By Tsafrir Peles

Mobile advertising is expected to grow from $1.6 billion worldwide in 2010 to $3.3 billion in 2011, and will reach $20.6 billion by 2015, according to Gartner research released June 16.

However, so far, profits are being enjoyed mainly by wireless carriers, technology providers, a few ad networks, aggregators and, to a lesser extent, publishers and consumers.

But the mobile realm is not yet profitable for most advertisers, who are spending their money without gaining bottom-line results largely because they lack the data required to understand the value of their campaigns.

In fact, for the most part, they are unable to even see what they are paying for. And, clearly, if advertisers do not sufficiently benefit, mobile advertising will simply not reach its potential.

Adds up
Amazon and eBay – with more than $1 billion and $2 billion respectively in mobile commerce revenue last year – have proven that it is possible. They are the exceptions that prove the rule, though.

These marketers are able to rake in profits due to their control of every aspect of the value chain – smart and precise media buying, through offers and creatives to conversion funnels and mobile commerce platforms including shopping carts and checkout options.

There are also some direct response clients – traditionally ahead of the curve in terms of advertising technology – who are already able to profitably buy mobile advertising.

Scale, however, is still inadequate, due not to a lack of supply, but rather to the limited liquidity of inventories.

Now the stage must be set for advertisers to stop wasting their money and start reaping the rewards of mobile advertising.

The similarity between mobile and online advertising must be recognized, shortening the learning curve as well as the development of efficient media buying tools.

The additional targeting capabilities inherent in mobile advertising technology should be used to further leverage smart and exact media buying.

The carrier, network, location, and device have significant influence on campaign performance and if taken into account – in addition to the common online/mobile characteristics – will provide even better results for mobile advertisers and publishers.

Best practice
For mobile to actualize its promise, several best-practice tips should be employed:

(1) Measurement and tracking: Providing advertisers with in-depth visibility and ongoing updates regarding their campaigns, i.e., total campaign tracking across the entire value chain and multiple traffic sources simultaneously, enabling a clear picture of the complete process, insight into whether advertisers are actually getting what they have been promised and valuable knowledge to be used in future campaigns.

(2) Precision targeting: Enabling sophisticated targeting based on smart, real-time campaign data and analysis, capitalizing on the additional targeting criteria available in mobile, including carriers, operating systems, networks, device make and model and time schedule, and (b) on-the-fly, instantaneous optimization throughout the entire course of the campaign and down to the individual clicks and user parameters, allowing smart budget allocations on the best-performing mobile channels and spending only when it really works.

(3) Engagement and conversion: Identifying the most effective funnels to yield increased conversion and higher value for every dollar spent and increased interaction channels for higher user engagement.

(4) Efficient marketplace: Transitioning media buying from a closed to an open trading environment and into a state of liquidity, which will enable greater volumes and more cost-effectiveness for advertisers and better yields for publishers.

The future of mobile must include positive ROI for advertisers such as engagement and conversion, an increasing number of aggregators and exchanges, and the widespread use of advanced buying (DSP) and yield management (SSP) tools.

Once advertisers can fully optimize their campaigns and once inventories have been set free to enable unlimited open trading, the actualization of mobile’s full potential will be possible.

Tsafrir Peles is co-CEO of DSNR Media Group – DMG, Ra’anana, Israel. Reach him at [email protected].