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Why mobile programmatic does not yet use its full potential

The mobile Internet booms in Germany, both in terms of users and traffic. Even shopping on a smart phone is becoming more popular. At the same time, programmatic advertising has established itself as a fixed value, at least in online media business. As a consequence of both developments, mobile programmatic would therefore have to be a big hit. But the advertising volumes in this segment – beyond the silos of Facebook and Google – do not grow to the extent which one would expect. Why is it that mobile programmatic advertising does not yet use its full potential in Germany?

When we talk about mobile advertising today, we mean primarily in-app advertising with formats such as banners and video ads, all the way to full-screen interstitials. Three out of four advertising dollars are presently spent with apps. Apart from the fact that there are significantly different and fewer web formats in apps than on the desktop and the use of data on Apple devices is made difficult by the lack of cookie acceptance, in terms of programmatic possibilities, the mobile web works in a very similar wayto the web that we access on the desktop computer.

German marketers have overslept the topic

And indeed, mobile apps have already experienced a boost through programmatic advertising: before the era of DSP and SSP, coverage could only be booked via aggregators. A third-party control via the agency’s or client’s ad server was not possible. Due to the advertising ID from apps today, a very stable identifier is available which permits a longer-lasting profiling than a browser cookie. Via programmatic advertising, an advertising client can control his campaign, targeting these profiles for the first time in an app-encompassing way.

And there is another important advantage: data providers make data available that permit new and effective campaign approaches, especially in the area of hyper-local targeting – to address potential customers in close proximity, directly and accurately.

So why the hesitation? German marketers of quality apps have slept through the topic of programmatic advertising. They are only slowly making their coverages for in-app advertising reasonably programmatically usable – because this includes more than simply adjusting the app to the supply-side platform. This carelessness means that large parts of the programmatically available offer of mobile advertising in Germany still consists of opaque ranges of international marketplaces.

Not the technology, but the advertising formats are the obstacle

And in the “Global Exchanges” there are considerable deficits concerning transparency and technical control. The consequence: AdFraud – traffic which is generated, not by human users, but by so-called bots – is a significant problem for mobile in-app advertising, both in terms of reach and data, and thus represents an obstacle to growth for the industry as a whole.

With the extensive possibilities of programmatic advertising, mobile advertising also becomes easier to book and to control in a targeted fashion. But programmatic, too, cannot solve a central problem which advertising on smart phones generally still has: there is still the lack of large-scale, attractive advertising formats which are indeed eye-catching, but still do not annoy the users. If we can cope better with this challenge, the boom will be yet to come for mobile advertising.

Facebook Messenger chatbots: a communication channel for brands?

For six months, chatbots have existed in Facebook Messenger and there are now more than 30,000 available for users. The initial hype has calmed down and now companies are wondering if bots actually have the potential to become relevant communication and distribution channels for their content.

All chatbots essentially work in the same way. Users ask the bot a question and the bot searches through its stored database in accordance with certain rules, in order to respond with a suitable answer. The greater the database, the greater the knowledge which the chatbot can revert back to.

Mobile driven user behaviour and technical developments smooth the way

The requirements needed for the success of chatbots certainly exist: On one hand, internet usage is extending increasingly to mobile devices and here communication occurs primarily through instant messengers. The approach to text messaging has finally become seen as an everyday matter and the users have got accustomed to this reduced communication form.

On the other hand, all major tech companies are investing massively in the development of artificial intelligence, machine learning and in the understanding and processing of natural language through algorithms. Bot providers can relatively easily incorporate offers and services of interested companies into chatbots via standardised interfaces.

Unpredictable human communication

It will remain some time before a conversation with a chatbot is indistinguishable from a talk with a real person, as many chatbots currently reach the limits of their communication rather quickly. Either they fail in the correct processing of human communication, including all unpredictable factors such as slang, dialect or typos, or their repertoire of responses is rapidly used up. Initial reactions of early adopters were sobering. Among other factors, this was due to the fact that Facebook opened the chatbot platform for developers only a few weeks before the official launch.

Facebooks vice president of messaging products, Davis Marcus, admitted that this time frame was possibly too short to develop a good chatbot. Since the launch, Facebook has made many APIs and much guidance available to developers. We can therefore look forward to seeing how the second generation of bots will turn out.

For long term success, however, two central requirements must be fulfilled, above all:

Discovery: There is currently no easy way to find chatbots for Facebook Messenger, as we are still waiting for the launch of the announced bot store. The user must therefore know the name of the bot and integrate it via the search function of Messenger. Other messengers like Kik, Telegram or Skype already offer overview catalogues.

Added value: So that users don’t delete a chatbot after trying it out just once, from the first use on, the bot must offer real added value. This can include various aspects:

  • Reducing complexity and information: shopping bots, such as Tommy Hilfiger’s chatbot, help users when looking for suitable products, by giving them a pre-selection of products through targeted questions. The added value of news bots like the one of CNN also depends upon a reduction in information. Users indicate which content they are interested in and then receive suitable contributions in return through push messages.
  • Time efficiency and problem solving: The airline KLM emphasises special service for their customers: if you want to change your seating place, for example, you don’t need to open the app. You can simply send a quick message to the KLM bot.
  • Additional offers: In several US cities, through the Absolut Vodka chatbot, users can find bars in which the product is available. The added value here is that the user receives a voucher for a free drink as well.

If these points are further optimised in the new generation of chatbots and the problem of discovering bots is resolved, there is much to suggest that these services will establish themselves as communication channels for brands. With a sufficient amount of offers, in Europe and in North America Facebook Messeger could become a mobile central service point for users, just as weChat, LINE and Kik have done in many Asian markets.

The story of Beacons

Following an afternoon full of presentations and panels concerning the Bluetooth Low Energy technology at the 3rd Beacon Summit at our head offices in Munich, I got into a discussion with two other attendees. It was clear that all of us understood how this technology works: A small sender (Beacon) sends out a signal that almost any mobile device can read/detect. If your mobile device has Bluetooth activated and is within about 30 meters of the sender, it can read/detect the signal. If you have the right app, the signal can be interpreted and used to identify where you are and send you messages.

It is a very simple and fairly robust technology that anyone can use. Many companies have already stepped into the Beacon market and even Apple, Facebook and Google are investing heavily. A lot of people are investing a lot of money, a lot of time and waging their businesses and quality of life on this technology.

So what can you do with it? Well, there are a couple of standard showcase ideas. Indoor Navigation and Retail Push are the most common scenarios. Say you arrive at the airport and need to go to gate G49. You have no idea where that is, but by using Beacons, your location and the location of the gate are known and our app can easily get you from where you are to where you want to go. The same basic idea with a twist accounts for the other scenario: You enter a retail store and instantly get a notification on your mobile device telling you that the blue jeans are on offer. The jeans are located right next to you, on your right. – And here’s a 5€ coupon to sweeten the deal.

After two minutes of polite small talk, my fellow attendees and I got into an interesting discussion: Are indoor navigation and retail coupons that interesting? And if it works that well, why isn’t it already everywhere?

Sometimes we tend to geek out about the possibilities and forget the actual use case. We wait for a technology to solve our problems, missing the fact that our problems might actually just be the symptoms of a larger one.

Say you are a retailer. You sell jeans. You want people to buy more jeans. If your solution is to point your customers to the exact jeans you want to sell, give them a 5€ discount, lean back and wait to see your sales numbers soar, you have a bigger problem.

Why we buy stuff is simple: Maslow’s hierarchy tells us we have needs concerning physiology, safety, love/belonging, esteem and self-actualization in that order.

How we choose what to buy falls in those just-to-the-right-of–the-middle categories. We buy stuff to find and signalize belonging and to gain esteem from our peers and ourselves. So we don’t (just) buy jeans because we wouldn’t survive the winter without them, but also because we would become outcasts and lose our self-respect if we went to work without them.

What exact kind of jeans we choose doesn’t really matter on the account of needs. Of course if you produce jeans and want to increase your sales, it matters to you. But not to me. I just want to show up at work wearing jeans.

However, telling a great story will help move my opinion from one product to another. And that will change my attitude. People stand in line for days to get the latest iPhone but complain if there’s more than five people in front of them at the supermarket. Why? Because the story of the iPhone is better than that of Broccoli*.

So instead of just offering me a 5€ discount, tell me the story of your product. Let me know where I fit into that story and what my role is. Engage with me on an emotional level. And before you go buying Beacons because it’s the Next Big Thing, take a step back and answer these questions first: What kind of story do we want to tell, and what technology might help us tell it in a way that is relevant for the end customer? How do we engage with our customers, take them by their hand and start telling a story together?

Beacons might be a vital part of the solution, but don’t expect the technology to deliver the sales by itself. The story is more important than a technological framework. And if you need help with figuring out exactly what the story should be, how to tell it or what technology fits in where, I know a great agency for that!

*Actually, the man-made(!) vegetable Broccoli has an extremely interesting history. So maybe Broccoli has to have a talk with it’s advertising agency about telling the story in a better way?