Smartphone ads: The potential to reach the masses or deliver a love letter

Television, radio, newspapers, magazines, outdoor advertising... Advertising methods, traditionally categorized by the medium used, are being forced to transform due to the proliferation of digital and mobile technologies and the resulting shifts in consumer behavior. This short series, "The Near Future of Advertising Seen Through Devices," aims to organize these changes by drawing a line through the concept of "devices." The first installment focuses on the smartphone, a symbol of this shift.
What are the challenges and near future of smartphone advertising, the medium now closest to consumers and most frequently used?

(From left) Kensuke Hara (Dentsu Digital Inc. / Strategic Planning Department, Department Manager), Ryohei Takagi (Dentsu Digital Inc. / Strategic Planning Department, Smart Device Group, Group Manager), Susumu Namikawa (Dentsu Digital Inc. / Executive Officer, Chief Creative Officer)

Dentsu Digital Inc. was established in July 2016 to accelerate growth strategies in the digital domain. Members working on smartphone projects engaged in a candid discussion about current challenges and future themes requiring attention.

Are we facing a dilemma where focusing on the visible market leads to reverse branding?

Hara: This year marks the 10th anniversary of the iPhone's debut. The advertising landscape has drastically changed since then, with smartphones now playing a central role. Recognizing this, we set up this roundtable to explore our current position and what's expected of us, together with our readers.

Takagi is a digital native who also understands the field well. Namikawa serves as head of the Advanced Creative Research Center (ACRC) [*1] and is a creator deeply knowledgeable in this area. First, I'd like us to start by sharing our thoughts on the current state of smartphone advertising.

Takagi: One thing that hasn't changed is the prevalence of ads aimed at directly acquiring customers, where delivering results based on metrics like CPI [*2]and CTR [*2] is the fundamental premise. However, we're starting to see a problem: by relentlessly pursuing these numbers, are we inadvertently creating reverse branding? CPI and CTR measure whether we've reached visible targets, so focusing solely on them tempts us to use "extreme" expressions to grab attention and boost numbers.

Hara: Even when we recognize this, we often fall into the dilemma of not being able to stop. When we narrow our target audience to pursue efficiency, we tend to compete over minor differences within a closed world. I suspect we might be falling into a trap.

Namikawa: To see this clearly, we need to look back at what's happened over the last decade or so. Previously, we thought within frameworks like AIDMAor AISAS for consumer behavior. Typically, it was about informing people via TV, then having them search later and finally make a purchase. But with the digital shift and the rise of smartphones, the focus shifted to the idea that digital results could be quantified. This led to smartphone ads prioritizing the later stages like "search" and "acquisition."

But recently, consumer behavior patterns have changed further. Smartphones are increasingly handling the initial stages of the purchase journey too. In other words, discovering something on a smartphone and buying it on a smartphone is no longer unusual. If we discuss this without clarifying these changes and ignoring the underlying assumptions, things get messy.

Takagi: Initially, digital ads were used for the final action in AIDMA or the search phase in AISAS. Now, the situation has changed.

Namikawa: When consumer behavior starts with "learning via smartphone," ads designed for the less than 1% who click are actually seen by the other 99%. That aspect gets overlooked, and it's becoming a reverse branding effect, right?

Takagi: That sense of unease seems to exist everywhere on the front lines.

Hara: To add to the reverse branding point, consider how banners we see frequently sometimes become memes on social media like Twitter. It's paradoxical that the original ad's high visibility is precisely what makes it meme-worthy.

Smartphones are actually already mass media. It's only natural, given that consumers now spend overwhelmingly more time looking at their smartphones than any other medium. Otherwise, they wouldn't work as memes. So, fundamentally, the classification into traditional mass media and digital is flawed. For example, in the AISAS model, smartphones can be involved from the early stages of attitude change, like Attention.

We need new metrics that go beyond the traditional mass media vs. digital distinction.

Takagi: Thinking along those lines, while maintaining traditional metrics like CPI as a foundation, metrics that also contribute to branding are crucial. I can list several, but I'll highlight two straightforward ones.

One is a system to accurately evaluate reach, including other media. TV has clear metrics like viewership ratings or GRP (Gross Rating Points; airing one TV commercial on a program with an average 1% rating counts as 1 GRP). Digital, however, varies by platform in terms of impression weighting and definition. We need to resolve this ambiguity while also factoring in human perception and emotion.

Hara: What we really need is something like a weighting coefficient for impressions.

Takagi: I think we've reached the point where we need to discuss such matters.

Namikawa: Digital impressions are similar to ratings, but they're not the same. However, there's potential for smartphone ads to delve deeper into qualitative areas, like whether users view them favorably. That's frontier territory.

Hara: Even the same banner changes depending on where it's seen, what time it's seen, and the viewer's state of mind.

Namikawa: So rather than simply comparing it to TV, I think we should aim to deeply capture people's feelings. The "View-Through Conversion Rate" recently announced by Dentsu Digital Inc. is one such attempt. It focuses on "attitude changes brought about by interest aroused after ad exposure."

Takagi: Another point is viewability, which measures the percentage of impressions that were actually in a viewable state.

Namikawa: Improving the quality of smartphone ads, including these aspects, is an urgent priority, right?

Hara: Conversely, it means that even these fundamental aspects, or the basic assumptions that were taken for granted in traditional advertising, aren't always in place. There's a lot we need to tackle.

Namikawa: To summarize, one point is that we can visualize the entire journey from awareness (like AIDMA or AISAS) – where someone goes from complete ignorance to purchase – as a linear path. Building on that, if we think in terms of this linear path, focusing not just on quantity but also on quality could enable smartphones to truly resonate with consumers' emotions.

Another point I want to raise is whether the digital world treats events that can't be measured numerically as if they never happened. We shouldn't stop thinking here. We need to categorize and consider: ① It didn't happen, so it doesn't show up in numbers; ② It happened, but it doesn't show up in numbers; ③ It happened and it shows up in numbers. Even in case ②, where tracking by numbers isn't possible, if behavioral change is expected, we should actually try it. The methods to quantify or visualize it with technology will likely emerge later. If we don't try to capture the potential that isn't yet quantified at the starting point, nothing will begin.

Sometimes, if conversion (meaning results or acquisition) in consumer behavior isn't visible through numbers, people conclude "we can't do funnel analysis [※4]." But that's not the case—it's just not quantified yet. Consumer behavior, meaning people's feelings, can actually be quite accurately predicted using traditional hypothesis models. Sometimes I think we just need to plan while anticipating the unseen aspects too.

Hara: Sometimes we move forward by treating things that don't show up in numbers as if they don't exist.

Namikawa: This is slightly off-topic, but regarding quantifying the unquantifiable, Professor Yutaka Matsuo from the University of Tokyo, renowned for AI research, recently made an interesting point. He suggested mass media lowers society's communication costs by delivering information at a certain level.

Instead of requiring enormous effort to explain everything like "What is this?", using expressions like TV commercials that raise awareness means you can understand a product when you go to the store without needing detailed knowledge. Also, at home, for example, when mom buys a product she saw in a TV commercial, dad doesn't need to ask "What's that?"; it just ends with "Oh, she bought that." Scenarios like this, where communication costs are lowered, occur in various situations.

Takagi: That's the social significance of mass communication. As things stand now, while the internet and smartphones exist as mass media, they haven't achieved massification in the sense of "creating shared understanding." I sometimes worry this will lead to continued, half-hearted siloing. It's not just a reach issue. It makes me wonder: Can smartphones, now a mass medium, also shoulder the role of creating shared societal understanding? And what can advertising do to support that?

Launching new initiatives that fuse digital evolution with creativity

Namikawa: Targeting broad, general audiences and creating things they like—things with a certain universality—is actually a highly specialized skill. TV commercial creativity has a history of honing that skill.

For example, the creators at Dentsu Inc. excel at crafting such universal appeal, and its effectiveness remains largely unchanged even in the smartphone era. However, platforms like LINE are like a school locker where love letters are stashed. When advertising enters such spaces, factors like whether people genuinely want to share it become crucially important – very different from TV commercials.

Hara: In that sense, I believe we can solve challenges by operating with both our frontline teams and the Advanced Creative Center's creative teams working in tandem. The idea of lowering communication costs is closely related to the need to do branding on smartphones or achieve brand lift. It's essentially asking: Can we create a certain kind of narrative?

Namikawa: Smartphones serve both roles: expanding awareness like TV or newspapers, and closing the distance with users like radio or magazines. Their potential is truly immeasurable.

Takagi: Beyond offering access to all four traditional media, smartphones are physically close and used for extended viewing periods. I'd like to create a new form for smartphones—a concept car, if you will—that builds on these strengths.

　
Hara: To take it to the extreme, maybe even create an OS (laughs).

Namikawa: Despite digital media's relatively short history, there are surprisingly few methodological options available. Just as someone created the structure for TV commercials, I believe we can create a new structure more suited to smartphones.

Hara: Let's do something, the three of us.

Takagi: That sounds like it could be fun.

Summary

The advent of smartphones—which integrated mobile phones and PCs, making the internet even more accessible—radically changed people's lives. Their existence has also dramatically transformed advertising, business, and corporate management environments. So, within this changing landscape, are marketers truly unlocking smartphones' potential? Can they structure their thinking based on this fundamental question? Hara, Takagi, and Namikawa began confronting this challenge. Their major task now is to share this critical awareness with others involved in marketing and expand the circle of engagement.
　

※1: Advanced Creative Center

A group of specialists formed to answer the question of how the 'evolution' of ad technology and artificial intelligence can fuse with the 'craftsmanship' of creative work. Established within Dentsu Digital Inc. in April 2017. It comprises 34 specialists centered around creators.

※2: CPI/CTR

CPI (Cost Per Install) is the cost per action from app download → installation → launch on smartphones. CTR (Click-Through Rate) refers to the percentage of ad clicks. On smartphones, there's a tendency for expressions to become overly aggressive, largely due to the prioritization of boosting these metrics.

※3: AIDMA/AISAS

AIDMA is a psychological analysis model positing that consumer behavior progresses through stages: Attention → Interest → Desire → Memory → Action. Its origins date back to the 1920s in America. AISAS is Dentsu Inc.'s adaptation of this model for the internet era, modified to: Attention → Interest → Search → Purchase → Share.

※4: Funnel Analysis

A type of behavioral analysis that visualizes models like AIDMA/AISAS using funnel-shaped diagrams. In the digital domain, it is used to segment consumer stages more finely—such as whether they are currently comparing options or making a payment.