Cracking the Mobile Advertising Code; Real-Time Exchange Poised to Help Advertisers Find Target Audience

September 20, 2013, 11:59 a.m. ET

Cracking the Mobile Advertising Code

Real-Time Exchange Poised to Help Advertisers Find Target Audience

JOHN JANNARONE

Madison Avenue has been slow to follow consumers onto mobile devices, but it’s about to get a helping hand. As advertisers try to track target audiences on smartphones and tablets, there has been a persistent problem: In many cases, app developers simply show all consumers the same images rather than attempt to match them with relevant ads. But this week, advertising-technology firms AppNexus and U.S.-listed Millennial MediaMM -0.26% launched a real-time exchange aimed at that problem. The exchange will compile information about a user such as their location and activity on an app, then let advertisers bid for an ad space—all in milliseconds. If effective, apps will show more relevant ads, such as a pair of skis for someone browsing a travel app for a holiday in the Alps.Will it work? The history of desktop advertising suggests exchanges have a decent chance. After being introduced a few years ago, real-time bidding now accounts for about 20% of display ads in the U.S., according to eMarketer.

Still, it isn’t a perfect comparison. The key difference is that people using a desktop Internet browser often have “cookies,” or packets of data, that keep track of the sites they visit. Developers will have information only about what a consumer has done within a particular app; activity on an Internet browser won’t be available.

Certain apps stand to get a bigger lift than others from real-time bidding. Among likely winners are apps that track a consumer’s location, such as Yelp YELP -0.81% orOpenTable OPEN +0.58% . Knowing where a consumer is located is crucial information for, say, a restaurant or retailer.

At the other extreme, some app developers may resist exchanges. Consider an app that targets a wealthy group with a specific interest. That app might extract a premium from advertisers because it’s the only place to reach a particular demographic. But through an exchange, advertisers may be able to find the audience they want through any number of apps, possibly at lower prices.

Exchanges probably won’t go as far on apps as on desktop. But, given the increasing amount of time consumers spend on mobile, advertisers will likely embrace any edge they can get.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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