As mobile phones evolve, mobile advertising is evolving, too.
Already, we've seen a shift from tiny text and banner ads to more sophisticated efforts. Some are trying to captivate you with mini-games, interactive widgets, and contests. Others serve up a specific deal based on your location.
And while today's mobile ads aren't doing too poorly -- 60% of mobile users click on mobile ads at least one a week, according to a recent report -- there's still a lot of room for advancements as the industry matures. (Especially considering that a lot of those "clicks" are probably by accident.)
These are the trends we expect to see in mobile advertising over the next several years. We hope the result for users will be a less annoying, more useful ad experience.
1) More interactivity and "apps as ads."
You use your phone for different things than your laptop and your TV. So ads should be different, taking advantage of unique things you can do on your phone -- like touching its screen, moving it around, accessing its camera, and using it anywhere.
That's the basis for interactive mobile ads, or the concept of building ads like mini applications. Apple's iAds are perhaps the most famous interactive ads -- letting you explore a tiny virtual world inside the ad, watch video, enter contests, play games, etc. -- but they're far from the only ones. Other companies like Medialets and Crisp Media offer similar tools to app makers and ad agencies.
We expect to see more of these interactive "apps as ads" as brands and agencies discover all the things they can do with mobile ads. The key is figuring out a way to make these ads useful and engaging, not just annoying pitches.
One big question is whether people will care enough to bother playing with these ads, or if they'll ignore them. Another is whether they'll actually buy stuff.
For an example, here's a screenshot of one of Apple's early iAds, where you could goof around with the way this kid looks.
2) Deals and rewards, not just empty pitches.
One of the coolest mobile ad models we've ever seen is from a new startup called Kiip. Their ads -- rewards and coupons -- show up in mobile games when people reach certain points in the game. For example, if you beat a level, you might be rewarded with a free cup of coffee or a discount on new shoes.
We're also intrigued with real-time local offers like the new Groupon Now service from Groupon.
The idea is that you can get a short-term deal on something right now -- like a sandwich or a haircut -- which encourages you to do something right away. This is the sort of thing that could be expanded into an ad product for other apps over time, if Groupon wants.
The big idea is to give people a reward or save them money for using these ads. That seems more worthwhile than just sticking ads in someone's face.
Here's how Kiip works:
3) Companies using cool mobile products to reach consumers directly, instead of ads.
New distribution tools like the iPhone App Store are giving brands unprecedented direct access to consumers, without the need to necessarily buy actual ads to reach people.
Take Nike for example. Sure, it can buy online and mobile ads. But thanks to Apple's iPhone and the App Store, it can make cool mobile apps -- like the Nike+ GPS app for tracking your runs and bike rides -- that may generate as much goodwill and purchase intent as a banner ad.
That's not to say that Nike won't buy any ads anymore -- of course it will -- but it's getting new, direct routes to potential customers via mobile devices, which it didn't have before.
In some cases, brands may find that it's more effective to spend money on marketing products instead of just buying mobile ads from media companies and ad networks.
4) Ads helping save you money on mobile gadgets or services themselves.
Wouldn't it be cool if you can get a discount on mobile service, or even on the price of your gadgets, if you agree to spend some time with ads?
Amazon is leading the way here with its new Kindle with special offers, which is priced $25 cheaper than its ad-free Kindle models, with the requirement that you see some ads instead of its typical screensavers. Since its launch, it has been the best-selling Kindle that Amazon offers.
This may be the future of how gadgets are sold. If companies like Amazon, Google, mobile carriers, and others figure out that they can earn a certain amount of advertising revenue per customer, per year, they may subsidize your device or service.
5) Mobile ads linking up with mobile payments to "close the loop."
Mobile ads have information about you that other types of ads don't, including your location and the apps and music on your phone (Apple's iAds). But in most cases, they still can't tell the ad buyer that you've purchased something after seeing the advertisement.
But now that companies are trying to turn your phone into a mobile wallet, the opportunity to "close the loop" is growing. Companies may be able to know that you've made a purchase after seeing an ad, even if you're buying something in person at a local business -- not just an online shop.
Beyond giving everyone a better idea of which ads are working, one useful byproduct might be figuring out how to show you better ads or offers, which actually get you to buy stuff based on seeing them.
MORE FROM OUR SPECIAL REPORT ON THE FUTURE OF MOBILE:
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See Also:
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The Future Of Mobile Advertising: Less Annoying, More Useful (AAPL, GOOG, AMZN)
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