Social Mode

It’s fairly obvious that the next “advertising” land-rush is in mobile.  Really, it’s been that way for a solid 5 years.   What’s not yet clear is how the marketplace will develop.   Up until the explosion of iphones and android there hasn’t been enough demand (inventory) to put into a marketplace that supports bidding, yield management and the associated structures.   It’s now time.

A couple of clear distinctions between mobile advertising and other mediums is how much more you know about the user and little real estate (display and attention) you can get from the user.   i.e. the targeting has to be GREAT for this to work en masse.

Here are my thoughts on what the basics of the algorithms would be for a great mobile ad marketplace.

Targeting

Targeting the user isn’t terribly challenging as a great deal of information is available to the advertising engine about a user.   Knowing where someone is and how often they frequent a location and browse certain info reveals pretty much as much as an ad server would need.

Targeting facets:

• Time of Day
• Location (lat/long)
• Demographic (gender, household income, age)
• Service Provider
• Phone/Client
• Connection Speed
• Segment (business user, soccer mom, etc.)

Yield Management

Targeting only gets you so far.  The most important aspect of “online” advertising isn’t hitting someone right the first go ’round, it’s getting the funnel right.  Can you take someone from initial view/siting/click of an ad through a transaction with the most profit possible?  that is the essential question in advertising.

Yield Management facets:

• User click history (time of day, location patterns)
• price per click/action/view
• advertiser account balance and history
• Time of Day
• Location Features (bar district, business, sports complex, etc.)
• type of advertiser (restaurant, national advertiser, services business, website, application)
• type of advertisement (offer/coupon, brand ad, registration, etc)

Creative Execution

Beyond getting the math right it’s important to get the creative – the design, content, UI, IA – of an ad correct.  Targeting and yield can only get you so far… if the ad stinks, well, it stinks.  Local ads are of a different type than Super Bowl ads.   What’s good creative in a specific time and location and context isn’t always what wins a CLEO award.

Ad Capabilities:

• Text only
• Display
• Connected to App
• Click to SMS/private offer
• Alerts
• Customized to user info
• Connected to Inventory Feeds (where it makes sense)

Bidding

To put the above three in play you need some sense of a bidded marketplace – some way for advertisers to compete for real estate.  Generally that was determined, on older local sites, by very basic algorithms involving who pays the most for the top spot within a category and location (e.g. who pays the top cost per click for Restaurant in NYC gets the top spot).

This approach is no longer sufficient.  The market is there to compete for “top spots.”  However, what’s changed is the concept of top spots.  Owning a keyword on a search engine, even if it’s a “local” search engine doesn’t matter that much and isn’t worth bidding on.   What matters now is are you the ad/sponsor/location/brand that pops up/shows up/is presented when the user passes through a particular latitude+longitude?

Amazingly, the world has been here before.  It’s called a billboard.   Very quickly that’s what local advertising online (in mobile apps) becomes –  a competition for a couple of premium “billboards” in navigation and “check in” apps and social networks.

Bidding algorithm will center on figuring out who pays the most, has the most inventory available and converts the most users over time.  You’ll pay more as advertiser if you are further away, don’t spend enough and/or can’t put buts in seats.  Figuring out how to report those metrics back isn’t that hard as more of our systems (e.g. FB Connect and Open Table and pos systems) become tightly coupled.

Recommendations

If you are still buying online ads based on category and general location keywords or IP location you are wasting your money. And if your ads are still “click” based you are wasting your money.  People don’t click on their mobile phones.  They act.

The Algorithm To Rule Them All (…Locally)

To be published soon!

it goes something like (and this is very much not real math):

show_particular_ad? = category_segment_action_history+historical_action_per_impression*(budget_remaining/cost_per_action) is greater than (other ads values in consideration based on basic relevance of lat/long, keyword, category).