As the earlier post pointed out, Apple iPhone may not be the only game in town, but, for many developers and advertisers, it certainly is where the action is. Demands from both parties have prompted AdMob to launch an iPhone Advertising Exchange, a concept similar to the banner and link exchange services we know from the Internet.

But there’s a twist. This exchange is built from the ground up to maximize the effectiveness of exchange ads by ensuring they only run on devices that do not already have the same application installed. What’s more, it allows targeting according to Operating System (OS) version, geography, and device (iPhone vs. iPod touch).

Shortly after the announcement, I caught up with Russell Buckley, AdMob VP Global Alliances, to learn how the new service enables the ecosystem (advertisers and developers) to get consumers’ attention, promote apps, and drive results.

By way of background, advertisers already use Download Tracking, a service AdMob launched in January (and discussed in this podcast interview) that allows advertisers to monitor App Store conversion rates and cost-per-download. Specifically, advertisers can use Download Tracking to view and track multiple applications and drill down to look at conversion rates by specific ad and for specific dates.

Russell tells me AdMob’s advertisers are already using this information (gleaned from using Download Tracking) to write better ads, calculate their return on ad spend, tune their App Info pages, and develop better pricing strategies. The new-launch iPhone Download Exchange is about allowing developers with apps and ad space to serve ads that promote other apps within the Download exchange, and get traction for their own apps in the process by placing ads for free on other applications.

Put simply, it’s a what-goes-around-comes-around concept that helps applications increase downloads by advertising within other iPhone applications – AdMob already has over 1,000 apps in its network. It’s a good starting point, particularly since “the top 33 of the top 100 iPhone applications” also figure in this group. How will this build AdMob’s business? What is the volume really? And how does AdMob maintain relevancy across sessions? These are just a few of the topics Russell and I explored in the following Q&A.

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Q: You’ve had your eye on the prize since the start, building a mobile ad network for the iPhone and now launching this ad exchange. What are the numbers?

A: It (ads on the iPhone) is pumping through quite a lot of volume at the moment in terms of helping us grow our business. We don’t actually break down the page use between applications and the web browsing through the iPhone. But what I could tell you is that we’re serving ads in about 1 in 3 iPhones every month. That means that we’re serving on 7.2 million iPhones and 3.9 million iPod Touch’s worldwide. So it’s about 1 in 3 total.

Q: Why launch an ad exchange?

A: We’re very close to the mobile development community and one of the things that they keep telling us is that they want more creative ways, better ways, to tell people about the applications and get them to download them. With something like 25,000 applications in the app store, it’s quite difficult to stand out now. But at the same time, not everyone wants to spend money. And so, listening to what developers wanted, we came up with the idea of an exchange. This way, publishers who sign up to the AdMob network, who we’re serving ads to already, can donate a portion of traffic to other people to serve free ads in their applications, and in return they get similar amounts of advertising on other peoples traffic.

Q: So it’s basically bartering?

Exactly- It’s helping our publishers or the application developers grow their businesses. And obviously, indirectly, we benefit because the more inventory, the more people have downloaded it, the bigger our network gets. But the primary reason is because we were asked to come up with a way of being able to promote ads. And we’ve got quite sophisticated targeting, so that if you’ve already got an application downloaded on your iPhone, we won’t serve you an ad for that application again. So there’s no wastage and it’s an efficient way of doing it.

Q: Apple is the one to watch now. What about Android?

A: The iPhone is a hugely significant device. That’s certainly obvious. But in the future more phones will be like the iPhone; and one coming up is Android. We already serve ads on the Android and they [Android] already have an application store, so we’ve already got an ad unit focused on that. From what we’ve seen, the iPhone type of experience – and I’ve included Android in there – does tend to drive a lot more traffic for publishers than normal phones. The iPhone has always had very high metrics in terms of consumption of Web pages, and now it’s got high metrics in terms of consumption of applications, and, therefore, ads within applications.

Q: The numbers are significant for iPhone, but it’s not the only game in town. What about the other devices and the other app store schemes coming online?

A: Obviously our business is serving everybody and serving ads to the less common denominator. So we’re going to continue to be in that business without question. The iPhone has allowed us to create some new ad units, which are more interesting than perhaps what you can achieve on today’s smartphones. And, because of the explosive growth in advertising consumption and the great volumes we’re seeing in terms of browsing and application downloads, we’ll continue our efforts in the iPhone.

Q: It’s not just about advertising; it’s about relevancy. How does AdMob enable content discovery through relevant advertising?

A: In practice, when you download an application, we already know something about you: We know that you download applications on an iPhone and we also know what [apps] you don’t have on your phone. For example, if you’ve got the Facebook application already installed on your iPhone, we won’t promote Facebook to you. We’ll promote something else you haven’t got, which makes you more likely to buy it.

Q: You keep that relevancy going across sessions…?

A: No, it’s not about a session. We can tell from the phone itself, from what’s installed on it.

Q: That’s quite sophisticated.  I would imagine with some tweaks to the algorithms AdMob could figure out what content is similar to other content and recommend it.

A: Yes. That’s in there and we might be exploring more. However, at the moment it’s pretty basic. Right now, if we serve an ad through the exchange, we check first to see what applications the user has on the iPhone to be sure we serve an ad for a different, but related app.

Q:  I see from checking out the self-service at the backend that developers can do quite a lot themselves. Take the ads. AdMob automatically creates exchange ads for the developer’s app based on the description in the Apple App Store.  However, there is a mechanism that allows developers to edit the ads or create their own.  Targeting is based on the app description in the Apple App Store, and the developer can also apply ad filters.  Can you explain some of the nuts and bolts?

A: It’s a self-serve platform. You simply go there, check the box that says ‘yes, I want to participate in the exchange,’ and then we start serving a few ads in your apps and your ads get served elsewhere. If you want to stop, you just uncheck the box. It’s something you can switch on and off at will really.

Q: No money changes hands here. But what about moving forward?

This is more about enabling discovery of our own products. So it’s barter more than anything else. Obviously, the more eyeballs they get, the more money they make through serving ads. So yes, it’s in their interest to get more and more in-store apps because they make more and more money from the paid-for ads. Let’s just be clear on this. When you sign up at the application exchange, it’s not about saying ‘I want only to serve free ads in there’. It’s about ‘I want to give a small portion of my traffic at my site while continuing to make money through serving normal ads.’ So you don’t give all of your pages away. You just give a portion of them to promote other people who will then in turn promote you. But all of that time, your traffic’s growing and we’re all making more money from the paid-for ads which we’re serving.

Q: You just launched and I see you are organizing events for iPhone developers. I’m think here of the Developer Meetup in San Mateo, where developers talk about their strategies. What is the feedback on the exchange?

A: As I said, we work with about 33 of the top 100 already. So we’ll be reaching out to more people in the next few weeks to tell them about the exchange. The idea is going to be popular because, at the end of the day, it’s a way of growing your business for free – which we’re enabling our publishers to benefit from. I think it’s going to have good up-take actually. I think we’ll certainly see within a couple of weeks, hundreds of developers giving it a try.

Disclaimer: AdMob has been an MSG supporter.

          

Tags: AdMob, Android, Google, iPhone, Mobile Advertising, mobile analytics, Mobile Internet, Mobile Marketing

This entry was posted on Wednesday, April 15th, 2009 at 8:27 am and is filed under Content Discovery, Mobile Advertising. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.