Are You Wasting Money on Mobile Ads?

Advertisers Still Paying for Ads That Never Display. Industry Turns to Tougher Standards for Legitimacy.

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The debate over the value of mobile advertising typically focuses on what effect, if any, it has on brand lift, sales and getting consumers into stores. But advertisers have been wasting money on mobile in the literal sense because a significant portion of the ads they're paying for never properly display on devices.

Now, networks and publishers are being pressured to more accurately report how well they deliver ads in an attempt to legitimize the industry and increase mobile-marketing spending.

Apple's iAd earlier this month became the first major mobile-ad network to be fully accredited by the Media Ratings Council as adhering to the standards the Interactive Advertising Bureau and Mobile Marketing Association jointly released earlier this year.

During the auditing process, iAd demonstrated accurate reporting of impressions, taps, tap-through-rate, visits, views, views-per-visit, average time spent, conversions, unique devices and unique device visits. Apple said its mobile ad network is more streamlined than others and that it only charges for ads that fully render on users' screens.

"We were favorably impressed with the range of metrics that iAd provides and their quality," David Gunzerath, senior VP and associate director of the MRC, said. "It gives the buy and the sell side confidence that the measurements are accurate and can be relied upon as currency."

The announcement could benefit the entire mobile advertising industry at large by pressuring networks and servers to standardize how they calculate and report how well they're executing their clients' campaigns. The lack of a widely adopted reporting standards has resulted in advertisers spending money on ads that smartphone owners never see.

A handful of firms are going through the accreditation process, including Google's DoubleClick.

Mobile-ad network Millennial Media and mobile-ad server MoPub, are weighing whether advertisers care enough about MRC accreditation before they go through the process, which involves an in-depth audit and costs more than $100,000.

For advertisers, the wasted dollars are difficult to quantify. Digital analytics firm ComScore recently found that about 30% of desktop ads aren't viewable. And due to an array of technological complexities, the number stands to be even higher on mobile.

Serving a mobile ad involves a publisher sending an ad request to its ad server, that ad server sending a request to a third-party ad server, the third-party ad server making a request for creative and the creative server delivering the ad unit to the device. (If this sounds complicated, it is.) Couple all that with mobile-connectivity issues, and it's easy to understand why a mobile ad might not render.

Still, publishers typically get paid regardless of whether the ad ever appears because ad servers usually use "server-side counting," meaning it's counted as soon as an ad impression is requested. To receive the MRC seal of approval, mobile ad networks and servers need to use "client-side counting," tallying an impression only when the ad is successfully delivered to the device.

DoubleClick is being audited for MRC accreditation and executives said its mobile-ad serving is steadily improving, especially when using its DoubleClick for Publishers Premium service. Google declined to comment.

Millennial lets its advertiser clients choose whether to use client or server-side counting. Jim Payne, CEO of the third-party ad server Mopub, said it doesn't work with publishers until they get their discrepancy rate -- the gap between the ads a marketer paid for and the ads that never rendered on a device -- to less than 5%.

Eric Litman, CEO of mobile-ad serving startup Medialets, entered into the MRC accreditation process because he thinks it's integral to convincing marketers that mobile is a worthwhile advertising channel and, in turn, inducing more spending.

There's an onus on publishers to improve as well, since they're the primary beneficiaries of these wasted ad dollars.

The Weather Co.-which had the 14th most unique mobile visitors in the U.S. in March, according to ComScore-said it compensates advertisers for any discrepancies by "overbooking," or offering them more ad inventory than they paid for with the understanding that some may fail to render. The company also said it improved its discrepancy rate from more than 20% to less than 10% after it switched to using DoubleClick for Publishers Premium for its ad serving last fall.

Weather Co.'s VP-digital monetization echoed the need for ad counting to be standardized.

"There's no agreement about how to measure it, and that's just not fair to anybody," he said.

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