The Human Context Can Unlock The True Value Of Mobile

heathermenerysellsiderThe Sell Sider” is a column written for the sell side of the digital media community.

Today’s column is written by Heather Menery, vice president of emerging solutions at PubMatic

There are many debates today surrounding mobile and display: Are they now one and the same? Should we still have dedicated, separate budgets or simply merge mobile and display together?

Although it’s clear that we must manage all these channels in an integrated and efficient way, mobile still has unique qualities that set it apart from others. Users, for example, behave very differently on their mobile devices than they do on laptops. We can also take advantage of mobile’s unique attributes, especially in the programmatic space.

The key is in understanding that the value of mobile is ultimately captured in the human context: a person’s location, activities and intent.

Our mobile devices accompany us everywhere, from our first morning coffee run to the workplace, business lunches and happy hours, before ending up on our nightstands as we go to sleep. While traditional display ads are presented in the context of the activity on the device, such as the web page being read or game being played, mobile ads become more effective when they reflect the context of the person’s activity. The ability to use location to make inferences about what people are doing and what they might want based on that activity is far more valuable than the on-device context in which the ad itself is shown.

Media buyers know location is the single most requested data parameter on exchanges and they are willing to pay a premium for it. In my experience, publishers that pass location of the device can see an increase in CPM of up to 124% over those that do not. They are also becoming smarter about the type of location they will bid on. For example, location was a hot topic last year, but media buyers were not picky about the type of location data publishers passed along so it didn’t matter if it was the user’s ZIP code or IP address.

But a shift has occurred within the last six months. Media buyers now require that publishers specify in bid requests whether location data will come from device GPS – the most precise and valuable type of data – or from other sources, such as IP address or user registration data. The implication is that media buyers are being far more strategic about the role location plays in satisfying their campaign needs.

It now matters whether the user they’re targeting is in the same city as a store, within five miles of a store or standing right in front of it. Soon, thanks to assisted GPS, iBeacons and NFC, it will become feasible to buy based on whether a user is standing in a particular store aisle or even right in front of the product.

Most agencies now challenge their demand-side platforms (DSP) and ad networks to better understand where location is coming from. In turn, many DSPs and ad networks now challenge their own technology partners to specify not only location, but also the type of location a publisher is offering in the bid request.

The industry is also witnessing the emergence of a variety of “hyperlocal” mobile DSPs that will bid only when the most accurate form of location is present in the bid request. Advertisers’ sensitivity to the type of location they are accessing is an encouraging sign for mobile, as it proves the increasing sophistication of the industry and further unlocks its tremendous marketing potential.

In addition to opportunistic targeting based on a user’s location, this data is also being used by mobile DSPs in more intelligent and sophisticated ways to build user profiles based on where the user has been and where they may be going. For example, understanding that a particular mobile user travels 25 miles from point A to point B every weekday morning signals that they live in one neighborhood and work in another, making for a long commute. Combine this data with other inferences about the user’s demographics and interests, and you end up with some very valuable targeting data.

Mobile is growing fast in reach and sophistication, which is astonishing for a business that barely existed before the introduction of the iPhone in 2007. Premium publishers are attractive to media buyers, but they are that much more attractive when they have valuable data.

Not having that data today already hurts monetization rates. Not having that data tomorrow as part of a publisher’s offerings could be a deal breaker. Publishers that are sitting on lots of valuable data can expect the phone to ring a lot more next year.

Follow PubMatic (@PubMatic) and AdExchanger (@adexchanger) on Twitter.

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