Mobile Advertising needs Rich Media and Better Targeting

Mobile advertising is a $2.2 billion business. Advertisers put up mobile ads for two reasons: (1) Building brand awareness and (2) generating leads, whether to download their iPhone Apps or sign up for their service.

Two possible improvements:


Two possible improvements:

Rich Media

All ads you see today on your phone are static text or images. Brand advertising works by playing to emotions, and to do that, you need animations and sound. I know you dislike those Flash ads on websites, but they're how the content gets paid for.

Those ads are static for a reason: iPhone doesn't support Flash, and the ads need to be small in size due to limited bandwidth. I'm sure one of the players in this space is already working on building technology to show great-looking, animated, interactive ads - whether with proprietary technology or some sort of browser plugin. Rich ads, rich CPMs. Even the bandwidth problem can be solved: There are plenty of ways to preload ads and cache them for later display.

Better Targeting

If you've tried putting up an AdMob ad, you know that the targeting options are pretty limited: You can narrow down by country, device (iPod Touch / iPhone), and connectivity (Wifi/3G).

There's one type of ads that could unleash dramatic growth in mobile advertising: Imagine you're on the way to lunch at Pete's Burgers, and your iPhone shows you a coupon for Joe's Burger Shack. You go to Joe's and show them the coupon you just clicked on. The ad just generated a verifiable lead, and the advertising network just made a bunch of money.

For this type of application to work, targeting needs to get better: We need street-block level targeting, time of day ("only run this ad at lunchtime"), and likely user activity ("user likely walking to lunch").

I imagine that local ads like that could be bigger than the $20 billion / year search advertising business (e.g. Google AdWords), which makes money by generating leads for people to buy stuff online. The number of real-world transactions and the amounts I spend on them are much higher than what I spend online. Done right, mobile advertising could be much bigger than that.

The Mother Lode of Data on the Mobile Internet

Browsing the Internet this morning, I found this Morgan Stanley report on the Mobile Internet. Depending on which version you look at, you'll find hundreds of slides packed with data and insights on mobile internet usage. I recommend you at least flip through the this short 92-slide version.

Here are some of the highlights - this is the data I found most interesting.

iPhone Growth

The growth of iPhone + iTouch outpaces that of Netscape, i-mode, and AOL. It's more explosive than anything we've seen so far.



iPhone and iPod Touch are growing at the same rate This slide was meant to demonstrate the explosiveness of the iPhone platform, but another thing it demonstrates is how iPhone and iPod Touch sell around the same number of units, and have done so consistently even through the introduction of the 3G and 3GS.

Web Usage

Unproductive sites are increasing their addiction levels. Online global time spent is trending heavily toward Facebook and YouTube. MSN and Yahoo are shrinking away while Google (probably the most work-related of all these sites) is holding steady. I wonder about the effect of all this on global GDP.



Google now makes $20 per user per year in ads. I still remember when my friends were asking "Who clicks on all those ads anyway?" Somebody does. Google's annualized revenues per user have increased from $10.22 / year in 2005 to $20.06 in 2009. That's a large chunk of the total ad revenue per user on the Internet, which is $46.41. Wow.



PS: Morgan Stanley has done an outstanding job in assembling all this data. I just wish they'd hired a graphic designer for their slides - they do look a bit busy, especially pasted at small sizes.

Mobile Email Usage to Grow from 131M to 434M in 2 Years

I just found this great report [pdf] by email research group Radicati. It comes with bucketloads of stats and predictions on email usage.

In particular, this one table is a gem. According to Radicati, mobile email usage is poised to grow from 131 million users today to 434 million in 2011.



That's pretty substantial growth - almost 100% growth year-on-year! I'm happy that's the space that reMail is in.

The New Consensus: It's Android vs. iPhone

In our YCombinator Demo Day presentation, we had a slide about how we'll also build reMail for other platforms, starting with Android. This was 9 months ago. Members of the audience were puzzled: "Why would you build on Android, not Blackberry or Windows Mobile?".

I'd reply "I think the war was going to be iPhone vs. Android". It seemed like a reasonable bet at the time. Google has deep pockets and great engineering talent. Turns out the only thing missing was the right device.

Now, of course, there is the Droid, which sold more than 800,000 devices since its launch. That's a huge number. My roommate just got one the other week!

And attitudes have changed. Fred Wilson says that Android will be to the iPhone what the PC was to the Mac. In many conversations in the past weeks, no one took offense with "it's iPhone vs. Android".

Android still has a long way to go. I'm confident they will get there. Usability and stability need to improve, developer tools need to get a big speed bump, and I'm a little worried that by the end of 2010, we'll have too make device configurations to develop for and test on. But the speed at which the Android team cranks out iterations is very high.

Armed with a G1, I've fired up my Eclipse this weekend and started toying around again with Android apps. I have some ideas about what I want to build. I'll keep you posted.

A Quick Observation about Mobile Apps

In 2005, no one was using apps on their mobile phones. Those were the days of the Nokia Series 40 running J2ME. Developers making J2ME apps at that time were claiming that once mobile apps took off (any minute now!), they would be best positioned to take advantage of the new market.

Along came iPhone, Android, and most importantly, all-you-can-eat data plans. But where are those J2ME developers?

If you go through the Top 10 paid or Top 10 free apps on the App Store, you'll find that the companies there are either name brands (Walt Disney, Facebook, Adobe), or smaller development firms that were started recently: For example, ngmoco, founded 6/2008, or Limbic Software, founded 2008, and so on. I couldn't find an About page or Crunchbase profile for all of the companies, but the ones I found about all matched this pattern.

Once again we learn that being early is the same as being wrong.

A Flashback to 2006

I just re-discovered this blog post I wrote in 2006 talking about how amazing it would be to all your maps, mail, or Wikipedia on your mobile phone.

I had completely forgotten about this until one of this blog's readers pointed out that reMail is just the incarnation of an idea I had many years ago. Whoops.

Six Mobile Ideas

Here are 6 ideas for mobile applications I’d like to use. Two of them are about easier data access:

1. Access to desktop files: I’d like to list, search, and open files from my desktop on my phone. Dropbox lets you do this through an iGoogle gadget, but I’d like to go to a simple page on my iPhone.


2. Offline content: When it has WiFi reception, my phone preloads itself with all the content that’s on top of Hacker News, and lets me to quickly browse it when on the go. Similar to AvantGo from the old Palm days, but doesn’t need you to plug your phone into your computer.

The rest are location-based services which require either good position triangulation or built-in GPS on your phone:

3. Instant Meetup: An extension to my Academic Lunch Dating idea from years ago. I’d like to do things like: “I’m in Washington Square Park right now and would like to find someone with similar interests”. It’s GPS-powered instant friendship building or dating.
4. A Location-based Upcoming: “I’m at 3rd and Market and would like to do something exciting within walking distance.” This would give recommendations of what to do – it might give you your friends’ party 4 blocks down, or the latest SFMOMA special exhibit.
5. Yelp it now: Instead of tediously going through Yelp’s interface – which is super slow on my iPhone – I want a simple, fast-loading page that returns the top 3 rated restaurants on Yelp within walking distance.
6. NextBus plus GPS: Using built-in GPS, finds out which bus stop I’m at. List the next bus arrivals here, in any directions. Much like the existing NextBus, but no scrolling through pages of stops.

Has someone already done any of this? If so, please leave a comment and let me know.

Offline Mobile Content

Have you tried Google Maps Mobile? It's the most useful application I've ever seen on my cell phone. Still, at least here in Europe, few people are using mobile services. Since telcos are competing on the price per talk minute and price per SMS, they are still charging extremely high fees for GPRS. With my current plan, I pay a whopping CHF 2.50 ($ 2) per MB! Most people don't even know what GPRS costs, so they are hesitant about using it.

Still there is so much content you'd want to have access to on your phone: Aside from the maps, I'd love to have mobile access to tour guides, restaurant reviews, business listings, movie ratings (for next time I'm at the video rental place without a clue of what to get) [*].

Almost every new mobile phone today comes with a memory card with ample capacity: My Nokia 6280 came with a 64 MB card. Its successor comes with 512 MB.

For the time being, this creates kind of an arbitrage opportunity for content providers: While GPRS data rates remain high, they could offer downloadable packages of offline content instead of a web service. A map of Zurich to download on the web and store on my cell phone via Blueooth? All for CHF 5? I would certainly pay for that.

This model will be viable unless data service becomes practically free: Most would probably rather pay a small flat free than put themselves at the mercy of intransparent price plans. Once data is free, it's better to use the online service as it is more up-to-date. But I doubt this will happen soon: Making data service free endangers the telcos' core business – Mobile Skype, anyone?

[*] Update on Oct 11 2009: And my email archives might be a good idea too.