Using Smartphone in the Street

Bill Gross is one of the forefathers of intent-based digital advertising, having pioneered paid search advertising as the founder Overture (which sold to Yahoo in 2003 for $1.63 billion). A decade later, Gross, now the CEO of UberMedia, is looking to create the same kind of disruption with a new mobile advertising platform called UberAds that utilizes social signals and location data for ad targeting.

The magic of search ads is that they are based on intent and highly contextual. If you are searching for something, then an ad for that product or service isn’t a nuisance, but rather a potential solution to your problem. Other ad models have yet to replicate this level of relevancy. While not making it all the way to intent, UberAds offers one of the more compelling mobile targeting solutions I’ve seen and has seen click through rate increases that validate its approach.

For example, if you are an action movie fan who follows Tom Cruise on both Facebook and Twitter, and then checks into a restaurant next to a movie theater on Foursquare, a mobile ad that offers discounts to the new Mission Impossible movie for a show that begins in an hour is highly targeted and likely to be well-received. The same is true for an ad for a new Chevy delivered to a consumer who has visited four American car dealerships within the last week (as indicated by location or check-in data).

Everyone has their own recipe for targeting, including Facebook who is likely the leader in this category. And despite the having the best user identity and intent data, the social network is still getting underwhelming CPMs (impression-based advertising rates) compared to paid search search. But for situations when explicit intent is unavailable, precision targeting is the next best thing.

Gross tells me that his team began working on UberAds in response to the famous Mary Meeker slide illustrating the gap between the time spent on mobile devices, 10 percent of all browsing time, and the amount of digital advertising dollars being allocated to these platforms, one percent – the numbers have since grown to 15 percent and 1.5 percent, according to Gross, but the gap has yet to narrow. With limited screen real estate and limited attention spans, mobile ads need to be more relevant and more highly-targeted than in other instances. UberAds have shown they are effective.

In beta testing, UberAds achieved a 5.7 percent click-through-rate (CTR) for an entertainment TV channel launching a sitcom by targeting fans of comedy, celebrity gossip, and reality TV. The new platform also achieved a 4.1 percent CTR for a sportswear brand launching a new athletic shoe designed by a star basketball player by targeting consumers in Manhattan and presenting a dynamic countdown of the number of steps to the nearest retailer carrying the shoes. These rates are roughly 4.7 to 6.5 times greater than the standard mobile display CTRs of 0.88 percent.

To achieve these high CTRs, UberAds has combined three different strategies. The first is using public social media data from Twitter, Instagram, Pinterest, Foursquare, Yelp, and (where privacy settings allow) Facebook to derive intent. The company has built a team of data scientists, many from nearby Caltech, to dissect all this data and use it to inform ad-targeting. Combined with the time and location data available on a smartphone, and UberAds become some highly relevant.

The next improvement is in time optimization. Currently, when buying mobile ads on AdMob or another platform, advertisers typically have two choices: run the ads as quickly as possible, or space them evenly throughout the day. UberAds, on the other hand allows ads to be targeted to the minute – most others allow hourly targeting at best.

Taking this a step further, UberMedia provides reporting to the millisecond, whereas competing platforms only deliver analytics with a multi-hour delay. By measuring what is working in real-time, advertisers can be more effective in their decision making. UberAds automated time-optimization has shown a three times improvement in CTRs in early testing, according to the company. Gross admits that this advantage is likely to be copied rather quickly by the competition, but given the architectural changes required, he anticipates maintaining this advantage for at least a year.

Finally, UberAds utilizes dynamic ad units that resize and optimize based on the device, location, time, and other factors. For example, an ad may read, “The next showing of Mission Impossible starts in 25 minutes at the Regal Cinema 1.2 miles from your current location. Buy Tickets Now!,” with the time and distance updating dynamically. The ad would also look different on a 4 inch iPhone, a 5.5 inch Samsung Galaxy Note II, an 8 inch iPad Mini, and an 11 inch iPad. UberMedia did not invent dynamic creative – Google and others offer similar options – but by combining it with its intent and time optimization tools, the company creates a rather compelling package.

As great as these tools are for advertisers and brands, all this ad targeting runs the risk of upsetting privacy conscious consumers, despite the fact that UberAds work their magic without any personally identifiable information. Advertisers never know that “John Smith is around the corner from the theater right now,” but instead only know that “a big Angelina Jolie fan is around the corner from the theater.” And if the ads are well targeted and relevant, then they should be viewed as helpful, rather than intrusive.

Nonetheless, these reassurances will provide little comfort to users who feel that their phone and brand advertisers are spying on their every move. Gross points to research indicating that 38 percent of smartphone users want to receive location based advertising, adding that this number is rising steadily.  It is likely inevitable that in the future we will all be highly targeted by our every move, act, and thought and grow comfortable with this fact. But that doesn’t mean that the majority of consumers are ready for that reality today. UberMedia will need to walk a fine line in the early phases of rolling out UberAds, so as not to be too jarring.

Through its partnerships with 10 mobile ad publishers, UberMedia can reach 55 million Americans currently, a number Gross expects to increase to 250 million across 100 publishers by year’s end. the company has been beta testing the UberAds platform for six months with its internal advertisers and for one month externally. Over that time, it has run campaigns for the Hobbit and Oblivion movie launches, as well as multiple TV launches. Today, the platform is open to the public. Those wishing to run campaigns of less than $1,000 can use self-serve options, while the company will do custom deployments for larger buyers.

For as long as there have been mobile devices capable of displaying ads, the industry has been in search of a more effective solution for reaching consumers at the moment of decision. With more advertising dollars going digital every day, and more time being spent on mobile devices than ever before, likely – but not inevitable – that these two trends eventually collide. But it takes a mobile ad product capable of delivering the results demanded by advertisers. UberAds appears to be exactly what Dr. Meeker ordered.