Yahoo’s move to acquire mobile-ad targeter and data-management software provider AdMovate follows on the heels of a busy mobile acquisition week with Criteo acquiring AD-X Tracking; Media6Degrees picking up EveryScreen Media and [X+1] buying mobile marketing firm WDA.
All four acquisitions point to an increasing urgency among marketers to optimize their mobile campaigns and find more ways to target the growing pool of mobile users, noted analysts.
“When the average American is only three feet away from their phone at any time, there is a great need to get it right for the next generation of mobile ad technology,” said Ray Wang, principal analyst and CEO of Constellation Research. “Brands are looking at who’s got the best ability to target an ad with better context and drive down CPMs.”
The latest wave of mobile acquisitions also reflects a maturation of the space, maintained Rebecca Wetteman, research VP at Nucleus Research. Whereas marketers were initially experimenting with mobile advertising, many have decided “we need to invest in technology that’s going to help us scale in a much more manageable way,” Wetteman said. “It’s no longer about just getting into mobile advertising, but to also do data management and real-time bidding in an intelligent way and manage the returns from mobile advertising.”
Mobile advertising revenue is up across the globe, according to recent findings from the Interactive Advertising Bureau. The report showed mobile ad revenue grew from $5.3 billion in 2011 to $8.9 billion last year in an 82.8% increase.
At the same time, there are still a number of weaknesses in mobile ads that are true for other forms of advertising, noted Jason Arnitage, principal analyst at Yankee Group. “A couple of the pain points are how do I know who I’m reaching with my mobile ads and how do I measure the effectiveness of the ad?” Arnitage said. “Because of that, analytics is one of the areas where we expect to see more activity.”
Many of the recent mobile acquisitions are of lean startups that are well-positioned to be acquired. Like other startups, these mobile startups are niche companies that offer specific features that can be rolled into comprehensive solutions, noted Melissa Parrish, research director and principal analyst at Forrester Research. “Few startups have the potential to go public; they will never have the revenue,” Parrish commented. “Operating as a small company or being acquired are the exit options.”
Pressure from clients to work with simplified solutions and fewer partners is also driving a consolidation of the mobile space, added George Bell, CEO of the mobile ad network Jumptap. “Advertisers have been consistently saying to us that they understand mobile is important but they just don’t have enough time to take a pitch from everyone and so there’s going to be more consolidation because clients want greater scale from fewer players,” Bell said.
As the mobile arms race continues, the competition to build out the best offerings will push mobile advertising to mature even further, according to Wang.
“The technology is what people are competing on and it will keep getting better,” he said. “Over the next 18 months you’ll see a greater focus on improving not only the [mobile] channel but improving the context as more data comes into the equation in terms of targeting…and whoever wins the conversion rate optimization race is going to win because that’s the metric that matters in digital.”