Here’s a piece of advice for all mobile startup CEOs who are looking to build on what has worked in the world of online advertising:
One could be forgiven for wanting to try. After all, success has many imitators. And “successful” is certainly a word that can be used to describe the online advertising industry.
Online advertising is growing, and fast. In 2010, it grew by 13.8% to reach $25.8 billion. eMarketer projects that online advertising is projected to exceed $40 billion by 2014.
And where does all this money go?
More than a third of these online advertising dollars are spent on online banners. Second only to search advertising, banners are among the most favoured forms of online advertising. Think of any major advertiser. They use the online banner to get their message across to their prospects. Think of any major publisher. They serve online banners in their quest to make revenue.
It’s no wonder that when mobile apps became widely prevalent, the banner ad unit migrated from the online to the mobile world. Before you could say “monetise me,” a wealth of mobile app advertising solutions offered advertisers the ability to place banners in mobile apps.
These early solution providers were making a mistake. I should know. For a very brief while, my company was one of them.
When we introduced our first mobile advertising solution, our first offering was a mobile app banner. The banners were served while people interacted with the app – such as when they were playing a game or listening to a song. When people tapped on the ad, they were taken to a page where they could sign up for the advertisement.
The initial reaction to our offering was less than optimal. The root cause of the problem was that due to the small form factor of the smartphone, many users were clicking on the ads accidentally. As a result, there were a disproportionately high number of clicks as compared to signups. And overall people didn’t really want to interrupt what they were doing to click out.
By migrating the online banner to the mobile world, I fell into the trap of viewing history as a continuum. And history is never a continuum. On the contrary, disruptive events are what have most shaped its course. I had experienced a Maginot Line moment.
For reference, the Maginot Line was the ill-advised fortification that France built along its border with Germany prior to World War II. The wall was built against the advice of strategists like Charles de Gaulle, who favoured investments in modern aircraft and other systems.
But the French government went ahead and built the Maginot Line anyway, as a similar approach had yielded good results in World War I. Their decision, the direct result of outdated thinking that failed to understand the changed tactical environment, eventually helped the Germans march down the Champ Elysees for the second time in a century.
Luckily, our company’s potential Maginot moment was but a brief moment in time, a scenario that could have been had we not corrected course. We immediately adjusted our strategy. We stop serving banners in mobile apps. We changed our Pontiflex AppLeads strategy and adopted a different approach that has proven to be enormously successful.
We served ads during non- disruptive points in app usage – such as between game levels or while a ringtone was being downloaded. The number of signups went up dramatically. Advertisers like the ASCPA and Tommy Hilfiger were able to connect with thousands of prospects. And developers like Brisk Mobile and Moonbeam Development made CPMs in excess of $80 by serving the ads that were respectful of user experience.
Flaubert’ s Sentimental Education is among the finest books ever written. Courbet’s painting will always be a wonder and a mystery. The steak frites at the Le Temps Perdu in the Quartier Latin is to die for. But I draw the line at the Maginot Line when it comes to appreciating all things French. And if you are the CEO of a startup, I hope you do too.
Zephrin Lasker is the CEO and Co-founder of Pontiflex. Pontiflex will host an App Developer Workshop on January 20th in Brooklyn, New York. Drew Ianni, Founder App Nation and Richard Harris, CEO Moonbeam Development will talk about monetization strategies for Apple and Android app developers. Sign up here.