Mobile Rich Media Ads Getting Clicks & Eyeballs

Rich media ads are making their way on to more mobile apps, but some early signs of success suggest we’re poised to see a lot more of them soon. Volvo recently completed a video ad campaign with Admob (s goog) on the iPhone (s aapl) and found multi-media ads have led to almost a 10x improvement in click-through rates compared to traditional banner ads.

The Volvo campaign on the iPhone touting the S60 sedan was led by Mobext, the mobile marketing arm of advertising agency Havas Digital. Mobile users who visited certain applications such as a CBS News (s cbs) app were greeted by a 30-second video of the S60 and given the option to view the car in 360 degrees, see a photo gallery or get information on local dealerships. Jared Hopfer, associate director of Mobext, told me users clicked through for more information 3.91 percent of the time, usually for a look at the 360 view of the car. He said that’s far ahead of their traditional mobile ads, which see click-through rates of 0.4 to 0.7 percent. Users who clicked through also spent an average of a minute in the ad, far better than traditional ads.

“Nearly a minute spent with a brand is about all you can ask for; that’s serious time exploring what a brand is all about,” Hopfer said. “We knew this tactic would be successful, but the performance went beyond our expectations for engagement and performance of click-through rates.”

Rich media ads are still an emerging product, but they’re poised to become an important way for large brands and companies to drive awareness and engagement on mobile devices. There’s some question, however, about how reliable click-through rates are on all mobile ads. A recent study by Harris Interactive (s hpol) found that about half of users accidentally clicked on mobile ads. But respondents also said they preferred ads like the Volvo rich media ad which kept them within the app they were using, instead of ads which click through to a mobile browser.

That’s one of the reasons why publishers are turning to rich media ads to drive engagement. Admob told me the number of publishers using interstitial video ads to monetize their apps has more than doubled from December 2009 to December 2010, with more than half of AdMob’s top 50 brand advertising campaigns in December using interstitial ads. The company said ad impressions grew more than 500 percent in the past year from the AdMob interstitial ad unit.

Admob’s progress reflects the growing acceptance of rich media ads in mobile. In 2009, IDC noted that mobile video ads accounted for just $12 million of the $220 million spent on mobile advertising in the U.S. By the end of last year, it was expected to have grown to $90 million, out of a total $498 million spent on mobile ads. By 2014, video ads are projected to represent $485 million out of $1.8 billion in mobile advertising.

Hopfer told me rich media ads are a win for both publishers and advertisers. That’s why Volvo is poised to begin a similar campaign on Android soon. “For publishers, serving up rich media ads are a much better way to monetize their ad inventory than pure text. And publishers can demand more for the audience and the advertiser is willing to pay more because they can get more engagement,” he said.

Rich media ads are going to be an important battleground for Admob, Apple, Medialets and others who are looking to power the mobile advertising market. The key is to find an ad unit that demands a higher price from advertisers than simple banner ads. So far, rich media is proving to be more engaging, and when paired with local data like business information and maps, it can prove to be a potent product. Expect to see a lot more of those video and animated mobile ads in the months and years to come.

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