In mobile, there are two worlds: the mobile Web and apps. There’s video being played on both sides, but mobile video ad company AdColony has bet on the app world.
AdColony’s TV-style mobile video ads play in many popular mobile apps across Android and iOS, and it has worked with some major brands: Scion, Gameloft, and Universal.
AdColony’s pitch to advertisers: scale, high-quality playback, and no-nonsense metrics.
The placements include the usual pre-roll, mid-roll, and post-roll types, as well as interstitial video. AdColony has also rolled out an ad product called Value Exchange Video, which prompts users to watch video ads in exchange for in-app rewards.
Will Kassoy, AdColony’s CEO, has plenty of experience on the buy-side. He was an executive at Disney and at Activision Blizzard for many years, helping both companies promote and grow brands.
His outlook on mobile video’s future is sunny, but he’s also honest about the challenges of working with media buyers who balk at the challenge of including more mobile in the mix.
We sat down with Will Kassoy earlier this month in New York.
This Q&A has been edited for clarity and brevity.
BI Intelligence: The rap on mobile advertising is that it offers low-quality experiences and that audiences consider mobile ads invasive. Can video change that perception?
Will Kassoy: Quality matters. When I was on the advertising side, I would spend nine months going from concept to execution of a TV commercial. When you create an asset like that, and you put so much work into what that message is, it’s really critical that you get it out there in a high-quality way, especially if you’re a movie studio or a car company, where you have gorgeous shots and fashion. You want to be able to carry that quality over into mobile.
BII: A great deal of mobile video plays in mobile Web browsers, but you’ve bet on apps. Why is that?
WK: We are 100% native apps. That’s where we think user experiences are the best. We are seeing this inflection point where native apps are really growing to be more popular than the mobile Web.
BII: Can you give us an example of how your ad units work within a specific app?
BII: What do you say to ad buyers or an agency who might say, “Well I can get video ad inventory and scale on YouTube, why do I need to go beyond YouTube?”
WK: Remember, we’re talking about apps. If you look at where time was spent, even if you look at the most popular app around the world — at Angry Birds — what is the market share Angry Birds represents of the overall app market? 1%? You want scale and you are not going to get scale with one app. In the app world, YouTube is one of so many apps you need to build reach. If I’m Coca Cola, I want to get the broadest reach, the most visible placement, and the highest quality partners. What makes the greatest digital agencies unique is they work with hundreds of vendors. And they try to craft the media campaign that’s really crafted to the audience they are trying to reach. Whether it’s demographic or psychographic segmentation, it takes a little bit more work than buying on YouTube.
BII: Well, let’s back up. Why buy mobile or apps at all?
WK: It depends. It all depends. I almost feel like at AdColony we have two business units. We’ve got a brand or Madison Avenue-type business unit, and we’ve got more of a Silicon Valley app discovery unit. That’s more performance based. Those performance guys are very much mobile-first, mobile-centric. On the brand side, it really depends on the brand advertiser and we work with some that are just getting started. They want to know, “How do I start?” Any CMO who is not recognising the usage on mobile devices, which is now rivaling that of online, they’re not going to be in a job much longer. And if you go back to any media in history — whether it’s radio or TV — it generally took those mediums about 15 to 17 years to reach this tipping point of 50% U.S. penetration. Online took about 10 years to hit that 50% tipping point. Mobile has done it in seven years. It takes time for brands and the infrastructure — the creative agencies, the media agencies — to catch up. But we’re starting to see them catch up. I work with CPG companies that are really sophisticated. They are well beyond asking, “Is mobile part of the media mix?” They’re asking, “How do we optimise the mix?”
BII: So it’s about the mix. About more than one screen?
WK: I’m not advocating that mobile video needs to be the only part of your buy. You need all three: mobile, PC, and TV. You need all the screens to generate the reach, and I feel like people are figuring out the right mix. So if today people are spending, say $10 million on TV, $2 million online and $300,000 on mobile video, I would argue there’s opportunity for optimization, that you can probably get your online and your mobile buys a little bit closer together to make sure that you are maximizing the effectiveness of your campaign.
BII: What about the idea that mobile apps just don’t hold users for long enough to serve them video ads?
WK: Our network has over 10 minutes average session time. Tablet sessions are much closer to 20 minutes, which is the length of a typical network TV sitcom, which might have 12 commercials. I agree if you are in the wrong apps, if you are in utility apps, if you are in the short-session time app experience — that’s not good.
BII: In terms of the pricing for your mobile video ads unit, what can you tell me?
WK: Our pricing is a lot higher than everybody else in the marketplace. Here’s the reason why. Video completion rates on mobile are not great. Let’s say on average the completion rate is 40%. If someone spent close to $10 CPM on video, they may only get a third of those views. If they’re at $10 we’re more like $30 CPM but we only charge on 100% completion. So we are equally taking into account completions, so we are competitive. But if you are talking to a junior media buyer who’s just thinking, “I just want the lowest CPM possible, not everything else,” there’s more to explain to them.
BII: Are mobile publishers moving away from banners, and is mobile video helping accelerate that trend?
WK: Yes. Publishers are starting to get rid of banners. We surveyed a bunch of our top-grossing publishers on what trends they are seeing in terms of monetization. There’s a huge trend towards video, and they are moving away from banners, because they clutter the user experience and the banners are not making them that much money. It’s not worth it. I see this trend taking hold. We’re working with Zynga on this, as they want to put less advertising in their apps, but higher quality ads.
BII: What about the argument you can’t put TV on a mobile device. Is there a need to customise these video ads so that they’re mobile native?
WK: Absolutely. It’s a trend I see, and over time it will happen. In the old days everything was one way: one-way messaging, one-way marketing, one-way TV commercial. You were going to hammer the message over someone’s head, right? There’s a new, younger generation that doesn’t want to be sold to like this. They want to engage. They want to explore. They want to be entertained. We’re working with some leading advertisers on creative ad units that are shorter. We’re creating six second units that aren’t ads, but more like something that is going to pique people’s interest and be a bridge towards deeper engagement. That’s the future. That said, I think that the 30-second commercial can work on a smartphone. Tablets are better obviously, but they work on smartphones. When the dollars get there, the larger creative agencies will think more about mobile, and create specifically for mobile. I think that we’ll start to see the creative go there as well.
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