Top 3 Themes at Boston Mobile-Ad Firms: Timing, Targeting, & TV

8/1/12Follow @gthuang

Mobile advertising is one of those tech areas that the average guy on the street might find boring. But it is quietly crucial to the way most of us interact with digital information and content—now, and (especially) in the future.

Think of it this way: If mobile advertising fails to take off as an industry, many of the sites and services you access on your smartphone or mobile device could cease to be free. Some would say mobile ads have already taken off—it’s hard to argue with the amount of money that Apple, Google, and others are pouring into the sector—but relative to TV, Web, print, and radio, mobile is still a small piece of the advertising pie (something like 1 percent).

And it’s been that way since the days of m-Qube, Third Screen Media, Enpocket, Quattro Wireless, and Where—all Boston-area mobile-ad companies acquired by big players since 2006. But local tech companies are making a big push, with some new approaches, to cash in on what observers say is the inevitable rush of dollars into mobile. (An oft-cited Internet trends report says that last year $30 billion was spent on Web advertising while $1.6 billion was spent on mobile advertising in the U.S., with both on the rise.)

Not surprisingly, people who are building businesses around mobile ads think the industry is entering a new era. And they may very well be right. “We’re in that next phase where companies are trying to push the envelope,” says Lars Albright, the CEO and co-founder of Boston-based SessionM. “Banners are a broken entry point,” he adds, referring to the practice of taking banner ads from the Web and applying the concept to mobile.

Albright, who previously worked at m-Qube, Quattro, and Apple, is creating a new kind of rewards-based ad platform at SessionM. The company’s bigger goal is to work with developers, publishers, and advertisers to make mobile ads work better, using a combination of analytics and game mechanics. Asked which buzzword he hates less, “big data” or “gamification,” Albright chose the latter for its specificity. (And, after all, SessionM uses a point system to reward consumers for interacting with mobile ads and media.)

But data has a big role to play here too. Adelphic Mobile, a Lexington, MA-based startup, is using predictive modeling and machine learning technology to help advertisers and publishers target ads and media to specific audiences. Adelphic can, in principle, help a restaurant chain tailor a breakfast ad campaign to reach, say, mobile users in the Boston and New York areas, of a specific age demographic, who tend to browse music or sports content from 7 to 10 o’clock in the morning. Doing this efficiently while reaching large audience segments is what differentiates Adelphic, says co-founder and president Jennifer Lum.

Like Albright, Lum has experience from m-Qube, Quattro, and Apple. Her Adelphic co-founder and CEO, Changfeng Wang, adds his experience from Enpocket and Nokia, as well as analytics work at various companies. Together they decided to tackle the problem of helping mobile marketers reach the right audiences quickly and at scale—which required a new kind of data platform.

“Because online ad-tech has evolved in a very impressive way, so much infrastructure has been built there,” says Lum. “People have been fixated on that—how to extend it to mobile, or mimic how online has evolved. That hasn’t worked. It really takes a different approach.”

Meanwhile, more traditional ad businesses are still being built, and most fall into one of three categories: ad networks, ad exchanges, and demand-side platforms (which help advertisers manage multiple exchanges and optimize campaigns—see Boston firm DataXu). “The pivots have stopped and the ecosystem has crystallized,” says Victor Milligan, the chief marketing officer at Nexage, a mobile-ad exchange that specializes in real-time bidding for advertisers. “People are coming to terms with what mobile is and what it isn’t.”

Milligan sees some interesting parallels between mobile advertising and the smart-grid energy industry, where he spent a few years running strategy and marketing for Martin Dawes Analytics. The fields both depend on analytics, transparency, and speed, he says. “Technology-dependent markets will go closer and closer to real time,” he says. “It’s true in energy and it’s true in mobile.” While the smart grid promises to help utilities adapt to changes in electricity supply and demand on the fly, a mobile ad exchange like Nexage tries to help advertisers and publishers optimize their business through an automated auction process for each ad impression.

And just like the smart grid, progress in mobile-ad adoption has been painfully slow. “Any change creates an expectation that businesses can adapt as fast as the market shifts,” Milligan says. But in the energy industry, he says, “most utility companies haven’t employed [the smart grid]. There’s a frustrating, annoying lag between the opportunities and the realizations. This is no different. It takes a long time for people’s competencies to catch up.”

Indeed, one of the problems mobile advertising faces is that consumers’ devices and software are evolving so rapidly that advertisers and tech providers are struggling to keep pace.

“The advertising community in general is much further behind the consumer than they were even in the go-go years of the Internet, because the adoption of the devices has been so ubiquitous and so fast,” says George Bell, the CEO of Jumptap, a Boston mobile-ad tech firm. “The Internet didn’t reach anywhere near this kind of penetration for four or five years. [Ad] agencies got to come along and improve their education over a slower period of time.”

In any case, Madison Avenue is certainly embracing mobile now, says Paran Johar, Jumptap’s chief marketing officer. “They’ve seen this movie before with the PC Internet. They know what click-through rate is, what rich media is,” he says. “It’s that same movie, but it’s on steroids.” (For more on rich media mobile ads, see Boston-area firm Celtra.)

So, I wondered, if we peer up from our focus on the Northeast and look at the broader mobile landscape, where is this all headed? From talking to industry execs on background, the general consensus is that Apple and Google will continue to build their empires, while Microsoft is becoming a more serious player in mobile software. Amazon could follow in the footsteps of Apple in terms of devices and content, but it also has tons of consumer data. Facebook will use its social-network data, but its mobile-ad strategy is still in flux. And look for everyone else, from Adobe to Zynga, to make a dedicated push in mobile.

Is there a dark horse in the industry? Well, interestingly, the folks at Jumptap say the big event they’re watching for is the next iteration of Apple TV. How that plays out in terms of software integration across different screens—phones, tablets, laptops, and televisions—could have big, unknown implications for mobile ads. Especially as Apple, Google, and others creating proprietary mobile ecosystems try to muscle in on TV and video ad revenues, perhaps by tying their mobile operating systems to their TV products.

“What if the equivalent of my Kindle Fire is a TV set?” says Jumptap’s Bell. “I don’t fear for what it means in terms of advertising—it’s probably promising—but I don’t know what the hell it would be.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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