September 17 – Microsoft, after a long hiatus in advertising-related announcements, unveiled two new salvos in its bid for a major role in mobile advertising: a Mobile Advertising SDK for Windows Phone 7 and a Microsoft Advertising Exchange, claimed to be the first such platform to support real-time bidding (RTB). (See details on this Microsoft blog.)
On the principle that three data points close together define a trend, here are two more:
- DataXu, a leading demand-side platform (DSP) for RTB announced last week the “industry’s first” DSP advertising solution for mobile, GroupM’s B3 (using DataXu’s decisioning technology);
- Ericsson announced that, on September 22, it will announce AdMarket, a “an open marketplace for targeted mobile advertising through which Ericsson acts as a neutral broker” (in other words, an ad exchange) – see video here.
This is all good news for the mobile advertising market, which still trails online by about $60 billion worldwide. It shows that many of the technologies and concepts innovated for the Internet can help accelerate the mobile market and potentially avoid some of the pitfalls of fragmentation and inefficiency that have at times impeded the development of web advertising (at least on the display side).
The problem, of course, is that for an exchange to work – that is, to attract a critical mass of buyers and sellers and generate enough fees to cover infrastructure and operations – there needs to be sufficient liquidity to start with. This also goes for the highly-touted targeting capabilities of mobile: they’re only valuable if the resulting segments are large enough to interest advertisers, and we still appear to be short of audience.
Part of this is simply a factor of where we are in the growth curve, but there’s another things to consider in assessing the prospects of the mobile ad exchange concept: the problem of smallness. I mean smallness, both in terms of literal size and figurative impact, of the common formats available across platforms, especially as compared with the bigness of proprietary formats like Apple iAds. Proprietary formats may be more attractive than a 300×50 MMA banner, but they fragment the audience in a way that is not conducive to the exchange model. Advanced targeting may someday overcome this, but until then we appear to have a chicken-and-egg problem with mobile ad exchanges, even if they can do RTB.
So, what will it take for mobile ad exchanges to take off? Look for it when Google integrates AdMob mobile inventory into its AdX online display exchange.
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