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Revenue Generation on Mobile Devices

It’s early days but publishers are already tweaking how they sell.



By Deborah Caldwell
01/11/2011

Almost immediately after Apple founder Steve Jobs introduced the iPad to much fanfare last January, publishers everywhere began trying to figure out how to create content and advertising for the new platform.

Meanwhile, advertisers are telling publishers that they want to be able to create campaigns and execute them across the widest universe of devices, particularly mobile platforms. Yet despite all this great news, it’s not clear how much revenue publishers are actually earning from this advertising. The Financial Times announced recently it has generated about $2 million with advertising on its iPad app, but few other publishers are yet describing similar success.

As The Knot—the wedding planning Web site and magazine—began work on the iPad app, they decided to focus exclusively on the user experience—and not include any advertising—for the first issue launched in October. The only advertisers involved in the iPad app are Magazine Directory advertisers already in The Knot’s interactive product guides.

“We saw this an opportunity for the magazine to be displayed as it’s intended to look, with dramatic layouts—and at the same time, we can layer on the Internet experience,” says site director Miles Stiverson. “We wanted to develop the very best product we could and really figure out how we will reinvent our magazine for the iPad.”

Yet those conversations ultimately led to greater clarity about what sorts of advertising would work best on an iPad, say Stiverson. “I’ve seen ads where you land on a page and press a button and it reveals content you wouldn’t have seen otherwise. The iPad makes you stop on a page and examine it closely to see if there is any interactivity to play around with.”

In the next issue, The Knot will include simple sponsored sections and videos, plus some custom interactive tools. Editors and developers there had already launched two iPhone apps, both in 2009. The first was called “Wedding 411,” a mobile message board that allows brides-to-be to connect with each other on the go. The second app took the popular “Wedding Dress Look Book” from the Web site and turned it into a searchable and sortable wedding dress finder. Only Wedding 911 has had any advertiser involvement.

Hearst sees the best results from selling tablet pages, which appear in apps for brands such as Esquire, Popular Mechanics and O, The Oprah Magazine. “They appear in a very similar fashion to print pages, but the end user will have a much richer user experience once they engage with the ad depending on the level of functionality incorporated within,” says Avi Zimak, advertising director of tablet media at Hearst.

Mobile ad pricing for Hearst varies depending on whether the application is a utility-based app (stand-alone app) or a digitally enhanced version of the magazine. “Pricing can also vary by magazine brand,” says Zimak. “We do believe many of our apps warrant a premium, as we are limiting the number of advertisers that appear within these apps so the advertisers can showcase the richness of their brands via the individual functionality.”  

QR Codes for Mobile

Not everyone is caught up in the mobile app scramble, however. Developers at Budget Travel have taken a different—simpler—approach to mobile content and advertising. Instead of creating mobile and tablet versions of the magazine and Web site, they’re launching a QR code application for mobile phones. QR codes are matrix barcodes readable by QR scanners and mobile phones with cameras.

The QR codes appear in the magazine next to travel tips. When readers point their phone at the QR code, they’re led to a mobile-enabled Web site consisting of more travel tips, plus the ability to share those tips in social networks and elsewhere online. “We wanted to do this because we’re really interested in how we can deliver our content across different platforms in ways readers and advertisers want,” says Lisa Dickens Schneider, general manager of digital products at Budget Travel.

The launch sponsor is La Quinta Inns & Suites, which will have a full-page magazine ad facing the travel tip content, as well as branding within the QR code copy. When users land on the mobile site, they will also see La Quinta branding, essentially turning the experience into a custom mobile microsite.

“If you’re working for a multimedia brand, you have to understand that advertisers are also moving toward more integration,” Schneider says. “And you have to understand how the brand behaves in each medium, and what are the benefits of each medium.  The smart advertisers are starting to understand how to reach people in different ways. The content I want on my phone is not the same as what I want on my big screen computer.”

One Ad, Many Screens

That said, creating content and advertising campaigns across multiple devices with different screen resolutions is complicated—one reason why mobile and tablet advertising remains the Wild West right now, according to digital strategy and user experience according to consultant Jonathan Hills.

“This is a much more fluid world than PCs,” he says. “Ad sales teams are struggling to understand how to sell and what the rates should be and even how to serve the ads from a tech standpoint.”

Hills, who launched two iPhone apps for Reader’s Digest Association while he was general manager at readersdigest.com last year, ultimately decided to sell the campaigns on a fixed-price basis. The ad sales team offered advertisers 100 percent share of voice on its Life IQ app, launched last February, for, say, $20,000 per month—as opposed to guaranteeing a certain number of impressions or even downloads. The main selling point was being associated with something cutting-edge.

The Life IQ app, a trivia quiz on everyday life, is free. So far, about 50,000 users have downloaded it, but there have been no ads to date. The second app, Word Power, launched in April for $2.99 per download. It did not include ad integration.

“We were telling a compelling story, but it’s still difficult,” says Hills. Sponsors know how to measure visitors to a Web site—currently about 3 million per month to readersdigest.com. But they don’t know how to price downloads of an app that may or may not ever be used, since 70 percent of all apps aren’t used after their initial few weeks of residing on someone’s phone or tablet device.

“Advertisers want to know what they’re measuring,” says Hills. “But there are no meaningful benchmarks.”

For instance, Comscore is an imprecise Web site traffic measurement device but it’s the industry standard because it’s operated by a third party—neither publisher nor advertiser. Nothing like this yet exists for mobile devices.

Hills believes that, ultimately, iPad apps will be more interesting to sponsors in large part because the screen is so much bigger. 

At the moment there are three types of advertising on the iPad: the desktop Web site ads displayed in the browser; the iPhone-style ads and banners on applications, and an advertising opportunity that is totally unique to it—interactive print. That allows for full-page ads, larger photos, video content and 360-degree product tours.

“It’s a much more tactile device, too,” Hills says. “It does present a unique opportunity to get people to do things” such as sign up for a coupon or watch a video.

He predicts there will be mobile advertising standards in place by the end of 2011. “The big players are making moves to establish coherent standards,” Hills says. “But before that happens there will be a period of experimenting. People are trying to figure out what sorts of campaigns they want to be running.”

By Deborah Caldwell
01/11/2011







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