The future of ads on mobile devices?

by on February 11, 2013 at 2:08 am in Economics | Permalink

The Chad2Win app was developed by a Barcelona-based company and while it was only launched last month it has already attracted close to 100,000 users. All these early adapters are being given a cent for each ad they look at and three times amount if the click on it.

Mind you it is not easy to reach the maximum monthly payment of €25 and to get there a user would have to click on more than 800 ads or nearly 30 different banners every single day.

Experts who have looked at the business model have suggested that most normal users are unlikely click enough ads to make themselves more than €10 a month.

Volkswagen, Panasonic and Spanish lender Caixabank have all agreed to advertise on the app which is only available in Spain. It does not appear to have wowed users and has a three star rating among android users while those who have signed up using their iPhones have decided it is only worth two-and-a-half stars out of a possible five.

Here is more.  Overall I see the collapse in value for ads on mobile devices as a major problem facing mainstream media at the moment.  No one wants to view an ad on a mobile device.  Economic carnage will result.

Firat Uenlue February 11, 2013 at 2:24 am

whilst no one may want to see an ad on a mobile screen there are other ways to monetize. micropayments are much easier on mobile devices as billing can be done through the carrier: wanna read an article, pay 2cents through your phone bill and enter a pin number for security, done. successful mobile ads have a huge return on investment. check out tomi ahonens presentations on youtube or his blog ( http://communities-dominate.blogs.com ), he is a great speaker and gives many nice examples. these include a japanese magazine app that charges higher rates than even the biggest TV shows (!!!) and companies that boosted their revenue simply by mobile-optimizing their websites. other companies had great success by using SMS (yes, simple SMS) for their ad campaigns. Mobile will not only save some industries but also develop new ones, it is just a matter of creating decent business models. I for one am thrilled by the opportunities presented by mobile payments and mobile ads.

Rahul February 11, 2013 at 2:54 am

“Economic carnage will result.”

Hardly. You panic easily.

John Bauman February 11, 2013 at 3:21 am

Yeah, I’m sure these people who need cash so badly that they’re willing to get a tiny amount for clicking on ads are exactly the target market advertisers are after.

Ryan T February 11, 2013 at 6:35 am

“No one wants to view an ad on a mobile device. ”

Shouldn’t this read “no one wants to view an ad?”

Firat Uenlue February 11, 2013 at 6:47 am

amazon´s ads are so good that people willingly check their website for ads – people do not even realize that they are looking at ads as the quality and degree of personalization are so high. people willingly give amazon more data to work with because they want even better ads. mobile allows for an even greater personalization, ads delivered with an amazon-like quality would be a boon to any company.

Rahul February 11, 2013 at 7:23 am

Who are these people? I don’t know anyone who “willingly check their website for ads”.

dan1111 February 11, 2013 at 7:36 am

I haven’t done so, but I do think that better targeting makes ads a lot less annoying.

Rahul February 11, 2013 at 7:42 am

Agreed.

liberalarts February 11, 2013 at 7:58 am

Maybe they are the same people who get excited about watching advertisements during the Super Bowl. Not I, but I have heard people proclaim that.

Claudia February 11, 2013 at 8:13 am

I only watched the Super Bowl for the ads, okay and the half time show. It’s fun. Also I read the ads, even like the ads, in my women’s magazines…they are part of the point. But I really don’t like pharmaceutical ads during news shows, reminds me that getting old stinks. I like how Amazon tells me what books to try, though I have to admit clicking on books here seems to confuse it about my reading habits. I have high hopes that technology giving individuals more control, after some adjustment (economic carnage?), will lead to a better outcomes.

I February 11, 2013 at 9:29 am

do

Noah Yetter February 12, 2013 at 11:12 pm

They’re so good you don’t think of them as ads. He’s talking about their recommendations. Which, of course, are just links to products that they wish to sell you, and are therefore arguably ads.

zbicyclist February 11, 2013 at 9:48 am

Amazon’s recommendation engine — which are basically ads for Amazon — are useful to me and I always look at them and occasionally buy.

I would imagine that they are also ads for the book, i.e. that publishers can bid their way higher on the recommendation lists, although I don’t know for sure.

jpa February 11, 2013 at 12:40 pm

Look at sub. numbers on Youtube channels for ad campaigns like Old Spice, Bud Light, etc… people subscribe to be notified when new ads are created.

dan1111 February 11, 2013 at 7:35 am

This exact same business model was tried with desktop web ads in the early days of e-commerce (I remember it around 1999 or 2000).

I don’t think it lasted. I did get one check out of it when I was in college, though.

I don’t see how it works as a business model. Wouldn’t people clicking on ads just to make money have a very low conversion rate into customers?

Adam February 11, 2013 at 9:46 am

Yeah, that was my thought exactly. Can’t remember the name of the company, but I recall that they took over a strip of your screen and looped ads to you continually. There was some hype around the notion that they were logical evolution of the “attention economy.” Surprise, the handful of people who are willing to stare at ads for a few pennies a shot aren’t a very desirable demographic.

dan1111 February 11, 2013 at 10:20 am

And the people who install software to automatically move the mouse are an even less desirable demographic.

Dingerz February 12, 2013 at 12:51 am
Iowamatt February 11, 2013 at 8:46 am

This reminds me of a speculative exhibit at the Chicago Art Institute, which imagined how augmented reality might play out. Users have an option to turn the ads they see up or down, and their account rises or falls depending on their exposure to ads.

http://vimeo.com/8569187

Mark Thorson February 11, 2013 at 9:38 am

Is there an app that clicks the ads for me? How is that app advertised?

dan1111 February 11, 2013 at 10:55 am

Obviously the optimum place to advertise that app would be on the service itself!

Brock February 11, 2013 at 9:42 am

dan1111 is right. They tried this before, with the desktop web. My roommate would click on it for hours. I however had a job that paid $10/hour, so it wasn’t worth even a small fraction of my time.

“No one wants to view an ad on a mobile device.”

But this is the truth. The small screen makes them so annoying. And how is it possible that Facebook, of all companies, shows me ads I am completely uninterested in? It has my social graph and interest graph; how it might think I’m interested in photography or whatever is beyond me.

William Gadea February 11, 2013 at 9:43 am

In an odd bit of synchronicity, the next item after this one in my RSS feed was a blog post by venture capitalist Fred Wilson. He writes:

“The mobile advertising market was estimated at around $3bn in 2012 but it is growing twice as fast as app purchases and is projected by Gartner to be over $20bn by 2015, a 90% annual compound growth rate.”

He does add this:

“I do not believe that we have yet cracked the code on mobile advertising. Mobile native approaches like Twitter’s promoted tweets show the way. Interruption and “display” models aren’t likely to work in mobile so we will need ad formats and solutions that are truly native in the mobile app and browser. The market is quickly innovating and I believe we will see a number of interesting models emerge this year which will cause the mobile ad market to grow quickly.”

If you see a collapse in value, I would be interested to know what the driver of it might be. The good thing about advertising on the internet is that results can be measured with exactitude. If mobile ads didn’t work, they wouldn’t have lasted more than a month. It is true that mobile ads have much less value than desktop ads.

Regarding the business model you reference, it has been tried many times in the States, and is just not taken seriously by the VC community any more. Perhaps the unemployment rate in Spain is giving it a bit more pop?

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