When I grew up watching "M.A.S.H." there were three ways for brand advertisers to reach audiences with compelling commercials: ABC, CBS, and NBC. Today there are myriad channels for delivering commercials that I don't have to enumerate for fear of slipping into the land of convergence clichés. So everything has changed.
Except nothing has changed. Buyers still categorize broadcast and network programming on digital as "premium," paying more and perpetuating two classes of inventory: premium and non-premium.
When Volkswagen bought commercial space back in the '70s during "M.A.S.H." it cared about four things:
- Context -- The brand liked the award-winning programming and wanted to be associated with it.
- Targeting -- It knew it was talking to heads of households watching.
- Reach -- There was a big audience.
- Price -- The car maker could get all of the above at a price that drove return on investment.
Today, the same is true. When brand advertisers make their buys they care about the same four things: context, targeting, reach, and price. It's decidedly more complicated to get those things, but media buyers themselves often engender that complexity by overvaluing the benefit of one variable: context. The momentum of feeling good about a commercial that aired during an episode of "M.A.S.H." or "The Mary Tyler Moore Show" in the '70s still trickles down today; we have what is called "premium pricing" for "broadcast-quality" context.
As brand and video advertising starts to gain serious momentum in the mobile industry, we're seeing the same categorizations that broadcast saw and online has been seeing. But even more pronounced on mobile, where no great Hulu-type brand experience exists with broadcast premium content. Mobile app developers should take note of what this means for their business and monetization.
There are signs that the premium ad inventory bucket on mobile is starting to expand, and expand in a very real way, including what I call the "new premium."
What is the new premium? It is simply made up of publishers who don't have, or need, the broadcast-quality imprimatur. They play successfully with two other variables in the brand buyer's four-sided decision set: targeting and reach.
Take a look, for instance, at the top 25 free iPhone apps at the time of this writing. There are two owned by traditional "premium" broadcasters: MySpace and The Weather Channel. The rest are a mix of utility, social, games, and independent entertainment apps. Even in the entertainment category, there is only one media-company-owned app in the top 25: Star Trek's Captain Log. Consider also the eMarketer chart below.
Not only are the traditional premium brands not present in a significant way in the app ecosystem, but total attention is shifting away from their areas of strength: broadcast and even online.
What does this mean for advertisers and publishers? None of the venerable broadcast brands have near the usage or interaction level of a fun little app called Type and Talk (the top free app in the iTunes store as of this writing). Yet advertisers remain reluctant to commit the same level of contextual faith in these newly popular channels as they have and do in the traditionally popular channels.
It's too easy to blame the brand ad buyers for buying narrow context, but that is a publisher cop-out. Advertisers will buy when they are told why they should, and it is the publisher's job to understand those objectives to get the buy.
The new premium publishers do not have the traditionally exalted context of prime-time entertainment, but they do know their audience very well and they are building reach around that audience. Rather than dismiss buyers of context, new premium publishers have created value by embracing their audience. Place the right brand ad in the right place in front of the right person. They've changed the game, and brands are starting to follow.
Many app developers fail to recognize that they have the opportunity, in fact the need, to optimize their targeting and reach. When was the last time you downloaded an app and it asked you your age and gender? If you are an app developer, are you launching your apps to drive downloads or to make money? The answer seems obvious, but it's surprising how few steps app developers take to ensure their apps are positioned to make money, ready to be part of the new premium.
If users spend five minutes downloading your app over a 3G network, they very likely will spend a couple seconds more to tell you a little about themselves. Take the data. Learn about your audience. Get intimate with them, and your advertisers will reward you. It is not intrusive. In fact, the more you know about your audience, the better you can serve advertisers, meaning the more money you make and potentially the fewer ads you need to show. In the end, you are thrilling users with fewer more-targeted ads. This is the direction the new premium publishers are taking, and advertisers are rewarding them with big buys at high CPMs.
So if you are a publisher, start to know your audience better than anyone else and you can make up for a loss of perceived value of the "context" of your channel. Learn who they are. Apple certainly is by leveraging iTunes data, so shouldn't you know your audience just as well if not better? New premium publishers know this and are executing on it well. It's time you joined their ranks.
Frank Barbieri is founder and chief product officer of Transpera.
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