<img class="alignnone size-full wp-image-2327" alt="Post - Mobile ads graphic" src="http://redwingconsulting.com/wp-content/uploads/Post-Mobile-ads-graphic.jpg" width="700" height="200" />
<h4 style="text-align: justify;">With mobile penetration so high and credit card penetration so low, mobile ads look like an obvious path to monetization for Indonesian startups. Yet while mobile ad volumes are impressively high, mobile ad rates are startlingly low. Why is this, and will it change?</h4>
<h5 style="text-align: justify;">Indonesia is a huge mobile ad market</h5>
<p style="text-align: justify;">By all accounts, Indonesia is one of the most dynamic mobile ad markets in the world. Mobile ad platform Inmobi said Indonesia ad volumes grow 100% year-on-year from 2011 to 2012, and mini-browser maker Opera revealed that Indonesia was the second largest mobile ad market in the world in the last quarter of 2012, second only to the USA.</p>
<p style="text-align: justify;">Redwing estimates that over 200 billion ads were delivered to mobile phones in Indonesia in 2012. That’s about a thousand ads per mobile subscriber each year. As the chart below shows, Entertainment &amp; Lifestyle and Glamour &amp; Dating account for around two-thirds of all mobile ads:</p>
<p style="text-align: justify;"><img class="alignnone size-full wp-image-2326" alt="Post - Mobile ads chart" src="http://redwingconsulting.com/wp-content/uploads/Post-Mobile-ads-chart.jpg" width="510" height="455" /></p>
<p style="text-align: justify;">Yet low CPM rates mean that it is difficult for startups in Indonesia to monetize their audiences via mobile ad revenues. With CPM rates typically in the US$0.01 to US$0.03 range, each mobile subscriber is only worth about US$1 to US$3 in gross advertising revenue per year. By the time this revenue is split between the ad network, the operator and across numerous startups, there’s not much of a revenue flow.</p>
<p style="text-align: justify;">So will this situation change? The answer: yes.</p>

<h5 style="text-align: justify;">Four reasons mobile ads aren’t there yet</h5>
<p style="text-align: justify;">1. Mobile impressions aren’t as rich as desktop impressions</p>
<p style="text-align: justify;">In a desktop browser, the advertiser can be confident that the ad is being viewed as it was meant to be seen. Desktop browsers are relatively standardized, and users are able to view, click and act on ads. With a mobile ad, things are not so predictable. Different form factors, screen sizes and device capabilities mean the advertiser can’t be entirely sure what will show up on the users screen and what the user will be able to do if they like an ad.</p>
<p style="text-align: justify;">2. Mobile click-throughs often lead to user confusion</p>
<p style="text-align: justify;">Then the advertisers let themselves down. When users click on a mobile ad, they are often taken to websites that aren't optimized for mobile, landing pages where it’s unclear what to do next, or thrown into an app store with no indication why they are there.</p>
<p style="text-align: justify;">3. Advertisers aren’t set up for mobile ads</p>
<p style="text-align: justify;">Most advertisers are fairly new to the mobile ad game. The people on their teams are more experienced with mass media campaigns, and their online teams know the desktop. Mobile is a bit of a mystery, and even if they have the ad piece figured out, the back end often isn’t: hence the poorly-optimised websites, unclear landing pages and app store jumps mentioned above. So many advertisers are not prepared to do the extra work needed to
create new pages or optimize their websites or shopping carts.</p>
<p style="text-align: justify;">4. Different ad strategies are required</p>
<p style="text-align: justify;">Publishers and advertisers can't just shrink down their desktop web ads for mobile and call it a day; they need to rethink their strategies. What used to be a show-and-click model is now a display-and-engage model. Few users buy direct and immediately from the mobile phone, so the advertiser needs to engage them at a different level from a simple direct-response ad.</p>

<h5 style="text-align: justify;">Current trends are all positive</h5>
<p style="text-align: justify;">The good news in all this is that a lot of large organisations are working to improve this, from Facebook to Google to the ad agencies to the mobile ad networks. All are trying to develop a more palatable user experience that will lead to better engagement rates and ultimately higher conversion rates. All are trying to develop platforms which will enable advertisers to integrate mobile as part of their overall strategies, rather than seeking to develop mobile as a standalone advertising channel.</p>
<p style="text-align: justify;">Publishers are starting to roll out more sophisticated ad tools, including better targeting intelligence and profile management, which will enable marketers to feel comfortable with bigger ad buys and higher CPMs.</p>
<p style="text-align: justify;">And the users themselves will gradually cause mobile ad prices to rise as they get more comfortable making bigger purchases on their phones and tablets (especially their tablets, which have a more consistent and predictable user experience from an ad perspective).</p>
<p style="text-align: justify;">What will emerge are a variety of advertising strategies that deliver immersive brand building and direct response campaigns that take proximity, call and device capabilities into account. When marketers get the experience right, the intimacy of the mobile devices could provide a game-changer for them.</p>
<p style="text-align: justify;">The essence of a mobile device is that it is personal. Users want to feel like people rather than targets. Successful advertisers will increasingly use mobile to develop intimacy and long-term relationships with their customers rather than stealing some of their mobile screen space to deliver messages which the users don’t want.</p>
<p style="text-align: justify;">And as these strategies emerge, expect to see monetization opportunities for startups to rise considerably.</p>