THE STATE OF US DIGITAL ADVERTISING 2015Mobile Trumps Desktop, People Trump Devices

MARCH 2015

Cathy Boyle

Contributors: Rebecca Chadwick, Lauren Fisher, Rimma Kats, Chris Keating, Jeremy Kressmann,

Martín Utreras, Haixia Wang

Read this on eMarketer for iPad

THE STATE OF US DIGITAL ADVERTISING 2015: MOBILE TRUMPS DESKTOP, PEOPLE TRUMP DEVICES ©2015 EMARKETER INC. ALL RIGHTS RESERVED 2

CONTENTS2 Executive Summary

3 Mobile Trumps Desktop in Ad Spending

8 Four Common Misconceptions

11 Strategically, People Trump Devices

13 eMarketer Interviews

14 Related eMarketer Reports

14 Related Links

14 Editorial and Production Contributors

EXECUTIVE SUMMARY

The much-anticipated shift toward mobile will

occur this year in the two largest digital advertising

categories—search and display. For the first time,

US advertisers will spend more in these areas

to reach consumers on mobile devices than

desktop computers.

eMarketer estimates 59% of the US population will regularly use a smartphone this year, 49% will use a tablet and just over one-third will use both devices. The average US consumer now expects every digital experience—media, shopping, social networking, communication and advertising—to move as seamlessly across devices as they do themselves.

Advertisers cognizant of this expectation are not only shifting ad budgets, they’re moving away from desktop-, smartphone- and tablet-specific advertising strategies to a holistic strategy based on how, when and why a target audience accesses the internet.

The goal of this report is threefold: to quantify the shift in spending across the search and display ad categories (including programmatic display); to dispel a handful of misconceptions that are holding marketers back from extending campaigns beyond desktop; and to provide insight on marketers’ progress toward implementing a people-centric advertising strategy.

KEY QUESTIONS ■ To what degree are search and display ad spending patterns changing?

■ How do spending patterns differ between desktop and mobile?

■ What misconceptions are holding advertisers back from extending ad campaigns beyond desktop?

■ When will people-based, cross-screen advertising become a reality?

billionsUS Display and Search Ad Spending, by Device, 2015

Search ad spending

$12.82

$12.85

$25.66

Display ad spending

$12.38

$14.67

$27.05

Desktop* Mobile**

Note: numbers may not add up to total due to rounding; *includesspending primarily on desktop-based ads; **ad spending on tablets isincludedSource: eMarketer, March 2015186591 www.eMarketer.com

THE STATE OF US DIGITAL ADVERTISING 2015: MOBILE TRUMPS DESKTOP, PEOPLE TRUMP DEVICES ©2015 EMARKETER INC. ALL RIGHTS RESERVED 3

MOBILE TRUMPS DESKTOP IN AD SPENDING

Digital advertising in the US has reached an inflection

point: For the first time, advertisers will spend more

money to serve search and display ads to mobile

devices compared with desktop computers.

eMarketer estimates US advertisers will spend a total of $52.71 billion on search and display advertising in 2015, up 16.6% from the prior year. In an effort to catch up with consumers toting smartphones and tablets, more than half (52%) of the 2015 investment in search and display ads is expected to be spent on mobile campaigns.

As more money flows into mobile advertising, the balance between search and display spending is shifting. On desktop, the amounts spent between search and display are nearly equal, but on mobile devices, spending skews more heavily toward display.

billionsUS Display and Search Ad Spending, by Device, 2015

Search ad spending

$12.82

$12.85

$25.66

Display ad spending

$12.38

$14.67

$27.05

Desktop* Mobile**

Note: numbers may not add up to total due to rounding; *includesspending primarily on desktop-based ads; **ad spending on tablets isincludedSource: eMarketer, March 2015186591 www.eMarketer.com

The following sections provide a detailed explanation of eMarketer’s outlook on spending in the search and display categories, the factors influencing the shift toward mobile and two inaugural forecasts for spending in mobile-only advertising categories—app-install ad spending and spending by mobile channel (mobile websites vs. apps).

Behind the Numbers:

eMarketer bases all of its forecasts on a multipronged approach that focuses on both worldwide and local trends in the economy, technology and population, along with company-, product-, country- and demographic-specific trends, and trends in specific consumer behaviors. We analyze quantitative and qualitative data from a variety of research firms, government agencies, media outlets and company reports, weighting each piece of information based on methodology and soundness. In addition, every element of each eMarketer forecast fits within the larger matrix of all our forecasts, with the same assumptions and general framework used to project figures in a wide variety of areas. Regular re-evaluation of each forecast means those assumptions and framework are constantly updated to reflect new market developments and other trends.

SEARCH SPENDING: MOBILE TAKES THE LEAD, BY A NOSE eMarketer projects US advertisers will spend a total of $25.67 billion on search advertising in 2015, an 11.5% increase from the prior year. The double-digit growth stems mostly from larger investments in mobile search, which will exceed the amount spent on desktop search for the first time this year.

The difference in spending between mobile and desktop in 2015 will be less than 1%—$12.85 billion vs. $12.82 billion. But, in 2016 and 2017, the total spent on mobile search is projected to far exceed the desktop total, by 69% and 138%, respectively.

billionsUS Search Ad Spending, by Device, 2014-2017

2014

$14.30

$8.72

2015

$12.82

$12.85

2016

$10.56

$17.87

2017

$9.12

$21.73

Desktop* Mobile**

Note: includes contextual text links, paid inclusion, paid listings and SEO;*includes spending primarily on desktop-based ads; **ad spending ontablets is includedSource: eMarketer, March 2015186469 www.eMarketer.com

THE STATE OF US DIGITAL ADVERTISING 2015: MOBILE TRUMPS DESKTOP, PEOPLE TRUMP DEVICES ©2015 EMARKETER INC. ALL RIGHTS RESERVED 4

Growth in mobile search spending is not expected to come from a large influx of new ad dollars, although new money coming in will funnel to mobile. Mostly, ad dollars will shift from desktop to mobile. eMarketer estimates the total amount spent on desktop search will decline from $12.82 billion this year to $9.12 in 2017, at which point 30% of total search dollars will be allocated to desktop and 70% will go to mobile.

eMarketer’s bullish outlook on mobile search reflects a confluence of several key trends:

■ Advertisers are keenly aware of mobile’s growing share of browser-based search queries, paid clicks and referral traffic—key indicators that discoverability increasingly requires winning the top spot on mobile search engine result pages. The growing volume of mobile search advertisers is offsetting the lower cost per click (CPC) on mobile to drive the total mobile search spend higher.

■ The leading search engines have made it relatively easy for advertisers to extend campaigns to smartphones and tablets.

■ Product listing ads (PLAs) have ported over to tablets and smartphones and gained popularity quickly, particularly among advertisers aiming to drive in-store and mcommerce sales.

■ Consumers are increasingly turning to category-specific apps to search for information, particularly local information. To keep up with this change in behavior, advertisers are investing in app-based search as well as browser-based mobile search.

■ Lastly, search engines and ad tech companies are bringing better attribution tools to market to help advertisers understand how investments in mobile search influence sales in other channels.

DISPLAY SPENDING: MOBILE PULLS FAR AHEAD A similar but more dramatic shift is expected to occur this year in the display category. More money will be spent on mobile display advertising than desktop display—a first, just like it is for search. But unlike search, mobile spending is projected to exceed the desktop total by double-digit percentages. eMarketer estimates $14.67 billion will be spent on mobile display ads in 2015 compared with $12.38 billion for desktop display, an 18% difference.

billionsUS Display Ad Spending, by Device, 2014-2017

2014

$12.56

$9.65

2015

$12.38

$14.67

2016

$11.59

$20.80

2017

$11.67

$25.69

Desktop* Mobile**

Note: includes banners, rich media, sponsorships, video and other (staticdisplay ads such as Facebook's News Feed Ads and Twitter's PromotedTweets); *includes spending primarily on desktop-based ads; **adspending on tablets is includedSource: eMarketer, March 2015186471 www.eMarketer.com

The heavier investment in mobile display is driven by two key factors:

■ Consumers’ penchant for accessing social networks from mobile devices and advertisers shifting budgets to follow those eyeballs. In addition, the robust audience targeting capabilities offered by the leading social networks and ad formats that are native to the mobile newsfeed environment are proving to be effective. In 2015, eMarketer projects $7.59 billion—slightly more than half—of the mobile display total will be allocated to the “banner and text” display ad category, which includes spending on mobile-social ads. Spending on Facebook’s and Twitter’s mobile ads alone will comprise the lion’s share (80%) of the “banner and text” total. A similar situation will exist in 2016 as well.

THE STATE OF US DIGITAL ADVERTISING 2015: MOBILE TRUMPS DESKTOP, PEOPLE TRUMP DEVICES ©2015 EMARKETER INC. ALL RIGHTS RESERVED 5

■ Brand marketers’ interest in delivering more immersive ad experiences on mobile devices is spurring the growth of mobile rich media ad spending. That interest is also turning rich media into a mostly-mobile ad format. eMarketer projects the amount spent on mobile rich media ads will total $4.46 billion in 2015, which represents a 30% share of mobile display spending overall and 87% of spending in the rich media category as a whole.

In aggregate, the amount spent on display advertising will increase at a compound annual growth rate (CAGR) of 16.4% over the forecast period. But, desktop spending will continue to decline as advertisers shift larger portions of their ad budgets to mobile.

The decline in desktop spending will not be as steep as in the search category, however, largely because the bulk of video ad dollars will continue to flow to desktop. Advertisers’ desire for big-screen impact and the wider availability of video inventory on desktop are the main factors driving video ad dollars toward desktop. Even though spending on mobile video is ramping up quickly, eMarketer expects desktop video to maintain an advantage over mobile throughout the forecast period.

billionsUS Digital Video Ad Spending, by Device, 2015-2018

2015

$5.15

$2.62

2016

$5.65

$3.94

2017

$6.16

$5.09

2018

$6.86

$5.96

Desktop* Mobile**

Note: includes in-banner, in-stream and in-text; *includes spendingprimarily on desktop-based ads; **ad spending on tablets is includedSource: eMarketer, March 2015186377 www.eMarketer.com

Programmatic Spending: Mainstream and Mobile The shift to mobile is just the first half of the display advertising story; the dominance of programmatic spending is the other. 2015 will mark the first time more display ad dollars will be spent programmatically compared with traditional buying methods. eMarketer estimates 55.0% of US display ad spending will be transacted programmatically in 2015, up from 45.0% in 2014.

billions, % change and % of total digital display ad spending*

US Programmatic Digital Display Ad Spending,2013-2016

2013

$4.24

108.7%

24.0%

2014

$9.99

135.5%

45.0%

2015

$14.88

48.9%

55.0%

2016

$20.41

37.2%

63.0%

Programmatic digital display ad spending% change % of total digital display ad spending*

Note: digital display ads transacted via an API, including everything frompublisher-erected APIs to more standardized RTB technology; includesadvertising that appears on desktop/laptop computers as well as mobilephones and tablets; *includes banners, rich media, sponsorship, video andotherSource: eMarketer, March 2015186642 www.eMarketer.com

It’s important to note that eMarketer’s definition of “programmatic display ad spending” accounts for all automated methods of transacting and/or fulfilling digital display ads. This includes everything from publisher-erected APIs (common to social media sites and ad networks, for example) to more standardized real-time bidding technology (RTB). The 55% share mentioned previously, which equates to a total of $14.88 billion, includes money spent via RTB on open exchanges and private marketplaces, as well as programmatic direct buys.

The zinger to the programmatic story is more than half (56%) of programmatic display ad dollars spent this year will go to mobile display ads, not desktop ads.

THE STATE OF US DIGITAL ADVERTISING 2015: MOBILE TRUMPS DESKTOP, PEOPLE TRUMP DEVICES ©2015 EMARKETER INC. ALL RIGHTS RESERVED 6

billions, % change and % of total programmatic digital displayad spending

US Programmatic Digital Display Ad Spending, by Device, 2013-2016

Desktop/laptop

—% change

—% of total programmaticdigital display ad spending

Mobile*

—% change

—% of total programmaticdigital display ad spending

2013

$2.92

-

68.7%

$1.33

-

31.3%

2014

$5.55

90.5%

55.6%

$4.44

234.3%

44.4%

2015

$6.52

17.3%

43.8%

$8.36

88.4%

56.2%

2016

$6.26

-3.9%

30.7%

$14.15

69.2%

69.3%

Note: digital display ads transacted via an API, including everything frompublisher-erected APIs to more standardized RTB technology; *ad spendingon tablets is includedSource: eMarketer, March 2015186650 www.eMarketer.com

The shift to mobile within programmatic channels may be surprising to some, considering mobile is a relatively new area of display advertising, and programmatic is new (as well as rooted in the desktop world). Still, there are a number of factors driving ad dollars to mobile across programmatic buying channels:

■ The overall shift in display ad spending from desktop to mobile, as just described.

■ The movement toward cross-device advertising. The companies that are making the biggest strides in this area—and who advertisers frequently rely upon to deploy ads to audiences across devices—are the same companies that are heavily invested in programmatic. Examples include Google, Facebook, Twitter.

■ Noncookie-based tracking methods, used by companies like Facebook and Google, are motivating others to rely less on cookies to execute campaigns programmatically. Such a change makes it easier for advertisers to buy mobile inventory programmatically. For example, exchanges and other platforms are getting better at incorporating noncookie-based mobile data into the bidding protocols to improve the targeting capabilities of mobile inventory.

MOBILE-ONLY SPENDING CATEGORIES Mobile advertising includes two categories of spending that do not exist on desktop. The first relates to the bifurcation of media across mobile websites and mobile apps. The other involves spending on a mobile-centric advertising objective—driving app installs.

Mobile Apps vs. Mobile Web Ad Spending Mobile ad inventory is spread across two mobile media channels: mobile websites and native applications. To accurately project spending within each channel, eMarketer used a bottoms-up approach to account for multiple factors, including time spent with each channel, the split of ad inventory across channels and the difference in ad performance by channel.

On the whole, US advertisers have spent—and will continue to spend—significantly more each year to advertise in apps vs. on mobile websites. This is mostly driven by the greater amount of time spent in apps vs. mobile websites, better location targeting capabilities in apps and in-app ads typically outperforming their counterparts on mobile websites. The amount spent to serve in-app ads in 2014 totaled $13.67 billion, which represents 71.4% of the total amount spent on mobile advertising in the US last year. Looking ahead, in-app ad spending is expected to increase by double-digit percentages in 2015 and 2016 to total $20.79 billion and $29.66 billion, respectively.

Growth in mobile web ad spending will not be as steep compared with in-app ad spending, but it, too, will increase by double-digit percentages over the next two years. eMarketer estimates the amount spent to serve ads to mobile websites will total $7.93 billion this year and rise to $10.84 billion next year. Mobile web ad spending will comprise 27.6% of the total spent on mobile advertising in the US this year and 26.8% next year.

US Mobile Ad Spending, In-App vs. Mobile Web,2014-2016

In-app (billions)

—% change

—% of total

Mobile web (billions)

—% change

—% of total

Total (billions)

2014

$13.67

88.2%

71.4%

$5.47

61.0%

28.6%

$19.15

2015

$20.79

52.1%

72.4%

$7.93

44.8%

27.6%

$28.72

2016

$29.66

42.6%

73.2%

$10.84

36.8%

26.8%

$40.50

Note: includes advertising that appears on mobile phones and tablets, andincludes all the various formats of advertising on those platforms; numbersmay not add to total due to roundingSource: eMarketer, March 2015186912 www.eMarketer.com

THE STATE OF US DIGITAL ADVERTISING 2015: MOBILE TRUMPS DESKTOP, PEOPLE TRUMP DEVICES ©2015 EMARKETER INC. ALL RIGHTS RESERVED 7

App-Install Ad Spending Many who remember the dot.com bubble fear spending on app-install ads is propping up the mobile advertising industry. “There was definitely a point in ’98, ’99 when a big chunk of internet ads were for internet companies,” said Joe Laszlo, senior director for Mobile Marketing Center of Excellence for the Interactive Advertising Bureau (IAB). “Breaking out app install ads from total mobile ads is a way to test whether the mobile advertising market is bubbly.”

According to eMarketer’s analysis and calculations, spending on this much-talked-about campaign objective comprised just 8.7% of the total amount spent on mobile advertising in 2014. This year, eMarketer expects the share to increase to 10.4%.

Drilling down to the channel level, eMarketer estimates app-install ad spending comprised 17.3% of mobile display ad spending last year and that share is expected to grow to nearly 20% in 2015. As for search, spending on app install ads was negligible last year. The leading search services/providers are making strides to attract app developers’ ad dollars, but eMarketer expects app install ads to represent an insignificant portion of mobile search spending in 2015.

Although the shares are minor, the total dollar figures spent on app install ads are not small. eMarketer estimates US advertisers spent $1.67 billion on this single advertising objective in 2014 and that total is expected to grow to $3.00 billion in 2015. To put the 2015 figure in perspective, the total spent on app-install ads is expected to exceed the amount spent on mobile video advertising by 14%. It’s important to note that spending on app re-engagement ads are not accounted for in eMarketer’s estimate.

US Mobile App Install Ad Spending, 2013-2015

Mobile app install ad spending (billions)

—% change

—% of total mobile ad spending

2013

$0.77

-

7.3%

2014

$1.67

115.5%

8.7%

2015

$3.00

80.0%

10.4%

Note: includes advertising that appears on mobile phones and tablets, andincludes all the various formats of advertising on those platforms; excludesapp re-engagement adsSource: eMarketer, March 2015186911 www.eMarketer.com

In terms of growth, eMarketer’s outlook is positive. With nearly 1.5 million apps in each of the leading app stores—Apple’s App Store and Google Play—the likelihood that any app will be discovered organically has decreased significantly. App marketers are increasingly investing in mobile display and mobile search ads to stand out from their competitors. Additionally, app-install advertising is common across multiple industry verticals, particularly the retail, travel, media, financial services and of course the gaming sector, where it has the longest history. With those factors in mind, eMarketer expects spending on app install ads to increase by 80.0% in 2015.

THE STATE OF US DIGITAL ADVERTISING 2015: MOBILE TRUMPS DESKTOP, PEOPLE TRUMP DEVICES ©2015 EMARKETER INC. ALL RIGHTS RESERVED 8

FOUR COMMON MISCONCEPTIONS

Although ad dollars are flowing more freely from

desktop to mobile, eMarketer’s research indicates a

handful of misconceptions make advertisers nervous

about extending advertising campaigns beyond

desktop. The goal of this section is to dispel four of

the most common misconceptions.

1. IMMERSIVE BRAND EXPERIENCES ARE LIMITED TO DESKTOP This misconception manifests in different ways, but typically boils down to this: Marketers believe desktop ad units enable them to tell a compelling brand story whereas mobile is a creative wasteland limited by screen size and unsophisticated ad units.

According to Jeremy Sigel, mobile director for North America at digital media agency Essence, “A lot of marketers believe they can’t tell a story on a small screen. That somehow the experience on a laptop, desktop or TV is superior because of screen size alone.”

The IAB’s Laszlo said desktop advertisers extending campaigns to mobile falsely believe that “mobile advertising is all just tiny banner ads that can’t be used to tell a story about a brand.”

There’s no question banner inventory is widely available. However, mobile rich media and mobile video inventory is on the rise and interest from brands is rising with it. In Google’s Q4 2014 earnings call, Omid Kordestani, the search giant’s interim chief business officer and special advisor to the CEO said, “Mobile revenue on YouTube is up more than 100% year-over-year.”

Sheryl Sandberg, Facebook’s chief operating officer, reported in the social network’s own Q4 earnings call that over 65% of Facebook video views globally occurred on mobile devices. “Marketers have followed this trend and are using video to help people discover and learn about their brands,” she said.

According to eMarketer’s analysis of advertisers’ spending patterns, 46% of the total amount spent on mobile display advertising last year was spent on mobile rich media and mobile video ads. In 2015, eMarketer expects that share to increase to 48.3% as brands increasingly invest in more immersive ad formats. In the outer years of the forecast, rich media and video ad spending will comprise the majority of spending in the mobile display category.

For now, however, a larger share of ad dollars will be spent in the banner category. But it’s worth repeating that spending on mobile-social ads like those served by Facebook and Twitter are included in this category. And 80% of the dollars spent in the banner category are spent on Facebook’s and Twitter’s mobile ads. That leaves a comparatively small amount going to the “tiny banner ads” that many mistakenly believe dominate mobile advertising.

Net US Mobile Display Ad Revenue Share, by Format,2015

Banners, sponsorships and other*51.7%Rich media

30.4%

Video17.9%

Note: ad spending on tablets is included; *includes ads such as Facebook'sNews Feed Ads and Twitter's Promoted TweetsSource: eMarketer, March 2015186473 www.eMarketer.com

2. WHAT WORKS ON DESKTOP WILL WORK ON MOBILE Many advertisers falsely believe ads that work on desktop will work on smartphones, tablets or other connected devices, too.

“People take that PC ad and they convert it for mobile,” said Tom Giovingo, audience sales director at Yahoo. “That’s something we’ve got to get away from. We don’t treat other means of advertising like that, where we take the same ad and slap it on a different form factor. So we shouldn’t do that for mobile.”

THE STATE OF US DIGITAL ADVERTISING 2015: MOBILE TRUMPS DESKTOP, PEOPLE TRUMP DEVICES ©2015 EMARKETER INC. ALL RIGHTS RESERVED 9

Jeremy Hull, associate director of paid search at digital agency iProspect, noted the same problem exists on the search side of the business, especially now that search engines have made it easy to add mobile to the desktop bid. “One big misconception is mobile search is just an extension of what you’re doing on desktops and laptops,” Hull said. “In the era of automatic mobile opt-in, it’s very easy to not pay attention to the specific strategies you should be doing on mobile. But that’s not going to drive success.”

Yet, repurposing desktop creative for mobile is a mistake that keeps getting repeated. The results of a survey conducted last year by digital marketing software provider Offerpop showed 62% of US marketers polled did not design their ad campaigns for mobile devices, despite having intentions to do so.

% of respondents

US Marketers Who Designed Mobile-SpecificCampaigns in 2014

Yes38%

No62%

Source: Offerpop, "The State of Digital Marketing Trends: The 2015 Report";eMarketer calculations, Dec 8, 2014187053 www.eMarketer.com

A lack of time, money and resources weigh heavily on the decision to repurpose creative. “We live in a fast-paced industry and for a lot of clients taking the road with fewest barriers is the easiest,” said Yahoo’s Giovingo. If a marketer has desktop creative assets that just need to be resized, he added, that can be a big win because they can get the campaign out the door quickly.

However, marketers who make the investment in developing unique creative assets for mobile have found mobile-specific messaging that is tailored to the device and the context of the user experience performs far better than desktop ads served to the smaller screen. “You’re going to see success in the path to purchase when you optimize mobile for the user experience,” Giovingo said.

The key takeaway for marketers who are porting desktop creative to mobile is to start testing mobile-specific ads head-to-head against the repurposed desktop assets because those desktop ads are likely leaving money on the table.

3. IT’S IMPOSSIBLE TO TRACK CONSUMER BEHAVIOR BEYOND DESKTOP The subtext here is this: Without cookies, tracking isn’t possible. While this may have been partly true a few years ago, there have been several developments in digital identifiers that make tracking consumer behavior possible on mobile devices as well as across devices.

First, it’s important to note that cookies do work and can be used for tracking and targeting on most Android devices, which by eMarketer’s estimate are used by 52% of US smartphone users (98.5 million consumers). But the rub is cookie-based tracking on Android devices is limited to mobile websites only.

Second, Apple and Google have developed persistent and privacy-compliant identifiers that enable advertisers to gain insight into consumers’ in-app behaviors and target ads to specific audiences in apps.

Lastly, deterministic IDs and probabilistic IDs enable advertisers to track consumer behavior across devices as well as target ads across devices. Deterministic IDs are persistent and unique markers that the consumer creates—a Facebook login, for example. Probabilistic IDs, as the name suggests, are derived mathematically using a host of device- and server-derived data to make an assumption about someone’s identity with statistical confidence.

“Because we have logged-in users we truly know who the user is on desktop and on mobile phones,” said Yahoo’s Giovingo. “We aggregate that information to one username, so as all the data goes into person XYZ. Then, we are able to use that data across any screen.”

THE STATE OF US DIGITAL ADVERTISING 2015: MOBILE TRUMPS DESKTOP, PEOPLE TRUMP DEVICES ©2015 EMARKETER INC. ALL RIGHTS RESERVED 10

Connecting the audience data from multiple devices is not always that straightforward, however. “Technically, there’s still work to be done on figuring out how to take [audience data from] this world over here and have it inform this world over here,” said Christine Bensen, senior vice president of media for digital marketing agency iCrossing. “The folks that are rocking in the mobile space—the people who are selling mobile—are primarily mobile companies that have been building their own data sources.”

Mobile ad network Opera Mediaworks is one such company and according to CEO Mahi de Silva, “that data chasm people believe exists really doesn’t. The data, the quality and volume of the signals and the strength of the profiles, are getting very close to what we’ve had on the desktop.” In fact, he said, mobile can provide more granular and more precise signals for user identification compared with desktop.

The truth is there are reliable ways to identify and track audiences outside of desktop but it requires the use of multiple IDs and clever ways of weaving data from multiple sources together. “There are different types of technologies that perform the function of the cookie and make all those things you can do online possible,” said David Staas, president of mobile audience intelligence firm NinthDecimal. “So tracking should not be seen as a limitation.”

4. MEASUREMENT IS ONLY RELIABLE ON DESKTOP Many advertisers worry that mobile is the “The Wild West” when it comes to measurement. “Two years ago, I would have said it was the Wild West, but it [mobile measurement] has gotten a lot better,” said Jonathan Eccles, ad product manager for Pandora.

The root cause of the measurement misconception is, “marketers are not quite sure what they’re measuring [on mobile]. The KPIs used vary quite a lot,” said Ben Plomion, vice president of marketing at programmatic advertising firm Chango.

An October 2014 survey conducted by Chango found agency and brand executives were misaligned on what mattered most in terms of measuring mobile performance. The agency executives were most interested in measuring mobile website and app traffic, whereas brand marketers wanted to measure retargeting and branding metrics most. Plomion contends settling on KPIs should not be an either-or choice: “Brands and agencies are going to realize there are multiple ways to measure the success of mobile. Traffic and engagement, conversions and interactions are a more diverse set of metrics.” Presumably, they are also more reliable in aggregate than any single metric.

Research from CRM software provider Salesforce validates Plomion’s point. Salesforce polled marketers worldwide about the metrics they used to measure the success of their mobile marketing spend and there was little variance in responses, which suggests that the use of the metrics in question was nearly balanced.

% of respondents

Metrics Used to Measure Mobile Marketing SuccessAccording to Marketers Worldwide, Nov 2014

Mobile website or app traffic43%

Conversation rate39%

Lead generation37%

Volume of mobile phone interactions35%

Overall brand awareness/preference35%

Revenue directly attributed to mobile device transactions35%

Mobile app ratings28%

Number of SMS/push notification opt-ins28%

Other1%

Source: Salesforce Marketing Cloud, "2015 State of Marketing," Jan 13,2015184493 www.eMarketer.com

THE STATE OF US DIGITAL ADVERTISING 2015: MOBILE TRUMPS DESKTOP, PEOPLE TRUMP DEVICES ©2015 EMARKETER INC. ALL RIGHTS RESERVED 11

None of this is to say mobile measurement is easy; it’s not. “Measurement is something that advertisers struggle with to varying degrees and there are different flavors of this problem,” said Will Crew, director of product management for mobile of marketing software provider Kenshoo. Topping Crew’s list of trouble spots were in-app ad measurement, quantifying the effect mobile ads have on in-store purchases and cross-device attribution, particularly in the context of paid search.

For Pandora’s Eccles, the wide array of native ad formats used in mobile apps makes mobile measurement difficult. “How do you measure an ad whose visibility or functionality is arbitrary or contingent on the application that created it?” Eccles said.

Despite the difficulties, Chango’s Plomion said, “Mobile conversions are something that can increasingly be measured and tied back to the overall integrated marketing plan.”

WHY LETTING GO OF THESE MISCONCEPTIONS MATTERS: The executives interviewed for this report emphasized that these common misconceptions often derail plans to extend ad campaigns beyond desktop. Additionally, they stand in the way of marketers adopting a people-based strategy, which most strongly believe will be the key to success going forward.

STRATEGICALLY, PEOPLE TRUMP DEVICES

Devices take center stage at the budgetary and

tactical level, but strategically, marketers are focusing

less on devices and more on people, specifically

connecting with consumers wherever and whenever

they access the web.

“The biggest change we’re seeing is the move towards people-centric marketing,” said Chad Gallagher, global director of mobile for AOL. “Both brand and performance advertisers are saying, ‘We don’t necessarily care about the device, we care about driving results against people.’ That’s a fundamental change.”

Marketers are keenly aware that the average person relies on multiple devices to access the internet so the device itself is no longer a strong indicator of the type of person using it. According to Forrester Research, US consumers across all demographic groups used an average of 3.3 devices last year. Millennials used more—four devices on average.

Average Number of Connected Devices Used by USInternet Users, by Generation, 2014

Gen Z (ages 18-24) 3.6

Millennials (ages 25-34) 4.0

Gen X (ages 35-44) 3.6

Younger baby boomers (ages 45-54) 2.9

Older baby boomers (ages 55-64) 2.6

Seniors (ages 65+) 2.0

Total 3.3

Source: Forrester Research, "The State of Consumers and TechnologyBenchmark 2014 US" as cited in company blog, Jan 16, 2015184904 www.eMarketer.com

Armed with such knowledge, marketers are thinking more holistically about the customer experience they deliver across multiple screens instead of focusing on each device and channel as a silo. The vast majority (86%) of marketers worldwide polled by Salesforce in November 2014 said delivering a cohesive customer journey across devices was very important or critical to the success of their business.

Marketers polled in January 2015 by Econsultancy on behalf of Adobe held similar views: Fifty-nine percent of marketers worldwide said cross-channel marketing would be a key focus for them this year.

THE STATE OF US DIGITAL ADVERTISING 2015: MOBILE TRUMPS DESKTOP, PEOPLE TRUMP DEVICES ©2015 EMARKETER INC. ALL RIGHTS RESERVED 12

% of respondents

Client-Side Marketing and Ecommerce ProfessionalsWorldwide for Whom Cross-Channel Marketing WillBe a Focus in 2015

Strongly agree14%

Agree45%

Neutral30%

Disagree8%

Strongly disagree3%

Source: Econsultancy, "Quarterly Digital Intelligence Briefing: Digital Trends2015" in association with Adobe, Jan 28, 2015187061 www.eMarketer.com

Indeed, most agree that identifying target audiences across devices and delivering a cohesive brand message to each screen is the path toward success. “Marketers have all seen the graphs that show people are spending more and more time on mobile devices and they know they need a strategy,” said Adam Berke, president and chief marketing officer for retargeting platform provider AdRoll. “However, if you ask, ‘What’s your business objective for mobile,’ they haven’t had a great answer for that.” It’s difficult to extend campaigns beyond desktop, Berke added, if a marketer doesn’t know what they’re aiming to achieve by serving ads to mobile devices.

Strategically, that’s one challenge to overcome. Tactically, there are a handful of other challenges, chief among them audience tracking across screens; producing creative assets that will render properly on all devices; cross-screen targeting; and measurement. In a Q2 2014 survey conducted by multiscreen advertising provider Jivox, US agency professionals were asked to name the top challenges associated with cross-screen advertising and responses were near evenly split across the aforementioned areas. The small degree of variance in responses suggests all four areas are troublesome. Interestingly, the misconceptions mentioned in the previous section fall within these four areas as well.

% of respondents

Biggest Challenge of Multiscreen CampaignsAccording to US Agency Professionals, Q2 2014

Audience tracking33%

Creative production24%

Common metrics22%

Targeting21%

Source: Jivox, "The New Era of Multi-Screen Advertising," July 28, 2014177647 www.eMarketer.com

CAN THESE CHALLENGES BE OVERCOME? The consensus among the executives interviewed by eMarketer was, “Yes.” According to Nitin Chitkara, director of mobile product marketing for programmatic media buying platform Rocket Fuel, “We’re getting closer to the point where a marketer can begin to focus solely on the consumer as opposed to saying, ‘I have $10 million in budget. I need to spend X% in desktop, X% in mobile.’’ As an industry, Chitkara added, we’re getting closer to that point where a marketer can say, “Here’s $10 million. Find me the customer who’s going to buy more Dr. Pepper,” for example.

Still, more time and a few breakthroughs are needed before a people-centric strategy can be implemented at scale across multiple devices. “We’re getting the plumbing, infrastructure and technology that allows us to have a one-to-one conversation that is relevant to the consumer at the right point in time,” said Doug Kofoid, president of global solutions at agency trading desk VivaKi. “We’re not all the way there, but we’re getting there.”

eMarketer’s viewpoint is the industry is months, not years, away from overcoming the challenges and misconceptions that stand in the way of implementing a people-based strategy across devices. Last year, significant advances were made in cross-screen audience tracking, targeting and ad serving. A big breakthrough is needed in multitouch attribution but eMarketer believes that will not be a roadblock; cross-screen advertising at scale is expected to become a reality for a large number of brands over the next 12 to 18 months.

THE STATE OF US DIGITAL ADVERTISING 2015: MOBILE TRUMPS DESKTOP, PEOPLE TRUMP DEVICES ©2015 EMARKETER INC. ALL RIGHTS RESERVED 13

EMARKETER INTERVIEWS

Mobile Advertising Is Farther Along than You Think

Steve Ahlberg Vice President, Revenue Solutions and Product Management

Gannett

Interview conducted on February 23, 2015

Programmatic and Mobile Remain Critical Media Plan Components for 2015

Christine Bensen Senior Vice President, Media

iCrossing Interviewed conducted on December 18, 2014

What Does ‘Premium Inventory’ Mean in Mobile Display Advertising?

Nitin Chitkara Director, Mobile Product Marketing

Rocket Fuel Interview conducted on February 20, 2015

Mahi de Silva CEO

Opera Mediaworks Interview conducted on January 21, 2015

Chad Gallagher Global Director, Mobile

AOL Interview conducted on November 4, 2014

David Staas President

NinthDecimal Interview conducted on February 13, 2015

Adam Berke President and CMO

AdRoll Interview conducted on February 20, 2015

Will Crew Director of Product Management, Mobile

Kenshoo Interview conducted on January 27, 2015

Jonathan Eccles Ad Product Manager

Pandora Interview conducted on February 12, 2015

Daryl Evans Senior Vice President, Mobile, Media and Advertising Strategy

MediaLink

Interview conducted on February 25, 2015

Steve Gershik CMO

Swrve Interview conducted on January 29, 2015

Tom Giovingo Audience Sales Director

Yahoo Interview conducted on February 24, 2015

Aaron Goldman CMO

Kenshoo Interview conducted on January 27, 2015

Jeremy Hull Associate Director, Paid Search

iProspect Interview conducted on January 29, 2015

Doug Kofoid President, Global Solutions

VivaKi Interview conducted on October 16, 2014

Ash Kumar Co-Founder and CEO

Tapsense Interview conducted on February 20, 2015

Joe Laszlo Senior Director, Mobile Marketing Center of Excellence

Interactive Advertising Bureau

Interview conducted on February 3, 2015

Chen Levanon CEO

ClicksMob Interview conducted on January 30, 2015

Ben Plomion Vice President, Marketing

Chango Interview conducted on February 2, 2015

THE STATE OF US DIGITAL ADVERTISING 2015: MOBILE TRUMPS DESKTOP, PEOPLE TRUMP DEVICES ©2015 EMARKETER INC. ALL RIGHTS RESERVED 14

Josh Speyer CEO

Aerserv Interview conducted on December 19, 2014

Melissa Gallo Solutions Development Director

VivaKi Interview conducted on February 13, 2015

Jesse Pujji Co-Founder and CEO

Ampush Interview conducted on March 5, 2015

Jeremy Sigel Mobile Director, North America

Essence Interview conducted on February 27, 2015

Tim Vanderhook CEO

Viant Interview conducted on January 12, 2015

Tiana Zhang Manager Solutions Development

VivaKi Interview conducted on February 13, 2015

RELATED EMARKETER REPORTS

Digital Display Advertising: Nine Things to Know for 2015

Mobile Apps vs. Mobile Browsers: How Usage, Ad Spending and Mobile Commerce Sales Differ by Channel

Cross-Device Targeting: Success Hinges on Device Identification Methods

Mobile Search Trends: Dominating SERPs While Venturing into Apps and Anticipatory Search

RELATED LINKS

Adobe

Chango

Econsultancy

Forrester Research

Jivox

Offerpop

Salesforce

EDITORIAL AND PRODUCTION CONTRIBUTORS

Cliff Annicelli Managing Editor, ReportsBen Clague Chart Data SpecialistJoanne DiCamillo Senior Production ArtistStephanie Meyer Senior Production ArtistDana Hill Director of ProductionKris Oser Deputy Editorial DirectorEzra Palmer Editorial DirectorHeather Price Senior Copy EditorKatharine Ulrich Copy Editor

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