What Is Mobile Advertising?

The term mobile advertising refers to any form of advertising that appears on mobile devices such as smartphones and tablets using wireless connections. Companies advertise on these devices through text ads via SMS or through banner advertisements that appear embedded on a mobile web site. They may also be found through downloaded apps including mobile games.

Key Takeaways

  • Mobile advertising is any form of advertising that appears on mobile devices such as smartphones and tablets using wireless connections. 
  • Companies advertise through text ads via SMS or through banner advertisements that appear embedded on a mobile web site. 
  • Ads are tailored based on consumer tastes and/or browsing history using data mining and other information gathering techniques.

How Mobile Advertising Works

Modern technology has given consumers a wider range of options when it comes to how they consume media. In fact, the popularity of mobile devices—smartphones, tablets, and other devices—now outnumbers that of television sets. According to reports, people now spend more time on their mobile devices than they do sitting in front of the TV. That's because of the ease and cost of these devices—not to mention the availability of wireless connections allowing people to tap in.

In order to keep up with changing consumer habits, companies adapted their advertising campaigns by adopting mobile advertising strategies. That's because the chance that new and existing customers will see an ad through a mobile device is greater than they would through traditional avenues. Because mobile devices typically have smaller screens than computers or laptops, this form of digital advertising is usually optimized for small displays by being concise.

The earliest form of mobile advertising took place via SMS text messages. But mobile ad campaigns quickly evolved into mobile web and in-app advertisements. One of the popular models in mobile advertising is known as cost per install (CPI), where payment is based on the user installing an app on their mobile device. CPI mobile advertising networks work either as incent or non-incent. In the incent model, the user is given virtual points or rewards to install the game or app.

Many apps offer a free version that can be downloaded at no cost, but which is paid for by placement of advertisements within the app. Mobile versions of websites also have advertisements that are optimized for mobile displays—smaller than they would appear on the full version of the same website.

Consumers can remove ads by purchasing full or premium versions of an app.

Special Considerations

Companies tailor their ads based on consumer tastes and/or their browsing history. For instance, ads that appear on sites and apps like Facebook are based on an individual's web browsing history, geographic location, and other data like online shopping habits. Gaming app developer King Digital Entertainment advertises its games across its offerings, along with ads from other companies.

Although mobile advertising helps keep company revenues up, there are concerns about consumer privacy. That's because companies use data mining and other ways to collect information about consumers while they use their devices. Advocates argue that companies may share or even sell the data they collect and use with others.

Types of Mobile Advertising

Mobile advertising can take a number of different forms. These include:

  • Push notifications: These are pop-ups that appear on a mobile device. These are delivered to consumers at any time. This means users don't actually have to be on an app in order to get a notification.
  • Image text and banner ads: Users who click on their ads are redirected to the advertiser's page by opening it up on a browser.
  • Click-to-download ads: When a consumer clicks on these ads, they will route them to the Google App or Apple App store. The destination depends on the consumer's operating system and device.
  • Click-to-call ads: Advertisers allow users to click on their ads in order to call them directly with their smartphones.
  • Click-to-message ads: A consumer who clicks on this type of ad is directed to contact the advertiser directly via SMS.

Mobile Advertising vs. Mobile Marketing

Mobile advertising may seem similar to mobile marketing, but the two are inherently different. Mobile marketing is a more general term that encompasses mobile advertising. While it uses personal data collected, mobile marketing also makes use of technology such as location services to personalize ads based on user preference, habits, or location. This means that some mobile advertisements may only appear when a mobile user is in close proximity to a certain store or service provider.

Mobile ad placement works by way of a programmatic bidding process for ad placement, in which advertisers bid in real-time for the right to place an ad on a mobile device. The infrastructure that allows for this process is known as a demand-side platform (DSP). The use of such platforms will enable advertisers to optimize their performance based on a number of key performance indicators (KPI), such as effective cost-per-click (eCPC) and effective cost-per-action (eCPA).