The Mobile Advertising Ecosystem-Part I
November 2006
Submitted by Third Screen Media
Written by Tom Burgess, CEO

This article will be the first of a five part series.

One of the disadvantages of being first in a market is that there is plenty of disorder and chaos.  When Third Screen started in mobile advertising, we knew who all the players should be, we knew that a platform was necessary to connect them and we knew it was going to be big.  So not so surprisingly, the players are in, we have a platform and the industry numbers are growing every quarter.  What we didn’t realize until this past year is the way the business would evolve.  Essentially a mobile advertising ecosystem has formed with a lot of interaction by a community not only of companies, but of consumers.

Our ecosystem is comprised of these entities:



As in every ecosystem there is a lifecycle, but instead of a food chain, mobile advertising really is more of a value chain.  At any point in time, each member of this community brings something to the process to enable it to move forward.  What drives value to these parts of the ecosystem?  And how will it sustain and grow?  For now, let’s look at the individual components of our ecosystem.

First there are the advertisers.  What started as testing and trials in mobile campaigns has turned into a groundswell as budgets for mobile advertising have increased over 300 percent in one year.  With research and measurement being critical to advertisers, studies have validated the mobile channel for some very specific objectives such as engagement and branding.  And what will keep advertisers healthy in the ecosystem?  Ad standardization will be key and the MMA has played a big role in working on this topic.  In addition, the maturing market will be able to offer advertisers lower production costs and easy replication and scalability. With consumers showing a clear interest in mobile ads, advertisers are looking up the value chain to the enablers and aggregators for more premium content and to publishers to leverage cross-media relationships.

The next piece of our value chain is the ad enablers.  Connecting the advertisers to the publishers has resulted in significant off-deck penetration with average $30-$50 CPMs for WAP and average 3-5 percent click-through rates.  But for the mobile marketing ecosystem to grow and thrive, the enablers know that the market needs the same kind of technology and service solutions that work well in online and traditional print and broadcast advertising. Enablers are essentially the diplomats of the ecosystem, facilitating and enabling advertising management and delivery, working with third party research firms and the analyst community to help define the market, participating in the dialogue about how the ad rights between carriers and content providers will be monitored and looking at the advantages to the ecosystem of carriers making targeting data accessible to advertisers and publishers.

Then there are the publishers.  In every ecosystem there are costs associated with delivering value - in biology-based ecosystem the costs are food, water and air.  For publishers the costs are in the development required to extend their properties into the mobile channel and the good news is that advertising revenue can offset these costs. Publishers are also exploring the growing interest in and viability of video and downloadable applications as advertising vehicles. With all the attractive possibilities, publishers are looking forward to a variety of off-deck and on-deck advertising revenue opportunities, along with the need for scalability, ad standards and creative executions that will delight and entertain the consumers in the ecosystem.

Carriers serve a dual role in our ecosystem as both content publisher and distribution network.   As a distribution network, the carriers’ role in the mobile market is an important one; they have a lot of valuable data.  Although the data is not personally identifiable to an individual subscriber, in aggregate this data means they can provide better targeting of messages for advertisers, appropriate ads for consumers and still allow the carriers to maintain a guardian role.  Because carriers consider themselves the subscribers’ advocate, they, while enthusiastic and optimistic, are proceeding cautiously with advertising roll-outs on their networks.  With initial (and carefully managed) on-deck trials achieving good results and consumer feedback positive, carriers are now looking at business and revenue models to make mobile advertising viable.  With advertisers creating demand in the value chain and publishers with plenty of supply, it’s clear that there is a market that will be financially attractive to the entire ecosystem in the very near future.

In the end, this young ecosystem looks energetic with much enthusiasm from the whole community.  As it grows, changes and adapts, we will be able to say we were there in the beginning.  In the coming months, we will be talking more about each of our ecosystem members and how we anticipate they will and can influence the growth and impact of mobile advertising.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />