Mobile Ad Budgets Are Rapidly Increasing, Says Head Of Mobile At Publicis

alexandre mars phonevalley publicis

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Alexandre Mars is the CEO of Phonevalley, a mobile ad agency with 200 employees in 25 offices. Phonevalley was acquired by advertising and communications giant Publicis Groupe in 2007, and Mars is also the Head of Mobile at Publicis. We interviewed Mars last year about the state of mobile advertising and thought that six months later would be a good time to take the pulse of the industry.

Here’s what we learned:

  • The mobile ad market is still growing very fast.
  • Large brands are now integrating mobile budgets into their strategy and devoting significant resources to mobile advertising.
  • Rich media ads work well on mobile ads and command a premium. Unlike other types of mobile ads, they can be as, if not more expensive, than desktop ads.
  • Facebook’s mobile ad push is lacking. The company hasn’t integrated location well.
  • Google’s mobile ad growth is “staggering” and the company has put lots of money and some of its best people on mobile advertising.
  • Apple’s iAds is a good product, clients love it, but it is held back because Apple isn’t fully invested in the product. Also, Apple has a huge weakness in mobile search, and Siri isn’t close to solving it.

Here is the full interview, edited for clarity.BI Intelligence: What’s the biggest trend in mobile advertising?

Alexandre Mars: Mobile advertising is evolving very strongly.

There are four different planks to what we offer brands: strategy, ideation, production and media.

Normally, you would think people would start with strategy, and then work their way down. But in mobile, it’s happened backwards. People have started with media buys, and are only now starting to think about what their strategy should be first. This is one reason for the difference between the time people spend on mobile and the ad spend.

But it’s evolving. The market is complicated, there’s a lot of fragmentation. But this means brands can be lost and need help. It’s a real trend in the market, that now brands are looking for real help with their strategy.

When we started, our relationships were one-offs. In other media, you usually have the AOR, or “agency of record”, which you retain for a number of years to help you with your strategy. That’s only starting now in mobile: now brands are retaining mobile agencies for one to three years, instead of a few months for one-off assignments.

So for example, Phonevalley is the mobile agency of Bank of America, and we have been for two years now. This means that we understand them and their issues better, and we can help them better. And this, in turn, means that they’re dedicating real budgets to mobile.

So that’s the strategy front.

On ideation, we’ve been seeing very recently mobile-first briefs. Usually, a campaign would be web-first, or TV-first, and then you would tack on a mobile piece. Now we are seeing briefs where clients start with mobile–I’ve seen two from big clients in the past three months. So again, a real, new trend.

On production and execution, there are tons of platforms, tons of technology out there, it’s evolving very fast, which means it’s exciting.

On media, things are also evolving very fast. Google is pushing AdSense, ad networks are starting to scale up, we’re seeing rich media on mobile. Media is also where you’ve had the most startups, which has meant a lot of innovation.

So the bottom line is things are doing very well; we’re seeing three-figure-per cent growth this year as with every year.

BII: So budgets are increasing?

AM: Oh yes. Especially media.

BII: What are the trends in terms of social advertising on mobile?

AM: On the strategy and ideation side, it is always a concern, it’s always on our minds. And on the media side, networks are always offering to integrate social networks into their products. So it’s a big part of it.

BII: What about location?

AM: It’s very central. Very important.

Obviously particular brands, like CPGs and retail, care a lot about location. If you hit a potential customer at the right place and at the right time, when they’re about to make a purchase, that’s when you have a lot of impact.

You know, three years ago, retailers were working on ways to block phone signals in stores so that people couldn’t comparison-shop. Now they have the opposite attitude. They want to know how to create foot traffic, how to work coupons into the buying process, how to integrate social, et cetera. They’re devoting huge budgets to that.

And it’s something you can’t just do with a banner. You need to have the right strategy, the right idea and the right execution. And then you buy a lot of media.

More and more clients, especially big brands, want mobile solutions, so-called MCEs or Mobile-Centered Experiences, that they can use everywhere. If a brand in Russia wants to get people in stores interested, odds are it’s already faced that same problem in another country and it can use the same solution.

BII: Facebook recently announced a big push into mobile, what do you think about it?

AM: I think they still have to spend a lot of time on it. I love Facebook, but the problem is it’s obvious they don’t have a mobile culture. They’re a PC company.

BII: What does that mean?

AM: Well, for example, they need to integrate location into their products. But there’s a lot of potential, and they’re working on it. So for example, they recently acquired a startup called Tagtile, that made software that was integrated into retailers’ point-of-sale system. There’s a lot of potential with those ideas. They still need to work on it.

BII: What about Google? An issue investors and observers have are that clicks are cheaper on mobile and this is dragging the company’s business down.

AM: Yes, the price of ads are lower on mobile–except for rich media. Everyone knows that. But the growth is so staggering that it makes up for it.

They have huge reach now. They put lots of money and lots of their best people on it. They still have some work to do on video and rich media, which has never been their strong suit anyway, but overall I’m very impressed.

BII: What about Apple? Are they good? Bad?

AM: The problem is that Apple is very far behind on maps and search. That’s their biggest weakness. It’s great that they’re moving forward with their own Maps offering, but why are they so far behind on search? Have you tried to search for something on the App Store? It’s like 1985. They really need to work on search.

BII: Well, Apple’s search engine is Siri.

AM: Come on. Have you seen the ads? Famous people going golfing or ordering salmon or whatever? Don’t get me wrong, Siri’s great, and when it works, it works really well. But it reminds me of when France Telecom launched video calls 30 years ago and said it’s the future. And it turns out when it’s 7 am or 11 pm and you don’t have your makeup on, you don’t want to video call with anyone, you prefer voice. And so video calling’s been around for 30 years and it only works for very specific things. Siri’s great, but it’s good to get the basics as well. People shouldn’t have to use Google on their iPhone.

BII: What about iAds?

AM: You saw what Tim Cook said recently. The people I know at Apple were pinching themselves. Their CEO was on stage, essentially saying he doesn’t believe in their product.

The product is good. It pushed the market forward. Clients like it, and they want more of it. They’re still lots of demand for clients–did you see Romney did his first iAd campaign? It worked really well. But it’s hard for management to be so far behind.

BII: More broadly than iAds, there seems to be excitement around rich media on mobile. How’s that going?

AM: iAds has shown that you can create lots of value to agencies and clients with rich media campaigns on mobile. With the latest smartphones that have bigger screens and more processing power, you can have really high quality campaigns.

In this business, you can either scale up, and blast the entire world with a message, or do a high quality campaign targeted to specific audiences. So for example Google is all about volume. But all publishers are now integrating rich media platforms like Medialets, and this lets them charge $YY instead of $Y. Why? Because they get twice as many clicks.

As you know, Publicis has a unit called Vivaki which works on digital advertising, and a unit within that called The Pool that works on a lot of solutions. So for example they worked with Hulu, Google, Fox and ABC to figure out what is the best ad unit in online video, using lots of data. Right now, they’re doing the same thing for tablets, and starting on mobile, to figure out the best ad units.

The IAB is working on it too, so that we can get standards across the industry. Our industry is very good at working together on things like that, and it will be great to get standards.

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