Contributed by James Lamberti, VP of Global Research & Marketing, InMobi / With contributions from Paul Chen, Papaya Mobile.
This is a part of InMobi’s thought leadership whitepaper series from the Mobile World Congress 2011 which focuses on concepts that will define the next phase of mobile advertising.
With the first decade of mobile advertising now behind us, developers can at best be described as pawns in another man’s game (Steve Jobs?) or worse, completely marginalized by monolithic telco incumbents. In this next phase of mobile advertising, developers will become the primary focus. The industry that once sought to manipulate and control them, will now find it essential to cater to their needs. The developer community will be a significant force in innovation and wealth creation in the mobile industry for 2011 and beyond.
Trend #1: (Lack Of) Innovator’s Dilemma
Consumers are way ahead of the advertising industry when it comes to mobile technology. In a world where the majority of media consumption among smart device owners is now mobile, ad spending should be much higher than the 1% or 2% we see today. The reason we see disparity in consumer behavior relative to ad spend is the result of a fixed web innovator’s dilemma. For publishers and advertisers in developed markets, there is simply nothing forcing advertisers to change. Consumers can be reached in many ways at scale and the existing media industry has only recently become comfortable with fixed web. Under these conditions, no one should expect a rapid shift to mobile advertising among existing advertisers.
Developers are different. They are 100% committed to mobile, have no preconceived notions about advertising, have substantial technical and analytical prowess, and collectively have a product or service desired by hundreds of millions of consumers globally. As Figure 1 below indicates, mobile apps are already a U.S. $2 Billion business for iTunes alone and growing faster than payments to record labels. Figure 2 shows the wealth creation in advertising occurring also.
Trend #2: The Mobile Ecosystem’s Bullseye
Using an influencer grid (see below,) it’s easy to see why innovation will come from developers. The grid is organized into seven mobile ecosystem segments going down the left side. Across the top, we have key areas of the mobile advertising ecosystem. In the cross sections we have defined three states: A notation of control, influence, or no influence.
Developers are the only segment of the mobile ecosystem that have influence or control in every dimension. Furthermore, in the next phase of mobile advertising the ad impressions controlled by developers will continue to grow, this will in turn push an ever increasing share of data and ad spend into the developer segment. Developers will find themselves a highly sought after group given their pivotal role in the mobile ecosystem.
Trend #3: Truly Global
Another critical dimension to consider is the global nature of developers. Unlike the rest of the media community, geography is irrelevant. Developers will chase a download frenzy in Norway just as happily and easily as one in Thailand. Figure 4 shows just how global the mobile advertising app ecosystem is with the majority of iOS inventory outside the US and Android showing the same trend.
In this new, truly flat world, borders don’t matter. Developers will find ways to innovate in mobile advertising that we’ve yet to even consider. “Our experience on the Papaya network is that mobile advertising plays a key role in revenue generation across all geographical demographics, whether it be the emerging markets, U.S. or Europe,” says Paul Chen, Director of Business Development at PapayaMobile.
Paul Chen adds, “As developers continue to find the most effective advertising solutions in different locations around the world, they will drive innovation for specific advertising mediums in an effort to achieve maximum ad revenue in those geographical areas.”
Trend #4: Developers Are Savvy Business People
Mobile gaming is great example of evolved business models emerging from the developer community. It is a highly competitive industry and the competition continues to increase. Given this, dynamic developers cannot expect to create a successful, well monetizable game without proper business planning. Developers have taken note. They are increasingly becoming more business savvy and understand the value in the implementation of effective monetization strategies.
As an example PapayaMobile, Android’s largest social gaming platform, has continuously evolved the monetization solutions they provide to developers. “In game banner ads used to be the status quo for monetizing freemium games. But as developers have become more attuned with other monetization and business solutions, PapayaMobile now must offer tools for wall advertisements, in-app microtransactions, support for various billing solution, and others,” says Paul Chen.
Developers are no longer an interesting byline of the mobile ecosystem. They are global, independent, innovative, and savvy technicians and business people. The rest of us will end up following their lead in the next phase of mobile advertising as a result.