AdMob Happy

Thanks to his excellent blog, MobHappy, Russell Buckleys passion for mobile is well known to many. But earlier this year, he strengthened his ties to the mobile industry when he took up the post of Managing Director of Europe with mobile ad-serving company AdMob.  David Murphy caught up with him to find out more about the man, and the company

DM: So tell us about AdMob

RB: Its a pretty simple business really. We find people with mobile Internet sites (publishers) and invite them to let us run ads on them, and we share the revenue with them 60:40 in their favour. Because we have a self-serve model, publishers can come and get the code and strip it on to their site and get up and running in matter of minutes. So we can turn any site that has some traffic into money. Even if you only have a couple of pages a day, youre not precluded from doing it. Once we have some inventory, i.e., sites with pages, we can sell those to our advertisers.
Advertisers bid for the ad space. They tell us how much they will pay for a click and then they win the bid or not. To help people bid, we give them a minimum, medium and maximum price guideline, and we compress the ids, so if you say you will pay 30 cents and the next highest bid is 15 cents you only pay 16 cents to win the bid. And we have algorithms in place to make sure that your ad is served even if you are always being outbid. For example, if someone has seen an ad three times and not responded to it, we dont serve it again, so in that instance, the next highest bidders ad would be served.

DM: And how is the business going?

RB: Very well indeed. We are one year old now. In our first six months, we sold 30 million ads. In the second six months we did 1 billion, and we wont be far short of another billion in the next three months.
We have 500 million pages available for advertisers. We have inventory in 119 countries and we have been a global company from day one, because wherever the website owner is based, they are accessible via the web all over the world. Our top countries for traffic are the US, S. Africa, the UK, Romania and India.
At the moment its all text links, but we are launching banners right now in the States, and in Europe next month. At the moment the text links are on a pay-per-click basis, but with banners, it will be pay-per-impression.

DM: So what sectors do your advertisers come from?

RB: There are two types. One is mobile-related content such as ringtones, logos etc. This is because it is incredibly effective and cost effective to do. If you take an ad out in a newspaper to promote ringtones, for example, an awful lot of people will not know how to get on the mobile web and come to your site. They might not have the right settings and then they have to get out their mobile, type the URL, and get to the site, which is all pretty inefficient, whereas here we say: Click on this and youre So its quite cheap and theres no wastage.
A subset of these people is the mobile handset makers. We can target ads by handset make as well as location, so we can target Nokia owners in the UK. This is very useful because the handset makers often dont know who their users are because the users are the operators customer. So Nokia could use us to advertise purely to Nokia customers.

DM: So if two people went to the same site, one with a Motorola and the other with a Nokia, one would see the Nokia ad and one wouldnt?

RB: Thats right. What happens is when a user clicks on a link to take him to a page on one of our publisher sites, this is a page request. At that point, the publishers server contacts our server to ask if we have an ad and we look up the database and serve an ad or not, depending on the targeting criteria, so in that instance, the Nokia user would see an ad, but it would not be apparent to the Motorola user that there should have been an ad there. Or there could be an ad targeted at Motorola users of course.
We can target by location and carrier, so if T-Mobile have their Web & Walk product and Vodafone dont have such an offering, T-Mobile could target Vodafone customers. Which would be a clever thing to do, of course, because they know that person is a mobile web user and probably conscious of the price they are paying for mobile data.
We can also target by mobile platform, such as Symbian for example, so if you were selling Java games, you would only want that ad to be seen by people who could download the game on to a midp2 handset. And we can target by device capability, so WAP push, video streaming etc.

DM: What about demographics?

RB: That sort of stuff is on the roadmap. The challenge with mobile is that there is no way of telling unique users because when they log off and then come back on again, they are treated as a new user, but we are looking at ways round this.

DM: What about other brands and sectors that would be interested in reaching the type of people likely to be on the mobile web. Fashion brands, sports, etc?

RB: Yes, other people are interested in this. As they did with their websites, brands are looking to create a mobile website because they can see more and more people spending time on the mobile web. But Build it and they shall come is not a good strategy for any campaign so I think we will see more brands coming in and building mobile sites and then using us to help them promote them.
As an example, we ran a campaign for a portal for a sports brand over the summer to drive traffic to their mobile site. They spent 0.4% of their budget with us, and that delivered 40% of their traffic.
We are working with a lot of brands and I can only see things growing. But they have to think what the call to action will be. We direct traffic from one website to another, so you have to think what you will put on your landing page.

DM: A year or so ago, I heard people say that mobile would not take off as a marketing channel until media buyers could buy mobile ad space in the way they can buy TV airtime or space in a magazine. Do you believe this is hat youre delivering?

RB: I believe so, yes. When you are building this sort of company, you have to balance supply and demand. You cant sell ads until you have your inventory, but you also have to be careful how you manage your publishers. The key thing is to balance that and build up the inventory, and thats what weve done. The publishers are happy with the money they are getting, and the advertisers are getting access to more and more people. So now we have a more interesting proposition for agencies. If I went to them last June and said that I had 100,000 pages every six months, they might not have been interested. But now with 500 million pages a month, that is interesting, so now we are opening a more serious dialogue more agencies.
Up until now, we had the sales team covering the pay-per-click sales also covering the one or two agencies with the vision to see the opportunity, but we are about to recruit a Head of Agency Sales because we have reached a critical point where we think we need someone to focus on agencies.

DM: How did you get involved with AdMob?

RB: It was through the blog. Omar (Hamoui) the Founder of AdMob was doing an MBA and he is an engineer. He had an idea for a photosharing website called fotochatter.com which I blogged about, so I knew him from there. It was a nice application, but it ran into the classic problem of, he could not take it any further because he had no conventional marketing budget and he didnt have the time or the inclination to deal with the operators and let them take half the income. So he worked out what the problem was and sat down again and came up with the idea for AdMob, got some publishers and advertisers together, proved the concept, and talked to a couple of Venture Capitalists. One of them read my blog and suggested he talked to me, and the rest is history. I was their first  employee. We started talking last February and by March I was working for them.

DM: But this is not your first involvement in the mobile marketing business?

RB: No. Ive been involved in mobile marketing for seven years. I stuck with it because I was convinced that one day it would go somewhere.  I have been consulting for the last few years, and before that, I was involved in ZagMe, which did location-based shopping alerts. We did a trial at the Bluewater shopping centre near Dartford in the UK. We had 85,000 consumers, and we ran 1500 campaigns, so we went back to the VCs for more money, and we signed a deal on September 11 2001 in the morning, and then in the aftermath of the disaster that unfolded that day, they withdrew the offer. If youve ever been involved in raising finance for a business venture, youll know that when you secure the funding, its more relief than triumph, so we got the money, went away relieved, and then it all fell apart. I spoke to one of the VCs involve recently and he told me that looking at his portfolio, not investing in ZagMe was his only regret, but I told him that I thought it was the right decision, made for the wrong reasons.
It was too early for what we were doing and the results were always mixed. I dont think push alerts are the right way to go. The problem is that they are expensive, especially when you take into account the redemption you need to get payback, and even when you have optin, if the recipient is in the wrong mood to receive the message at that time, they see it as spam, so unless you can get the context right, which is impossible to do with push, it is very hard. Outbound traffic will increase with CRM applications like getting your bank balance or finding out your flight is delayed, but I dont think push alerts, whether via Bluetooth, which is a bit of a joke, or SMS, are not the right direction to go.
The great thing about AdMob is that it really does work. You dont have to convince people. They try a $50 dollar campaign and they see that it works, and they carry on spending money.

DM: Its interesting you talk about push ads because I wanted to ask what you think the reaction will be if the networks start pushing ads at their customers as part of a mobile TV offering. Its one thing to see an ad on the mobile web and make a conscious decision to click on it, but how do you think this would be received?

RB: Well the question assumes, of course, that Mobile TV will take off in the first place, and I dont think thats proven yet. But I think we have to be very careful as marketers to try to avoid the obvious mistakes our online colleagues have made with interstitials and pop-ups and pop-unders. People dont like them. One of the reasons our ads work is that you can ignore them. Or you can easily click on them if they are of any interest. 
Also, we are helping people to discover content. Its like having a PC in 1995, firing up the browser and going to Yahoo and then thinking: Where shall I go now?  What we are doing is helping people to discover new content and new applications they dont know about, but they can ignore them if they want to. Banners are a bit less easy to ignore but they are still ignorable. As a marketer, you have to respect the fact that you can only put your product in danger of being sold; you cant force it down peoples throats. 
The thing about Mobile TV at the moment is that the data costs are astronomical. You cant expect people to pay to download ads; its not going to happen. So until the data charges go flat rate, this is a big issue, but when that happens, we have to be very careful about the way we interacts with consumers, and respect them, and dont force it down their throat.
Im intrigued too by this business model of: Watch this ad and we will give you something for free and then ask you a few questions. I just dont think it works, and also, the type of people attracted by this type of service, are not the type of people that advertisers are interested in. I think its a mistake, too, to call this type of model ad-funded. If you look at an SMS costing 10p, to get 10p worth of advertising, thats very high. I think a better phrase would be ad-subsidised. Ad-subsidised is very doable. Ad-funded is much more challenging.