Interview: Howie Schwartz CEO of Human Demand Talks Mobile Marketing

Me: Hey Howie thanks for taking the time to do this Interview with me today.

Over the last few years you’ve really gone heavy into mobile. You were one of the first people I know of to enter the space aggressively both with your time and money. That says a lot about your “first mover” foresight. It’s impressive.

Everything’s going to mobile obviously. Everyone’s checking their email over mobile. I read a stat recently that a huge number of people are reading their email via mobile. Something like 60% (I made that number up, but it’s high). Sales were up something like 80% over mobile this holiday season. Mobile is really growing tremendously.

Howie: You know I started focusing and investing in the mobile space probably about 3 and half years ago. So it was definitely early to market. And at that point everyone was like “mobile advertising seems cool” but it wasn’t that big of an interest. And then people would say “yeah, you know I think that would make sense. Maybe we’ll invest in that in the next 6 months to a year.”

That went on for maybe a solid year where people were saying that mobile looked exciting but really weren’t putting a lot of dollars or focus behind it. That was around 2009/2010. Once we started getting into the fall of 2010 is when that started to change. Where mobile went from kind of a “nice to have” to a “we actually need this as part of our advertising strategy.”

So I that’s a big part of it, the market has really matured very quickly. As you mentioned the stats have finally kind of caught up to where the market has been going to. That’s really on the advertiser side.

On the other side, the affiliate side, it’s really the same thing. Three or three and a half years ago it was sort of the same conversation. You talk to affiliates about mobile and they’d say “oh it’s kinda cool we can see that things are shifting that way.” But it wasn’t something that they needed to do. Today, in 2013 or even rewinding a year ago or so a lot of affiliates realized that they actually needed to do mobile whether they wanted to or not. It’s just become a requirement for doing business.

There are two other trends of interest there too.

1 – Consumption versus media spend

You look at the time that the average person in the U.S. spends on mobile (Side Note – For me, I group mobile and tablets together when speaking about mobile.) So if you look at mobile phones plus tablets something like 25% of media and entertainment are being consumed. Advertising budgets are something like 1% of ad budgets. There’s a huge disconnect. That’s all shifting.

You’re going to start to see (and we are already over the past year) an increase in mobile ad budgets. It’s going to take a while to, sort of, catch up to that 25% of time but it’s getting there. I think that the other trend is

2 – The App Developer Side

If you look at the fastest growing markets in general its mobile apps. Mobile apps have a key issue. That’s around “discovery” which is the concept of “how do I get my apps found.” There’s something like 1.2 million apps out there between iOS (iTunes, iPhones, iPad) and the other side of the market which is Android. Add them together and it’s over 1.2 million apps.

It’s truly a needle in the haystack issue. Its similar to launching a blog or a forum online.The competition is so much fiercer in mobile than it was two years ago. We see the other trend is the need for app discovery. The promotion of apps has been a fast moving force with a lot of budgets that are moving towards both sides.

More people are budgeting out CPA which is cost per action or in the app world CPI, which is cost per install. Some people call it PPD which is pay per download. But I think the more popular term would be CPI. So instead of running a CPA campaign you can find affiliates starting to run CPI focused campaigns.

I think those are probably the two biggest trends pushing us forward.

One note on a “confusion point” is that one of the challenges in mobile is that there are segments of ad dollars that are running through incentivized media. Everyone knows who has been around the web space is that incentivization can have it’s place but you need to understand that it is incentivized. In the web space you’ll see them carve out saying “no incentivization allowed.”

Mobile is the wild wild west. You see a lot of incentivization mixed in. I don’t think developers understand the lower quality users that are coming in. So the lifetime value (LTV) is going to be really low with incentivization. I think theres a lot of confusion in the market. So what we’ve been seeing over the last 6 – 9 months is that developers are starting to identify that.

What we’re starting to see in mobile affiliate networks (such as http://www.offermobi.com) what can and what can’t be incentivized. Most of it can’t be. I think it’s important for the market, especially for affiliates reading this, is to understand what can and can’t be incentivized at the offer level and really start to learn about UN-incentivized sources of traffic.

Any questions on that Dustin?

Me: No, I think that makes sense. You bring up some really good points. One word I pulled out of that was “confusion.” That’s a big deal for a lot of people that are just getting into mobile. There are so many new terms, so many ways to get traffic, and there are so many solutions now for tracking when there weren’t so many not too long ago. There’s just a lot going on with mobile. It’s not been as straightforward as grab and offer, get traffic, and convert. Well… I guess it is that straightforward but it seems a little bit more confusing when it comes to mobile.

Howie: Yeah and it’s getting clearer. Like you mentioned there’s more sources for traffic – we’ll talk about the one I’ve been working on in a bit. There’s more mobile offers. There are better tracking tools. So it’s still confusing but the market has taken some pretty good leaps over the past 3 years.

Not only is it confusing, it’s also really fragmented. You have iOS from Apple, you have Android, and they’re very different. It’s not like on the web where if someone’s on a Mac versus a PC it doesn’t really matter. When it comes to mobile there are some core differences between Android versus iOS. Especially if you’re doing app promotion. It’s very specific. There are different versions of operating systems on iOS – you have iPad vs iPhone vs iPod Touch. And then in the Android world you have 1,000 to 1,500 + devices. It’s very very fragmented. They don’t all support the same features.

The fragmentation kind of adds to the confusion. It’s definitely much better than when i started investing in this three and half years ago.

Me: So do you want to tell us a little about the traffic side of things that you’ve been working on?

Howie: Sure. I think first it would be good to talk a little bit about the different sources of mobile traffic. I kind of break it into a few different categories.

The first one is mobile search

If you’re familiar with running search campaigns on the desktop – running on mobile you’ll just target mobile devices. You can work through Adwords or Microsoft on that side of things. There are a lot of similarities. If you’ve got your desktop search experience you should definitely run mobile search. Lots of similarities there. There are some differences like carriers or devices but that’s the first part.

The second one is incentivized sources of traffic

I stay away from this. There are certain offers that may permit that. You need to identify and sort of “bucket” incentivized sources of traffic together.

The third would be mobile display

This is basically banner advertising. It’s banner ads running either in apps or on the mobile web – When someone’s accessing a website on their mobile device. Not to make it more confusing but I would break display on mobile into 2 camps.

1 – Blind Ad Networks
2 – Demand Side Platform (aka DSP – a newer technology)

When you’re running mobile display ads you have those two choices.

With mobile ad networks you have the usual suspects like JumpTap, Millenial Media, Ad Mob (which Google acquired), etc.

These are blind networks. What that means is that when you’re running a campaign you don’t know where your ads are running. So if you’re running any tracking software it’ll say something like QR72411 or whatever. You’ll see a mish mosh of letters and numbers that represent a site or an app. It’s blind. You don’t know where you’re running.

The other side of the camp which we focus on is the DSP or demand side platform. It’s a newer technology versus the ad networks. What I’ve been running for a year now (we just hit our 1 year anniversery) is a company called Human Demand .

Human Demand is a mobile DSP. We aggregate 10’s of thousands of apps and mobile websites. We make those available for advertisers to run mobile display, mobile ad campaigns. So with a blind ad network you won’t know where you’re running. With Human Demand, everything is fully transparent. When you’re running a campaign on Human Demand you actually see your ad is running in an app like “Tiny Tower” or you’re running mobile web ads in “Accuweather.” It’s very very clear EXACTLY where you’re running.

You have much greater control over optimization. You can start to understand the audience and the type of demographics that are important for your offer. So that’s what I’ve been working on over the past year. I wanted to bring an easy platform for any mobile advertiser including mobile affiliates to run mobile display.

We’ve got fully integrated conversion tracking. You can see exactly the offers that are backing out. There’s really a unique level of detail in our system. You actually see through “XYZ” app exactly what your conversion rate is. You’ll see what your ECPA is, your effective cost per acquisition on individual placements.

So with knowledge comes power, right?

All of a sudden you start to learn about what’s working for your campaigns. You can optimize down to the placement level. And also start to say “oh let me try this app” or this category. It’s a very different experience than a blind mobile ad network.

Another key point is that the blind ad networks are typically CPC focused. You buying on a click basis. What Human Demand does is focus on RTB or real time bidding. You’re actually bidding on impression by impression. So you have a fine level of control. You can choose exactly what to bid on every device or every specific app or the types of banners you want to use. So it offers a level of optimization that just isn’t available anywhere else.

That’s the end of Part 1.

Stay tuned for Part 2 where Howie shares some insider tips on mobile advertising and the mobile affiliate game specifically.  You can check out his ground breaking mobile traffic tool Human Demand here.