Mobile Advertising 101 – Understanding the Pros and Cons of Each of Your Mobile Advertising Tools

In case you haven’t heard, mobile use has surpassed PCs.  As of January of 2014, mobile devices made up 55 percent of Internet usage with 47 percent coming from apps and 8 percent coming from mobile browsers. Yet for all the hype, businesses are only spending 1 percent of their marketing budget on mobile advertising while still spending up to 25 percent on print ads in which only 7 percent of people direct their attention.

How can a company spend so much on a medium that is only going to reach a small amount of people and spend so little on an ad that has the potential to reach so many more?

Mobile advertising is still relatively new, having only been around for about five years, it is still trying to find its identity. Internet advertising began in the 1990s as static pictures slowly morphed into animated graphics, splashing up and down the side of your screen. Mobile advertising is still in those early, experimental stages.  Many CEOs don’t like to put money into a medium that isn’t tried and tested while others just don’t know how or where to start.

Since mobile advertising is still in those elementary years, now is the time to get involved and test the waters. Few businesses have started any type of mobile advertising so by getting out there now, you’ll be ahead of your competitors and it’s still very cheap, making the venture only a small financial risk.

The amount of data that companies receive from mobile users is staggering. A single device can tell a company where the person has been via the GPS locator and what the person has viewed on their device. This information alone can tell a company the places you visit, what apps you like to use, what sites you like to visit and what services you use on your device. With this information, companies can tailor advertisements that target a specific audience and when and to whom to send it.

Getting to the Advertising Basics

When beginning a mobile advertising campaign, it’s good to know the different types of ads that are available and the pros and cons of each. With this information, you can then tailor your advertising strategy according to your goals.

Most advertising on mobile comes in two forms: Display or search advertising.

Display Ads

(Examples: Google display network, I-App advertising, Banner Advertising, Facebook Advertising)

The most prevalent form of mobile advertising currently is the display ad. This display method comes in a form of a small banner on the mobile device that will direct the user to a landing page once it is clicked. This form comes in several cost methods such as Cost Per 1,000 impressions (CPM) and Cost Per Click (CPC). In CPM the advertiser would pay after the ad reaches 1,000 impressions or in CPC the advertiser would pay only when the user clicks on the ad.

Pros

  • Low cost per click – On average, Cost per Click (CPC) on display advertisements are 30 percent less than search advertising. This means that, if done right, it has the potential to also yield a low cost per conversion.
  • Higher reach – Display advertising casts a very wide net across multiple websites and pages across different topics. If one of your objectives is to create awareness, this could be an effective medium.
  • Bidding flexibility – Unlike search ads, you have the ability to set your bids on a CPC or a CPM basis.
  • Visually appealing – With display, you have the ability to use imagery for branding purposes, as well as to make your message more compelling.

Cons

  • Low click through rate (CTR) – Because display ads are interruption based (meaning that people exposed to the ad may not be looking for your value proposition), the CTRs on it is rather low (Average of only 0.24 percent).
  • Accidental clicks – Because the phone screen is so small, accidental clicks can occur quite often. If you bid on a CPC basis, this means that you will be paying for a bounced click.
  • Long set-up – Creating effective display advertising requires time spent in design and researching the target spots you want your ad to show in.
  • Low control – Unlike search advertising, marketers have very little control of who sees the ad and who clicks on it. This often means lower quality clicks, leading to lower conversion rates.

Search Ads

(Example: Google Search Network, Bing Search Ads, etc)

With search advertising, your ad is shown only if it fits within the confines of the search being made (normally by keywords). On Google for instance, you can bid for “[Running Shoes for Men with Flat Feet]” if that’s the target audience you want to advertise to. Your ads will only show when someone types that exact query.

Pros

  • Simpler set-up – With search advertising, your ads are normally limited to text, making it easy for you to adjust and change your messaging when necessary.
  • High quality clicks – If you set-up your campaign right, it has the potential to generate really high quality clicks. With the right keyword selection, we can only advertise those who have the budget, authority, need, and time (BANT) to convert.
  • Predictable results – Often, the intent behind your audience’s search query stays the same. This means that when you have optimized your campaign to an acceptable Cost per Acquisition (CPA), then your performance will stay relatively consistent.
  • High CTRs – Because you are targeting by search queries, you can make your ads extremely relevant to what the searcher is looking for.

Cons

  • High competition & CPC – From small startups to large corporations, they are all using search advertising to gather leads or sales. This results in an extremely competitive space, often driving up the CPC.
  • Complex management – There are a lot more factors to consider in search advertising, including the keywords, the intent behind the keywords, the positioning of your ads, the quality score of your ads, the relevance of your landing page and etc.
  • Small real estate – Unlike display ads, you are limited to only three lines of text (more if you employ sitelinks). This is not much space, especially given the fact that your ad is on the same page with four to seven other ads.

Why Mobile Advertising Can Be More Effective than Desktop

The section above gives a good breakdown of which types of ads to use for different objectives and campaigns. However, we need to go back to the question: “Why should marketers focus more on mobile advertising?”

In order to answer this, we need to explore the different elements mobile advertising allows us to do that cannot be accessed through desktop.

Location-Based Ads

With people carrying their devices everywhere they go, this will naturally allow marketers to employ better location based advertising than desktop ever could.

These ads are highly successful in more urban areas as they direct ads to the consumer based on location or search criteria. Location based ads come in two forms: push or pull.

Push Method

The push method is something a user has to opt into, where they can select what types of advertising they wish to receive. Then once that user is within the area of an advertiser, it will push an ad to the user, notifying them of a deal they might be interested in due to their selected criteria and distance from the store.

Pull Method

The pull method is successful when coupled with a local search application to help people find places in a large urban area. These ads arise when a mobile user searches for a specific thing like “Chinese restaurant nearby” and then an ad for a discount on Chinese food comes up from a nearby restaurant.

In-App Ads

In-app ads are becoming more popular since 86 percent of the time people are on their mobile device, they are using an app. In-app ads are generally found to be less intrusive than banner ads, and if handled properly, can blend seamlessly into the app and make the user want to click on it. For example, a game requires a special type of currency to purchase important items to level up. One of the biggest ways to acquire this currency is through watching an advertisement. Most people are willing to watch a 15-30 second ad in order to gain something for the game, and the click-through rate is more than 11 times greater than with standard banner ads.

Committing to a Strategy

As with any form of advertising, it is good to sample a few of the different types, as there is no one way to reach your entire audience. It is also highly suggested that advertisers keep up on current mobile trends as this form of communication is still very young and the landscape can change quickly and drastically over night. Not to mention that it is projected, in the near future, that mobile searches will exceed desktop searches. No one can say when for sure but there are roughly 2 billion PCs in the world and 5 billion mobile devices, so really it’s just a matter of time.

esd & associates is a pioneer in mobile advertising and our qualified team members can assist you in determining the best types of mobile advertising for your company.

Written by Jerrime Castle

Recently working as a free-lance journalist covering video game news and reviews, Jerrime Castle is currently interning on esd’s Content Development team. With degrees from the University of Washington in Creative Writing and ITT Technical Institute in Visual Communications, Jerrime possess a wide range of both creative and technical knowledge. 

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