Will Mobile Advertising Make Same Mistakes as Desktop?

In the display world, unsold inventory abounds, low pricing has become the norm, and brands continue to doubt its efficacy. Based on research and comments from Digiday’s Mobile conference in New York on Thursday, mobile appears headed in the same direction.

According to Erin Wilson, director of mobile, DataXu, a whopping 87 percent of the mobile ad inventory from DataXu’s clients goes unsold. To put that in perspective, Wilson provided several other eye-opening stats about DataXu’s sellers: Weather sites lead the pack by selling roughly 18 percent of their mobile ad inventory, while finance sites sell just 10 percent, portals just 6 percent and home-and-garden properties a pathetic 1.5 percent.

That means that, like the online display business, mobile publishers already desperately need ad networks and exchanges to unload unsold  — despite the immaturity of the medium. “We don’t want to make the same mistakes as we did in display,” said Wilson.

According to research released earlier at the event by JumpTap, 46 percent of mobile ad inventory is sold by ad networks and 12 percent via exchanges. Just 30 percent of mobile inventory is sold directly by publishers.

Wilson argued that mobile consumption is growing so quickly that brands haven’t been able to catch up. That’s probably partially true; according to JumpTap, 69 percent of advertisers the company surveyed spend less than 5 percent of their budgets on mobile.

Naturally, Wilson contended that sophisticated ad technology like demand-side platforms and real-time-bidding platforms can unearth lots of hidden value and demand in all that unsold inventory. But aren’t brands supposed to be so in love with mobile that all this ad tech wasn’t going to be necessary (at least for a while)?

The mobile ad market is growing at nearly a 50 percent clip and should reach $1.1 billion this year, per eMarketer. Advertisers are supposed to be enamored with the idea of targeting users on highly personal devices where engagement levels are high, and the targeting options are slick and sophisticated.

But, according to Jerry Rocha, vp media solutions at The Nielsen Company, while “mobile video is selling at a premium right now, there are companies that can’t give away static [display inventory] right now.” Thus, networks and exchanges are rising to prominence. Google announced last week that it plans to add mobile to its exchange purview shortly.

But some see that as a mistake. As with display ads, ESPN wants no part of the secondary market.

“As a premium publisher, you are best suited to represent your own inventory,” said Brian Colbert, director of mobile advertising sales, ESPN. “Mobile display [is starting to get] commoditized already. I see it as being very valuable. We’re hoping it doesn’t migrate to this commodized market.”