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In-App Advertising Goes Missing; Might Resurface in Your Campaign

WAP Ads in the
Bad Old Days

We were all supposed to gird for it; the impending crush of massive in-app ad avails that were finally going to be made ready for advertisers. Juniper Research predicted $2.4 billion flowing in 2012, although they appear to lump in-app purchases along with advertising. Strategy Analytics more reasonably predicted $1.2 billion in the belief that 2011 saw spending of $500 million.

But now here we are at the end of the year, suffering through all those top-ten 2012 trend stories, and most advertisers would snort at the notion that they are dedicating on average about 10 percent of their online campaign budgets to in-app advertising.

Now, Facebook's chief of ad products has been hinting at a strategy that might explain where all that inventory is going. Ad Exchanger asked Gokul Rajaram, who is responsible for getting rid of huge quantities of mobile avails, what'll be big next year, and he said, "Mobile will evolve from being a completely silted marketing channel to becoming a more integral part of cross-platform campaigns"

He said that all types of advertisers will "stop thinking about mobile separately." Which could be interpreted as plans to inject the mobile inventory under the hood of Facebook's already simplistic advertising front end without giving advertisers the option of avoiding it.

Talking about in-app ads can be confusing because different companies think of it in different ways. Facebook thinks of "appvertising" as when a brand pays for friend-to-friend promotion of the use of their Facebook app. A more common definition is when an ad appears in an app. The Facebook model appears to work well when advertisers make apps that have high value for users. Which appears to be extremely rare.

As online media has evolved, certain kinds of media have earned bad reputations for responsiveness. Banner ads hung atop user forums, for instance, had strikingly poor response. In-game advertising in its early incarnations were similarly painted as things to buy only with CPMs based in the pennies. Early mobile advertising back in the days of the WAP standard fared similarly, and modern mobile display advertising is earning extra scrutiny currently.

If Facebook were to sneak the mobile impressions into the general mass of its media, it would be consistent with comments Rajaram made to Wired back just after Facebook went public. He indicated his worldview of online advertising was that advertising of this sort should influence future buying decisions, but not necessarily spark the immediate purchase. In the dozen or so interviews Rajaram has done since, he often refers to this as "higher funnel" advertising, versus the direct response-oriented "lower-funnel." He views Facebook as operating in the middle, connecting brand messages to ongoing relevant conversations among friends, but not as a direct response vehicle.

That is a very convenient conceptualization of the model because all those mobile ad impressions Facebook owns might not be very good at direct response in the absence of home-run geolocation relevance targeting, which does not happen for the vast majority of avails. Rajaram's background with Google's Adsense product management prior to his stint at Facebook puts him squarely in the supply-oriented side of product management.

He can rightly brag about impressive performance in integrating Facebook's Demand-Side Platform (DSP) into the gaping maws of Facebooks robotic media sales partners that they call Preferred Marketing Developers (PMDs), which may be a prime channel into which it can blow out mobile impressions.

On the other hand, the absence of a demand-side front-end to Facebook's growing mobile inventory that satisfies the Facebook's direct advertisers might indeed give at least some reasonable motive for the rumored potential Facebook acquisition of Microsoft's Atlas network.


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