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Smartphone apps: the future of mobile advertising?

NEW YORK - Consumers' insatiable appetite for mobile applications is driving exponential growth in the space, which creates opportunities for mobile marketers, according to a panel at IAB Marketplace-Mobile.

Apple has generated a lot of interest among consumers, who now know that apps are a key part of their mobile experience. Savvy marketers are feeding their hunger and engaging consumers by delivering a mix of in-application advertising and branded mobile apps providing utility and/or entertainment.

"When developing an app, design is the most profound differentiator there is, especially for a brand," said Michael Lebowitz, founder/CEO of Big Spaceship, Brooklyn, NY. "Providing a high-quality user experience and quality of design is a differentiator available to brands, because the baseline level hasn't gotten that high yet.

"Location data is available and it's massively underused, and when it is used, it's used in a very simple way, but there's a lot more you can do with all the data that gets generated," he said. "Brands should take advantage of location as an info source and as a way of creating a richer experience, which is one way to overcome the limitations of the smaller screen.

"I'm glad there's a lot of competition out there, because it's going to push innovation in the mobile space."

Big Spaceship has worked with Lexus to integrate branding promoting the automaker's IS convertible into Urban Daddy's targeted iPhone application.

"We needed to create an app that has real value to differentiate from the Yelps of the world and help create a tight marketing program in the form of the app that tied the values of the product -- the Lexus IS convertible -- to a lifestyle audience," Mr. Lebowitz said.

"Urban Daddy's content is highly curated, and its audience is people in the know, so we had to create an app you would be proud to show off with a light-touch element of branding, becaused you don't want obstructions to content," he said. "The value the brand gets is that its logo and placements are integrated thematically.

"Ultimately, we had a really wonderful content partner in Urban Daddy and a lovely brand in Lexus, so we needed to figure out a few really natural behaviors and start our process with a value exchange with consumer intent and desire being top of mind, very targeted at a particular demographic."

AOL's Platform-A has helped publishers such as monetize their mobile applications. has inventory such as clickable banner ads that are expandable to full page interstitials, with three choices for a response. Platform-A can enable responses such as buy a ticket, see a trailer, collect consumer data and find a store.

The landing page is inside of the app, so consumers don't have to leave to see the brand's full-screen page.

"Publishers want their mobile content to be monetized with advertising, and the flipside is brands that want to buy inventory in apps and also want to be able to reach people who haven't downloaded that app, accessing content on WAP sites, so we set out to build ads that would display everywhere and look the same everywhere," said Bill Guild, director of product management for AOL's Platform-A.

"Mobile doesn't have the volume of the Internet, but it does have more engagement and targetability," he said. "Mobile is also a lot less cluttered than online -- you have one ad per page on mobile versus five competing for attention on the wired Web.

"Effectiveness and lift across all metrics is very good in mobile, and really effective mobile campaigns involve scanning a bar code taking a consumer to a mobile Web page with contains an SMS call-to-action and a section for consumers to enter their email address and ZIP code -- that's when it really starts to sink in."

Marketers can find success with a campaign as complex as that, although something as simple as mobile display ads with click-to-download-an-app functionality can drive uptake effectively.

Zumobi is a mobile media company that creates applications running on next-generation smartphones -- especially the iPhone and iPod touch but also including devices such as the Palm Pre and the G1 on Google's Android -- which the company calls "superphones."

"These superphones have created a revolutionary new distribution channel, which represents the next great media opportunity," said Ken Willner, CEO of Zumobi. "Apps are the new music, in the sense that app stores have created a frictionless distribution system, and now getting an app on a consumer's phone is as easy as getting a song on iPod, so there are lots of opportunities for brands and media companies.

"App stores have opened up new possibilities for direct-to-consumer distribution and have created a rabid user base," he said. "The App Store has reached 1 million unique downloads in less than half the time that iTunes music downloads took to reach that mark, so the growth trajectory is outstanding."

Whether the iPhone or another mobile device, panelist agreed that mobile is a unique channel.

"I think there is a difference in mobile because of the personal nature of the device -- it's intimate," Mr. Willner said. "In the case of apps, everything is opt in, because the user has raised his hand to download it on his phone and oh by the way it's on my homescreen and I see it every day, which is different than the online and the TV experience.

"We're more attuned to per-user metrics than per-impression metrics, because it's more valuable," he said. "An advertiser is paying for engagement with users, not necessarily how many impressions they can get.

"Our goal is to drive repeat engagement with the apps over time."