Why Those Who Jump First Will Win A Pricing Advantage On Mobile: Amobee Boss

Why Those Who Jump First Will Win A Pricing Advantage On Mobile: Amobee Boss
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For all the talk of the rapid rise of mobile marketing, the truth is a little more sanguine according to those at the front line. Concerns over cost per click and a lack of internal capabilities are holding many brands back.

“The biggest barrier to our growth is market willingness to move,” says Liam Walsh, the local managing director of Amobee, which provides the services and tools companies need to execute their  plans.

Mobile advertising is effective, he says, even if right now it is not always efficient. But as brands become more engaged they will get better at it, which will feed into stronger ROI, he says.

Walsh fears, however, that a natural reticence has taken hold. “Do we really have to go through two to three years of studies about whether mobile works or not? Why would you do that?”

According to the Amobee boss, the main sticking point is basically fear — or at least discomfort.

“There are a few pieces to this. I have pitched to many marketers and this is what I see. They are worried about splitting up their budget, and adding mobile to the plan.”

But, he insists, marketers have to sell their mobile strategy up the chain.

“Product managers are generally fearful, because they don’t have good answers. The CEO might be convinced to invest money in mobile by technology people in California, but his managers don’t execute it because they are also fearful about getting a return.”

And that is where it breaks down, he says.

Walsh is a long time leader in the local digital marketing sector with stints at Fairfax, Facebook and, most recently, Kenshoo. He says he has seen it all before. “It is just like in the early days of the banner business.”

At this stage in the cycle, he says, there are only some companies that have the necessary culture and capabilities to leap in and really exploit the opportunity.

The good news for the early adopters, however, is that the  practice knowledge they develop now will put them in a good position to extract the best ROI by the time the rest of the market catches up.

“Take a scenario with hypothetical numbers. Let’s say a brand to takes ten per cent of their budget and agrees to spend it at $90 cost per acquisition on mobile, and spends the remaining 90 per cent at $45 on the desktop.

The reason they are paying such a premium on mobile is that when they start they are not very good at it, he says.

“But next year they will be better, and better again the year after that.

“By 2019, there will be a whole bunch of advertisers who think they can join the mobile revolution when the average has fallen and they will assume be able to extract that lower price right away.”

They are kidding themselves, warns Walsh, who insists there are no shortcuts.

“Sorry, but if you join in 2018, you still have to go through the pain of learning mobile. You have to hire all the people, develop all the institutional learning. It’s not like waiting for the price of a car to drop.”

In other words, the CPA you extract is a function of your own internal skills and capabilities as well as market demand.

“We are having the mobile advertising conversation right now with a bank. We are talking to them about personalised advertising, which is what we do for Optus.

“But it took about three years for Optus to build all of the technology and processes. We can probably compress it for you down to about 18 months to two years. But we just can’t roll it out off the shelf.

“Mobile is about 60 per cent of the Internet now. It’s growing rapidly, and yet many brands are still running all of their advertising on the desktop, which is only 40 per cent of the market.

“Let’s say the market is 80 per cent mobile by 2018. Will you still do all of your advertising on the desktop then? What about when the market hits 90 per cent?”

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