Here’s Google’s big strategic problem in mobile advertising, according to Zephrin Lasker, CEO of Pontiflex, the mobile lead generation company: The search giant is treating the mobile ad market the same way it tackled the search and display ad market, and that’s a fundamental error.The result of this misstep could be the long-term suppression of ad prices in both mobile and web advertising—which will hurt Google’s revenues and the revenues of its rivals.
And it’s all because the underlying bet that small, local businesses will be the ones who want to do mobile advertising the most because of its location-targeting capabilities isn’t going to arrive in the market nearly as fast as Google thinks it will, Lasker told us recently.
Indeed earlier this month, Google integrated its AdMob mobile ad market into its AdWords search ad market, so that anyone buying ads through AdWords can now get placements on Google’s mobile media just as easily. That suggests Google sees the one medium (mobile) as a natural extension of the other (desktop). It also increases the supply of comparable inventory available to buyers, which is probably what’s driving prices down for Google’s ads.
Google seems to be betting that the massive influx of cash into mobile advertising will have the same effect it had on the web in the late 1990s and early 2000s: With Google as the largest provider, what it loses in premium pricing it can make up for with volume and market share.
Lasker argues, the clients for whom mobile advertising is most relevant are local businesses who will want to make you offers as you stroll or drive around their neighborhoods. Small businesses have been huge clients for Google’s AdWords because it’s easy to use.
But that’s not so for mobile. A mobile ad is only useful to a local business if it ultimately points a user to a mobile-optimised web site. The problem is that it’s going to take small businesses a long time to build those sites. Thus Google is flooding the market with available mobile ad inventory but the clients don’t yet have the ability to buy into it.
“Google won’t be able to raise [cost-per-click] prices on mobile through local merchants—they aren’t going to build mobile-optimised pages fast enough,” Lasker says. “It’s a massive deflation of impressions.”
Naturally, he believes Pontiflex has the answer. The company just launched is new AdLeads mobile self-serve platform, and 3,000 local businesses have signed up. In AdLeads, advertisers only pay when a mobile ad generates a “lead” (that is, an email address accompanied preferably by a name and some demographic data).
Those email addresses can then be converted into customisable, targeted lists reaching only the consumers who are actually interested in them. There’s no need for merchants to build entire new web sites, or to pay for impressions and clicks that didn’t generate some useful data. There are 90 million customers in Pontiflex’s database and the company counts Southwest Airlines, Kimberly-Clarke and Johnson & Johnson as clients. Pontiflex, based in Brooklyn’s DUMBO neighbourhood, has 58 employees. Lasker declined to disclose his revenues.
Google has noticed, Lasker says. Last year the search company quietly experimented with a lead generation product of its own. Next to search results for certain keywords, he says, Google also asked users for their email addresses.
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