With MoPub deal, Twitter combines basic tools with mobile ads that actually work
MoPub, which Twitter purchased yesterday for $300 million to $350 million, was one of the more promising mobile ad companies out there.
But here's how early days we are in mobile advertising: MoPub's business was not much more than tools that publishers and advertisers had built for the Web -- real time bidding, ad optimization, ad serving, for standard display ads -- refashioned for mobile.
Granted, there is sophisticated tech behind bringing things like real-time bidding to mobile. Certainly the problem MoPub and others solve is not an easy one. But it's also not the revolution we were promised, either.
MoPub's head of strategy, Paul Gelb, once told me that he believed mobile advertising would overtake TV advertising. That's a statement that most TV executives find LOL-worthy. With good reason -- a quick glance at the scoreboard shows that TV is still bringing in around double that of all digital advertising, including video, display, search and mobile combined.
And yet, if you go by time spent alone, it doesn't seem far off. A year ago I wrote:
Mobile is certainly winning the attention war. Smartphone adoption is the fastest in history. Mobile devices are more popular than computers. Time spent on mobile is on track to outpace all other forms of media. And in many emerging markets, mobile is the only way users have every encountered the Web.And yet doesn't this exciting new medium of mobile require a whole new way of thinking about ads?
We learned this lesson the hard way in the early days of media consumption moving from print to the Web. Publishers saw the shift in attention and just assumed that where the eyeballs would go, the ad dollars would follow. They didn't try to innovate much around the real-estate type of ad unit that print had offered. (Or they occasionally did and it sucked. See in-line linking, interstitials, pop-ups.)
Now, 15 to 20 years later, everyone loathes the most popular form of digital advertising, the annoying, ineffective banner ad. Most draw a direct correlation between that hatred and the fact that online ad spend is not yet commensurate with time spent online.
From a year ago again:
But from an ad spend perspective, not so much. Last year the category brought in around $1.6 billion in ad revenue; this year it’s expected to be closer to $3 billion. That’s not going to come close to TV’s $70-some billion, particularly if the ad units continue to look like smaller versions of the crappy display ads everyone already knows and hates.(Note: IAB's final number of 2012 mobile ad spend was $3.4 billion, out of a total $36.6 billion in digital ad spend.)
So is the media world going to make the same mistake with mobile? Are they just going to port the same tools and the same ineffective (or trivially effective) ad tools to mobile?
The answer, for the majority of mobile ad-tech companies thus far, has been "YEP!"
If all other forms of digital advertising haven't yet overtaken the all-powerful (and immeasurable) 30-second TV spot, then why should we think that using those same tools on mobile would be any different?
No matter. Facebook and Twitter are racing to prove to the world they can make it happen. They've been selling their native ad units on mobile, and it has actually worked. Facebook now captures 15.8 percent of all mobile ad spend. Meanwhile Twitter says on some days mobile is a bigger revenue-driver than desktop. And what kind of unique, mobile-first ad units do Facebook and Twitter serve to their huge populations of mobile users? The same damn ones they serve on desktop. Twitter and Facebook's mobile ads are not particularly mobile-first at all.
And yet, Facebook and Twitter are both pulling huge mobile ad buys. For most sophisticated brands, buying on each of these networks has become the cost of doing business. My theory on why they have succeeded is that, while Facebook and Twitter's ad units were first developed for desktop, their unique social and personalized qualities still translate to mobile more effectively than a standard banner ad. Facebook and Twitter's desktop units weren't originally designed for mobile, but they just happen to be more mobile-friendly.
Which brings me back to MopPub. In buying MoPub, Twitter has a way to make its ad units, which are more effective than your average mobile ad, easier to buy. It's a good blend of ad units that seem to be working combined with the necessary nuts-and-bolts tools to supercharge buying.
And even if that fails, Twitter will still benefit from adding MoPub's $100 million in existing revenue to its bottom line, which the company earns from selling ads for other mobile publishers. For a company preparing to go public (…), the added volume is a big boost.
[Image via Wikimedia]