Of devices and desires

Attending an early morning session at the bustling AdTech conference and exhibition this week in Olympia I heard Theo Theodorou promoting the Apple iAd format.

His pitch was interesting and persuasive, full of data on how mobile apps generate far more engagement than online rich media or even (so he claimed) TV.

He started by saying that iPads were massively dominant in the world of tablet computers. And to prove this he asked how many people in the room had iPads. Everyone in the room, apart from me, put their hands up. Theo turned to me with a sad smile and admitted that iPad use wasn’t universal yet.

At that point I admitted that I did have a tablet, but that it was a Samsung Galaxy (bought because it fits nicely into my jacket pocket). And therein lies a moral or two, I think.

First of all, don’t assume that because almost all London media types have an iPad it means that everyone has one. While smart phone possession is on the way to becoming ubiquitous in the UK (although even that will take a few years yet), tablet possession is limited to a small minority: 7.5% of the adult population this autumn according to Kantar.

And second don’t assume that all tablets are iPads. While no doubt the iPad is dominant in the UK market with nearly 75% market share, the market is changing fast and Apple may well see a market share nearer 50% within the next year or two.

The marketplace for apps though is different. In the smart phone market, iOS is far less dominant and Android devices lead Apple strongly. That is reflected in app downloads with Ovum predicting that 2011 will see over 8 billion Android app downloads compared with 6 billion iOS app downloads. And that difference is only set to widen.

But back to Theo. His proposition was this. TV is a great medium for driving emotion, but it is a one way medium. Online is a two way medium, but poor at driving emotional story telling. But iPad apps take the best of both worlds being both emotionally engaging and two way.

Because of this, long form ads work well on the iPad – they show a 6% click through rate and indeed time spent on an iPad ad is on average 60 seconds compared with 9 seconds on a web based rich media ad. The examples Theo showed us, ads for a car and a camera, bore out the potential.

Those are powerful data to support using iPad apps (and I suppose apps on any tablet device) as an advertising vehicle. So why is it that tablet apps are so engaging?

Accurate targeting, said Theo. And because the ads are intuitive and fun. And because you can touch the ads.

I’m not convinced that accurate targeting would have such a massive effect although I am sure it has some. It probably does enhance click through rate (although those of us with long memories can remember the (brief) time that online ads had similar CTRs).

But I think perhaps it is the game like nature of the ads that generates that length of engagement. And that is of course helped by the fact that you can touch the screen, and also because you are holding the device in your hands so that it is physically closer to you.

So perhaps it isn’t surprising that game-like ads do work well on a tablet.

But creating good interaction is difficult, risky and expensive. And it is not going to be appropriate for every brand. So much digital advertising (especially as TV advertising isn’t going to disappear any day soon) will remain as long form video.

The question for Theo is, will video ads on a tablet drive engagement, or will advertisers who want to use this format be forced into using “advergaming”. If that is the case then the market for tablet advertising must surely be limited.

Ten Cs of DAB

At the Intellect Consumer Electronic conference yesterday and heard Ed Vaizey speaking.

He is an engaging and amusing speaker – slightly “BoJo lite” perhaps – and he had several interesting things to say about digital radio.

Alongside the news that the switchover to DAB by 2015 is now just an “aspiration”, he made some excellent points about why digital radio hasn’t taken off in the way some predicted. The four Cs, he said: content, coverage, cars and consumers (although he did add a fifth – cell phones).

Always a one for lists I think there are in fact at least 10 Cs!

Content: of course. Radio generates deep engagement with its listeners. Without good content why would anyone listen to a new digital channel. And the furore around the threatened axing of  BBC 6 Music does indicate that digital radio can generate extremely loyal audiences.

Coverage: another no brainer. If DAB coverage is limited then people outside the coverage area, and also people travelling through or to areas that are not covered, will obviously be less than enthusiastic about it. Having said that according to uk-dab.info I should be able to pick up several dozen stations in SW6 – but I cannot pick up any. Coverage needs to be good coverage.

Cars: people in cars are a big part of the radio market; standards are starting to develop and reasonably cheap car converter kits are now on the market. But until motor manufacturers fit DAB as standard, people are unlikely to take the platform seriously

Cell phones: the same is true with phone. Many phone come with FM radio. Rather fewer with digital radio.

Consumers: well, they need convincing of the benefits. Why fix it if it ain’t broke, they will say. What’s in it for me if I switch? And the benefits aren’t immediately obvious to anyone outside the industry.

Continuity: that’s another consumer issue; in the short term, while FM and DAB are both available, consumers need to be able to switch seamlessly from one to the other, for instance when they move from an area where DAB is available to one where it isn’t.

Carbon: DAB needs to work using low energy – not because we are all told to be carbon conscious, but rather because technologies that use too much energy give out too much heat to be successfully miniaturised.

Cost: now that you can get a very nice Pure portable digital radio for £35, cost is far less of a problem than it was a couple of years ago; but the cost of radios that enable you to do more than listen is still a problem.

Certainty: the industry won’t invest without the certainty that DAB is going to be a success; government has a role to play here in identifying how they will make DAB happen.

And finally Commercial opportunities: what are the marketing opportunities on DAB that match and ideally go beyond standard radio advertising? If advertisers are not convinced of these, it’s hard to see how DAB stations will ever be commercially viable.

That’s 10 Cs I think – you can probably think of some more!

Apple pi?

It’s not often that Apple is out of the news. But recently a couple of quite negative stories about their mobile strategies have been circulating.

First publishing, and Apple are facing accusations of censorship. Apple, in pious pursuit of a moral web, have been upsetting some major and perfectly respectable German publishers. The story goes that not only have Apple refused to allow certain mobile apps they disapprove of to be sold via their apps store, they have also demanded a zero nipple count on content accessible via iPhones.

This, some say, leaves them open to the accusation of trying to censor printed material!

Well maybe. But remember, Apple is an independent corporation and is, surely, quite entitled to sell whatever it likes in its own shops. And if publishers don’t like that, then they need to get their publications distributed elsewhere.

The second story is about advertising. According to Addictive’s excellent weekly Mobile Fix email, Apple have effectively banned Google and Microsoft from serving ads with any iPhone apps. This means that advertisers will need to serve ads via Apple’s own iAds system. 

That is likely to be a pain for advertisers. A new system to design ad formats for; new media and ad serving processes to understand; and perhaps worst of all the danger of yet another stream of data which doesn’t use quite the same assumptions and measurement methods as other data streams.

Not ideal!

And yet does it all really matter? To many Apple is synonymous with mobile apps. But the truth is subtly different. There are other mobile platforms out there. And they are already delivering substantial numbers of apps to mobile users.

After all, while i-phones may have 25% of the Smartphone market, they don’t have 75% of it!

So if other platforms are more flexible than Apple then they have an opportunity to outflank them and attract publishers and advertisers frustrated by the restrictions imposed by Apple. And that could well lead to a mobile content market that is larger and more competitive than it would be if a single retailer has a quasi monopoly. And that would be to everyone’s benefits. Even Apple’s.

Making online media pay

I went to a Westminster eForum meeting yesterday. On the agenda was “The Future of online content” and much of the discussion revolved around business models.

Several contributors seemed to feel that advertising revenues would ride to the rescue of media owners and that other revenue models were not worth bothering with. In particular video advertising was held up as a powerful revenue generator.

Well,  it’s true that you can pay over £20 cpm for some video advertising inventory. But you can also pay £2 cpm! The reality is that the marketplace for video advertising is still forming and value is still being established. OK – online you can click through to a website from an advert – but you can buy TV advertising of £3.50 cpm or less, and even primetime can be bought for well under £20. Is a pre-roll online ad worth so much more than TV?

In addition, does a linear video ad, which by necessity has to be capable of delivering its message without audio, represent the best way of advertising online? Surely more interactive formats are likely to be more engaging.

Given that online display revenue actually declined last year in the UK it seems unwise to rely on video advertising to rescue the online media industry. And while video advertising will no doubt have a part to play, media owners need to examine all other opportunities. These will include:

• Subscription – possibly along the lines of that being trialled by Johnson Press, or possibly of certain premium elements of a site – which common sense would dictate will be elements that are hard to find elsewhere and which are particularly suited to delivery in an online environment
• Data - which can be used to help advertisers understand marketplaces, deliver advertising messages that are effective and develop new products and services
• Syndication – but only where this doesn’t have a major impact on subscription revenues
• E-commerce share – which can involve specially developed readers offers or simply a share of revenue from sales made by third parties
• Pay to participate revenues – which might include fees for joining communities (e.g. dating), talking to specialists (e.g. astrologers), competition entry fees, and fees to participate in online games and virtual environments

Of course, advertising will also be an important source of revenue – indeed it may remain the largest source of revenue for many media owners; but on its own it is unlikely to be enough to be enough to deliver a robust online business for most media owners.