Why Your Mobile Ads Have Low Return on Ad Spend

Kargo
Kargo
Jan 24, 2018 · 7 min read

Originally ran on ANA’s Marketing Knowledge Center on January 14, 2018

With consumers spending an average of three hours a day on their smartphones, one would believe it self-evident that mobile is the most important screen on which to be seen. So why are so many brands convinced that mobile has a low return on ad spend?

Ed Romaine, CMO at Kargo, dispelled the myth that mobile is a poor advertising platform by identifying the likely reasons that brands’ mobile campaigns may be underperforming. He also shared his insights on how to address each issue, so that future campaigns can be better optimized.

Why Your Mobile Ads Have Low ROAS

Lately, there have been rumblings in the ad industry that “mobile has a low return on ad spend (ROAS).” My experience in mobile, and advertising generally, tells me that, if true, it’s certainly not because mobile is a poor platform to reach consumers — by all accounts, mobile is an incredible platform on which to reach consumers. According to TechCrunch, 80% of the US population not only owns a mobile phone, but sleeps with one. And as television becomes ever more fragmented (who’s watching the 443 new scripted shows this season?) and print publications are increasingly transitioning to or being eclipsed by digital ones (which are read, you guessed it, on mobile devices), the only place where you can truly reach an audience at scale is on mobile.

Additionally, having conducted a fair amount of research with partners like Kantar/Millward Brown, NCS, Nielsen, Media Science, Oracle Data Cloud and others, I happen to know that when done well, advertising on mobile is not only capable of capturing the reader’s attention, but it can significantly increase upper funnel metrics like brand recall, as well as lower funnel metrics like sales lift — a main focus of ROAS.

So why are brands convinced that the opposite is true?

Ruling out that mobile is a bad ad platform (because it’s not); it is more likely that advertisers have been running ads that are, well, not great. And no one would argue that bad advertising results in a low ROAS.

The good news is that with just a little bit of effort, it’s easy to make mobile ads work well. Here are the four biggest mistakes we’ve been seeing that negatively impact ad efficiency, and what can be done to remediate each:

Invisible Ads

The ubiquity of the lowly banner ad has resulted in its demise. People have become so conditioned to ignore them that they don’t even see them anymore. Research has shown that while banner ads are considered 100% viewable by third party measurement companies, they are actually only seen by 38% of mobile users. Years of banner ad overuse has rendered them essentially invisible to nearly two thirds of mobile users. What this means from a financial perspective is that if you pay $1 CPM for a banner ad, you are actually paying nearly $3 for it as it will take up to three impressions of the ad for just one person to see it.

Can you find the ad in this screenshot?

The Solve:
If you want your ad to be seen without irritating the mobile user, consider using more intriguing ad formats. We’ve seen success with high-impact, responsive in-article units, which successfully navigate the line between attracting the user’s attention and irritating them.

This ad appears within an article and while it doesn’t cover any of the text, it’s unmissable.

(B)ad Creative

At the Ipsos Connect conference on creativity last year, a panelist stated that “75% of an ad’s ability to leave brand-linked memories is due to creative.” Perhaps an even more potent statistic came from James Hurman at the 2017 Cannes Lion Awards, “Creatively awarded [ad] campaigns are 11 times more efficient than non-awarded campaigns.”

A poor creative design can sink even the most powerful mobile ad format. Too often we’ve seen brands take creative designed for television or desktop and try to jam it onto a smaller screen and then into even smaller ad formats. These same companies are spending millions of dollars on audience data and geographic data. Why wouldn’t they invest in creative science to ensure that their artwork will engage that finely honed audience? All ads, no matter where they run, should be treated with the same attention to detail and finesse.

The Solve:
Consider transitioning a portion of your campaign budget from your media buy into creative science. A better ad run in fewer places will deliver stronger results.

This interactive ad has a high impact due to the clarity and simplicity of its creative.

Ad Fraud

Ad Fraud is a highly profitable criminal activity with estimated returns of 1000%, according to Dr. Augustine Fou, a prominent cybersecurity and ad fraud researcher. He estimates that 47% of the $29 billion in mobile ad spend (outside of Google and Facebook) is being siphoned off by fraud.

How does this happen? Of 7 million apps, 96% carry ads, while only 1.5% of the apps are recognizable, or something you’ve likely used yourself. Further, a 2017 Forrester study shows that the average person uses 27 apps on their phone, and 85% of their time is spent in only five of them. What is the purpose of the rest of these apps? To fraudulently serve ads. In fact, ForensIQ, an ad fraud investigation and solutions agency, conducted a study in 2017 that showed that as many as 12 million smartphones worldwide have apps whose sole purpose is to run invisible ads when the app is not even open.

Mobile web is the same story, on an even larger scale. Of the nearly 360 million active domains, roughly half carry ads, yet only 3.5% are sites you’ve likely heard of or would trust. Further, 90% of consumers’ time is spent in a mere 63 URLs. It is almost impossible to overstate the scale of this crisis — there is about the same number of fraudulent URLs used for the express purpose of making criminals money as there are households in America.

As a result there are millions upon millions of apps and URLs where ads are being rendered and paid for, that no human being will ever see. And that doesn’t even take into account “dark revenue” that diverts desperately needed income away from legitimate publishers using spoofed URLs. An example of this was this summer when the Financial Times found that its video ad inventory was being sold on several programmatic exchanges in spite of the fact that the Financial Times doesn’t sell video inventory programmatically.

The Solve:
You need to know what you’re buying. Curated or private marketplaces are the best weapon against ad fraud. JPMorgan Chase experienced this for themselves this spring when they reduced the number of sites on which their ads ran from 400,000 to 5,000 and saw absolutely no diminishment of campaign efficacy. Industry certifications such as TAG (the Trustworthy Accountability Group certification is the first-of-its-kind, cross-industry accountability program) and Ads.txt are helping brands identify the trusted players in the digital advertising supply chain.

Lack of Accurate Mobile Measurement/Transparency

When it comes to measuring the efficacy of mobile ad campaigns, you’re up against a different challenge. Forgetting about the fact that Facebook itself is a complete black box (you trust them, right?), good luck comparing apples to apples across the rest of mobile, as many third party measurement techniques are measuring different metrics in different places. What does this mean? It means that fraud analysis could be entirely wrong, depending on where the ad’s tag is placed on the page and where the measurement is done. For example:

  • One measurement company uses a pre-bid formula based on the URL’s average viewability across all ad slots which will give the same score to a bottom banner as an ad running above the fold
  • Another company determines fraud by matching IP and user agents to determine if the user is a human, when in reality an IP can have 100s of UAs and still be human so they consistently underestimate match rates
  • An advertiser will mandate the use of certain measurement partners or tools, while the technology they’re using to serve their ads isn’t certified to use them
  • Publishers can be forced to “over–serve” when reporting is done off of their page tags, but billing is done off of an agency tag that’s further removed and more discrepant
  • Compounding this, fraud, viewability and brand safety detectors that are not “on the page” wind up disqualifying TONS of perfectly good publisher traffic

The Solve:
As an industry, we need to work with the measurement companies to establish better standards that can be applied universally. Only then will we be able to accurately analyze and compare campaigns across the mobile spectrum. Until that happens, however, it would behoove both advertisers and publishers to work with only premium quality sites. There is little to any fraud happening on high-quality sites; it’s the long-tail world of the open exchanges that has given the ad fraud market the opportunity to explode.

Overall, if your mobile ROAS is in the tank, before cutting it out of your budget, take a hard look at what you’ve been running and where you’ve been making placements. If you want to see the powerful impact that mobile can have, you need to first make a commitment to running quality creative on quality sites. Until you do that, you’re destined to fail.


Originally published at www.kargo.com on January 24, 2018.

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