How A Mobile Ad Turns Into A Paying Customer

Desktops and even laptops are slowly becoming less relevant. Now we work on-the-go, and mobile phones and tablets are replacing our computers. The numbers don't lie — Gartner predicts that worldwide mobile connections will grow to 7.6 billion in 2016. By 2013 mobile advertising revenue will reach $11.4 billion, up from $9.6 billion in 2012. By 2016 that number will more than double to $24.5 billion.

The chart below shows how these numbers are increasing rapidly worldwide:

Facebook is a case in point. Its Q4 earnings report revealed that more people are logging on to on their phones than with their laptops. Of people who check Facebook, 16 percent do so only on their phones and tablets. That's about 157 million of Facebook's 1.06 billion monthly active users. The social network is isn't wasting any time profiting from it. Mobile ads account for 23 percent of its ad revenue.

Steven Rosenblatt, the Chief Revenue Officer of Foursquare, says that any company that doesn't keep up with the changing times is going to fall behind. Very behind.

"My rule of thumb is that in 2013, if you're a media company, if you're a publisher, and about 50 percent of your overall web traffic is not coming from mobile devices, you're in trouble," says Rosenblatt.

According to Rosenblatt, the company puts mobile first. "We're leap years ahead of everyone else because we are mobile first [company] and because mobile is in our DNA. … I think that gives us a massive advantage over others who are trying to figure out that space," he adds.

Rosenblatt says Foursquare taps into one of mobile's greatest advantages: its ability to emotionally and physically connect advertisers to consumers. As Rosenblatt puts it, mobile advertising is so powerful because "it's driven by two things: location and context."

Consumers are more likely to buy a product or visit a venue if they are given the tools to search for what they want at their fingertips and are then motivated to physically go to the location and fulfill that need.

"We have an incredible search recommendation engine that we like to think of as Google ads for the real world," Rosenblatt explains. "Mobile is driving people back into the real world and getting real-world action," he adds.

One of the ways Foursquare does this is by offering users discounts that they can only redeem at a restaurant or store when they "check in" to the Foursquare app.

Check-ins allow companies that advertise with them to track their progress and see just how well their advertisements are doing. "We're showing marketers that … they can literally see the direct impact of results whether somebody checked in, whether somebody used their credit card … all these actions are critical for the merchant and our users love it as well," says Rosenblatt.

Their Promoted Updates platform, launched just last year, allows Foursquare to get paid for promoting other businesses in their explore tab. This means that users are notified through updates about upcoming deals and what new products the businesses who partner with Foursquare are offering.

According to Rosenblatt, "That allowed advertisers to reach those consumers in a way that was not intrusive, in a way that was very organic to their experience."

These interactive ads are generating a lot of revenue for the company, Rosenblatt says. "In 15 years [of my career] I've seen a lot of ad campaigns and the results we're seeing here at Foursquare are off the charts ridiculously incredible. So not only are we driving people to take action, we're seeing on average 3 to 4 percent engagement rates across different categories and about half of those people are actually checking in to this particular business."

The future of advertisement lies in the ability to make the advertisement experience less intrusive, more interactive, and more personal.

Rajesh Reddy, CEO of July Systems, a cloud-based mobile application platform provider, says the market is changing from being "commerce centric" to focusing on the consumer or, as he put it, being "user centric."

"So you turn the model upside down and you make everything you offer specific to the individual user and the context of that user. So your content is completely personalized," July Systems' CEO explains.

According to Reddy, "If you do not take advantage of the ability to personalize and contextualize, people will not use your products ... It is that extreme a risk of not doing it."

Foursquare CRO Steven Rosenblatt, agrees that in the future advertising will be all about maximizing a user's experience. People want to be reminded that they aren't just another person surfing the web, and that their needs and wants matter to brands. Making the mobile experience less digital and more "real," as Rosenblatt put it, might just be the key to making the virtual world feel more "human" to the consumer.

Rosenblatt's advice to companies looking to sell their products online?

"User experience, user experience, user experience. Stay away from anything that remotely resembles the desktop pop up. Rethink your whole strategy and do not just do what you're doing on the web and try and shoehorn it in to mobile."