‘Baby « Funlimited

When Flurry published their chart on exponential mobile adverting growth late last year I had an uneasy feeling that I couldn’t pin down immediately. It showed mobile inventory soon outpacing online inventory. I didn’t have issues with their methodology, though many have questioned it. I didn’t think the data was “bad” in any way. Growth is great, right? And further, they pointed out that session times are high, smartphone growth is good, and the demographic is attractive. All great news, right?

But a dormant question kept nagging me: Is any of this data really “good” for the industry? I have spoken to a few people about the data, but the problem with the industry as a whole didn’t crystalize for me until I had a conversation with a Fortune 100 senior media buyer a couple months back. This person has a total media budget in the tens of millions annually, and for the first time since she started buying mobile, she decreased her spend in mobile in the last two quarters and expects to decrease it this year as well. Why? Perceptual and brand attitudinal data has consistently come back as not even outperforming search engine marketing.

Mobile advertising has become the Baby Huey of the media world: it’s huge and lumbering, but not mature. Analytics, measurement and targeting have not caught up to where online is, exactly when we’re hearing inventory volume is set to surpass online. Neither Comscore nor Nielsen rank the top mobile apps like they rank the top online properties by category and unique users. Nor do they rank ad networks. Phone and operating system manufacturers as well as the carriers have created fragmented and feature poor cookie environments on phones. What is seen as standard operating procedure online, the use of cookies to target users and understand usage, is treated as heresy in mobile. (More on ad tracking systems’ “blindness” here.)

Because of this only in isolated cases is buying brand advertising on mobile valuable. For instance buying direct from content brands with huge audiences and registered targeting data, like Pandora and The Weather Channel. Or buying video where brand studies still consistently show attitudinal value. Otherwise it’s just too hard to buy quality at scale.

Look at the summersaults Millennial Media, the largest North American “independent” ad network undergoes just to try and replicate simple cookie functionality to target a unique user (from their S1 filing):

MYDAS then runs a proprietary set of algorithms to analyze multiple data points from the device, carrier and app to statistically determine, on an anonymous basis, the likely unique user of the device and the app requesting the ad.

Seriously.

No doubt consumers have strong opinions about companies using and storing data on their phones, and they should have controls and transparency. But shouldn’t the browsers at least shoot for parity with the web? Isn’t that a better experience for consumer in the end? Where cookie infrastructure feeds a revenue model and users always have the option to turn cookies off. That revenue model in turn allows great content and apps to flow. Simple unique user targeting is foundational to online ad spending and in mobile we’re using magic potions to describe a “likely” unique user. Ad spend will never catch up to online with these constraints. That will eventually hurt developers and end users.

Now Apple, the one company that has the leverage and scope to fix these problems has essentially given up. In a weird reversal for a company that built its reputation on quality, not price, Apple last week slashed their buy-in price for iAd campaigns and increased the publisher revenue share. At first blush you might think this is good for publishers, but it is really a signal that ad buyers are not finding quality and not spending enough.

This is bad for publishers no matter what the revenue share. Ask yourself: would you rather receive 70% of a $10 CPM or 60% of a $12 CPM? Does Apple seriously believe that they can cut their way to quality and value? Do they believe they can increase share by slashing prices? Apple? When has that ever worked for them?

Apple could have easily taken a position to build quality and value in the mobile brand advertising ecosystem and address problems the buyer at the beginning of my post highlights. They could have allowed at least limited third party cookie generation thus allowing networks and brands to better track and target users and ad usage across properties, web and app.

This would have started to build the infrastructure for brand buying at scale with confidence and credibility. Buyers could buy on quality and value just as they do online. The mobile segment as a whole would have benefited and that would increase the total available pool of quality based inventory. Users would get higher quality advertising. What they did instead is tell advertisers they are slashing prices and opening up the bargain bin. Shame. Mobile advertising is very close to its Cinderella moment, and Apple just decided to cancel the ball.