largest content publishers in the U.S. – some of those publishers are local media companies and some are national publishers. For local publishers, Local Marketplace gives them additional scale in their markets. It allows their local sales teams to access additional inventory in their respective markets through the Verve Ad Manager automated interface. For national publishers, by making their inventory available in Local Marketplace they tap into local ad dollars and harness the power of Verve’s huge channel of partner local sales teams.
Mobile is growing fast, but it's still a small fraction of the roughly $30 billion digital ad market. How is Verve's business scalable?
I know people have been saying this for years, but unlike in the past, mobile is now very disruptive in tangible ways. Just look at Google and Facebook – both are being challenged by the fact that mobile user activity is cannibalizing web activity. People are foolish to think of mobile as just a slice of digital. Certainly if you include tablets (and we do), mobile is the successor – the post PC standard. You don’t need a crystal ball to know that media, marketing and advertising will adapt to this new reality. It may take a while, it may be messy, but it’s a foregone conclusion.
What is the value of geo-targeting versus, say, behavioral or contextual targeting? Or is geo-targeting more of a complement, an additional layer among these other targeting layers?
Effective mobile advertising is about creating relevance and meaning for the consumer; the various targeting techniques are simply ways to create that relevance. One of the big differentiators in mobile is the ability to leverage location and we do that better than anyone. Location fidelity enables more efficient geo-targeting, but it also unlocks additional value in mobile behavioral and contextual targeting. When combined with other attributes, such as our own proprietary first party data or with other third party providers such as PlaceIQ, Targus, Polk, etc. mobile advertising is unique in its ability to predict intent and relevance and establish more meaningful dialogues with consumers in an efficient and demonstrable way.
What can you tell us about the company's revenue growth/profitability?
We have gone from 20 to 65 employees in the last 18 months. Our 2012 revenue will be approximately 3x our 2011 revenue (which was about 3x our 2010 revenue) and we should reach profitability later this year.
Does Verve have any acquisition plans?
We are actively considering a couple of opportunities and you should be hearing more from us on this subject in the fall.
What trends are you looking to emerge more clearly in the second half of the year?
We think you will see more and more companies – across the spectrum of publishers, brands, agencies, technology companies etc. -- wake up and say to themselves “Oh no, we’re way behind in mobile,” and begin to take more decisive action across the board.
Again, I’d point to data we’re seeing from big companies like Google and Facebook that show they’re not sufficiently prepared for the consumer shift that is happening at a faster pace than their internal adjustments. We think you will also see more advanced audience and data targeting in mobile in Q4 and greater adoption by marketers (location data being the value-add in these solutions, of course). We think you will see the real-time buying and selling of mobile inventory become more real (vs. hype) in 2013 as more actionable data becomes available to drive mobile RTB.