Google’s 2nd quarter earnings came out last week and took analysts and investors by surprise. Earnings per share were less than expected, and it got the blogosphere buzzing. Would mobile monetization turn out to be the David that took down the Google Goliath?
There are plenty of reasons why some may have overreacted to the minor dip in Google stock. But the unexpected earnings miss prompted questions.
Advertising startup inadco would beg to differ. Its founder, James Walker, thinks he has the answer to mobile monetization (or at least one of the answers). Inadco creates ads that facilitate “two-way communications between consumers and marketers” in the native application.
Whatever that means. If you’re like me, your eyes glaze over and your brain stops functioning when you come across advertising jargon.
Inadco founder James Walker very patiently walked me through what his company does twenty times. We talked about “cost-per-click” and “demand capture” and “sales funnels” until the poor man was blue in the face. I still didn’t get it, until I pulled up an inadco ad on Yahoo… and then it clicked. Showing works better than telling. Here’s an Esurance inadco ad – can you spot why it’s unique?
Inadco allows users to interact with ads in a variety of ways, without leaving the program they encountered the ad on (such as Facebook, Twitter, or Yahoo). The types of interaction vary depending on the ad itself. Users might be able to enter their email address if they want more information sent to them. They could put in how many cars they have and get an insurance quote. They could even pick from a drop-down menu what type of care provider they need and what zip code they live in (see care.com example below).
Inadco isn’t the only company out there doing demand capture, but it prides itself on being multi-platform. Inadco form ads work on mobile or desktop, social (Twitter/FB), search (Yahoo), or display (alongside email or other websites).
This is helpful for advertisers because they’re able to “capture demand” i.e. gauge what consumers are interested in, where they live, and how to reach them. It’s helpful for consumers who want more information but don’t want to leave the site they’re already on, particularly when they’re browsing on their smartphone.
US Venture Partners’ John Hadl said advertisers are willing to pay more for this type of “high value” interaction that comes from a consumer providing information. He’s not the only one who feels that way, and inadco raised an $11 million Series B round a few weeks ago from USVP and Redpoint Ventures.
Part of the reason Google’s earnings this quarter were below expectations was because mobile ads aren’t as profitable as desktop ads (where Google excels). Google’s “cost-per-click” rate — the amount of money it gets when a consumer clicks an ad – dipped 6 percent this quarter.
On one recent story about Google’s earnings miss, a commenter named webjoe had an insightful reaction.
“It’s still hard to “sign up” or “buy” something from your mobile phone in one click – and when that ability comes, (Facebook Payment? Amazon Pay? Google Checkout? Square? New Startup?) and consumer behavior shifts to that experience, will mobile ads be valued closer to web/search ads[?]“
To me that connection between ad monetization and consumer ease makes sense, but I also know I’m not the target audience for online ads. I can’t remember ever clicking on an ad to learn more about the product. I’m more the type to accidentally hit ads while scrolling through my phone on a story deadline and cursing as I get redirected out of whatever I was reading. If I’m ever going to try to “interact” with an ad it better be as easy as hailing a Sidecar or dialing into a conference call with MobileDay. One click and I’m done.
I asked Walker if one-click buying was in inadco’s future. His answer to me was basically — one step at a time. “We see 25 to 30 percent of the overall market is helping marketers collect information,” Walker said. He didn’t discount the possibility of incorporating one click buying into inadco ads in the future. For now though, he’s focusing on capturing demand. He said inadco is exploring ways to make it easier for people to enter their contact information in the forms. Its focus is the consumer – if inadco reduces friction for the user, Walker believes the advertising dollars will follow.
Investor Hadl says he’s hoping inadco will use their Series B funding to solve exactly that sort of problem. “Less steps is critical in mobile — it’s hard to type stuff in, and we need big companies like inadco that can figure out better and more innovative ways.”