Advertising to mobile devices is intriguing to many advertisers because of the promise of reaching a highly targeted audience on the move. Much has been written about the number of wireless subscribers (230 million in the U.S.), the personal nature of a mobile phone and the potential for location based advertising. Here’s the dilemma. Maybe best explained by Tom Burgess – CEO Third Screen Media in a recent interview with Behavioral Insider [link]
BI: What is the current challenge in ramping up more targeted campaigns? Burgess: Once you start adding those data points the challenge is that, even if you have all sorts of behavioral detail and deeply rich demographic profiles to combine with them, it doesn’t make that much difference to a large advertiser. Not when you’re only talking about a universe of 2 or 3 million impressions. The problem is that for big advertisers testing mobile up till now, the reach available hasn’t really warranted the cost of targeting. BI: Can you elaborate? Burgess: The tradeoff that mobile advertisers have had to accept, and it’s been kind of a Catch-22, is that the more targeting capability that comes in on mobile, the smaller the reach, because there’s been such a limited universe of targetable users. If you start with an entire universe of just five or 10 million people a month and start narrowing that down, soon you’re down to a target of a million or two. Scale comes when you can extend reach across the silos of individual carriers and publishers. When you have tens and hundreds of millions of transactions across multiple carriers, all of a sudden really scaled targeting becomes worthwhile.
Here’s a good real life example. I was looking at a targeted political campaign using ads on WAP pages for a recent race. The political consultant had a list of 76,000 voters they wanted to hit. The carrier we were talking with has roughly a third of the market and about 30% of those are data users: Here’s the math:
Carrier’s Share – 25,080
Data Users – 7,524 (this is the addressable market)
Response rate – assume a generous 5% = 376 voters
That’s less than 1/2 of a percent of the voters targeted! Hard to make sense out of it in an ad buy. When we get to a point where most or all of the 76,000 voters can be addressed then this kind of targeting will begin to make sense. Now, however the political campaign’s ad dollars will go to something with a larger reach like direct mail, phone messages and TV ads.
We make more sense out of this when we go with a national advertiser covering 230 million mobile subscribers. Then the numbers begin to look attractive, but it leaves the little guys out and really hurts the concept of personalization that the mobile device offers.