Last week I flew to Berlin to interview Christian Henschel, the co-founder and CEO of adeven – one of the most promising mobile advertising and analytics companies in Europe.
During the interview we have discussed the following topics:
- About Christian and adeven
- Adeven’s future
- EU Privacy Regulation influence on analytics
- Technology behind adeven
- Facebook advertising
- When will mobile advertising become mainstream?
- Browser vs. App tracking
- HTML5 to replace native apps?
- Mobile advertising and wearable technology
- Mobile advertising for offline business
- Future of mobile advertising
Could you please tell me about yourself and how adeven has actually started?
Before I founded adeven in April 2012 with Paul Müller and Manuel Kniep, I was part of the management team at madvertise, one of the fastest growing mobile advertising networks in Europe. I was responsible for the whole supply-side, that means the publishing side. Just to give you an idea – when we started we had around 70 million ad impressions, and when I left we had around 2 billion. Before madvertise I ran the digital commercial activities at MTV in Europe and the DACH region (Germany, Austria, Switzerland). There I was responsible for all digital revenues coming from advertising sales, corporations, mobile and everything else. I was there for five years. Before that I was part of the Deutsche Telecom and part of their sales house, which is basically if the largest sales house in Germany – and still is. I was also with ZDF New Media, which is part of the ZDF (the largest television group in Germany). Originally, I studied economics and marketing in Berlin. That’s basically it.
I founded my first company when I was 23, at the University together with three other guys. At this time we founded a monthly magazine for the region where we used to live. In the end, after two years or so, we managed to have a distribution of around 20,000 magazines on a monthly basis. That was kind of a big deal at that time.
During this time we went through all the good and bad things – you always have hard deadlines with print products. You have to be on time with your documents and everything else, because otherwise you will have problems with the printing and supplying of the magazine.
I remember the time when we didn’t sleep for two or three days straight. For example, we had to be in the print house on Fridays to be able to print the magazine. So Wednesday and Thursday were the days when we had to work all night. And then, after and not sleeping for two days, I had to drive to the print house. I even slept in the car in front of the building and waited for it to open. Those were the days… It was crazy.
During my time with madvertise, I met Paul Müller [Co-Founder]. At this time he owned his own company called rapidrabbit, which had around 25 mobile applications. Back then they generated around $10 million, which is a lot, especially for a German publisher! There are not too many German publishers out there.
Paul and I got talking – they were tracking their marketing activities and revenues within their own 25 apps and Paul showed me some solutions they were working on. And I thought, wow, this is amazing! This is really amazing stuff! We really, really have to make this available for more people. I really believed in the idea and knew there was a huge market opportunity for this.
There is one thing that has been annoying me for the last 10 to 15 years. Everybody is talking about the targeting capabilities within digital and mobile marketing, and that everything is possible. But, you know, it’s still the case that it doesn’t matter if you’ve spent $5000 or $500,000, the only information you’ll see is the amount of clicks, the amount of impressions and the timeframe the campaign was actually running. And this is everything you will see as an advertiser! And this is just crazy when there is so much more information available.
I thought, why couldn’t we make this information available to the advertiser? After meeting the guys who had the solution to this problem, the whole idea came into my head… in 2011, I spent all of November and December, after working hours, working on the new concept. This was even until 3 or 4 o’clock in the morning. I had to prepare everything: the pitches, the presentations, set up the company and everything else… and by January I felt exhausted.
Fortunately, we pitched to some investors and they really believed in the concept and the team. They understood the whole situation. By March 2012 we received the first financing for the company. After this I was able to commit full-time to the new company., This was exactly 12 months ago – adeven celebrated their first birthday last Wednesday.
If you have helped madvertise to go from from millions to billions, what do you think you will accomplish within the next few years at adeven?
What we do is to help advertisers understand where and how they spend their money. So, we always say, it’s like turning data into revenue. If I look back at the last two quarters, for instance Q4 last year, we tracked and analysed around €116,000 in advertising revenue for our customers. And in Q1 this year we tracked in analysed around €5 million. This should give you an idea of how fast the app industry is growing.
In five years, the market will change so dramatically and so fast… let me just give you one example: no one really had Facebook on his radar just six months ago in terms of mobile advertising. The Facebook mobile app install ads were only launched last August. And now, there are around 10 companies who are official Facebook Mobile Measurement Partners, and we are one of them.
App marketers want and need to understand where their most valuable users are coming from and where they should spend their money. There is a huge need for transparency and measurability in the industry. The demand for this within the industry will only continue to increase in the next few years. We already see this trend within our client base.
I think that the days of reporting clicks and impressions are definitely over. adeven will always be ahead of this curve and take the responsibility of not only educating our clients but also being involved in industry organisations such as the IAB and BVDW to help move the industry forward globally.
We are now running businesses in Germany and the United Kingdom and we already have our first clients from Japan and from the United States. So, it’s growing globally. That’s what is also really good about adeven. We don’t have to be focused on a specific region. Our product is technology. It can be everywhere.
I hope that in five years time that will have lots of beautiful offices all over the world! [Laughing]
New York? Tokio?
Yeah, that would be fun!
You were talking about transparency. Transparency is a big thing in the new governmental regulations for European advertisers. And you’re one of the first companies to meet all the regulations there are. How do you think the new laws are influencing mobile advertising and analytics?
There’s a huge difference between what is happening online in what is happening in mobile. With online advertising you have only one browser and everything basically happens in that browser. However, from a technical perspective, mobile is completely different. You have your application, you click on something, you go to an app store, maybe you install another app… If you’d like it to compare it to the browser analogy, every app is a completely different “browser”. And these browsers do not talk to each other. That’s a huge problem from an advertiser’s perspective.
Apple has just announced that they will reject apps that are using the UDID tracking. This means that they are going into more user-friendly direction. We have always been big fans of that because, if you want to deal with big clients (like Deutsche Telecom) you really have to be privacy compliant in order to operate. Privacy is important not only to our clients but also to us and that is why we went through the process of becoming ePrivacy certified.
On the other hand, from an advertiser’s perspective, the more data you have the better you can understand the user’s behaviour and the more effective your advertising will be. This is what the digital industry has always been praying for and if the European law does not end up supporting this – that might be an issue. Hopefully they will find something in between so the industry can make improvements and move forward with a more privacy friendly model.
One thing you also do is in-app tracking and analytics. But you are not allowed to use the unique device IDs. What technology are you using than?
We are using “device fingerprinting” technology and hybrid technology. But I think that digital fingerprinting will fade out in the next few years. Apple also has an identification number for advertisers (IDFA) solution, which is their preferred tracking method. This new technology should give 100% accuracy.
There are some discussions going on at the moment – a lot of people are saying that it only works for iOS6 and upward. And then we thought; let’s look at our database! What is actually happening here? We saw that already more than 95% of all Apple devices are already on iOS6. So we think there will be no problem with Apple’s IDFA solution.
Just recently you have announced on your blog that you are now Facebook advertising partner. How are your Facebook app downloads actually performing? Also in term of click-through rates?
They work pretty well. The CTR is around 30%. The data is actually publicly available. And the costs per click are also pretty good: around 0.30€ to 0.60€ per click. So you end up with around between 1€ and 3€ per app download, which is okay, but keep in mind that you have really awesome targeting capabilities within Facebook, which you don’t have with other app-download platforms.
I think that this is really powerful – combining social with mobile app download capabilities and the massive reach. You can buy a lot of downloads because a lot of people are using Facebook. We have one client from the United States and then buying thousand downloads a day! And all these developments have only happens within the last six months or so. It’s quite impressive! The growth is crazy and it is really a big game changer, as it does not rely on top app lists and app ranking for visibility.
When do you think will mobile advertising become mainstream? Like, for example, online advertising has become within the last few years. When will mobile advertising become an obvious part of a brand’s advertising campaign?
I think that transparency and measurability play an important role in this. As soon as we have this established, then more money will flow into the app ecosystem. At the moment, a lot of companies are really in their “trial phase” when it comes to mobile advertising. They put some money in it, but that don’t really know how and if it is working. But then again, there are other companies who are leaders in their field and they have also managed to become the leader in the mobile space (which is not always directly connected). They were able to do this because they spend a lot of money and put a lot of effort into this channel and have acquired a lot of know-how when it comes to mobile so they really understand what they are doing.
As soon as you can prove your ROI on mobile, the money will flow in. This means robust analytics that covers all mobile marketing channels.
Is it easier for you to track ads within apps or within browsers?
We are really focusing on applications, because, from my experience with madvertise, I would say that 80% of the budget is spent within apps. And the aim of this budget is to get additional downloads. I don’t think that apps will just disappear because they still give the best user experience and also offer additional marketing perks such as push notifications.
But what when it comes to HTML5 vs. native mobile apps?
Facebook is the best example here: they started off with HTML5, but then went back to native applications. Although HTML5 is great, its capabilities are very limited. Of course, there are reasons to do HTML5, but I am still a big fan of native apps.
A lot of people are saying that within the next few years HTML5 will reach the point where it will have the functionality and capabilities of native apps. What will happen then? And what will happen to your business?
Nothing much, really. We will still be tracking what is happening and help our clients understand their marketing spend.
The big trend in technology is now wearable technology like Google Glass or “smart watches” and “talking shoes”. How can advertisers benefit from this kind of technology?
I think there are a lot of great opportunities, especially since the augmented reality stuff has been hard on the market for a couple of years. But I think the solutions from a commercial sense are still a little bit further down the road. It’s great! Imagine the opportunities you can have through this kind of technology! It’s crazy! But it will take some time for the technology to be attractive for advertisers.
Do you think that mobile advertising will have some kind of added value to offline business?
There is a big hype around mobile and its capabilities, especially when it comes to local advertising. I don’t know how many pitches I’ve heard such as “Yeah, we can do mobile. And you will have a banner. Your customers click on the banner or a voucher and they go into the store… bla bla bla”. I think it’s way too complicated.
Nobody really looks down on his/her phone while walking down the street. And this is also a huge problem: will we still purchase stuff in a physical store in five years? I don’t think so. On the other hand, this is also a new opportunity when is comes to local mobile advertising, however, I don’t believe in the concept of clicking on a banner when you are near a store.
What do you think is the next big thing in the mobile advertising?
We are focusing on native formats. I don’t believe in this small 300 x 50 banner stuff. I am not convinced that this is the answer to the mobile advertising problem. I think there are two ways: we have either full-screen ads or we have native ads, which are very close to the content. So the ad actually looks pretty similar to the content itself. Just look at Facebook – their ads are looking very similar to the other things around them. Also, as far as I know, LinkedIn is coming up with similar things. Twitter as well and of course there is Google.
I think there is a huge push coming from the side. Google is already doing a lot of things to really connect online advertising to mobile advertising. Especially with the new enhanced campaigns. This is not really a revolution, but it is definitely a huge development in the mobile industry.