John SanGiovanni is co-founder and vice president of product design at Zumobi, a company specialized in creating innovative apps and in-app advertising for the mobile industry through its platform called ZBi (Zumobi Brand integration). John has more than 13 years of experience in mobile interface design. Prior to Zumobi he worked at Microsoft Research. In this interview he talks about Zumobi applies native advertising methods to drive brand content and awareness in the mobile space and talks about the exciting future of mobile advertising.
Sramana Mitra: John, let’s start with some of your background as well as background about Zumobi. What do you do? What kinds of customers do you cater to?
John SanGiovanni: I have a hybrid background in technology and design. Our focus has always been in the realm of mobile media and mobile publishing. Zumobi has two complementary business areas and client groups: we work with major media companies and publishers, and we create technologies to bring their content into mobile apps – iPhone, Android, iPad, Kindle Fire, and other places. We have a publishing platform that powers the apps for NBC News, the “Today Show,” Popular Science, Motor Trend, Xbox and many others. The other side of our business is that we also have a technology that powers the advertising and brand experiences inside those apps. Those two businesses are complementary because the journey of publishing apps in a collaborative joint venture way has given us a nice perspective on how to do advertising the right and the wrong way, and it has lead us to a product suite that thinks about next-generation mobile advertising.
SM: Let’s double click down on that. Walk us through some of your customers and case studies. What kinds of apps are you developing, and what kinds of ad campaigns are effective for those apps and why?
JS: We have been active for more than six years. We did some of the first branded content apps in the app store, when the iOS App Store first opened. One of the things we learned very early on with some of our major publishing partners and advertising partners is how overwhelmed everybody is with mobile banners. Mobile banners are just not working. They are underwhelming to the advertiser because users are very good at ignoring them, but also they are not great for end users, since they tend to be lowest common denominator style of ad campaign.
But what is a rising trend in the broader marketing zeitgeist is the trend of brand as publisher and creating conversational advertising or storytelling around a brand story. That really doesn’t resonate with the format of banner ads, either. One of the banner ads we published was in partnership with Motor Trend – we publish the official app for Motor Trend on the iPhone, Android and iPad. We realized very quickly that particularly automotive advertisers have such cool stories to tell. They have a cool design philosophy, they have cool technology about how they build engines, etc. They have interesting technology in the car, interesting visions on the future of transportation, etc. There are so many great stories to tell.
It turns out that that content is compelling to the end user, and it happens to be so compelling to a specific user that he has opted in to the Motor Trend app on his phone. Let me give you an example. We worked with Chevrolet, which did a six-part technology series that included articles, video, photos, etc. It was not just traditional campaign messaging about a model. In fact, they didn’t have any of that. It was much more about “Here is our philosophy for design, here is how we think about transportation.” It was great content.
Our ad platform is called ZBi (Zumobi Brand integration). ZBi is designed to seamlessly and organically blend the content from the brand with the app itself. When this Chevrolet campaign went live, rather than just serving banners for the campaign, we were able to light up a special advertising section inside the app. That was real content, enjoyable to read. But the user could drill in and read it just as if it was another article inside the app. This concept of native mobile advertising is all the rage right now. As a result, this campaign performed very well – users engaged with us very well. We had a shocking 37% overall mobile engagement with that campaign.
Sramana Mitra: Facebook and LinkedIn are doing the same. They switched away from banner ads to pushing content in-stream. What works really well is if you can do content marketing in-stream.
John SanGiovanni: That is exactly right. Many of the publishers that are doing in-stream native advertising are doing it in a site-specific way. The challenge with some of those approaches is that they are difficult to scale. What we have innovated with the ZBi platform is that it allows us to do the same type of native and in-stream mobile advertising, but at scale across a series of different high-volume app publishers, which is the Holy Grail.
SM: In the example you gave us earlier, both Motor Trend as well as Chevrolet are your clients?
JS: That is correct.
SM: Please extrapolate that for us into this stream of publishers? What is the stream of publishers you are working with?
JS: We have a host of publishers. If you type “Zumobi” in your favorite app store, we work with many major publishing brands. The Motor Trend example is an example of a deeply collaborative project between the advertiser and the publisher and got 11.2% click-through rate. It was one of the most performing mobile ad campaigns through which the data has ever been shared. It validated the concept of native advertisement.
Another one of our big partners is American Express. They wanted to do native mobile advertising, but they wanted to use it in a different way. They wanted it to be very participatory. They wanted to let the individual user upload a photo that demonstrated how that person uses her credit card. If she found a new restaurant or bought a new pair of shoes, she could take a photo with her phone and upload it into the ad experience and have a personalized, customized ad experience.
Instead of having the ad be a takeover of a single app, American Express wanted to serve that campaign across multiple of the apps I just mentioned and that have ZBi technology for native advertising. As a result, everywhere that campaign ran, users were able to tab into their photo ticker, or they were able to connect their car to their Facebook or Twitter accounts. All the things they wanted to do they could do across each app. That was a nice way to both have the depth of a mobile ad campaign, but also to achieve scale in a sense that any app that has ZBi technology could run those units.
SM: Describe the ZBi platform.
JS: We have a deep background in user experience, and we feel that most of the advertising platforms didn’t take into account the user experience part of advertising at all. Almost all ad platforms on the market were rendered as a 320 x 50 banner at the bottom of the screen. The user tapped on it and it expanded to full screen. It was not very elegant or organic. We took the same user interface design philosophy that we apply to building great apps and applied it to our advertising platform. As a result, we have a variety of different units that are designed to nicely blend in to the app at different stages of the user flow. We can have an elegant loading screen presentation, for example, which feels like it is presented by [style] placement on the homes creen, it doesn’t feel like a banner. When you get to the home screen of the appm we can actually activate a new content section inside the app, so we can light up a new channel of branded content inside the app. That channel is served and tracked as media, but it looks like it is part of the app itself.
SM: So it is advertising content, but it is made to look like original content.
JS: It is appropriately branded and represented as such. We would certainly represent to the user where there is branded content and which is the editorial content. On zumobi.com you can see dozens of examples of campaigns and units that have thought differently about how to render this content in an organic and elegant way within the app. The goal is to try and come up with a more integrated placement within the app and do it in a modular way, so that every app can embrace those standards.
SM: In a nutshell, what you are doing is content marketing through this platform?
JS: About half of the ZBi campaigns are content marketing. Native advertising means two different things. One is the in-stream philosophy. The other thing it means is seeing the phone as a phone and using the native capabilities of the phone itself inside the app. Examples of that would be American Express. They wanted you to be able to tap into your photo role.
Another example would be social media. It is compelling for a brand to get a user to tap a Twitter follow button and have the user instantly follow the brand as opposed to having to log back in. That is a native requirement. We built that capability into ZBi. Or if there is a clothing sale, for example, and an advertiser wants the user to be able to put a reminder on a native calendar on his phone, we also built that into ZBi. There is a whole host of native features that we have lit up as well. Generally I would say that native advertising falls into two buckets. One is content marketing and the other is deep integration with the phone.
Sramana Mitra: What do you charge and how do you charge for the Zumobi Platform?
John SanGiovanni: On the publishing side we have two different business models. One is what I call co-publishing, where we do a revenue share with the publisher. This is great, because we have aligned incentives and objectives around getting high-quality and high-dollar advertising into these campaigns. The second model is that we will put the ZBi technology into any app, whether we built it or not, and will do that in exchange for a standard “per CPM rich media” fee – which is a common model for ad technology.
SM: In each case, who is doing the advertising sales?
JS: The answer is both. We have a direct sales team and the publishers have a very sophisticated sales team of their own. We collaborate with the publishers. In some cases we will sell a campaign across many ZBi apps, and in some cases we will power a campaign that the publisher sold inside their app.
SM: And on the advertising side?
JS: On the advertising side this is all structured as media. Native mobile advertising is so new – this is the Wild West of this new category of advertising. To make it incredibly easy to price and sell, we basically charge a standard media fee, just as if they were buying media. We build the creative services and the traffic costs into that.
SM: Who do you consider as competitors in this space?
JS: There is not really another platform that is doing native mobile in this way. As you mentioned in the beginning, a couple of the publishers have started to activate native products, predominantly in web. We don’t really consider them competitors, because that is their own site. In fact, we would love, to the extent that their native advertising strategies grow, for them to consider the ZBi platform to power those same native experiences on their mobile apps.
SM: I would like to do a few thought experiments on that with you. Let’s say someone came and said, “We want to work with you. We want to plug your platform into our content boosting feature.” On Facebook pages today, for example, they allow boosting of the content. They just put the content in the in-stream both on the web and on mobile. Let’s say they told you, “You can help us augment this process.” How would you do that?
JS: We have a process for that. We call it a brand integration study. Since ZBi, we have a team that will work with the publisher and say, “We are excited about native. In fact we already started selling some content marketing, but we have no idea how to do this on our app. Our app has millions of users, but it doesn’t have any way for us to take this content, render it, track it and serve it as an ad campaign in mobile.” Step number one is the forging of a business agreement with the publisher. Step number two is taking the app and having our user interface team do a brand integration study, where we come back to them with recommendations about how to blend in native content into that app, what the design changes are that we recommend, and what the placement changes are that we recommend – from our experience of how to create apps that perform very well.
It is a very thoughtful and rigorous user experience study of their app, specifically around mobile advertising. In phase three the publisher downloads the ZBi SDK, which is a really nice package piece of technology – very easy for them to drop in. Then they take our specification for brand integration inside their app and implement it. Once it is integrated, we do sales training and support on the back end.
SM: We are a blog. We are other things, too, but what we are working on together at the moment is web content. The reason we know so much about Facebook content promotions on Facebook pages is because it has been very convenient for us to boost some of our great blog content. That is what is driving our Facebook marketing effectively. We don’t do anything on mobile yet. We don’t have a mobile app of our own. Obviously, content marketing puts people with good content in a privileged position. How would you advise them to take their content and do cool things with it?
John SanGiovanni: That is a great question. That was an interesting snapshot of how you are using Facebook. But I would characterize that style of marketing in many ways as an inversion of what we are doing. What we would do is figure out a way to bring brand-specific content and present it organically to the presentation of your blog itself, instead of syndicating your content out in that way, ingesting content that is being written by the brand agency or editorial team.
The content has to be true and high quality content. It can’t just be an ad campaign. My recommendation to creators of great content is that increasingly brands are consumers of content now in terms of licensing compelling content that resonates with an audience they are trying to attract. Content-based marketing typically falls into two buckets. In the case of the Chevy campaign, they have in-house writers and editorials, and they created that great content because they have exclusive access to engineers at Chevy, so they were able to put together exclusive and cool content. That is one example where brands are sophisticated enough to create their own content. That is rare, though.
Another scenario is where brands just know the audience the audience they are trying to speak to, and then they do a curating exercise, where they try and identify the voices in the wild that resonate in that audience. Then they license rights to that content. It is not necessarily content about the brand, but it is content they can serve and they can be adjacent to and that resonates with the audience they are trying to reach. For a great content creator, this is an entirely new channel of revenue, where they can figure out a way to syndicate their content in support of these native programs.
SM: And who is managing that syndication?
JS: There are a lot of practices within agencies themselves that are content curating exercise organizations. Most often that falls into an agency. But there are also companies like Federated Media, for example, which is a partner company of ours. Their practice is about connecting the dots between great bloggers and great plans, and figuring out how to create that perfectly fused messaging. The new field is this idea of content curation and pairing. We are riding that wave as a platform company, because the more that happens in the marketplace, the more there will be a demand for it on mobile and a demand for ZBi-style platforms.
SM: Federated Media has always been working with bloggers, but they were also focused on working with large blogs and putting advertisements on large blogs. Now you are telling me that they are managing this content syndication process as well.
JS: They do have access to some long-tail content. But if for example UPS comes to them and says, “We are trying to communicate with logistics professionals,” Federated Media would find which voice would most resonate with that type of consumer. In the same way, we have a huge audience of auto enthusiasts.
SM: Talk about the broad industry trends. What do you see on the horizon in this space?
JS: It is a very exciting time in mobile. We have been in the space for a long time, and we feel that 2012 was the year when mobile advertising budgets became their own line item on most major advertisers. It stopped being emerging media, and it started being a real advertising practice. That is great. But it also is a time when a tremendous refinement is happening to the mobile advertisement experience. We did this thing right out of the gate, where we tried to make mobile be exactly like the desktop web, where we all try to stand arm in arm and agree that the 320 x 50 banner was going to be the unit. Everybody created this unit, and then we put a 320 x 50 band aid at the bottom of every conceivable app. Not surprisingly, that unit has become incredibly commoditized.
The fact is that there is an increasing amount of mobile advertising spending – every analyst projects that this is going to increase dramatically in the years to come. We as a community need think about new ways of placing advertising into apps and into mobile in general. That is going to be a very popular trend in mobile. When you are trapped at a bus stop or you are sitting at the doctor’s office waiting in the waiting room, you have the luxury called time. You might read an article from a brand, if it is of interest to you. I contend that that type of content marketing is even more appropriate in mobile than it is on desktop. When you are sitting at your desk and doing different things, it is difficult to find the time to read an article. But when you are on your phone, interacting with a social or content app, you might consume long-form content.
Another trend I find interesting is how the phone is finally becoming the user’s personal content core. In many international markets it is the user’s only personal computer – all their other computers are shared or at work. The idea that this device is their central conduit not only for communication but consumption of video, media and web content, is a very interesting trend. We need to figure out a way how to be respectful of that from a user experience standpoint, and place the marketing or advertising in a way that is elegant, respects the user, and also celebrates the brand.
Sramana Mitra: How do you see the evolution of video in that context? I agree with you about what you said about long form content – reading an article while at a doctor’s office makes a lot of sense. But presumably there is also a video element to this, right?
John SanGiovanni: Totally. Video in our mind takes a few different stages. We do a lot of video advertising inside the brand experience. We are always trying to think about how to present the content in a way that is respectful to the user and organic to the presentation. Most people, when they think about video on mobile, think of it as a 15-second pre-roll before a piece of video content. That feels more disruptive than organic to the content. It just feels like the way we would have done it three years ago. We have done a major campaign with Boeing, where they wanted to create compelling content about their manufacturing processes and sustainable engineering techniques. They created long-form videos about their manufacturing process. We then blended that content in and presented it to their audience. Once users drilled into the Boeing brand experience, they were wrapped up in lots of great long-form video content.
The key distinction here is that we typically request our brand partners to give us longer form content. There was a time where everybody was talking 15-second pre-rolls. I think that is the wrong direction for video on mobile. In brand advertising, the opportunity is to really tell a story and provide longer form content. We are running a campaign right now with Lincoln, where they have different artists re-imagining other artists’ work. We have a seven-minute video of a re-imagining of David Bowie’s “Sound and Vision.” You can watch the seven-minute-long vignette inside the brand experience, which is really cool.
SM: The 15-second pre-roll thing is because in TV advertising it is the duration of that video that drove the pricing structure, right?
SM: Is that also true in the kind of advertising we are moving towards or is it going to be more view-based? How is the pricing structure going to evolve?
JS: If the brand buys into our vision of these elegant and organic experiences, then the correct way to price it is by engagement – time inside the experience, not just click-through, but what are the different things the user is doing inside the app experience? The user spends 12 minutes inside an app, whether they are watching the video, engaging with social media, uploading photos or playing games, the brand doesn’t care, as long as it resonates with their current brand messaging and they are achieving engagement.
SM: How does the publisher charge for that?
JS: The publisher prices it as media. Right now these campaigns are typically charged as a very high CPM.
SM: If somebody clicks on a video, plays the video and spends 12 minutes on it, it is still counted as a high CPM engagement metric?
JS: Today, yes.
SM: What you are saying is that there are going to be more dimensions in terms of the tracking and engagement metrics? The duration of engagement in an app is going to be part of the pricing structure?
JS: In the future, yes. The challenges right now is that most of the media buys are not set up to be instrumented in that way. It is easier to buy and sell media as a CPM in 2013. But I will believe if we are successful in creating this new class of advertising – native mobile advertising that creates long-form experiences – there will be such an opportunity for us to think about clever, creative and performance oriented ways to measure engagement inside the app. The easiest one is time. It doesn’t matter what they are doing on the app, as long as they are spending a lot of time on it. But for native mobile advertising, there are all kinds of things you can put on the price sheet. You can put whether or not they have added a movie premiere to the calendar of their phone, or whether or not they have uploaded pictures of their car to your photo roll, etc. There are different ways to price that type of advertising. But we are still a couple of years away from there being enough scale for that to happen.
Sramana Mitra: I more or less agree with you that the ability of a click to get into a more immersive user experience is much higher than [with] a TV channel. When you are on the mobile phone and you click on something, instead of a 30-second ad roll there is a real story coming up; we spend five minutes listening to that piece. I do think that there is a much more interesting and productive engagement model than just viewing these ads.
John SanGiovanni: I agree. The numbers validate this point in a dramatic way. I referenced the Chevy example because they were kind enough to share the data. People spend six and a half minutes on an ad on their phones. For a high-volume automotive ad campaign that number is science fiction. It is an incredibly high number. If we can produce that with technology at scale, and if we can get publishers to embrace that as a trend, we can get advertisers to start thinking about buying advertising in this way. I think it is a whole new generation of branded content. Even as a user I am excited about this, because I am so tired of standard banner ads. I feel that I am not being respected as a user, whereas if I had an affinity as a user to American Express, I will engage with their high-quality content. This is an exciting trend.
SM: Are you working with American Express on the consumer or the small business side?
JS: We work with them on the brand side.
SM: Is there anything you would like to add?
JS: We are passionate about this category. It is an exciting time in mobile. The international growth of mobile is staggering, and it is so good to see brands thinking big thoughts on how to use mobile in a dramatic way. We just hope they will turn to technologies like our ZBi platform that powers those types of experiences.
SM: John, before concluding the interview, could you tell us about where your company is located and what the structure of the company is?
JS: We are venture backed. I was a program manager at Microsoft Research, working on user interfaces for mobile phones. In 2006 they packaged up my patent portfolio and a small team and spun us out to an independent company in downtown Seattle called Zumobi. Soon thereafter, the iPhone, iPad, App Store, and Android happened, so we were well positioned to take a position of strength in this expanding marketplace.
All of our engineering and product development is in Seattle, Washington. We have four other regional sales offices that are typically close by to our publishing partners – they are in New York, San Francisco, Los Angeles, and Chicago – so that we can work with our partners and cultivate direct brand relationships. We are about 40 people, and we have had incredible traction on the market with some of the biggest media brands in the world.
SM: It was a very interesting conversation, and I really enjoyed it.
JS: Thank you very much. I am a big fan of your writing.
Read the full article on Sramana Mitra’s One Million by One Million Blog here, and visit Zumobi.com to learn more about Zumobi’s award winning ZBi ad technology.