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The Future, or a Fleeting Fad? Evaluating the Merits of the Mobile Ad

By Jesse Butts | August 20, 2012

Whenever an entrepreneur has become proficient in one aspect of Internet marketing, it’s time to hit the books to learn the latest online advertising trend. And now is the time to register for Mobile Ads 101 before your competition looks through the course catalog.

Before devoting the time and energy to mastering mobile ads, this primer can help you get a handle on mobile ads and determine if they’re worth trying in your business. 

The Basics of Mobile Ads

A mobile ad, like an online ad, comes in several key forms. Some are graphical, some are text-based and some focus on content rather than a traditional call-to-action, such as calling a telephone number or clicking a link. 

Measuring the performance of mobile ads is similar to any online ad. You’ll want to pay particular attention a few key measurements:

  • click-through rate (CTR) — The average number of times your ad is clicked per hundred ad impressions (how often the ad is displayed).
  • cost per click (CPC) — how much you pay every time your ad is clicked. In most cases, the higher your click-through rate, the lower your cost per click.
  • conversion rate — how many people who click your ad complete the action you intend (usually completing a form on a landing page).

Most mobile ads appear in apps or in mobile searches, including map searches. At this juncture, mobile ads may sound nearly identical to desktop online ads with the exception of the platform. But they are, in reality, world wide webs apart.

The limited viewing space smartphones and tablets afford your targeted customers drastically reduces the amount of text and graphics available for mobile ads. While many marketers and small business owners frequently take pride in their ability to do more with less, developing enticing mobile ads can pose a challenge.

In addition to having less space to work with, mobile advertising platforms offer far fewer ad placements than their desktop counterparts. For example, the average website can easily host three or four ads per page:

  • a banner ad at the top
  • a skyscraper ad on the right side
  • a small box ad beneath the skyscraper
  • text ads within the content

When using a smartphone or tablet, that number of ads wouldn’t leave any room for any content. And the less space consumers have to view something, the less they’re willing to wade through ads.

Mobile ads clearly have their limitations, but they do offer unique advantages over desktop online ads. The most important, by far, is location-based advertising. For example, as smartphone users approach your business, your ad for 10 percent off for first-time customers could pop up. With location-based advertising, you can adapt to the way most consumers find products and services.

The Growing Popularity of Mobile Ads

Ads have long been a ubiquitous part of the online experience, especially since free social media services like Facebook and Twitter needed to prove profitability to investors by including ads and “sponsored content.” With the proliferation of smartphones and tablets—coupled with a culture that favors apps over Web browsing—mobile ads are likely on their way to becoming a must-have in your online advertising mix.

According to nationwide sales and activation figures, close to 50 percent of Americans now own smartphones. A recent Martin’s Software State of Mobile Search report predicts mobile search will surpass desktop search by 2015, which sounds likely considering mobile searches increased by 400 percent in 2011 according to Google.

When it comes to profitability for the mobile ad platforms, there’s no indication anyone is going to pull the plug. A Cowen analyst recently predicted that Google will amass $5.8 billion in mobile ad revenue for 2012. At that prediction, mobile ads will account for 25 percent of all Google PPC (pay per click) programs.

Will mobile ads continue to make headway? Many ad agencies and analysts float around a figure that mobile advertising will be a $50 billion business by 2015. Though that number has its critics, it’s clear that mobile ads aren’t likely to fade into obscurity anytime soon.

Mobile Ads Compared to Online Ads

Upon their debut, many marketers and business owners dismissed mobile ads. Now the tune has changed.

According to recent Venturebeat reports, smartphone PPC ads boast a higher click-through rate and lowest cost when pitted against desktop and tablet PPC ads. Thanks to the business world’s hesitancy to embrace mobile ads, they’re reportedly going for rates well below their value.

Of course, the mobile platform you choose will play a large role in how your mobile ads perform. Many apps produce little return for advertisers. Facebook, on the other hand, is proving itself as an up-and-coming mobile ads powerhouse.

A Techcrunch report revealed that Facebook desktop ads, including sidebars and “Sponsored Stories,” achieved a 0.083 percent click-through rate (CTR) at a $0.88 cost per conversion (CPC). Facebook mobile Sponsored Stories, in comparison, earned a 1.14 percent CTR at a $0.86 CPC. That equates to Facebook mobile Sponsored Stories achieving 13.7 times the CTR desktop ads did—and, most importantly, at a cheaper price. All of this data came before Facebook’s new mobile app ad system, which is in testing as of early August 2012.

Google’s mobile ad platform is also proving itself a good investment for advertisers. In 2011, T-Mobile experimented with Google’s mobile search ads. In a month’s time, T-Mobile’s Google mobile ads campaign led 162,000 people to T-Mobile’s website. These Google mobile search ads capitalized on the location feature. The results? A 13 percent CTR and 20,000 phone calls to stores.

Since T-Mobile’s experiment, Google has improved its mobile search ads function with:

  • More prominently placed calls to action such as “get directions” and “click to call.”
  • A “hyperlocal marker” that indicates how close a consumer is to your business.

Facebook and Google mobile ads may sound like the salvation to your sales woes. But before you launch your mobile ads on these, or any, platforms, consider the disadvantages.

The Potential Risks of Mobile Ads

Unfortunately, large companies and entrepreneurs alike have treated mobile ads like traditional online ads. The temptation to condense the contents of a traditional ad into a mobile leads to poor results.

Unless you’re willing to take a different approach to your mobile ads—or ensure your advertising agency understands mobile ads—your efforts to repurpose online ads will likely become a waste.

Of course, the limited size means limited options, a shortcoming a T-Mobile marketer pointed out. And rather than clicking on an ad for a nearby business, many consumers will simply cut out the middle man and visit that business directly once they see the search results. Without clicks and conversions, you can’t effectively gauge the efficacy of your mobile campaign, essentially transforming your mobile ad lead-generation program into an awareness campaign.

Considering their relatively recent debut, mobile ads present potential disadvantages that are not quite yet understood. Critics point out that mobile ads, even when displayed in the most popular apps, can easily be perceived as more obtrusive than traditional online ads. A banner or skyscraper ad, they argue, doesn't intrude upon the viewing experience like a mobile ad can.

The opportunities presented by location-based advertising may, in the near future, be viewed as the ultimate annoyance in advertising. What storefront owners see as an ingenious way to promote their wares may be perceived by consumers as spam for simply walking down the street.

Are Mobile Ads Right For Your Business?

Mobile ads present several disadvantages that must be weighed against the potential benefits. Before incorporating mobile ads into your online marketing mix, determine if they're right for you. After all, if your audience of targeted customers are reluctant to use the apps and maps on smartphones—let alone purchase them—mobile ads would be a waste. 

If you do know—or can make an educated guess—that a sizable portion of your target base is smartphone-savvy, you may have the case for a mobile ads experiment. A mobile ads experiment should be a top priority if your business:

  • includes a storefront open to the general public
  • is in the path of heavy foot traffic
  • targets tech-savvy consumers

Creating Your Mobile Campaigns

If you’re ready to take the plunge into mobile advertising, you’ll most likely want to start on Google and Facebook.

Facebook Mobile Ads. Once you’ve logged in to your Facebook account and created a Facebook page for your business, follow these steps to get started with your mobile ads:

  1. Visit the Ads Creator.
  2. Choose your page.
  3. Decide whether you want to promote your page or a specific post.
  4. Select the “New Ad” option in the “People will see” category.
  5. In the “Choose Your Audience” section, select “Mobile” from in the “Broad Categories” area.
  6. Complete the ad and follow the on-screen instructions.

If you’re more familiar with programming, you can also use try your hand at the Facebook Developers feature.

Google Mobile Ads. Through Google Ads Mobile hub, you can peruse mobile advertising options and start your own mobile ad. To begin:

  1. Visit the Google Ads Mobile hub.
  2. Click the “Get Started” button.
  3. Create an account and follow the on-screen instructions.

You may want to consider contacting the ad sales departments for apps you suspect your target customers may rely on, such as local or national news sources or community-based review apps.

Like any online advertising test, be sure to run it for roughly 90 days. This timeframe should provide enough data for you to determine how to proceed with your mobile ads. If possible, test more than one platform simultaneously to help you gauge whether mobile ads in general or in a specific venue are working or wasting your money.


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