What's holding mobile advertising back?

A version of this piece was published in Marketing in 2008


In the digital world as we all know, every year is going to be the year of the mobile. The networks haven’t forgotten the £22 billion spent on 3G licences, and they’d love to see the mobile ad market take off like the web did – growing almost 14,000% since 1998.

With estimates of the current market varying between £10m and £20m, if there’s one thing most people agree, it’s that there’s not a lot to go around.

But with flat-rate data tariffs and usable devices like the iPhone well established, it looks like some of the key obstacles are starting to disappear. Though whilst many observers feel mobile is set to take off at last, their optimism may still be premature.

Because whilst the industry’s focus remains on the high-level reasons why mobile has been slow to take off (consumer understanding, technology uptake) there are five simple hygiene factors that are blocking progress right now – exactly as they blocked progress ten years ago for web advertising. Fix these, and the market could be ready to go – fail to address them, and it’ll be pushing water uphill for the foreseeable future.

First, standardising banner ads. Before the IAB standardised banner sizes for the web, production costs often outstripped media – often making online campaigns uneconomic. Resolving this helped online advertising become a manageable proposition, rather than a production black hole – and mobile really needs to fix this. Although the Mobile Marketing Association published some standards in April, uptake has been very slow, and this area is still confusing and expensive.

Second, audience size. The lack of critical mass in the mobile market continues to be an obstacle, with mobile campaigns remaining too small for many agencies to be able to work on them. On the web, this was cured by networks forming to aggregate media sales into buyably large chunks. In mobile, we’ve seen some progress recently with Nokia forming its own sales network, but the market is still too fragmented and will benefit from further consolidation of sales channels.

Third, pricing. If you’re selling media in mobile you’re not going to like this, and you’ll probably say that I would say this. So here goes anyway. You’re too expensive. Right now, cost per thousands in mobile are absurdly high – supported more by ‘experimentation’ budgets than by real commercial demand. Coupled with high production costs, mobile advertising struggles to be cost-effective – certainly next to the web.

There’s every reason to believe that rates should be high in the future (quality of audience, interaction, location) – but right now there’s no research to justify it, and rates are going to have to come down before they can go up.

Fourth, and this is just the order they spring to mind, third party adserving. It’s hard to overemphasise how important this is. For web advertising it is fundamental to agencies’ ability to do their jobs. It enables them to distribute advertising copy (without needing to check manually that it’s running correctly), to target it at individuals and to measure success.

Without it, web advertising would never have proved the case for its cost-effectiveness to advertisers – and just as fundamentally, agencies would never be able to manage the administration that derives from running billions of banners every month.

But adserving still doesn’t exist in any meaningful sense in mobile. And until it does, mobile advertising will remain a largely manual process – restricted both in scale and transparency.

Finally, surely the easiest to fix. Just as with web advertising ten years ago, delivery is terrible. Campaigns start late, finish late and fail to deliver. Without these basics, the marketing community is never going to take mobile up – no matter how attractive the audience.

There isn’t one of these five factors that couldn’t be fixed. But if the mobile business is going to enjoy the boom it’s been looking forward to for so long, it needs to get the basics right first.

Will all media be digital eventually?

A version of this piece was published in Marketing in 2008


For the last eleven years, I’ve sought out my respite from the digital maelstrom on a small Greek island.

Just a few years ago, there was no cellphone coverage, getting on the internet required you to dismantle the phone socket, twisting the wires together and holding them in place with sellotape (or band-aid on one occasion), and the one internet café on the island offered two computers sharing one ponderous dialup connection.

It was charming, idiosyncratic, picturesque. After a few days, it was pretty annoying.

But arriving there last week, it’s all change. Instead of upgrading the phone system (still rather antiquated), they’ve gone straight to wifi. Across the island, laptops can be used pretty much anywhere (though the sand remains a problem) and it’s brought the global media village crashing in.

Islanders who have spent their lives getting the papers a day late (a week late in winter) are now keeping facebook profiles. They’re downloading episodes of Lost. They’re video conferencing on Skype. They’re more online than we are.

Their media world has changed beyond recognition, and it’s not been a gradual process.

It was a reminder of what we’ve been through in the last ten years, as email, instant messenger, online shopping, Google, eBay, iPlayer have reshaped our access to information, to media and to each other.

But it was also a reminder that this change continues unabated in lead markets like the UK just as less developed countries catch up.

Last week’s Washington Post carried an interview with Steve Ballmer, Microsoft’s ever ebullient CEO, who predicted that by 2018, all media would be delivered via the internet. “There will be no newspapers, no magazines that are delivered in paper form. Everything gets delivered in an electronic form.”

Of course, we can all see why Microsoft would like it to be so. But how realistic is this?

Already, cinema is transitioning to digital, fundamentally changing the distribution economics of the medium and enabling more choice in cinemas, as well as altering the way advertising can be delivered and targeted.

Internet radio has been around for years, but ironically it’s wireless that’s causing a new surge in popularity as portable internet radios that connect through a domestic wifi network become common.

Viacom is wiring the London Underground for digital advertising, launching cross-track HD projection later this year, and anyone who’s ever visited Japan or South Korea will have seen the explosion in massive digital billboards there.

But it’s print and TV that are the biggest prizes. Ballmer complains that TV is insufficiently interactive (his son plays Xbox games through the night with people around the world, and TV just isn’t that engaging), and that it fails to offer sufficiently personalised content – he’d like to watch his high-school football matches from back in Detroit – he knows they’re videoed, but he’d love to watch them online.

He’s right. The internet is raising the bar; changing consumers’ expectations of what other media will deliver. In time, it will be consumer demand, not technological change, that will make TV an internet delivered medium. Technology is the enabler, but it will be consumers that will decide – and no matter what the current establishment might hope for, TV will be a massively more attractive medium when consumers can control their consumption (as PVRs show).

Which leaves print. Whilst the convenience and indestructability of paper will ensure it’s around for a long time yet, the economics of printing relies on volume. But as electronic media eat away at that volume, offering up-to-date news, searchability and multimedia, there will come a tipping point where it simply becomes uneconomic to use paper.

Even on a small Greek island, the media world now is almost unrecognisable from ten years ago. As Ballmer cautions, it’s not really important whether digital will dominate in 10, 8 or 14 years, the point is that it is inexorably replacing other media as the means of distribution – and that process isn’t slowing down, it’s accelerating.

Let a thousand communities bloom

A version of this piece was published in Marketing in 2008


Every time disaster strikes a local area, we hear about the “sense of shock in the community” and the “anger in the local community”. “Community leaders” we hear, are pressing for action. So what is this “Community”?

Maybe you live in Albert Square or Coronation Street, and know all the people who live around you. But I don’t (and I suspect most people don’t), and I’m not really aware of a community.

Cynical maybe, but I always suspected this was just a part of the journalist’s lexicon – they’d perhaps spoken to a couple of people on the street, and somehow “community feeling” sounds more authoritative, more rigorously researched than “a bloke in a pub told me”.

People are thrust together in local areas, brought together by economic factors and accidents of birth and it seems to me are unlikely to share interests with one another, except perhaps by chance.

Which is what makes community on the internet such an exciting phenomenon.

Hundreds of millions of people across the globe participate in real communities, online. They may never have met the people they talk to, but these places are often more real and relevant to them than their local community.

Drawn together by interest, people of all ages are taking part.

Stardoll (a site I’ve written about before) is a tween girl website – aimed at 9-13’s and has 60 million registered users – 8 million of who use the site regularly. Like a virtual paper doll, users can buy clothes (using Stardollars of course) for their dolls and dress them as they like, using clothes from DKNY and Sephora as well as Stardoll’s own lines.

Celebrities like Heidi Klum, Hilary Duff and Avril Lavigne all have deals to have lookalike dolls in the site that users can collect, and some fans spend two hours a day on the site.

This is primarily a solo activity amongst younger users, but as they get to 10, they start to use it to chat with each other, and as one user puts it “you can have friends you don’t know, but you’re really close to them”.

Facebook is probably the best known of the community sites, with the Groups function allowing anyone to set up a special-interest group. Most of these are trivial “I think someone should make Ghostbusters 3” type groups, but many are serious and help people to create and maintain real friendships based around hobbies, professional interests and occasional obsessions.

But Facebook causes expands this out to fundraising for charity – letting any user easily set up a means of donating and encouraging others to follow. From political causes like supporting presidential candidates, to Darfur and global warming, sixty thousand people have created these.

These sites aren’t just a feature of the English-speaking world. Cyworld in Korea has over 90% penetration of 16-24’s, and Hi5 is the most popular social network in Thailand, Portugal and Mexico.

These sites have revolutionised the way we communicate – freeing us from the ties of geography that bind us. They have allowed us to make new friends, and to stay in touch with a closeness that would simply never before have been feasible.

They have changed the shape of conversations – users report that when meeting up with people they stay in contact with via social networks, they cut out that ‘so what have you been up to’ phase and get straight into talking – no preamble or catchup necessary – they already know.

If community ever existed before, it was driven by constraint. Whether you lived in a village in the Cotswolds or a town in Idaho, your neighbours were your community, like it or not.

But now you can choose. Whether your friends live next door, or ten thousand miles away, the internet has, perhaps for the first time in history, allowed us to know the people we like, rather than just like the people we know.

The death of the campaign

A version of this piece was published in Marketing in 2008
  On March 21st 1918, Erich Luderndorff launched the Spring Offensive, the massive attack that was Germany’s bid to end the First World War. In just five hours, the Germans fired over one million shells, and lightly-equipped stormtroopers cut deep swathes into British lines.

But the very speed with which the Germans advanced proved to be their undoing, as they outran their supply lines and ended up eating the very horses on which their progress depended.

Pace is everything, and a firm but flexible plan for how to deploy resources over a period of time to achieve a goal is vital. Using different assets to support each other (as Luderndorff failed to do) was as important then as it is to today’s marketer as a campaign develops.

The need to achieve cut-through from the cluttered media environment leads marketers to concentrate their resources – to focus them on a target group or time of year where their message is most likely to resonate – and accept that at other times of year and to other people, their message will remain unseen.

The production cost of TV advertising adds fuel to this, with the belief that individual executions ‘wear out’ means they have a finite shelf-life.

So the concept of a campaign is almost hard-wired in to the advertiser’s worldview. We gather our resources, make an assault on the consumer, then retreat, count our costs and regroup before having another go. After all, the advertising trade mag is even called Campaign.

But digital is challenging this approach.

The first place this was felt was search. Volumes of queries ebb and flow, driven by seasonality and publicity, but underlying demand is constant. But even though the number of people searching for ‘swimming pool’ might be lower in autumn than in spring, a pool company would still want to pick up these leads. Early activity in search followed the traditional ‘campaign’ format, but practitioners quickly realised that this was preventing them meeting existing demand from consumers – a missed opportunity.

So search tends now to be budgeted for from the bottom up. Rather than setting an amount to spend on marketing in a year, then dividing it up until an amount is reached for each medium, search volumes are modelled through the year, and the required investment set aside to meet this (allowing for extra demand created when TV activity is run).

Similarly, affiliate marketing doesn’t suit a campaign approach. Continuous activity is needed to build relationships with affiliates, and to reflect their outlay behind your brand – whilst they appreciate the impact of campaign-based activity on their own sales, they find it hard to build transaction volumes without investment over time.

But it’s the rise of Web 2.0 that has provided the most recent challenge to the campaign way of thinking.

Thousands of widgets have been created, alongside chatrooms, forums and even entire branded social networks. Of course if the venture is unsuccessful, its owners will risk little by shutting it down. But in all of these instances, marketers have stepped out of campaign-centred thinking and created entities that are long-term.

In many cases consumers have been asked to contribute their time and creativity to participating in the project. They have introduced their friends, created avatars, uploaded photos. They’ve made playlists, scrapbooks and chipped in with their own recipes, hints and tips – which means of course, that they can’t be turned off when marketing decides to move on, without creating inconvenience and resentment from users – turning a positive brand experience into a negative.

So whilst marketers have in the past taken much of their terminology and thinking from the military, perhaps now it’s time to move on. The campaign approach never really reflected how consumers behave, only the constraints of operationalising marketing in traditional media. Digital changes this – and the consequence of this change could be the death of the campaign.

SEO: make your own luck...

A version of this piece was published in Marketing in 2008


Richard Wiseman at the University of Hertfordshire has spent eight years looking at what makes people lucky. We’re not talking rabbits’ feet and avoiding ladders here – he’s devised four principles that determine a person’s likelihood of success.

Some of the veer a little towards the obvious; ‘Maximise your chances of something good happening by creating, noticing and acting on opportunities’ he says – which seems a little like saying you can avoid the misfortune of sinking, by swimming.

But at least we now know that we really do make our own luck. And nowhere is this more true than in natural search.

Search marketing has become a huge business in the UK. We’re Google’s second biggest market, and search alone will represent just under 10% of all UK advertising this year. This might seem big, but the real search market is five times that size.

Because 80% of traffic comes from the natural results – in Google, the listings below and to the left of the paid-for ones.

And these ‘natural’ or ‘organic’ listings can’t be bought. Instead, your position in the rankings is determined by the relevance that the search engine’s algorithm judges your site to have.

So with such a huge volume of traffic to play for, you’d think it’d attract a lot of attention from marketers.

But search engine optimisation (SEO) – the way of manipulating sites to improve their ranking – is fraught with difficulty. Traditionally the unaccountable face of search, it’s gained a reputation for impenetrable jargon (even for digital media) and unethical practice, and many sites don’t realise the influence they can have on their ranking.

Often, marketers simply aren’t aware that SEO is needed, thinking it comes ‘in the box’ when they buy their website. But the skills and preoccupations of web designers are very different to those of SEOs –concerned with design, copy, usability etc., whilst SEOs focus on metadata, tags, redirects and links, and their super-niche skills change constantly to reflect the hyperevolution of search.

In other words, websites are usually designed for people, and many ignore that other vital audience, the spiders that index sites for search engines.

These spiders see websites very differently. Animation and images are often invisible to them, they need clues to help them understand site structure and if you’re not careful they can easily misinterpret your efforts.

Take the 301 Redirect. Lots of sites have both the .co.uk and the .com web address, but only one site – you type in one and get redirected to the other. Google’s spider looks at this, and assumes you’ve got two sites with the same content – a common technique for trying to fool the search engine into ranking you higher. So Google’s algorithm will penalise your site for this – pushing you down the ranking.


The solution is simple. The redirect needs to be a particular type – a 301 Redirect. Doing this makes no difference to users, but tells Google you’ve only got one site – meaning you don’t get penalised.

There are hundreds of techniques like this, and properly implementing them can impact hugely not just on the volume of traffic you can get from search, but on the quality of your listing – one advertiser went from 500 to 23,000 referrals a month on one keyword alone, just by implementing a proper SEO programme.

But nowadays, effective SEO also impacts on paid-for search. Google takes the quality of your landing page into account when determining your ranking in paid search, adjusting the minimum bid downwards if it deems site quality to be high. So a poorly-optimised site might have a minimum bid of 15p, whilst a well optimised site could be 10p – meaning an SEO programme could pay for itself just in savings on paid-for search.

With this much value at stake, we can’t afford to let search happen to us. It’s time for sites to throw out the rabbits’ feet and start making their own luck.

Is digital advertising recession-proof?

A version of this piece was published in Marketing in 2008


News from the sharp end of the financial sector informs us that UK banking lunch budgets are slashed to £54 a head, whilst their German counterparts are barred from expensing trips to brothels. There are probably no more indicative measures for the climate in the city, so it’s safe to assume that it’s tough out there right now.

And whilst everybody’s assiduously avoiding mentioning the ‘R’ word, there’s no doubt that retailers are starting to worry as the credit crunch starts to bite. Share prices in many of the major high street retailers have halved over the last year as the city factors in expected consumer belt-tightening, and retail sales have only been propped up on the high street by deep discounting, with non-food prices falling at their fastest rate for 20 years.

Last time there was a recession, the internet took the full brunt of it. There was carnage as the dotcom bust ripped through the economy, taking hundreds of flaky web companies (and some good ones) with it.

So this time around, is the internet recession-proof, are stock market woes going to hit digital too?

Back in 2001, many internet businesses were still in the pre-profit stages of development. Their markets lacked scale, many of the management teams lacked the experience to weather a storm, and the online advertising market (a key revenue stream for many businesses today) that year was worth just £166m.

Online retail has been the key driver of growth in online advertising, and online retail is a capital intensive business, requiring heavy upfront investment to create a service. This means that scale is critical to businesses online, whether they’re selling airline tickets or insurance policies, because there’s a very low marginal cost of sales.

As the business scales, volume efficiencies develop much faster than in traditional retail where staff and premises are forced to grow in line with expansion.

The pre-profit phase of an online business is a scary place to be. You could be down a lot of money and still waiting for that tipping point to be hit. No wonder many investors pulled the plug back in 2001 – it looked then that the world had lost confidence in the web, and there were real concerns about whether that tipping point could ever be reached.

But this is 2008, and a lot has changed.

For a start, the audience is bigger. 32m people are now online compared to just 18m back in 2001. So any online business now has access to a potential customer base that’s 75% bigger – a crucial scale element that’s driving scale economies into web companies.

And those people now transact more online, 74% agreeing that credit card use is safe online (60% did in 2001). So they’re spending more – the average online shopper’s six monthly spend is now £628, up 37% on 2001.

So there’s a bigger, more economically active audience online now, and they’re spending much more time online than before, driven by broadband penetration that ranks the UK 11th in the world.

All this has created a vigorous online ad market that’s grown 1600% since 2001, reaching £2.8bn last year. For online businesses this is a double benefit. It’s a substantial revenue stream for many, but it’s also a key sales driver.

Advertising in traditional media is (wrongly) often regarded as a cost. But the accountability that comes with both display and search advertising online has caused it to be regarded differently. Whether this is formally reflected in their P&L or not, many enterprises now see online advertising as a cost of sale – which means they can directly gauge the impact on revenue that cutting ad budgets will have.

There’s no leap of faith here – spending less generates less. So whilst the rest of the economy may be in for a torrid time over the coming months, scale, accountability and attitudes are likely to mean digital’s unlikely to share the pain.

Newspapers - adapt or die?

A version of this piece was published in Marketing in 2008


Every medium that’s ever been invented is always expected to replace those media that went before. So TV was expected to kill cinema, radio to kill newspapers, newspapers to kill town criers (probably).

And for no medium has this been more true than for the internet, which has been touted as the killer of pretty much anything you can think of.

The reality though is more nuanced, and provides at least as much opportunity as it does threat.

In this context, Charles Darwin had it right:

“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.”

Newspapers adapted to the popularity of television news by changing their approach – either focusing on gossip and features, or bringing depth and consideration to stories that TV couldn’t give time to.

And the success of cinema chains like Vue is testament to how investing in the value proposition can bring audiences flocking to a medium that if we believed pundits in the ‘50s and ‘60s, would be dead by now.

But for the Capital Times newspaper in Madison, Wisconsin, last week was a landmark in their history as the company closed its afternoon-published newspaper, becoming an exclusively online proposition.

"Today marks our last edition as a traditional daily newspaper of the sort Americans knew in the 19th and 20th centuries," an editorial read. "Starting tomorrow, The Capital Times will be a daily newspaper of the sort Americans will know in the 21st century.”

So are they right? Is the future exclusively online, or is it likely to remain a mixed economy?

Of course, there is no ‘right’ answer. Whilst it is still economic to distribute newspapers in physical format and consumers demand them, there will still be a business – but this is obvious.

It seems likely that at some stage in the future, demand may shift to the consumption of media on portable devices. Units with roll-out colour screens that allow a highly portable but easily viewable experience are already in prototype, and with the ongoing desire of mobile networks to find a use for 3G we might not have long to wait.

Newspapers as diverse as the Sun and the Guardian have recognised this – building audiences to their online product. Their objective is to move the brand from being a ‘newspaper’ to a ‘media’ play – with the newspaper, website and mobile services being the outward manifestations of this brand.

This is smart, because it develops secondary revenue, constructs a successor to the primary vehicle should that market start to fall, and widens consumers’ expectations of the brand.

It isn’t just newspapers that face this challenge though – TV companies too are investing in their web presence with a view to achieving the same goal. Channel 4 are now regularly commissioning multimedia projects – the Big Art Mob, a four-part TV series comes with a community website and a mobile site that let users upload images of civic art, whilst the recent Embarrassing Bodies series is accompanied by a website and online games. All this content is merged in around their 4OD online video site, where you can catch up on shows you missed.


But the Capital Times isn’t completely abandoning its print past. It is hedging its bets, continuing every week to publish free an entertainment guide and a news digest.

Because in the past when newspapers and TV stations lost audience, they closed for ever. Now though, a future exists for these brands on the web and in mobile, and for stronger brands in building further value in their relationships with audiences – through enriching their output with content in these other channels.

So far from killing other media, the internet is creating new opportunities for them to evolve – and it’s their adaptability to change that will determine their success in meeting this challenge.