Where is the money in mobile advertising? Or more specifically: Where is MY money?

At European Mobile Media, a conference I chaired in Prague (congratulations to Mart Kikas, Business Development, CEE/CIS,Aspiro and Jan Rezab, CEO HungryMobile, for bringing together a quality cross-section of the mobile ecosystem to talk business, best practice and – most importantly – ask uncomfortable questions!), this was the question.

No surprise since we talk a lot about all the money to be made in mobile advertising – a discussion fuelled by over-hyped analyst forecasts, and excitement over a handful of super-cool mobile campaigns. But rather than ignore general discontent, Jonathan MacDonald (speaking with his Jonathan MacDonald Associates hat on) responded by changing his presentation on the fly, treating us to an insightful look at where the money is and how we can all get our share. Predictably, the presentation struck an important chord. (Jonathan and I cross paths on many podiums, and his presentations – which consistently force us to think outside the box – are always a highlight for me.)

Yesterday’s presentation outlined how (and why) advertising – like all forms of communication -is most effective where there is a climate of trust between the individuals involved in the exchange and a genuine interest in what is being said. How do we get there from here (and get our share of the pie in the process)? I’ll have more in a longer post early next week. Regular readers will appreciate that I want to create a detailed post that synthesizes the arguments and ideas presented by Jonathan and other speakers (including Mark Linder, WPP Global Client Leader, and Gunnar Selleg, Aspiro CEO) to provide MSG readers with the key takeaways.

The focus on the money during the conference brings me back to RingRing Media Ltd., an independent media agency headquartered in the U.K. whose client list and ad spending on their behalf (booking over $4.5 million in 8 months) is clear confirmation that mobile advertising is gathering traction among brands and content companies.

Put another way, the ecosystem is taking shape and companies are taking their share. Indeed, RingRing posted a particularly strong March, serving over 350 million ads and spending GBP350,000 on mobile Web advertising alone.

Excited by the stats and anxious to learn more about this company that is coming up to its first anniversary (formally founded and Angel funded to the tune of GBP300,000 May 2008), I caught up with Ben Tatton-Brown, RingRing Co-Founder & Managing Director, to dig into the numbers, delve into the details of the company’s new release ad-optimizer platform, and discuss where the money really is. (Thanks again to Tim Banks at infomob public relations for his prompt response in setting up the briefing!)

What do clients spend? What are the CTRs? And what are the options for publishers? Ben’s answers may surprise you.

But first some background on RingRing Media.

What does it do?

RingRing is an independent buyer and broker of mobile advertising. It has a headcount of nine, and profitable in 11 months. It focuses on two business areas: Media planning and buying, and ad optimization through the company’s new release IAm platform (Integrate, Aggregate, Mediate). IAm is a yield optimization platform designed to maximize mobile publishers’ advertising revenue by connecting publishers to multiple ad networks through a single platform, and by dynamically routing the traffic to the highest performing ad network, thus filling 100 percent of the publishers’ global inventory.

What services does RingRing offer?

Like many in the space, RingRing puts together a media plan and breaks it down into suppliers and spend. But there’s a difference: “Because we’ve booked over $4 million in 8 months, we know what works and what doesn’t work.” The client signs off the plan and Ben’s team starts negotiating rates. “We will go to an ad network with a price that we are looking to achieve and work together on reaching a price that is acceptable to the ad network as well as to the client. A GBP10 CPM rate is not always what a client is looking for.”

The rest is pretty standard. RingRing account managers set up the account, upload creatives, and put frequency capping in place, if the client requires. After the campaigns go live, RingRing turns its attention to optimizing and monitoring the campaign. “An example: If a client spent $100 yesterday on an ad network through one link, and from this campaign 100 games were sold so $1 a game, then great – we’ll buy as much of that traffic as possible. If, however the campaign did not perform, then we would contact the ad network and say “hey guys – help us make this  work or we will be forced to pause the campaign.”

Finally, RingRing undertakes reporting, billing, and invoicing. (More about reporting and analytics further down in our Q&A.)

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Q: Ben, you’ve booked $4.5 million in 8 months and you’ve also had a particularly strong March. What’s the story behind the numbers?

A: It’s quite an accomplishment. We joke that 1 in 4 mobile Internet ads is one of our ads, so we’re booking a lot. We are simply the largest spending media agency in the U.K.; there is no other agency that I know of in the U.K. booking this amount of money.

Q: Who are the clients? What’s the mix?

A: This is where I’m going to have to be careful about names. We work with both brands and content companies. We work with a well-known handset manufacturer; we’ve run campaigns for one of the largest football clubs selling their mobile content; and we are working with one of the largest U.K. gaming companies that provide  some of the best games on mobile.  We’ve also run a campaign for one of the largest supermarket chains in the U.K., and help promote services for an awesome technology company launching their mobile services in the U.K. These clients  have budgets that range from as small as GBP10,000 up to around about GBP100,000 a month.

On the content side, clients spend anywhere between $100,000 and $500,000 a month. So, you can imagine we’re talking about big budgets here and booking a lot of media, and we do that globally. Countries and territories that work particularly well for us are the U.K., and also the U.S., South Africa, and Australia.

Q: Ben, I’ve know you a long time, since your days at Medio Systems, a mobile search provider. What role does search advertising play in your planning, and in the mobile advertising strategies of the companies you deal with overall?

A: You’re right. It’s primarily paid search campaigns. That’s our space. We don’t do SMS, so the numbers that we talk about here are purely for the mobile Internet. And we will buy as much search as possible as we know this will perform better than display advertising.

Q: So we’re clear on what you do. Let’s talk about what you see. Best media buys, performance, traffic – whatever you can share…

A: As a buyer, we’ve identified four areas: on-deck, off-deck, search, and ad networks.  As you would expect, each has different response rates and different cost per clicks depending on where you buy and who you deal with. One of the benefits of working through RingRing is, that because we’re booking a lot now, we’re able to be quite aggressive with the prices that we get. I don’t really want to quote names, but the amount of people that come into the office and try and sell me a CPM of €30 or GBP30 is preposterous!

It’s all about finding the real value of that media. We’re using mobile as a direct response tool and clients will buy as much advertising as they can so long as the traffic performs. At the end of the day, search is the kind of Holy Grail. I will buy as much search as I can.

Q: How much is that? What percentage of your budget?

A: We would spend more on search if we could. We’re probably spending about 30 percent of our advertising budget on search, purely because that’s all that’s available. That’s because people aren’t searching enough; if they were, then we would buy more. We buy from Yahoo and Google, and I think we could or should be doing more with Google.  Search has got great click through rates. We’re talking about [CTRs] up to 16-18 percent, which is fantastic. Display varies depending on where you’re buying, but it could range from anywhere between 0.5 percent click through rate up to maybe 2 or 3 percent. So, you can see the value in buying search versus buying display.

Q: What CPM and CPC rates are you seeing?

To give you some specifics on CPCs: If we buy traffic in India or in Tier 2 countries, we’ll buy as low as 3 cents, that’s U.S. dollars cent a click. But we’ll also buy up to perhaps 30-40 cents a click on portal premium display inventory in tier 1 countries. CPM rates: I have never seen a media plan signed off with a CPM above maybe GBP10-15 max. And in those instances we would look for a 48- or 72-hour get out clause to protect our clients.

Q: While we’re on numbers, an MSG reader pointed out the stats in your last press release seemed a little off.  In March you reported that search was booming and that you were seeing CTRs up to 16 percent and conversion rates peaking at over 110 percent. How does a conversion rate exceed 100 percent? Does it mean people are clicking through and buying two pieces of content and that is counted as two conversions?

A: Just to define clearly what we’re talking about. The click through rate is a click on the ad to the actual landing page. And 16 percent is a big number. Conversion rates are exactly what you’ve basically said. So, it’s people buying more than one piece of content from that one click. I keep hearing people are just clicking on something out of curiosity or by mistake. But these numbers tell us people are clicking on an ad because they want to buy the product or sign up to these services.

Q: What content sells? Are ringtones and wallpapers dead?

A: Ringtones and wallpapers will always sell, but mobile content today is no longer simply about ringtones and wallpapers. Content has become much richer and more enticing for the consumer. Our clients are selling premium content including full track music downloads, 3D games and mobile applications.

Q: Is the big conversion adult content?

A: No, we don’t do adult.

Q: Let’s step back from your numbers and look at the overall mobile advertising market. Is this a banner year for mobile advertising – no pun intended…

A: We’re in the early stages of mobile. We’re definitely still in the early stages of mobile advertising. I was there when Internet advertising started and that is where mobile is today.  The cost of inventory is erratic and there are too many buying points. It’s all about land grab at the moment and identifying the men from the boys. We still get players walking into our office trying to sell us ridiculous CPM rates for inventory that we know will not perform for our clients.  That said, we are constantly on the look out for that Holy Grail of inventory that has not been tapped into , where there is s volume and which will performance for our clients. In which case, we will buy it all.

The indications are good.  We are spending more and more every month, and there remains a lot of demand for advertisers looking for good inventory. It’s a very young and exciting market to be in at this time with huge amounts of opportunities.

It will really take off when more brands finally move into the space. That will create a more competitive marketplace and that will help drive up CPCs and CPMs and make the market more vibrant. Until that time and until we have more ad diversity, the market will remain an attractive market, but will not reach anywhere near its true potential.

Q: I’ve written two how-to mobile advertising white papers, and I have come up against some issues I think might be holding all this back. I’d like your opinion.  I’m talking here about a lack of control I have as an advertiser/publisher on the rate of spend – or better said, burn. I have spent $120 in a matter of minutes, and I have also run campaigns that missed the target audience by a mile because they started the moment I finished the set-up procedure, which just happened to be 5 AM in the U.S. My point: Maybe this poor reporting and lack of control is why we can’t speak of this year or any other being the year of mobile advertising…

A: It’s a really good point.  You would be surprised by the limited reporting offered by many of the ad platforms in today’s markets. There are platforms that do not provide real-time reporting and have up to 72-hour delays. In a digital age, that’s just not good enough, and they must step up to the mark.  Like you say, a client can spend a lot of money in that time and without reporting there is little way to gauge response and performance. One of our clients spent close to $40,000 in three days without an ounce of reporting. In this instance, the traffic we bought performed very well, but it was worrying as for a period of time we were flying blind as it were. So, I agree. There absolutely has to be a huge improvement in online reporting and targeting functionalities as well .

What can we do in the meantime? Where we can, we put daily caps in place, and you can do that with a lot of suppliers if you’re buying on a CPM [basis] and limit the number of impressions served in a day.  It’s a little harder to do that when you’re buying on a CPC, but there are ways to minimize the volume you buy per day. Our account managers log into the platforms daily and look at how much the accounts are spending. We provide our bigger advertisers with daily reports, and all of our remaining clients get a weekly report which breaks down exactly how much they’ve spent per day across all of the [ad] platforms. That explains why our account management department is our biggest team here at RingRing Media. I’m investing in people who can look after our clients and provide the sort of service they deserve and expect from an agency.

Q: Ok- let’s move to your ad optimization platform IAm. I’d like the high-level view here.

A: We have built the U.K.’s first ad-optimization platform connecting publishers to multiple ad networks through one single platform. The platform is called IAm and it is serving half a billion ads a month. It is a yield optimisation platform designed to maximize mobile publishers’ advertising revenue by dynamically routing the traffic to the highest performing ad network. IAm will fill 100 percent of your global inventory with targeted mobile ads. We own the technology and have invested a lot of time and money in ensuring that it performs for our publishers. They are all very happy with the results to date.

When a mobile site integrates a single ad feed onto their site and shares the advertising revenue, we call this Mobile 1.0.  The problem with this solution is the ad fill rates are low and the eCPMS are also low.

What we have developed and refer to as Mobile 2.0 is a yield optimization platform that connects you to international and local ad suppliers, ensuring publishers tap into the largest possible pool of advertisers – so your site looks fresh. Ad networks connected into IAm include some of the largest CPC ad networks in the world. Our platform routes the traffic to the ad network that will make our publishers the most  cash.  It does this by analyzing parameters within the header such as location, handset, operator, and routing a higher percentage of the traffic to the highest performing ad supplier. Ad suppliers are ranked and measured by factors including “eCPM”, “Fill Rate”, “Click Through Rate”, and “Time to Delivery”.

So there are two benefits to the publisher: One, we are able to fill all of their global inventorybecause they are connected to so many ad networks. I can guarantee 100-percent fill rate for any publisher that decides to integrate IAm onto their site. Two, I can ensure a higher eCPM as the traffic is being routed to the supplier with the most targeted traffic. This can result in a 300 percent increase in the publisher’s net eCPM. [Seeing is believing, and Ben has promised MSG a case study that demonstrates this.]

Our record day was 15 million ads served across 100 territories, and something like one thousand handsets. We will be doing 100 million a day in a few weeks. That is our goal.

Q: So to paraphrase this: You have created something we’ll call an intelligent matching engine…

A: We like to call it a yield optimization platform designed to maximize mobile publishers’ advertising revenue. The integration is very straight forward and can be integrated in the same way you would integrate any other ad network into your site.

Q: Like tracking code?

A: It’s more often than not simply PHP code.  You add this code into your site in minutes.  By doing that, you’re connected to our feed of mobile only ads.

Q: Based on…

A: Based on location, based on operator, based on handset, based on as much information as the publisher can pass on to me.  For example, when we are working with social networking sites, we encourage they pass on as much information as possible including age, gender, and whatever other information the publisher can pass on. This data helps the platform select an even more targeted ad if it is available.

Q: And I would assume at some level this is a self-learning technology…

A: Exactly. We call them leagues; we’re building these leagues in the background that are constantly ranking networks on the fly. So the platform will pick-up any new advertiser that signs-up to one of our ad suppliers, and, if it matches a request from one of our publishers, it will feature seamlessly within the site. Remember, publishers can select exactly what type of ad they wish to see in their site.

Q: It’s data you can always leak to MSG (laughter). Readers would love to know which ad networks in the U.S. do well compared to the U.K., for a global operator such as Vodafone…

A: I’m conscious that I’m sitting on a lot of valuable data that I feel will help grow the advertising ecosystem and help us all make intelligent decisions based on facts and actual data. I am in the business of building relationships and making friends not enemies! (laughter)

My take: More is always better, and having control is best. The ability to spread the money (and the risk) across a range of mobile ad networks is one sure-fire way to increase revenues and reduce advertiser/publisher anxiety. Obviously, I can’t speak from my own experience with RingRing’s ad optimization platform, but a technology that intelligently routes traffic to an ad network based on performance, targeting options, and the relevancy of the advertising message certainly covers all the bases to wring more value out of mobile advertising for everyone involved.

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Please note, I have purposely chosen to avoid a deeper discussion of whether common ad formats (display and search) are sustainable in the long term. That’s a topic I reserve for my summary post, where I recount the impactful presentations I heard during the recent European Mobile Media Conference.

Tags: Mobile Advertising, mobile analytics, Mobile Search, Mobile Social Networks, RingRing Media

This entry was posted on Friday, April 24th, 2009 at 3:05 pm and is filed under Mobile Advertising, Mobile Research, Mobile Search, Mobile Social Networking. 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.