Wi-Fi is killing mobile advertising

August 16th, 2012 by · 5 Comments

This article was authored by John C. Tanner, and was originally posted on telecomasia.net.

Operators are increasingly enthusiastic about the prospects of Wi-Fi offload in their 4G roadmaps. But that’s going to be bad news for mobile advertising – at least until Facebook steps in to save the day.

That’s according to Shawn Scheuer, co-founder and CEO of mobile advertising network Moolah Media, who says that data from Moolah in May and June 2012 shows that conversion rates across “thousands of lead generation campaigns and over 100 million clicks” varied between 11.5% and 3.9% when ads were served over carrier networks, but just 0.6% for ads served via Wi-Fi connections.

The problem is that when users connect via Wi-Fi, it’s impossible to use targeting information like their wireless carrier to send more relevant ads to mobile users, Scheuer wrote in an op-ed for All ThingsD:

A mobile user’s carrier reveals a lot about who they are and how they might interact with an ad – information that’s essential for an ad to reach its target audience and to ultimately be profitable. Even the most basic facts are important: If an ad requires a credit card purchase, it makes sense to target users on a monthly billing cycle rather than those on prepaid carriers who may not have credit.

With Wi-Fi expected to account for over half of web traffic by 2016, mobile advertising will struggle to deliver relevant ads to users – which is of course one of the big differentiators that mobile broadband and smart devices are supposed to deliver. And that’s before working in other factors such as third-party browsers that hide info such as device type and country location.

The solution, however, could be Facebook, which is not only already in the relevant ad delivery business, but also pushing to bring that capability to mobile. Facebook already has the depth and breadth of detailed info that mobile advertisers want, and is now looking at how mobile users interact with other apps to deliver ads more efficiently, Scheuer says:

Facebook has the power to create targeted market segments, ones that are significantly more focused than just carrier name. And the now-public social network also has the resources to focus on post-click actions and backend – the unseen aspects of mobile advertising that truly matter to advertisers and can generate real profits.

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5 Comments So Far

  • Nelson Bostrom says:

    More mobile sites should adopt sign-on from social profiles to better learn about their visitors anyway, it’s probably 10x more valuable than the basic data you mention from the cell carrier (prepaid, carrier, device).

    • Anonymous says:

      nelson, I’m sure all the Ramblings readers really appreciate your shameful and gratuitous self-promotional posting. (For those with a real life who chose not to look up this clown, here’s how he describes his current company, Janrain:

      “Janrain provides a software-as-a-service user management platform with solutions for social login, social sharing and profile data storage/management to help companies improve user acquisition and build engagement…”

      Nelson, how is your proposal any different than requiring people to present ID every time they walk into a retail store, pick up their daughter at a mall, pay cash at a restaurant, go to a yankees game as a friend’s guest, grab a coke at a mcdonald’s, buy a slice of pizza place, visit a state park, watch a nephew’s t-ball baseball game, etc., etc.

      What I find amazing is that we seem to spend more and more money investing in businesses whose sole purpose is to extract personal information about consumers instead of creating services that actually improve productivity and grow GDP.

      The makers of WordPerfect, Lotus 123, Microsoft Outlook, Apple Itunes, Quarter Pounders and countless other products did not need to know what each and every consumer drove to work, wore to dinner, ate at lunch, went to college, and so on before they launched successful products. Instead, they used focus groups, product tests, and other market research tools.

      I find it quite ironic that the almost infinite personal information available to today’s largest brands hasn’t produced demand shifting business models.

      The greatest 20th century innovations did not require an inexhaustible profile of each American (European, Aussie, Kiwi…) before successful product launches and revenue growth. Paradoxically, how much personal information did Mark Zuckerberg have about his users BEFORE he launched The Facebook?

      • Anonymous says:

        The problem is no one wants to pay for anything when it comes to content on the internet. Ad revenue is what powers 95% of the content on the internet…. As long as that is the case, Nelson’s recommendation is actually a good one. And no, this is not Nelson’s mom…

        • Anonymous says:

          If you’re not his mom, you must be his wife or a co-worker. Forgive the bluntness but the idea is pure crap.

          Besides, you never answered my question about why I don’t have to use ID everywhere I go physically. What’s the difference between walking my dog at a local park and looking up that local park on the internet? Why don’t I have to notify advertisers and other interested parties that I’m taking my dog to the park for a walk, but under your proposal I have to identify myself to visit the park’s website?

          You probably also support planting chips in newborn babies so advertisers, government, health insurers and others can track every movement someone makes. Where does this lunacy end?

          it’s a wonder any products and services were ever sold pre-internet.

          More relevant to the immediate issue, today I maintain separate email addresses solely for logging into subscription base-services, signing up for access to websites that require it, and purchases I make. I don’t use a shred of real information unless I purchase something where it’s required.

          On the Internet I’ve been everything from a grammar school dropout to a post-doc at MIT. Is the quality of information websites collect really generating the bang for the buck?

          While I’m not naive enough to believe internet advertising has no effect, I have to seriously question its efficacy.

          When I need a new fishing reel, I research it. When my son wants a new hunting rifle, we research it. When my daughter wants new couture shoes, no advertiser is going to change that opinion.

          Does anyone believe for one second that because my next door neighbor wants a coupon to some retail establishment to reduce the cost of a gift for his obnoxious nephew and has to “like” that establishment on facebook to get it that he actually likes it?

  • Anonymous says:

    People do pay for content. For example, I pay for the WSJ, Barrons, The Economist and the FT.

    People are unwilling to pay for content they believe, rightly or wrongly, they can live without or find elsewhere.

    Sorry, Rob, although you do a wonderful job here, I for one wouldn’t be willing to pay for it. For me, at least, the information provided here is not actionable. Others may feel quite differently.

    Therefore, Nelson, the answer to the problem isn’t to require users to sign in with a universal ID so you can put a lojack on them to track their every click, as you propose, but rather a better solution is for content providers to enhance their content with actionable information so that people happily subscribe.

    (Think about it this way. Zoning issues not withstanding, imagine if every homeowner could turn their property into a park, how many people would actually pay to visit it? Perhaps if I owned 50-200+ acres people might be willing to pay, especially if I had something on the property visitors wanted to see. But the average homeowner with a 1/2 acre lot will not be able to charge anything. Some people may visit 1/2 acre lot properties if its free, but they’re not going to pay for something they don’t value. Therefore, the 1/2 acre lot owners need to add value to their property or perhaps pool their properties in some manner to create some unique value proposition — whole is greater than the sum of the parts model.

    But you don’t seem to have a problem that these 1/2 acre lots have little value. Instead, you say, let people visit for free but force the visitors to provide picture ID and personal information before they enter the property, which the property owner or its agent is then free to sell and use anyway he chooses after. I imagine there will be significantly fewer visitors to the these 1/2 acre lots under such a program.)

    The current model is broken because there’s so much mediocre content out there, the barriers to entry and exit are virtually non-existent, productions costs are extremely low and producers have varying utility curves (e.g., some people getting pleasure simply putting their thoughts on the internet while others wanting to build media empires).

    Eyeballs can and do scan a wide range of content, returning regularly to some places, less to others, and never again to most.

    When people pay for a service, they are (a) sticky, (b) more apt to use it regularly (not quite the same thing as (a) ), (c) willing to give a truthful identity that translates into higher ad dollars, (d) likely to tell colleagues, neighbors, friends and family about it and (e) but more importantly, give the content owner resources to improve the content to further differentiate its site.

    Nelson, you’re trying to build a business on the backs of mediocre businesses.

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