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For those who rely on public transportation, mobile app HopStop can be a godsend. Enter your location, where you’re going, and Hopstop spits out the best route. As a free service operating at over 5 million mobile impressions per month, HopStop relies on advertising for its revenue.
The problem, even for a useful, popular service like HopStop: mobile ads might no longer “suck” in Steve Jobs’ famous words but the CPMs still do, particularly when it comes to filling inventory HopStop’s small direct sales force hasn’t sold.
“The eCPMs of mobile network ads are pathetic,” said HopStop CEO Joe Meyer. “We’re almost better off serving nothing. We serve on average one ad per page view. If you’re only serving one ad per page view, it better be a high CPM ad especially if your app is free.”
HopStop hasn’t yet tried Apple’s iAds — it isn’t ruling it out — but it’s instead hoping to tap into the Internet’s latest moneymaking machine: daily deals. Beginning in January, HopStop began earmarking inventory to displaying deals from Gilt Groupe and other deals services, although not Groupon and LivingSocial.
HopStop knows quite a bit about its users thanks to the trips they plan. If a user has entered in an address multiple times, there is a high probability that’s their home or work address, which can allow for very granular targeting down to even a one block radius. There are few other companies out there that can target you to that specificity.
This is crucial to daily deals companies when it comes to mobile. The relevance bar for a deal on a mobile device is far higher than email, since the matter of only a few blocks can be a, well, dealbreaker.
“There’s no one that we work with that does something like HopStop does,” said Jack Mitten, junior product manager at NY Deal of the Day – Daily News. “As the deal of the day and group buying space develops, there’s a real urgency in mobile.”
“People have this thought that one way [of advertising deals] works, but there’s more to the driving force than getting the click.” said Mitten, “I was talking to a friend whose wife is a vegetarian. There was a vegetarian deal right near him that he had no clue about until he saw the deal. The whole program is just to enhance and promote business and get new customers.”
The results so far have been very strong. The overall click rate of the daily-deal units was 3.35 percent out of around 5 million impressions. At this point, only a small minority of HopStop’s ad inventory carries deals, but it plans to bring on new services and devote more space to the offers.
The results hold out a promising new avenue for developers and mobile publishers as deals companies push into new avenues of distribution. Mobile is clearly the biggest focus for the giants of the space, Groupon and LivingSocial.
“How can publishers continue to pump in resources if the economics aren’t there?” said Meyer. “If publishers can’t support the growth of mobile through the revenue that’s coming in, it becomes dis-economic. I actually see the growth of mobile ad networks as being detrimental to the success of mobile publishers and the growth of mobile overall. We’d have to start charging and we already know that users don’t like to pay.”
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