Mr. Rauhe, mobalo supports companies in reaching their customers with mobile, site-specific advertising. What advantages does this type of advertising offer retailers?
Tom Rauhe: Our advertising reaches prospective customers in a way that relates to the media use in the 21st century: on mobile devices. What’s more, our advertising is extremely flexible and can be adapted at any time in terms of time and content (compared to other localized advertising such as flyers or out-of-home advertising). The campaign can therefore also be adapted to current sales and then even be paused to use the remaining budget later on.
Just by using this type of modern advertising, the advertising company presents itself as innovative, because it is primarily the big brands that currently advertise on mobile devices. The minimum budget per sales campaign is only 100 Euros for 10,000 commercials with the smallest package price.
With mobalo’s service, a company can distribute its advertising in a variety of different apps. Can you briefly explain how your solution works?
Rauhe: Someone in your defined advertising environment opens an ad-sponsored app on his/her tablet or Smartphone, for which he or she allowed to use the location data. A request goes from the device to the app publisher, stating, “Hi, someone is opening one of your apps, I need a banner ad.”
The app publisher is selling ad spaces via a so-called real time bidding platform. These types of ad spaces are offered in real time (within milliseconds) for auction. It’s a little like eBay for banner ads, but with just one bid. Different advertisers are connected to this bidding platform (sell side platform) such as Amazon and large media agencies for example. mobalo analyzes the banner data and bids on the ad space, if it fits an ad campaign (in the local vicinity) and wins the auction (more than 50 percent of the time).
Our server sends your advertisement to the device and the app user, who is located in the defined area, sees your ad. Conversely, this means that at the time you open our app, it still isn’t clear which banner is going to appear, because it is still being bought at auction during this time. This is media buying of the future, which we already do.
At this point, many companies – especially retailers – focus on their own apps to boost customer loyalty and customer information. What benefits does this type of mobile marketing offer? Isn’t a company able to reach its customers even more directly this way?
Rauhe: An in-house app and thus “doing your own thing“ requires relatively high cost and technical knowledge, also from the app’s publisher. After all, the app needs to be loaded routinely with relevant contents. What’s more, the app has to offer enormous benefits for the customer to download it. All of this needs to also be communicated.
Retention, namely the continuous use to maintain an app is currently still something like the holy grail of app programming, which only very few app developers have succeeded in. For true customer communication, you would need to install so-called beacons, which means even more costs for the app. At the same time, an in-house app always puts you on the verge of “this annoys me“ territory.
If you deliver too many and non-relevant push messages to customers too often, the app is also in danger of quickly being uninstalled again. Having your own app might be fashionable, but so far, almost no retailer has managed to increase sales with it in a meaningful way.
Are mobile ad formats on the Smartphone and tablet going to replace the classic advertising formats such as commercials and newspaper inserts, or is the right mix crucial?
Rauhe: When you look at media usage, newspaper consumption is drastically decreasing. Advertising expenses exceed the use of print by about 400%. Mobile media consumption on the other hand is ten times as much as advertising costs. Advertisers therefore need to do a lot more in this instance to achieve adequate ad investments in terms of media use. Nevertheless, print costs have been declining for a long time; incidentally, compared to other ”old school“ advertising efforts such as radio, out-of-home and TV, which remain at a constant level.
Mobile is therefore going to ensure itself a crucial share in the media mix in the short run. At this point, the question of what portion of the pie is getting smaller and for whom, is no longer relevant since advertising costs remain constant all over the world. Our localized mobile advertising solution and namely reaching users precisely where there is a demand, provides an additional benefit that is going to make mobile advertising even more attractive in the near future.