We caught up with Joe Prusz, SVP and Head of Mobile for Rubicon Project here at Mobile World Congress in Barcelona, to get his thoughts on the company’s 4th Annual Global Mobile Advertising Survey, which was conducted in partnership with ExchangeWire.
Q1: Overall Joe, what would you say are the most important findings in the report?
Without a doubt, the most important global finding is the continued and dramatic forecasted growth of automated private marketplaces, which we call “Orders,” across all regions.
One of the key challenges in Mobile is the sheer number of Apps (millions in both the Apple App Store and Google Play) that marketers have to wade through. Private Marketplaces allow buyers and sellers to easily package and transact the highest quality audiences, at scale.
No wonder, taken in aggregate, the buyers we surveyed around the world are predicting a 27% increase in spend in these channels.
After seeing mobile orders on our platform grow by 1,400% in 2015 and then reading these 2016 global forecasts, it is clear to us that these programmatic and efficient, yet controlled and private settings — that now support both non-guaranteed and guaranteed orders –are rapidly becoming an essential part of buyers’ and sellers’ programmatic toolkits.
Q2: Is there anything specific to the North American market that stood out to you?
Yes. An interesting finding in the North American region is the shift of some dollars formerly spent in private marketplaces to Guaranteed Orders (so called “Automated Guaranteed”). This reflects the US and Canadian markets’ maturation in programmatic, and their desire to automate the laborious and painstaking process of sourcing, negotiating and buying media, executing guaranteed campaigns in real time, and then manually reconciling everything from performance and attribution to billing and reconciliation.
Q3: What did you find most surprising in the report this year?
Sitting at the intersection of two tsunamis of change — consumer adoption of mobile and the rise of automated and programmatic advertising — this shift to PMPs we call “the flight to quality” is now being lead by a new breed of brand direct buyer that now reflects about half of the brand buyers we surveyed.
These brand direct buyers told us that they are moving fully 80-100% of their mobile budgets into these automated private marketplaces, wherein they can hand-pick their seller partners yet execute programmatically via RTB at scale. These trailblazers also said they expect to spend more on video and native in-app ad formats (spending more on mobile native than on any other format), and plan to dedicate 81-100% of their mobile budget to location-enabled inventory to better connect with consumers on the go.
Q4: You surveyed sellers for the first time this year. What were the highlights of those findings?
Yes; and we are glad we did and will continue to do so going forward.
On the seller front, the survey shows that — more so than in EMEA and LATAM, but not nearly as much as in APAC — sellers are successfully monetizing mobile app inventory. Sellers in North America say their revenue comes from: 18% In-App vs. 84% Mobile-Optimized Web & Tablet (standard Web).
As we continue to evolve to more of a mobile-first culture in this country — and provided the many projections in the industry on the mobile tsunami prove true — this will likely shift to look more like the results we saw in APAC: 71% In-App vs. 29% Mobile-Optimized Web & Tablet (standard Web).
Given where North American sellers are in this transition to in-app mobile revenue vs. mobile optimized or standard browser, North American sellers reported the 75% of advertiser demand is still primarily for standard banner formats, with video consuming the remaining 25%.
To continue our comparison with mobile first APAC, their distribution is more even across standard banners (36%), rich media (9%), native (18%) and video (36%).
Finally, reflecting this lower volume of monetizable in-app inventory in the US and Canada, sellers in North America (at just 14%) lag behind the leaders in percentage of available inventory that is location-enabled: EMEA (35%) APAC (33%) and LATAM (17%).
Q5: What is the significance of these findings and implications for the programmatic marketplace and growth across North America and globally?
In North America, while 2016 marks the first time we have asked mobile buyers about their use of location data — so we can’t compare to 2015 — we did make note of an interesting bifurcation seen in agency spend on location-enabled mobile inventory.
While 33% of North American agency buyers say they will spend between fully 81-100% of their client’s budget on location enabled inventory, another 22% say they will spend nothing (0%) on such inventory.
There are a couple of folks in the middle (another 22% falls into the 41-60% of spend range, for instance). But, to me, this suggests the maturation of the mobile-first agency in North America, with proven expertise in location-driven mobile conversion campaigns, most likely executed on behalf of retailers and restaurants, with some CPG clients trying to drive in-store purchases.
Also specific to North American agencies, we had the second highest percentage of agency buyers (92%) purchasing native advertising, with 8% of them saying they spend up to 40% of their mobile dollars on native formats.
Globally: As we noted in our press release, 100% of surveyed buyers — be they brands, agencies or ATDs and DSPs — in APAC, North America, and LATAM predicted that their spend on mobile video advertising would increase in 2016, and 90% of buyers In EMEA agreed. Meanwhile globally buyers indicated an aggregated 21% year-over-year decline in demand for standard mobile banners, opting for more engaging formats like video.
Coupled with the anticipated increased commitment to mobile native, this finding suggests that all advertisers are “getting the mobile memo” and seeking to connect with consumers with more personalised, engaging and contextually integrated messaging.
The implications here are clear. Not only will sellers run out of video inventory — especially here in the US as we head into the most heated months of the presidential election — but they will be challenged by the lure of high video CPMs to find new and affordable ways to create net-new mobile video inventory.
Meanwhile, as they struggle to do so, sellers will — on the one hand — have to turn away some advertisers and — on the other — see a rise in mobile video CPMs as a response to chronic scarcity exacerbated by increasing demand.
Q6. What should publishers/marketers take away from this?
- With this increased spend coming to PMPs, sellers (desktop and mobile) should be even more aggressive with their Private Marketplace and Guaranteed Orders strategies. Packaging up their inventory with data will allow them to bundle audiences across devices and media, and also help attract buyers looking to advertise for a particular occasion or during peak seasons (elections, holidays, Super Bowl, Olympics, etc.).
Adding PMP packages to our Guaranteed Orders platform is a matter of a few easy clicks, and sellers will be alerted via email once a buyer has expressed interest in negotiating a schedule and a fixed price.
- Given this growing global demand for mobile video, sellers need to embrace new innovations, such as InLine outstream video for mobile web. These units insert a video player into regular text-based articles, autoplay when they come into view, have user activated audio and stop or disappear when scrolled out of view. We also support more than eight varieties of mobile in-app video, including interstitial, expandable, pre- mid- and post-roll, rewarded video and more.
- Mobile Native: With all buyers plannings to spend on mobile native, and especially with the rise of ad blockers around the world, this report should read a clarion call to all sellers to get serious about their mobile app strategies. It is time to upgrade to one of the many app templates that support native ad formats, and to start to court these brand dollars in earnest.
- Upgrade your PMP and Automated Guaranteed strategy: If you want to compete for the best mobile inventory, formats and audiences in today’s mobile media landscape, now is the time to master both automated guaranteed orders and mobile private marketplaces. #NoPressure, but eMarketer says mobile programmatic will overtake desktop programmatic and will account for the majority of U.S. display ad dollars by 2017. Time to get busy.
- Look to both mobile web and mobile apps to get the video impressions you need. The unique thing about mobile is that people are willing to watch branded video outside of a YouTube-like video context. They are used to watching mobile interstitial video between levels of gaming experiences. They often stop scrolling and watch videos shared by their friends on their mobile social media and messaging apps.
To paraphrase Greg Stuart, Global CEO of the Mobile Marketing Association (MMA), buyers should buy up all the mobile video inventory they can get their hands on. For the moment, it comes at a dramatic discount vs. desktop yet is more welcome to consumers and — according to the MMA’s SMOX research — more effective.
- Native ads generate 2-to-5 times the consumer engagement of mobile banners (source: InMobi). Until now, they have been the exclusive domain of Facebook, LinkedIn, Twitter and messaging apps like SnapChat.
But consumers don’t spend all day in those apps. They read the news and sports scores, make dinner reservations, trade stocks and navigate their daily lives via mobile apps.
That’s why — with OpenRTB 2.3 for native ads — we as an industry have erased the technical barriers to buying native units in the world’s most premium apps. They have loyal audiences comprising the most attractive consumer targets anywhere in digital media, and you already trust them today for both conventional and video advertising. Native in-app is the natural next step.
Q7. What’s holding programmatic investment back?
The automated buying and selling of mobile advertising has increased dramatically over the past year. For instance it now amounts to more than ¼ of our revenue worldwide, and is the fastest growing part of our business.
But there are still some unresolved obstacles that are holding programmatic investments back. Primary among these are ongoing issues around standardization, such as the one our partner Josh Speyer, CEO at AerServ wrote about recently in a bylined article on the challenges of mobile video.
Just like it took several years for the industry to standardize on a common device identifier for iOS and Android, we also need better standards to ensure all DSPs can accurately and effectively buy all of the exciting video formats that Mobile has to offer. Many traditional video-first DSPs aren’t equipped to buy all of the engaging formats we enjoy in Mobile, making standards all the more important to bringing more programmatic dollars to Mobile.
Also, many DSPs lack practical experience with — and therefore are reluctant to put resources toward — native advertising formats overall, and especially in mobile — despite all of the work we have done as an industry with the IAB on the OpenRTB 2.3 spec for native ads.
As a result of these two factors, DSPs only see and bid on a fraction of the mobile inventory available in-market and often wait until richer ad formats mature before doing the work required to support them. As a result, it takes time, combined with market-making activities from mobile exchange leaders, to help DSPs prioritize the work required to support new standards and richer formats.
In the long term, DSPs will be motivated by the ongoing migration of dollars to do the work required and these issues will be resolved. But in the near term, buyers can leverage mobile-first DSPs and/or work directly with exchanges with expertise in mobile to even gain access to scalable cross-screen audiences.
Finally, in this industry, the accuracy of data is paramount; especially when buying and selling mobile ads. Brands and sellers may hold back on heavily investing in programmatic because they mistakenly associate the technology with some of its initial challenges (e.g. imprecise geotargeting, something that has long since been resolved with the advancement of location technology).
Once brands and sellers alike understand the entire programmatic ecosystem, and the new technologies available today — for real time and contextual targeting, header bidding, native, video, and CRM-driven brand building — we’ll see budgets shift dramatically into programmatic buys.