Contextual advertising is often confused with geo-targeting. In fact, geo-targeting is a location-specific form of contextual advertising that presents users with local advertising relevant to their interests. Contextual advertising encompasses topic-based targeting, in-text hyperlinks and geo-targeted advertising methods. Each of these marketing methods can provide significant advantages to mobile app developers and advertisers. Taken together, however, they produce synergy that can boost traffic and increase sales in the mobile marketplace.

Understanding contextual advertising
Contextual advertising has dominated the online advertising field for a number of years. These advanced advertising strategies evaluate the content of a particular website or sites to provide advertising content likely to complement that content and meet the viewer’s needs. Contextual advertising essentially allows the consumer to self-select for the most relevant advertisements based on the content that consumer is currently viewing. Contextual strategies can be fine-tuned to include only ads in the local area, ads that relate directly to the topic or ads related to the subject matter of the application or webpage. Mobile advertising networks use contextual advertising techniques to monetize mobile apps and boost revenues for mobile-optimized content. These advertising methods increase the effectiveness of the marketing campaign by presenting relevant ads to the end user.

Geo-targeting
The mobile marketplace is an ideal environment for geo-targeted ads. Advances in GPS positioning and geo-location services in the mobile phone industry make it easier and more convenient for users to see only ads relevant to their interests. These advances are a boon for advertisers as well. They can choose to display their ads only in the areas where their brick-and-mortar businesses are located, allowing them to achieve more with the same marketing budget. Major search engines use this method to provide their users with local search options; geo-targeting pinpoints the audience and caters specifically to those located in the desired area or region.

Putting it all together
App developers and advertisers can achieve more by integrating both contextual advertising and geo-targeting into their collaborations. By including a few lines of code in the mobile app, developers can incorporate the revenue-building power of contextual advertising into their entire app. Application developers can choose to exclude specific categories of advertisements or certain advertisers; this can allow them to protect their branding and their reputation more effectively. For advertisers, the benefits of combining contextual advertising and geo-targeting are even more impressive:

• Contextual advertising allows the company’s marketing budget to be spent where it is likely to do the most good.
• By targeting consumers who are already predisposed to buy the products or services, companies can boost revenues and build name recognition in the mobile marketplace.
• Geo-targeting allows advertiser to achieve better ROI. Companies can focus their advertising budget to areas where they already have a physical presence, allowing them to get more bang from their buck.

The recipe for success
Combining contextual ads with geo-targeting is the most effective way to reach consumers in the frame of mind to buy. Each of these marketing methods offers significant advantages. When combined, they form a nearly unbeatable strategy that maximizes return on the advertising budget and increases revenues for app developers and advertisers alike.

As the year comes to the halfway point, and media buying departments take a quick breath before they prepare to head down the “big” half of the year, it is worth reflecting on the cycles and trends that shape our industry.

Advertising budgets are an interesting place to start. Monthly, quarterly and yearly cycles govern spend patterns in the industry. Usually, you will see spikes towards the end of the month as agencies and advertisers scramble to use up their remaining budgets. I say usually as an advertiser may have used up their budget several days before the end of the month. This applies more so at the end of quarters – where the pressure could be increased to spend that little bit more, or budgets may have been exhausted a month ago. Mix in burst campaigns, holidays, big gaming days – it is enough to send developers crazy, when all they are trying to do is track their advertising revenue from one day to the next.

The next aspect to look at is how advertisers determine their bid price for advertising. This will directly affect eCPMs earned by developers.

Obviously, return on investment (ROI) is the underlying factor. However, circumstances such as competition, market conditions, shareholder expectations etc can affect how much advertisers are willing to spend. A company in the process of fund raising may spark of a bidding war as they try and grab market share, while another reaching their campaign budget early may see the price fall dramatically for the remainder of the period.

The last area to address is overall market trends. When we analyze the performance of banner ads, we don’t lament the 0.5% click through rates they used to get 10+ years ago. This is because the performance of any new product goes through various cycles. A few weeks ago I wrote an article titled “Where are those $100 eCPM ad types?” which looked at the hype cycle of advertising. The reality is that in our super-fast paced industry, the move from one stage of the cycle to the next is even quicker. So while a year ago developers were seeing $100 ecpm on certain high performance ad types, those earnings have equalized at $7-15 ecpm as we enter the “plateau of productivity”.

So what do you do as a developer to ensure you are earning as much as possible? Make sure you are looking macro, not micro. While it is important to be watching your earnings daily or even hourly, don’t get caught up in the peaks and troughs that can come from daily cycles. Compare this month to last, last quarter to this quarter. Are you heading in the right direction? Are your actual earnings better – not just your ecpm. But more importantly, be aware of the changing trends and new developments in the market. New ad types will provide peaks to developers who jump on them early.  But also expect earnings to steady out over time.

Nowadays, the advertising cycle is almost as wild as riding a roller coaster, but just as much fun.

It has been well documented that consumer Trust plays a major factor in any form of marketing and advertising. The big question is how can we, as advertisers or developers showing these ads, positively affect this level of trust to increase our advertising performance? Additionally, does mobile advertising have different rules to the wider market or even the web?

Already in 2007, a study published by the Journal of Advertising Research found an interesting phenomenon in mobile advertising. While examining the role of trust in the mobile advertising and applications marketplace, their conclusion was that consumer trust is in-fact a major factor in the receptiveness and response to the advertising campaign and to the application on which it was displayed. However, more interestingly, the study showed that this correlation was much stronger for ads focused on durable goods. Consumers were more open to ads for services and nondurable goods, even from companies they had not previously heard about and with which they had had no dealings in the past. This indicates that trust may be easier to come by in the mobile sphere. Why would this be?

Building trust
In the mobile app marketplace, trust is already a key to success and expansion. Positive reviews and a professional presentation can help to build trust, but it is the quality and utility of the application and its associated advertising that are most important in retaining consumer confidence. Consumers demonstrate their trust in a number of ways:

• By downloading the application to their mobile phones, consumers show confidence that the application is both functional and free of any damaging code or programming.
• Using the application certifies that the consumer finds it entertaining, functional or otherwise worthwhile.
• Recommending the application to others is the most direct evidence of trust in both the application and in its general usefulness.

Mobile apps are judged by their performance and quality; by consistently creating unique and useful apps for end users, developers can create a brand name that engenders trust and respect in the mobile marketplace.

So building trust in the medium itself (ie the app), increases the trust a consumer will have in the advertising they are seeing. But another key factor cannot be ignored. The regulation imposed by the various marketplaces, creates a strong level of trust for consumers that the apps they download are bona-fide. This means that the trust starting point for all apps is already relatively high. This is a positive for advertisers and developers alike.

Clever repetition is the key.
So what else can advertisers do to further increase the trust consumers place in mobile advertisements? Numerous studies have shown that repeated exposure to advertising materials builds brand recognition among consumers, however, evidence also suggests that frequent exposure to the same advertising can actually produce a negative effect over time. By varying the commercial messages and keeping the company’s ad content fresh, mobile advertisers can achieve the benefits of brand recognition without risking backlash from too many repetitions of the same ad.

The final piece of the puzzle.
The last area of trust is built up by ensuring that there is relevancy between the ads shown and the place they are displayed. This is where LeadBolt helps our network partners increase consumer confidence. We spend much of our time developing cutting edge technology to increase consumer engagement for the ads we show. This means ensuring relevancy, but also imposing rigorous approval processes for all ads and apps so that you guys can trust that your consumers will increase their trust in you and your assets.

This harmonious relationship between developer, advertiser, market place and ad network, means you can continue to build trust and achieve superior results through increased downloads, boosts in sales and improved reputation of your product and services.

I read recently in the blogosphere that “The challenge for global brands in mobile is finding relevancy to the various activities a consumer may be performing at any given time”

While this is likely a fair assessment of the challenge that brands are perceiving, what I find surprising is that brands think that relevancy in mobile is a big challenge at all. For me it suggests that brands are perhaps overcomplicating the “challenge” and as a result missing the unique opportunities that mobile advertising represents.

Notwithstanding the mobile sphere’s unique ability to link to a consumer’s activities, just the statistics on the mobile revolution underway says that brands should be leaping at the opportunity mobile represents.

It’s been well stated that the number of mobile connected devices will exceed the world’s population within the next 2 years. Already its quoted that 4.8 billion people worldwide own a mobile phone and that as the smart phone revolution continues apace, a significant proportion of these devices will be more powerful that the leading computers of yore.

When you consider that tablets are taking over from desktops it’s clear that the inversion of first and third screen labeling is well underway with mobile the clear winner.

It makes sense, why rush home to check something online when you can do it right where you are standing. Where-ever that is!

And here’s the rub, where you are standing, right now in the midst of your activities is precisely the point of relevancy brands should be targeting. What could be more powerful than Nike ads when I’m at the tennis, Gucci ads while I am shopping and Starbucks ads whilst I am searching for coffee?

And it’s not even hard to achieve! Sure we can talk about clever targeting with geo-location and the like, but these miss the most significant phenomenon of the smart phone – Apps. Apps are the glue that drive relevancy. There are increasingly becoming the infrastructure that drives our lifestyles. How often have you heard people say – There’s an app for that.

But it’s more than brands building their own apps. It’s using the explosion of apps with their typical narrow application focus as a leverage point into the growing communities of users orientated around a particular lifestyle choice. This is incredible relevant to global brands.

It’s Nike dominating the advertising in the range of sporting apps available. It’s Gucci owning the ad space on the shopping comparison/preview apps and Starbucks right there on the daily deal apps just prior to that the coffee decision being made.

Brands are running behind but the mobile ad networks have already started building big app developer communities integrated and ready for innovative and successful ad type based campaigns. If they want to stay relevant, brands should be reaching out to users through mobile apps as a must-do item.

Back in February, a simple forum post set in motion a steam train that has resulted in a 30% decline in downloads from the top 200 Apps on the App Store.

Most of you would already be aware of the changes Apple has made to the way it calculates its top apps as well as its crackdown on download bots. A practice that Apple has apparently been aware of for some time, download bots artificially inflate the number downloads for the purpose of getting the app in the top 25 chart. At this point, the app begins getting real downloads and can be monetized effectively.

Apart from breaking all sorts of marketplace rules, it makes the marketplaces really unfair for those trying to get in through legitimate means. It is great that Apple has taken some action and the decline in volume shows how many downloads were being driven by this method.

There has already been a lot written about the importance of getting your app ranked in the top 25 or 50 charts in the relevant market place. Whether by geography or category, it has been suggested that 70%+ of users do not look passed the top charts when searching for new apps.

So how do you get your app ranked?

Well obviously, CPC/CPI campaigns, SEO / keyword search optimization, PR, discounting and getting it reviewed by popular blogs or new sites are all effective strategies. Another one for better known brands or niche apps may be to time the release with Trade Shows where you can make a big announcement and splash.

But the numbers required can be mind boggling. 25,000 downloads per day to be top 50 in US on the app store. 10,000 in China. 5,000 in the UK and South Korea. A little less in Germany, France and Australia. Obviously, the numbers reduce significantly when looking at the top 50 in a particular category.

There is also what day you want to feature. Weekends are busier, so getting into the charts is even harder, but then the rewards are greater as download volumes are 20%+ higher.

The other really effective strategy is burst campaigns. Running an intensive CPI (cost per install) campaign for a few days to get huge downloads can push you into the top charts where the 70% of users are searching. This drives organic downloads, where your ongoing and slightly less aggressive marketing program (which may include all of the above), may be able to keep you up there. Combine this with an effective monetization strategy and your app will begin making real money.

While this approach may sound similar to the download bots, the real difference is that your downloads will be real. Real users, finding the app on their own (as they do not have to click on your advertisement and then don’t have to download the app) You are assured that those downloading your app are interesting in doing so. And if your app is valuable, this will lead to great ratings and reviews, being shared amongst friends and family etc and therefore ranking even higher.

Then you can focus on what should be the most important area for you – making the app even more awesome and launching your next app (or five).

Of course, Leadbolt can help you achieve all these objectives from sustained to burst campaigns, so if you are serious about being number 1, then start running your campaign with us today.

Are you like me with a habit of remembering the big ticket ad types of last year. Do you remember them launching to great fanfares with stories of super eCPMs?  No doubt all your friends and every developer forum told you to move on up to these ad types. After all, why would you run banners at $0.10 eCPM when you could be making hundreds of dollars with each thousand impressions instead?

But 6-12 months on, are you still achieving those dizzy heights? Was it all just hype? Is there a way to understand the trends and therefore maximize your returns?

Over 15 years ago, Gartner began using a Hype Cycle to analyze the introduction of new technology. The hype cycle was designed to not only show the inevitable hype (and fall) surrounding new concepts, but the subsequent stages, when they move beyond the hype into long term benefit and wide spread acceptance. The key to understanding this can ensure you benefit from this cycle.

The cycle can be displayed using a simple info-graphic.

So referring back to the topic of new and advanced ad formats, there’s no doubt the promoted $100 eCPM lies at the top of the hype cycle and even though many developers reached those heights initially, many a developer subsequently found their ad revenue results dipping into the ‘valley of despair’, before flattening out into a ‘production reality’.

This production reality (long term stats) for high performance ad types is averaging $5 to $15 eCPM. Obviously, the more targeted and qualified a publisher’s traffic then higher values can be achieved but that is a good basis for our discussion.

So what does this hype cycle tells us about ad type performance, beyond some sales cynicism. I am going to suggest it tells us some very important things about user acceptance, customer expectations and can provide an indication into user responsiveness.

Here’s what the hype cycle teaches us in relation to high performance ads:

1. A new ad type is launched. Its new, fresh and attention-grabbing. Users respond positively, driving up ad revenues. The stage may take months as it has for our example, or years for examples like robotics.
2. Due to its success, the ad type appears more often, making it more commonplace/ discussed negatively, users respond less and ad revenue falls.
3. The ad type is optimized / reaches a level of status and delivers a stable revenue return.
4. Finally, adoption becomes so widespread the ad type becomes an increasingly invisible commodity and revenue eventually declines to almost nothing eg banner ads

Understanding the connection between the hype dynamics and users acceptance across multiple ad types can be the real key to consistently high revenue returns for app developers and publishers.

So, what are the practical learnings?

One, new ad types do deliver well in their first releases and early adopters can gain a lot. These developers exploit our natural curiosity to new things, so seeking out and testing new ad types is surely a way to revenue performance.

Two, beware of fighting against the curve. As the new technology moves beyond stage two, ad networks will continuously optimize the ad type to reignite the hype revenue and move it into stage three. However, it is at this stage that less than desirable practices are also likely to emerge as ad type implementer attempts to prolong the hype instead of moving the technology into productivity stage.

For the bigger picture, we can become much more sophisticated with our ad technology usage in several ways.

Savvy developers can recognizing the connection of the hype cycle with user acceptance, and in stage two introduce user friendly options with their ad type integrations to ensure the long term relationships with users and ride the hype wave successfully to the ‘production reality’.

In the final stage of the ad type lifecycle recognizing the emerging commodity effect gives you time to ensure you have a new strategy already in play. We can liken it to surfing a set of waves rather than crashing with the first wave’s drop.

Finally, the hype cycle/user acceptance connection teaches us that ad technologies are not immune to the hype curve and that an effective strategy is to combine different ad types at different phases in the hype cycle. This way you can benefit from the hype, not be too affected by the inevitable crash, and continue to maximizing your returns through the (hopefully) long productivity stage.

Much has already been written about the amazing amount Facebook is paying for Instagram. As a single app company with minimal monetization, $1 billion may seem extreme, especially given that the company had valued itself at about $500m. I am not, however, going to focus on the merits of Facebook’s decision, but rather the volumes that the decision tells us regarding Facebook’s current state of play, its strategy and vision for mobile – and what we can infer it believes is the future for www.

Let’s start with what we know.

Apps usage has surpassed web consumption in the past 12 month. According to a recent report, time spent on apps per day increased by almost 90% in the 12 months to June ’11 to 81 minutes per day in the US. In the same time, web consumption increased by 15% to 74 minutes per day.

So apps, and definitely mobile, are important to Facebook’s future strategy. No rocket science there.

It has also been heavily reported that Facebook is desperately trying to find its feet in the mobile market. Its revenue model has been heavily (if not exclusively) geared towards web, and, while its immense popularity has been keeping it relevant in the mobile space, it has not yet found the strategic advantage on mobile that it has on web.

One area that it has, now obviously, tried to change that is with photo sharing. Much of Facebook’s popularity has been as the leader in the massive growth trend of photo sharing. It has become a category killer on web against the incumbents like flickr and picasa. Buying Instagram is effectively killing off the major competitor to its future success on mobile and at the same time cementing it position as the #1 photo sharing community on all forms of digital media.

But the huge amount, $1 billion, tells us a little more.

It is interesting to note that in the same week that Facebook made its announcement, Google for the second consecutive quarter, reported a decline in “Cost Per Click” rates. The fact that this shift is due to the shift in traffic from desktop to mobile is obvious.

Interestingly, George Colony from Forrester Research, in his presentation at LeWeb 2011, place Google really low in its analysis of the strength of the company’s current strategy and offering versus where it sees the market heading. Its ad formats still based on what worked on the web and will diminish in appeal on mobile where the technology allows for more innovation and sophistication (as we at LeadBolt are offering). It recognized Google has Android, but only 3% of its revenue is derived from it.

So where are Forrester and Facebook seeing the market heading?

Well, Colony titled part of his presentation “Death of the Web” and the magnitude of Facebook’s outlay would indicate that they agree.

Forrester’s prediction is centered around the fact that processing power and storage are growing at faster rates than the network. So in other words, the power of the device is increasing at a faster rate than we are able to utilize through the web. An example cited is Xbox. Its technology is too advanced to access in the cloud so it uses native technology while providing connectivity through the internet (which is different to the web).

Let’s be clear, Internet and web are not the same thing. The web is the current pervasive technology layer connecting us to the internet. Just as other technologies preceded the web, Apps are gearing up to replace it as they allow us to fully utilize the advancements in power and technology. Facebook is clearly betting on this change.

I recently read with great astonishment, that Apple’s website is not optimized for mobile browsing. Not one to believe anything I read, I quickly pulled out my iPhone and low and behold – the irony!

I will admit, while being a little surprised that Apple does not have a mobile optimized site, I am not the least bit surprised when other websites don’t (some of our competitors in the Mobile Advertising market do not). In fact the opposite is true – I am pleasantly surprised when they do.

According to a recent report, only 20% of the FTSE100 corporate websites currently provide support for mobile devices. How can this be acceptable?

Mobiles and smartphones in particular, are quickly becoming our primary content consumption devices. Research shows that accessing the web through mobile devices has consistently doubled every year since 2009 and by 2014, will overtake desktop internet usage. Morgan Stanley predicts that in the next five years more people will connect to the Internet via mobile than on a PC.

So not only are the majority of companies not catering to the habits of their users and not keeping up with changing trends, they are also causing their business to under perform.

Research by Aberdeen Group shows that companies that provide mobile-optimized content outperform those that don’t by 80% in terms of year-over-year increase in web traffic and achieve a 55% greater year-over year increase in the number of repeat visitors. And different research predicts that companies with properly mobile-optimized sites, can increase sales by 12%.

Now days, most companies have adopted digital marketing into their overall marketing strategy – from sending out email newsletters to online search campaigns. However, the market has moved so quickly, that companies without mobile sites, are again behind the trend.

Between 15 – 25% (and in some industries up to 50%) of people read their emails on a mobile device. That means that if you have links to offers or news within those emails, your customers are being taken to sites that are not optimized for the device they are viewing them on.

And mobile search already accounts for over 12% of total search and more than 50% of all “local” searches are done from a mobile device. Just imagine the lost opportunity that this represents with so few companies able to fully utilize this traffic.

So why have companies been so slow at implementing mobile sites?

Fears of additional cost or the management of multiple sites are often quoted as reasons for not implementing mobile sites. However, mobile sites are not meant to be identical to an existing website. They are meant to be “slimmed down” versions that are easy to navigate on the smaller format while still be a great showcase for the business.

And the cost of implementing these sites can be small, especially relative to the lost opportunity of not having a mobile site. And for companies that don’t have the in-house resources, there are a multitude of companies and software solutions to turn existing sites into a mobile optimized site.

The reality is, with so many companies still struggling to implement effective web strategies, this is just another area of digital marketing where they are going to lag even further behind the market. For those that have begun or have already implemented their mobile strategies – the market will be their oyster.

Most internet ad professionals quickly learn to get their heads around the key metrics that drive their industry and get them so much kudos at dinner parties and the like. I am of course talking about cost per mille (CPM), cost per click (CPC), click through rate (CTR), and percentage conversions rates.

As the industry has matured, we are able to benchmark performance against the increasing amount of statistics that are now available in the display advertising industry…

Google, in their online report portal, show that the best performing click through rate across all ad sizes 0.26% (that is one click for every 385 people who view the ad). For banner sizes that generally appear in mobile campaigns the click through rates are much lower. Google quotes that 300×250 banners have a 0.1% CTR and  468×60 banners have a 0.05% CTR (1 click for every 2,000 views). Admob also a Google company is on the record as clarifying their click through rate as 0.5 -1% average.

Now what gets me all fired up is that these appalling click through rates are accepted as industry standard. Can you manage organizing a party and only 1 of your 385 guest turned up. You wouldn’t be telling yourself that the invite process produced a great result. Yet, we accept these results for traditional display advertising. It is akin to inviting people to your party via smoke signals when newer and better methods are already available.

Surely we should be doing something smarter?

I’m pleased to note that things are moving and mindsets are moving as well.

It’s common sense. What’s the point of an advertising campaign that broadcasts to people who aren’t particularly interested? The advent of digital advertising was supposed to be able take us away from the mass media wastage of TV and the like, where you blast millions of people with your message and hope it appeals to a handful. It is the interactive nature of digital media that is supposed to help advertisers target, entertain and most importantly, engage the consumer with meaningful and welcome messages.

So where is traditional display advertising going wrong? Click through rates tell us a lot about user interest and engagement. The current rates tell us that this traditional form of advertising is ignoring a major aspect of digital advertising,  the user experience.

“Smart advertising” is the next stage in display advertising. It is integrated in its placement, in that it appears in accordance with user need or action. It is directly addressing the user experience – and the results are dramatic.

Great examples include overlays or functionally integrated app searches(such as our App Wall) that are available when users need them and don’t crowd the app experience as traditional display advertising does. Rich media is coming of age and provides an immersive experience that will further enhance and re-captivate advertising audiences.

At LeadBolt we have been promoting high performance ad types for some time and I see that other innovative mobile advertising companies are getting traction doing the same.

The rewards are there, in this world, savvy advertisers are achieving click through rates that are a 15 – 30 times improvement on Google’s display statistics.

I’m sure the industry can be smarter and users will be the winners.