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Mobile marketing and advertising

Following the idea above, we will further explain marketing and advertising as a
phenomenon. Its overarching definition and to this this day the most complex is the one provided
by Kotler. He describes marketing as being a social and managerial process through which
individuals as well as companies obtain what they find necessary or desirable by creating, offering
and exchanging products that they see as having a prescribed value.1 While this offers a very
broad perspective of the marketing industry it is relevant to this day as the initial basis required to
understand the very complex processes that have been at work in the evolution of marketing
throughout the decades.
The American marketing association further defines marketing as the activity, set of
institutions, and processes for creating, communicating, delivering, and exchanging offerings that
have value for customers, clients, partners, and society at large.2
All in all, marketers agreed to the mix of 7Ps which includes: people, product, price,
promotion, place, process and physical evidence.
As part of marketing, advertising (promotion) most important role is to sell a product or a
service. In order to inform, attract, and convince the valued customers, a marketer undertakes a
number of promotional means. Advertising is one of the powerful means to inform about
companys total offers as a dominant element of market promotion. Many times, the entire
promotional efforts are replaced by advertising alone. Kotler defines it as any paid form of
non-personal presentation and promotion of goods, services, or ideas by an identified sponsor.
In traditional marketing an example is a TV commercial but when looking at mobile ads, a person
can view a banner promoting Chinese food delivery within their pizza ordering app.
This shows as Kotler puts it a promotion of services which reinforces the connection between
offline and online marketing. But to further understand the concept, one must also look on how
mobile advertising appeared and more importantly how it works.

Philip Kotler, Marketing Management, p.45, 2013
American Marketing Association, 2013, Definition of marketing
Philip Kotler, Marketing Management, p.45, 2013
1.1 Mobile technology landscape
The rapid growth of technology in the last two decades has changed the way the society
communicates and in a broader way, functions. In 2007, when Steve Jobs was presenting the very
first iPhone, everyone was amazed at the phones capabilities. Having the ability to listen to music,
send text messages or call someone, take photos and surf the internet with only one small device
has changed the way people interact.
As 4G mobile broadband and smart phones spread in the market, the use of the mobile web or
applications continues to increase and the platform competition among enterprises continues to
intensify. The development of technologies as Wi-Fi, hotspots, and Bluetooth were important
turning points in the growth of mobile advertisement industry.4
Nowadays, around 2,1 billion people own a smartphone. Worldwide smartphone market grew
0.7% year over year in 2016 (Quarter 2), with 344.7 million shipments5, according to data from
the International Data Corporation. Thanks to the development of the 3G network and the wide
spread of internet access in civilized countries, users can now have easy access to information and
a fast way to communicate with people around the world. Moreover, by installing different apps,
people can now order food from their phone, buy new clothes, buy tickets to concerts, make bank
transaction or simply play games.
These rapid technology developments in the mobile industry have in turn lead to great
opportunities for marketers to provide consumers with one to one personalized advertisement in
form of pictures, sound and videos6. A new possibility to target potential customers has emerged
for marketing specialists. This is broadly known as mobile advertising.

From an advertising perspective, the ability to send a specific user a specific ad is incredibly
helpful. For years, marketers have been trying to target people through ads but never have they
been able to tell for a fact if that one person has bought that one product because he/she seen that

D.H. Shin, H.S. Choo, K.S. Beom, Socio-technical dynamics in the development of next generation mobile network:
translation beyond 3G, p.20, 2011
5, International Data Corporation (IDC), accessed on 3rd
March 2017
Maneesoonthorn, C. and Fortin, D. An exploration of texting behaviour and attitudes Toward permission-based
mobile advertising in New Zealand, p.15, 2004
one ad. On mobile on the other hand everything is trackable from clicking an ad, installing an app
or to buying online products. Having access to this kind of data and observing trends can help a
marketer target people based various criteria.

1.2 Mobile advertising types and definitions

Because mobile advertising is a new type of marketing and a dynamic domain, researchers
have different opinions on where it stands as part of marketing mix.
A literature analysis shows that mobile marketing is often reduced on the communicative elements
and do not align it with comprehensive definitions of marketing itself. Several authors use more
than one term when they refer to mobile advertising. Concepts such as mobile marketing, wireless
(digital) advertising, mobile marketing communication, wireless marketing are all used as
Basically, mobile advertising can be simply put as a new marketing channel. As for the
nuances that this channel entails, researchers have been defining it as one providing great
opportunities for customization of the ad towards specific customers, reinforcing the idea of
targeting the consumer in the mobile ecosystem.7 When talking about the advertisement types
which can be served, there are certainly the online ones, but SMS, MMS and advertising units
complement the advertising strategy.
The Wireless Advertising Association (WAA) defines mobile marketing as sending
advertising messages to mobile devices such as mobile phones or PDAs through the wireless
network.8 In addition to that, mobile marketing also consists of showing and sharing videos (for
example YouTube ads within videos) and also image sharing in the form of pop-up ads or native
ads within applications.
Empowered by the Webs interactive and quick-response capabilities, <<wireless
marketing>> is a very promising direct marketing channel. Many direct-response advertisements
and some brand building ones have been used for time-sensitive communication.9.

Ki Youn Kim, Bong Gyou Lee, Marketing insights for mobile advertising and consumer segmentation in the cloud
era: A QR hybrid methodology and practices, p. 12, 2015
Wireless Advertising Association, definition of mobile marketing
Melody M. Tsang, Consumer Attitudes Toward Mobile Advertising: An Empirical Study, p. 5, 2004
The one thing that all definitions have in common is the timely fashion in which the ads
can be served. Almost instantly, after an advertisement (be it video or image) has been uploaded,
the ads can already be seen by users across the world, depending whether or not they are part of
the target. Moreover, when it comes to sending text messages the potential client will see the ad
incredibly fast given that more than 90% of the mobile phone owners people keep their phone
within one meter reach 24 h a day10.
Further research provides more definitions for mobile advertising. Melody M. Tsang puts
it in the following perspective:
Mobile advertising and Internet advertising have many features in commonboth are
emerging media used to deliver digital texts, images, and voices with interactive, immediate,
personalized, and responsive capabilities11.
Internet advertising allows individual customers to be identified and their behavior to be
analyzed. Mobile advertising relaxes the mobility constraint associated with fixed-line Internet
access. One may expect mobile advertising to be more favorable to consumers for location-
sensitive and time critical events.
Since the mobile phone is a very personal device that allows an individual to be accessed
virtually any time and anywhere, mobile advertising must be more personalized and may take
different forms. Regardless, due to limited resources, not many marketers can create personalized
content and in some cases a personalized strategy is pointless. For example, when one must
promote a new games launch worldwide, having all the copies translated in all languages would
be inefficient and highly expensive. In such cases, the message will be translated in the most
spoken languages and such as Chinese, English, French etc. and for the rest the ads will default to

Some researchers are classifying mobile advertising as part of m-commerce.12. This is

mostly because this field, with the help of developing technology, has managed to grow way over

As quoted in Anid K. Dey, Getting closer: an empirical investigation of the proximity of user to their smart phones,
p. 60, 2011

Melody M. Tsang, Consumer Attitudes Toward Mobile Advertising: An Empirical Study, p.7, 2004
Michael Pietz, Anton Olofsson, Advertisement to Mobile Phones, Success or Failure? p. 15, 2009
the sending messages to its targeted consumer base. It enables the consumers to interact and pull
for more information based on the received offer13
In terms of strategy for mobile users, Melody M. Tsang considers that mobile marketing has
three types of strategic applications: permission-based, incentive based, or location-based.
The permission-based advertising requires for a user to agree with receiving ads or virtual
good promotions. Although it brings less quantity in terms of served ads, the quality of the
user is higher. This type of advertising avoids irritating people and given their permission,
is more likely for them to read/see the message/ad and not simply close it.
For example, Apple has a strict policy when it comes to sending push-notifications (also
called server push notification, is the delivery of information from a software application
to a computing device without a specific request from the client.14) Firstly, the consumer
must agree on receiving them, if not the applications cant send them. This keeps users
from being spammed and allows marketers to reach people that are truly interested.
The incentive-based advertising provides specific financial rewards to individuals who
agree to receive promotions and campaigns. But given the fast-technological advancement,
an incentivized campaign can simply mean offering virtual goods within an application.
For example, if a person has been playing a game and has reached level 40 and stopped
playing the game as often, a marketer will offer the user special promotions (in-game
currency or unlocking new content) to keep the person engaged.
In addition to individual identification, mobile technology also makes it possible to locate
a particular consumer. Location-based advertising takes advantage of this feature to target
people in a certain location. Advertisements are sent based on where the user is or where
the user is going.15 This type of adverts is mostly seen on Facebook (where users check-in)
and on Google (where users allow Google Maps to use their location). The form of it is
usually a recommended restaurant within the area or an entertainment place and also events
that happen within the area.

As quoted in Michael Pietz, Anton Olofsson, Advertisement to Mobile Phones, Success or Failure?,p. 16, 2009
14, accessed on March 10th
Ramaprasad, U. & Robert H., Perceived Effectiveness of Push vs. Pull Mobile Location-Based Advertising,
Journal of interactive advertising, Vol7, Issue 2, p.50, 2007
Both permission-based and incentive-based advertising mechanisms are feasible for
mobile advertising because the wireless technology makes it possible to identify individual users.
Two-way communication is another feature that substantiates the potential of mobile devices in
marketing. Mobile devices allow for greater two-way communication than any other tool because
of their always on connectivity and short set up times.16
Another characteristic of mobile advertising is that it offers multiple channels to reach
customers. One of this channels has been SMS, the most popular mobile application17.
The SMS advertising is highly effective for generating brand awareness and consumer
response. It is mostly used in the form of reminders, updates and confirmations, as it is designed
for quick messages rather than for complete marketing communications. The phenomenal success
of SMS is attributed to its key features, such as ease of use, low cost, message forwarding ability,
and unobtrusive nature 18
To sum it all up, the mobile medium, or at least a smart mobile medium, is one of the best
communication tools available for connecting the end consumers to the advertiser's brand. This
point can and is reinforced by the fact that one such medium can be seen not only as a platform
containing advertisement applications and contents or unique hardware, but also as a converging
channel for an adverting marketing.

1.3 Privacy and security in mobile advertising

If we are talking about the impact of advertising, this is one of the pieces which is directly
affected by the consumers, by them being directly exposed to the mobile advertisement pieces.
This will lead to them starting to develop certain reactions and attitudes. The multitude of reactions
and/or attitudes of the consumer is one of the pieces which prove that the mobile ecosystem is
becoming an extremely complex one.

Joel Latto, Mobile marketing and its implementations, p.30, 2014
Carroll, A., Barnes, S. J., Scornavacca, E., & Fletcher, K., Consumer perceptions and attitudes towards SMS
advertising: recent evidence from New Zealand. International Journal of Advertising, 2007
Doyle, D, Software review using short message services as a marketing tool, Journal of Database Marketing, Vol
8, 2001
This is also one of the main points to consider if we are looking at the mobile advertising
industry, which should be able to seek highly targeted markets, which, may trigger certain
reactions and/or attitudes and, in turn, will lead to maximizing the effectiveness of the mobile
When looking at literature regarding the attitude towards mobile advertising, the focus of
it is privacy issues. Several studies indicated that consumers were in general negative towards
mobile advertising because of factors as, privacy, and risks associated with receiving ads to their
mobile phones19
These studies also discovered that consumers attitudes could be impacted. Some of the
main factors affecting the consumer attitudes were identified as incentives and the value of the ad
perceived by the consumer.20 The focus then shifted towards examining how the consumers level
of toleration could be increased for mobile advertising, and towards analyzing the connection
between consumer intentions and actual behavior.
Through the recent years several factors has been identified. These factors have then been
categorized into industry, medium and consumer factors.21
Industry factors concerns the technological aspect of the mobile advertising like for
instance; ease of opening the ad and receiving it at the right time. Another example would
be an ad that suggests users to install a game and after being clicked redirects on the wrong
download site. Sometimes, a technological error can cause real problems for marketers and
in very unfortunate cases it can lead to user complaints on different platforms (Facebook,
Reddit) which consequently affects the brand itself.
Medium factors concern the marketers way of developing the ad like the context,
relevance and incentives. In the case of image ads, the space where it can be displayed is
limited on the screen of the device. In such a small page, a marketer has to fit the logo, an
appealing image and also a catchy message. When it comes to videos, for YouTube, the

Melody M. Tsang, Consumer Attitudes Toward Mobile Advertising: An Empirical Study, p.30, 2004
Merisavo, M., Leppniemi, M., Kajalo, S., Karjaluoto, H., Virtannen, V., Salemenkivi, S. & Raulas, M.,
An empirical study of the drivers of consumer acceptance of mobile advertising International Journal
of Mobile Communications, Vol. 5, Issue. 1, 2007
Hanely, M., Becker, M. & Martinsen, J., Factors influencing mobile advertising acceptance: Will
incentives motivate college students to accept mobile advertisement?, International Journal Of Mobile
Marketing, Vol. 1, Issue. 1, 2006
advertisers need to catch the attention of customers within couple of seconds before they
can skip the ad.
The consumer factors concern the attitudes, level of innovativeness and involvement. The
latest factor is one used in traditional marketing as well, where an innovative ad can be
more successful than using the same stereotypes repeatedly.
In addition to that, another important finding in the domain is the need for permission from
consumers. Many studies mean that mobile advertising can never become a successful advertising
channel if permission to receive ads is not given by the consumers.22 As stated above, the
permission from users brings a higher quality segment of consumers. Their approval can also be
interpreted as a desire to know more about the product/service advertised or loyalty towards the
Even though studies have found that advertising through mobile phones is very effective
when it comes to brand recognition and intention to purchase a product or service23. A majority
of organizations are only in the embryonic stage regarding mobile advertising. This can be
explained by lack of knowledge in this area but also by the very low return rate compared to more
traditional marketing channels. 24
When it comes to mobile marketing the most interesting fact about is that everything is
trackable. From ones taste in pizza to ones interest in certain games, to ones spending habit
within certain apps, all of it can be tracked. The issue appears when a marketer must interpret all
the data coming from millions of customers. Even so, the tracking character of the domain provides
marketers with valuable insights about their customers. But from a customers point of view this
can be interpreted as a privacy violation.
In terms of preferences and interests, each person has his/her own likes and dislikes. From
a marketing stand point, preference is a highly personal factor. Like in traditional marketing,
advertisers want to know more about their customers and what influences their decision of
spending money for a product/service. In mobile, advertisers need to look at user interest, personal
information, and preferences to determine the products and services that users are willing to spend.

Hanely, M., Becker, M. & Martinsen, J.,2006

Barwise, P. & Strong, C., Permission-Based Mobile Advertising, Journal of Interactive marketing,

Vol. 16, Issue. 6, 2002

As quoted in Michael Pietz, Anton Olofsson, Advertisement to Mobile Phones, Success or Failure?, p. 35,2009
When it comes to social segmentation in online, Facebook is the leader for advertisers due
to the huge database that contains a good amount of personal information, provided by the users
themselves. All a marketer has to do is to select the desired segment for the ad and the platform
will take care of the rest.
The fact that this is a generally known information has raised concerns amongst users in
terms of privacy and data security. The issue doesnt stand only for unwanted ads or for targeted
ads (since that has been proved to be efficient from a customers standpoint) but more importantly
it stands for data security. When a person has their bank account within applications and the said
app is being hacked, a consumer can have its private information uncovered. In 2015, Yahoo
admitted to having over 1 billion accounts hacked and according to them the stolen user account
information may have included names, email addresses, telephone numbers, dates of birth, hashed
passwords and, in some cases, encrypted or unencrypted security questions and answers. 25
Moreover, the fact that an advertiser can create segments according to past searches or
future plans can be seen as a violation of privacy by consumers. Google combines data from search
engine queries, emails, third-party websites tracking or "cookies", location data and video
browsing to customize advertising.26

For instance, when booking a flight on a website, the algorithm is set to reset every 24
hours and it also gives lower prices for the same flight when the home is changed multiple times.
The way this can be used by advertisers is by looking at the final destination of the user and offering
him/her ads with hotels or touristic attractions within the area. These ads can be served on
Facebook, which tracks users actions on other websites when its opened. According to research
commissioned by the Belgian data protection agency, Facebook is tracking the web browsing of
all visitors to its pages, even those without an account and people who have opted out of web
tracking within the EU.27

accessed on April 1st 2017
26 accesed on April 1st 2017
theyre-not-a-member.html, accessed on April 1st 2017
Nonetheless this can be proven to be helpful for say a person that doesnt have time to
check for touristic attractions or hotels but from a privacy stand point it can also be seen as a
violation in terms of morality.
The privacy issue is indeed more alarming when it comes to internet usage, but mobile
advertising relies on wi-fi technology or internet access to show ads. Therefore, one may say that
the very issue of privacy on the internet is quite similar with privacy in mobile.
Both consumers and government agents have called for legislative action regarding privacy
protection online. Both groups agree that self-regulation by the online industry does not appear to
be working to protect consumer privacy on the Internet. The European Union has issued several
laws in order to keep everything under control as much as possible but it has been proven difficult
to keep up with the technological advancement. For example, Google cant display certain content
within the EU due to privacy issues. Google's March 1, 2012 privacy change enables the company
to share data across a wide variety of services.28
This includes embedded services in millions of third-party websites using Adsense and
Analytics. The policy was widely criticized as creating an environment that discourages Internet
innovation by making Internet users more fearful online.29
After Google merged its different privacy policies into a single one in March 2012, the
working group of all European Union Data Protection Authorities assessed that it failed to comply
with the EU legal framework. Several countries then opened cases to investigate possible breach
of their privacy rules.30
Marketers must comply with a number of information requirements prior the processing of
personal data. When it comes to EU, this is seen to be a necessary condition to guarantee the data
protection rights and in that sense a directive (95/46/EC) has been issued that defines in Article
2(h) the consent of the receiver as any freely given specific and informed indication of his
wishes by which the data subject signifies his agreement to personal data relating to him being
processed. Thus, before a company starts using personal data of a mobile user an effective
disclosure must be provided. For transparency purposes, the advertiser must provide his name and

28 accessed on April 1st 2017
29, Adam Cohen,
accessed on April 2nd 2017
30, accessed on April 2nd 2017
address, the purpose of the processing, the recipients of the data, and all other information required
to ensure that the processing is fair (Directive 95/46/EC, art. 10 and 11). The law also requires that
the mobile user gets information about the right to access, rectify and delete all personal
information during the m-advertising campaign (Directive 95/46/EC, recital 41)). It is also
important that the user has knowledge of the logic behind the data collection (Directive 95/46/EC,
art. 12)
Any violation of the above states is therefore regarded as an unlawful act. Consequently,
the user must be able to choose the type of data collected about him and it remains essential to
ensure that consent is given freely and voluntarily. This involves that the service provider has
informed the user with a clear, blatant and complete disclosure.
It goes without saying that mobile marketing advertisers must also consider user privacy and
security to earn user trust and provide higher quality services.
When the technology is evolving too quickly for legislation to keep up, the responsibility
remains for the industry to lead the way that help mobile marketing and at the same time respects
consumer privacy rights. But technology alone is not enough. It has to coordinate with deep
understanding of privacy choices and rights from consumers. The consumers need to be educated
about privacy issues and choices which would be in the best interest of publishers, advertisers and
more importantly consumers lacking an understanding of the factors at play, consumers may well
act in ways that compromise their interests and their security alike.
2. Mobile advertising strategies in mobile gaming industry
Ones scholar approach on mobile advertising was to compare it with traditional marketing
from a 4Ps perspective. The study by Kivien coherently shows that the resemblance between the
two (offline and mobile marketing) is uncanny. Furthermore, the findings indicate that mobile
marketing has a huge impact across all elements of the marketing mix. Most importantly, Its major
advantage lies in its unique ability to provide information in a personalized and interactive way,
without restriction of time and place.31
Looking at the 4 traditional Ps while mirroring the mobile marketing, it becomes clear how
they can be influenced:
- Product: a company can create a Facebook poll to receive more information about the
preferences of their consumers. By gaining feedback on new products, it becomes easier to
produce more desirable goods. This helps both the consumers and the company and this was
the case when Knorr Foods used a mobile blog to find out about young female preferences in
terms of soup flavors, which ultimately grew the sales by 50%.
- Placement: given the localization characteristic of mobile, a firm can reach clients in more
simple ways. The best in class example is Amazon Prime, a service that allows its members
to buy and receive products in less than two days and couple of hours in some cases.
- Price: by having a customized store within an app, targeting people based on their previous
purchases can influence the price. For example, when a customer spends $200 in a game, the
publisher can offer them exclusive content or discounts for in game currency.
- Promotion: nowadays, tech companies rely on mobile promotion to advertise their products.
In a recent study, Adobe found marketers are most likely to use mobile apps for building
customer loyalty (69%) and developing brand awareness (63%), marketing teams also rely on
apps for sales enablement (45%), boosting employee productivity (25%), driving mcommerce
(15%) and field services (10%).32
Even though mobile advertising clearly influences the marketing mix, it doesnt mean it
has the same effect in return. Since mobile advertising is such a dynamic field, the rules of the
process can change from one year to another. In the past, one of the goals for m-advertisers was to

Sofia Kivien, Advertising execution styles as a reflection of culture, p. 10, 2014
32, accesed April 5th 2017
gain as much users as possible, similar with selling a product on the market. Just couple of years
ago, the app store was filled with applications that a customer would have to buy in order to install
This made for the marketers main purpose to become gaining as many new users as
possible. But on the long term, this strategy has proven to be inefficient from couple of reasons.
One of them being the fact that a customer would pay at the beginning for the service and it was
quite difficult to motivate them to continue to invest money within the application itself.
Furthermore, the cost of maintaining an application online and functional exceeded the initial
price. These costs include keeping servers functional, creating updates for the application and of
course keeping users engaged. Consequently, this has led to a change of the business model and
free applications started to appear and take over the app stores.
When it comes to effectiveness, free apps have proven to be better in terms of acquiring
new users, revenue generated and users engagement. Although, paid applications still exist, with
some being at the top of charts (e.g. Minecraft: pocket edition) the primary focus of the industry
is now on free apps.
Nowadays, marketers focus on keeping customers engaged within the app and finding ways
to convince them to spend money on in-app benefits. At the moment, it is difficult to predict how
the business model will change over time and how it will influence the overall market, but its
nonetheless interesting to observe.
Given that mobile marketing its strongly connected to the internet technology, the first
approach to understanding mobile strategies is naturally the existing online marketing strategies.
Looking at marketing in general, the main goal for most of the campaigns is to either grow the
sales or improve the brand of the company. Since online marketing is based on offline strategies,
it is safe to assume that the purpose of a marketer in online is to raise the brand awareness, which
may lead to the growth of sales.
Figure 1. Online marketing objectives

As shown in the diagram above, the online goals are focused on brand awareness and the
first thing a marketer needs to do is reach new clients by building brand awareness and increasing
visibility. In order to do so, the marketer must optimize the SEO (Search Engine Optimization)
that would lead to traffic generation (website, social events) and optimize geolocation. In the case
of mobile marketing, the search is optimized by using keywords that are mobile user specific which
brings the potential clients on the mobile website or in the app store.
The next step is research which translates in testing new product/service ideas. This
principle can be applied in mobile advertising by running an A/B test. By showing two different
ads in the same place, it can be tracked which ad the targeted segment choses and thus determining
the one that is more appealing to the public. The research also determines user targeting and
behaviors which helps identify potential participation sites which leads to identifying and
contacting influencers.
In mobile, this can potentially offer insight into consumers spending habits which can help
marketers create targeted offers.
The third objective is savings which focuses on improving ROI (Return Over Investment).
Through this, the processes are optimized and possibly automated and alternative channels are
generated. For mobile, while promoting a game, a marketer can measure how much money have
been spent on ads to bring users in game and how much the users have spent within the game, after
installing. If it costs 2 dollars for every new user and every user spends one dollar in the app, the
marketer needs to analyze the campaign and optimize it.
The goal to sell must generate leads which can improve traffic to offline activity and result
in managing new business contacts.
The objective of service is to improve offered services to users/customers that can improve
the online and offline reputation of a brand. This can generate new users based on
Taking a glimpse at marketing strategies, their goal simplified is to attract customers, keep
them for as long as possible and hopefully turn them into loyal consumers. In mobile marketing,
the strategies do remain the same but with different tools. As seen in the diagram below, the first
step is to attract new users by having either SEO optimization, advertising, email or cross-
promotion. Depending on allocated budget and brand awareness this strategy will increase the
number of new users or will simply raise the awareness of the brand.

Figure 2. Mobile Strategies

After gaining new users, it is highly important to keep them engaged for as long as possible.
This can be achieved by adding new content within an app or customizing the app or the offers
based on customers needs. A good engagement will improve the loyalty of the customer and
he/she can further offer recommendations of the app through social media, blogging or social
Even though mobile advertising strategies and goals offer insights into how this channel
works, for a better understanding we will further define and analyze different measurements for a
successful campaign.

2.1. Key performance indicatives for mobile advertising

In order to have a campaign, a product or a service is needed. In m-advertising, the apps
are found in the app store where they have been added by various developers or published by
companies. To promote the app, a marketer needs to buy ad space within other apps or mobile
websites. This can be done by using mobile publishers such as AdColony, AppLovin etc. For
futher context a mobile publisher has been defined as an entity that owns and runs a mobile
website or app that dedicates space to display advertising in exchange for money. 33 It must also
be mentioned that a company can be a publisher and an advertiser at the same time, which is the
case for Google and Zynga.
To better understand the process, we will take an example of an advertiser that needs to
promote the new collection of dresses from company X. Given that its clothes for females the
advertiser will try to target them as much as possible. This means that the advertiser will look for
publishers that have a higher female audience. Afterwards the publishers who own ad inventories
on those websites will be selected. The next step is for the advertiser to buy or to bid on the
available spaces.
The difference between the offline and mobile marketing appears after the campaign has
been launched. In a traditional campaign, a marketer will use TV, Radio and street ads. This means
that anyone that is watching TV at the time or listening to the radio will see and or hear the ad.
The success of the campaign will then be measured by the sales it has provided. However, in
mobile marketing, an advertiser can look at the data and see how many people have seen the ad.
The term used for this is an impression which is explained as the moment when an ad is fetched
from its source, and is countable. Whether the ad is clicked is not taken into account. Each time an

publishing/, accesed on April 5th 2017
ad is fetched, it is counted as one impression.34 In addition, applications have the ability to count
how many times the said ad has been taped or clicked. The marketers will then look at the
percentage of how many people that saw the ad have also clicked it. This is generally known as
CTR (Click Through Rate) and is calculated as clicks per impressions. According to The Statistics
Portal In North America, it was revealed that 35 percent of mobile device users had clicked on
an ad which appeared on a mobile website and 26 percent clicked on an ad when it appeared on a
mobile app.35 This is possible due to the big spend on mobile in the US but looking at world wide
data, the CTR drops to an average of 0.1% in 2016.

Figure 3. Average CTR world wide


Depending on the integration of the ad, be it a pop-up or a native ad, the CTR may vary,
but its nonetheless an important indicator for the success or failure of the campaign. The data
from Smart Insights shows that the traditional banner performs poorly compared to newer types
of ads as Skyscraper and large rectangle format.

34, accesed April 5th 2017
35, accesed April
5th 2017
FIGURE 4. Click Through Rates by ad type.
When looking at a campaigns performance a marketer must take into consideration the
cost for all of it. For this, in mobile marketing the Cost per impression (CPI), or "cost per thousand
impressions" (CPM), is the term used. It refers to the cost of traditional advertising or internet
marketing or email advertising campaigns, where advertisers pay each time an ad is displayed. CPI
is the cost or expense incurred for each potential customer who views the advertisement(s), while
CPM refers to the cost or expense incurred for every thousand potential customers who view the
advertisement(s). CPM is an initialism for cost per mile, with mile being Latin for thousand.
It has to be taken into account that it can happen for a person to accidentally click the ad
and close it immediately and it will be further explained how that can be taken into account.

After the advert has been clicked the user will be redirected to the website selling dresses and he
may buy the offered product. By being on the website and purchasing the dress, the user will be
registered. This is accounted as cost per purchase or cost per order, which translates as the cost for
an mobile ad that led to a purchase. In online marketing, similar with mobile the is the cost of
internet advertising divided by the number of orders. Cost per order, along with cost per
impression and cost per click, is the starting point for assessing the effectiveness of a company's
internet advertising and can be used for comparison across advertising media and vehicles and as
an indicator of the profitability of a firm's internet marketing.36[1]

2.2. Mobile gaming industry overview

The gaming industry started developing a couple of decades ago, with the invention of the
first electronic games, followed by video games. The industry gained popularity when arcade video
games were introduced to the public in the early 70s. But with the development of technology,
people can now play games across various devices such as consoles, computers and recently
mobile phones. The types of games have also become very diverse with types as casual, shooter,
strategic, sports, puzzle etc. invading the market.

Apart from other industries, even within the gaming industry, the competition is fierce.
Couple of years ago, no one believed billions could be made out of a hobby, however the market
proved otherwise.

With the smartphone market in continuous expansion, more and more mobile apps are
being created. Such applications vary from entertainment to business, education and so on.
However, what is more interestingly is that currently the app store contains over 20% active
gaming applications. This has happened because of the free to play concept that took over the
market and also because it has become easier to program a mobile application. Video games
require years to be developed but when it comes to mobile, a developer can make a successful
application within hours (e.g. Flappy birds).

Games generated $91 billion worldwide in 2016, according to a report from market
researcher SuperData Research37

According to the same report, the mobile game segment was the largest at $41 billion (up
by 18 percent), followed by $26 billion for retail games and $19 billion for free-to-play online

Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; David J. Reibstein, Marketing Metrics: The Definitive Guide
to Measuring Marketing Performance. Upper Saddle River, p.8, 2010
37, accessed April 7th 2017
games. New categories such as virtual reality, esports, and gaming video content were small in
size, but they are expected to increase in 2017.

The high revenue from mobile gaming was driven by the 2016 blockbusters such as
Pokemon Go and Clash Royale. In addition to that, Monster strike was the number one mobile
game with $1.3 billion in revenue. From a territory perspective, the countries with most revenue
generated in mobile games are: Japan ($17.4 billion), closely followed by United States ($15.4
billion) and China ($14,4 billion).

Mobile gaming revenue by country

$16,000,000,000 $15,146,637,728
Japan United States China South Korea Taiwan United

Figure 5. Mobile gaming revenue by country


According to the same report from May 2016 to May 2017, Romania occupies the 50th place with a
spend of $68.500 in mobile games.

2.3 Mobile advertising in games

By having such a large amount of games available on the mobile phone market, the
competition makes it difficult for one to succeed. Many apps remain unnoticed by users in the app
store. Within the industry, many publishers are self-employed or simply small sized start-ups. The
issue occurs since they dont have enough resources to afford publicity to acquire new users to
play their game. In general, most mobile game publishers dont have enough money for offline
marketing (a TV campaign for example), but they use results-based advertising such as online
marketing campaigns.

Thus, the costs with these campaigns are associated only with the payment for actual game
downloads. Although this is the less costly option compared to TV campaigns, even this type of
campaign can generate substantial costs. On the US market, the cost of an installation (equivalent
to the purchase of a new user) is 1-2 dollars, and may increase depending on the campaign period.
This can happen, for example, shortly after December, when people buy new smartphones and are
looking for new apps to install on their mobile phone. In the United States, an acquired and
engaged user (known as "Cost per Loyal User") can generate costs of more than $ 4. Of course,
couple of dollars dont seem too much, but for a mobile game to survive it needs millions of daily
online active users (also referred to as DAU).

Due to the substantial spending needed to acquire new users, it is expected that major
mobile game developers will make a substantial advance towards competitors with lower financial
strength. Thus, 80% of the total revenue generated by the top 1,000 mobile games comes from just
the top 20 companies operating on the market. The survey by Deloitte showed that 17% of gaming
developers do not generate revenue, 18% of companies have earnings below $ 100 per month, and
50% have earnings below $ 1,000 per month. This reinforces once again that the level of
competition is high on the mobile gaming market and, moreover, it is difficult for a company to
generate profits in this industry.
The mobile games market is distinct and is even more distinct from the PC or console game
markets. Firstly, as mentioned above, barriers to entry in the mobile gaming market are minimal
to nonexistent. Secondly, the number of smartphones or tablets is on the rise. The result is that a
growing number of users will be able to access and play their favorite games anywhere and at any

mobile-games-leading-less-lucrative.html, accessed April 7th 2017
time. Thirdly, the gaming market business model is based on free to play games, games that are
free to install.

The user can download the application on the phone for free, then in-app purchase or IAP.
According to Deloitte (2015), only 10% of all smartphone owners make purchases in the game.39
The consequence is that a gaming developer can invest in the acquisition of new users without
having the guarantee that they will contribute to the company's revenue growth.

From a spending perspective, the amount invested in mobile ads is currently increasing
yearly. It is predicted that by 2020 almost 250 billion dollars will be spent on mobile ads in US

Figure 6. Mobile advertising spending predicament


mobile-games-leading-less-lucrative.html, accessed April 7th 2017
From a revenue perspective, the mobile advertising has made 14.2 Billion dollars
worldwide, this year alone (data since 1st January to 30 April) coming from 32 billion downloads.
The leading country for in app purchases is United States where $3.2. Billions have been spent,
followed by China with $2.8 Billion and South Korea with $826.2 Millions.40
While it is difficult and expensive to keep online in such a competitive market, the
marketers have found ways to acquire new users through different types of channels and
campaigns. Mobile advertising for games can be done through multiple online channels. The most
distinguished ones are social, paid acquisition and cross promotion.

The social channel includes social media platforms such as Facebook, Instagram, Twitter
etc. The cost per acquisition for these channels varies, but its most important feature is the fact
that it can target based on demographics. Having access to a lot of personal information about
users, these platforms have developed algorithms to help marketers target based on gender, age
and likeness of various products.

Paid acquisition channel is used by having an advertisement for a specific application

within other mobile apps that have a different publisher. This implies bidding for the available
placements with other competitive companies. The most common paid acquisition channel is
Google Ads.

Cross-promotion: where customers of one product or service are targeted with promotion
of a related product. In mobile games this implies convincing users to install new games by sending
ads in games that are already played. Ideally, this can be done within the same company that has
a large games portfolio.

Ideally a company should use all available mobile advertising channels to acquire new
users. However, that is highly dependent on the budget and of course the size of the company.
Companies such as Blizzard, Electronic Arts and King market their mobile games within social,
paid and cross-promotion channels.

Since advertising is a creative industry, the types of mobile ads vary in format, size and content.
This of course is only possible with advanced integrated technology but the most common ads are:
Interstitial, Native, Video, GIFs and Playable.

Interstitial ads are Pop-Ups that appear on the entire screen and have a close button.

Fig. 7. Example of an interstitial ad from Bejeweled Blitz

These types of ads are easy to integrate from a technical stand point but can become annoying for
users. Therefore, it is highly important to limit the amount of interstitial ads that are served on a
daily basis. Depending on the performance and tolerance of these campaigns, but also keeping in
mind the players experience, Electronic Arts shows zero to three ads within a game, per day. (for
example, Star Wars Galaxy of Heroes doesnt have any ads integrated)

Native ads are shortly put hidden in sight. These ads are well integrated within the game and
have only appeared in the recent years. For an ad to be considered native it needs to respect the
thematic of the game. To offer an example, a bottle washed ashore on a beach within a game is
considered native. These types of ads need to be built while the game hasnt launched yet, because
they require a lot of back end coding and design ideas. The benefit of native ads is that the user
can keep playing the game without being disturbed by unwanted promotions. Such ads need to be
clicked/taped by a user to expand or redirect to the app store.

Fig. 8. Example of native ad from Sim City Build It

The above example is of a Sims Free Play ad within Sim City Build It. The later is a game
where a user can design its own city and the native ad is a billboard that shows actual ads.

Video ads: are videos that can be played within a game. This can only be done with the
consent of the user because it requires high internet traffic. Most of the time, the user receives in
game currency for watching the ad. The video ads are also available on social channels such as
Figure 9. Example of video ad from Facebook

GIF ads: are advertisements that run in the background. They consist of a multitude of
images or a comprised video.

Playable ads allow the user to get a glimpse of the game before installing it. It passes the
players through the tutorial of the game while being in another application.

Figure 10. Example of a playable ad in Vungle