Mobile Advertising – great white hope or flash in the pan?

September 25, 2008

Mobile Advertising – great white hope or flash in the pan?

 

By VP Marketing and , CTO, Mobixell

 

Strategy Analytics predicts that mobile advertising will represent a fifth of global spending on Internet advertising by 2011 and will generate $14.4 billion of revenue, so it’s easy to see why mobile advertising is being hailed as a major opportunity for the future.  But who will be the beneficiaries of this upsurge of interest?  Will it be the Internet giants like Google or Yahoo or will the content providers and brand owners reap the rewards, or perhaps this time the wireless operators will grasp the opportunity.   I’d like to think that the mobile operators will heed the lessons earned by ISPs in failing to exploit the Internet advertising wave and make sure that they don’t become just the dumb bit pipe vendor whilst the other players run off with the major spoils. 

 

Snakes and ladders
At present the winners and losers are hard to predict.  We are seeing a number of mobile operators dipping a toe in the water with pilot projects and Google has been quick to enter the fray by offering Ad words on the mobile phone as a default option to all its advertisers.  The stakes are clearly high as 2007 saw the jostling for position by major companies in M&A activities such as Microsoft’s acquisition of ScreenTonic, Nokia purchasing EnPocket  and AOL snapping up ThirdScreenMedia, in a bid to buy in expertise in the mobile advertising arena.  One thing is for sure, the traditional media owners in the print and broadcast world are right to be worried as industry experts predict that 2008 will be the year when advertisers start to earmark a significant portion of their advertising funds for mobile and online advertising.

 

A note of caution

Yet in this rush to capture the hearts and minds of the mobile user buoyed up by the encouraging signs in mobile content downloads, mobile operators are right to approach the matter with a degree of caution.  A recent Forrester Research report discovered that although 79 percent of consumers find the idea of mobile ads annoying, consumers will happily engage provided that marketers deliver valuable information or content.   So, whilst advertisers celebrate the mobile media for its ability to deliver interactive personal messages to the individual, the mobile operator needs to consider the user experience and respect their right to privacy.   If the advert becomes intrusive or annoying or spoils the user’s enjoyment of the music track they are listening to, or the video they are downloading, it could be counterproductive and actually cost operators’ their customers. 

 

Until now the main focus for mobile advertising has been on text ads and mobile web banners.  Indeed the Mobile Marketing Association’s only guidelines on mobile advertising exclusively focus on this approach.  It’s our belief that other rich media experiences such as Video (live and on demand), MMS, rich media WAP or In-Game offer greater promise for mobile ads and the opportunity to enrich the user experience and offer the advertiser a multi-channel approach which is likely to produce better results overall. Such an approach also lends itself most easily to the ad-funded content model.

 

Ad-funded Content

Any debate about mobile advertising would be incomplete without considering this model and I’d like to examine it from the operator, the advertiser and the user perspective.  Firstly from the operator’s perspective, who has the chance to supplement subscriber revenue with advertising revenue.  As we know from other more traditional mediums the potential for advertising can offer substantial opportunities for a large and diversified income.  Certain services lend themselves better than others to these kinds of promotions.  Voice services for example are unlikely to be affected, but web 2.0 services can allow consumers to  consume content for free based on an agreement to receive certain advertising messages.  An example of such a service that could potentially be revolutionised by ad-funded content is mobile TV or “You Tube-like” services on the mobile.  Users have expressed reluctance to pay to receive these services but the option of enjoying them for free at the advertisers expense is likely to prove more enticing. 

 

But what about the advertiser?  How compelling a medium will the mobile one prove to be?  What will they need to convince them to spend their advertising budgets on this relatively untried new vehicle?  Two of the key challenges for mobile operators will be to ensure the quality of experience is uniformly good for the user and that the brand itself is portrayed accurately and of a sufficiently high quality to satisfy the most discerning marketing VP.  Unlike the Internet the mobile medium has a huge diversity of devices out there with different specifications and capabilities.  The operator will need to be able to convince the brand owner that his brand will be communicated at a sufficiently high quality irrespective of the user’s device. 

 

Targeting and reporting

Another key requirement of the advertiser will be the need to ensure that the information is accurately targeted based on behavioural, geographic or demographic criteria and that they will obtain reliable measurable results.  Since the mobile medium doesn’t have the simplicity of the cookie to provide this service, the challenge of providing the brand owner with reliable usage statistics represents a significant challenge for many operators trialling mobile advertising services today. Mobile offers the potential for an interactive dialogue between the advertiser and the consumer and the ability for immediate results.  Yet until the operators can provide the reassurance of real measurement metrics to advertisers the service won’t take off.

 

Self-targeted viral advertising

From the users' perspective we’ve heard mixed reactions.  But as yet there is little in the way of industry-wide regulation governing the do’s and don’t of mobile advertising. One area that we firmly believe to hold the potential for dramatic growth is the area of viral marketing in the mobile medium.  Mobile communities such as MySpace and Bebo offer the potential for self-targeted advertising where users forward offers and content on to other members of their group.  This offers the potential to extend the impact of a campaign beyond the operators own captive audience and identify people with similar interests, which could in turn be targeted by that operator with offers linked to that subject matter.  What’s more the recipient is far more likely to react positively to a message from their friend of colleague than from the operator or advertiser.

 

Enforcing user policies

So why you may ask hasn’t mobile advertising already taken off in a big way?  For the operators particularly there is a lot to win or loose.  If they get it wrong they could risk alienating their customers, if they get it right it could offer a welcome new revenue stream.  In the Internet environment the focus has been primarily on reaching the largest number of potential customers in an anonymous way.  Mobile is different – it’s much more personal.  In the first place the operator has to reassure the user that if he opts out of receiving mobile advertising, that promise will be honoured.  With no industry regulation determining how often an advert should arrive on a user’s device, it is down to the operator to ensure the user isn’t deluged with adverts and that policies governing the regularity of ads are strictly enforced. 

 

To protect the user experience and ensure that only relevant ad content arrives on their screens, the ad solution they deploy has to be capable of leveraging the copious amounts of information the advertiser already holds on the customer by interfacing with their existing CRM solutions as well as other internal services such as Location Based Services, so that the advertising they receive is relevant to the recipient.  The operator also needs to consider the ability to link to other off-portal content.  Offering an advertiser the ability to combine access to off- portal content such as CNN mobile, with accurately targeted behavioural, contextual and demographic information would be an alluring prospect and enable the operator to charge up to ten times higher a price than an external ad seller or Off-Portal aggregator.  

 

Protecting the user

So in summary, what are the key opportunities and risks associated with mobile advertising?  For the mobile operator protecting the privacy and interest of their subscribers is paramount.  They are legally bound to maintain their users’ confidential data in-house and not sell it on to the highest bidder.  There are, as we’ve seen, some interesting lessons to be learned from the Internet advertising experience.  But the mobile medium holds some major differences and technical challenges to overcome in order to exploit the diversity of devices in the market. Another key prerequisite is the need to ensure a high quality experience for the user and fulfil the brand owner’s specifications of how their logo or brand should be represented.  There are numerous opportunities out there to be investigated using multi-channel, rich media such as video and MMS that are still largely being ignored and the potential for leveraging self-targeting viral advertising over mobile communities is immense. We only hope that the mobile operators recognise the goldmine that they are sitting on and are ready to make sure that they and not the Internet search engine providers are the ones to reap the rewards.