November 19, 2008
November 19 2008
Mobile technology has a clear role to play in areas such as advertising and in offering services anytime, anywhere.
"The great thing about mobile is that it has the potential to work both in targeted campaigns and on a mass scale," says John Delaney, an analyst at IDC. "With the mobile you know what people are doing and who they are."
On the other hand, companies building businesses in the mobile world recognise that this power can be abused. "There is a risk of people switching off and feeling their personal space is being invaded," says Mitch Lazar, managing director of Yahoo Europe's Connected Life division.
Even brands that have been using mobile successfully admit the medium is a moving target. "Mobile has the highest potential but it's very difficult to leverage," says Prinz Pinakatt, European group interactive marketing manager at Coca Cola. "We always try to include it in our digital marketing, but certain target groups are not yet responding to mobile."
The majority of those doing business over the mobile internet have been selling products designed for mobile consumption, such as chat services, ring tones, and music.
But the spread of internet enabled handsets, faster networks and cheaper data rates are attracting a growing number of other businesses.
Some are taking advantage of the technology to enhance their presence. Amazon.com, for example, has been offering a rudimentary form of mobile commerce since 2001. Now the online retailer is hoping to sell more over mobile by creating sites optimised for particular handsets, such as Apple's iPhone.
But hurdles remain. Perhaps the biggest is low usage, compared with the fixed internet. Research by Capgemini found mobile internet penetration rates in Europe and the US were only 14 and 12 per cent respectively in 2007; and 40 per cent of European mobile consumers did not see value in using mobile internet services, citing prices and a lack of compelling content.
Blyk, the youth-focused, advertising-funded mobile service, says that in the 15 European markets where it conducts research, typically two-thirds of 16-24 year olds have not used the mobile internet, and only a fraction of 1 per cent has used their phone for a financial transaction, or "m-payment".
"Some companies don't want to move to mobile yet," says Ray Anderson at Bango, which provides mobile content billing and analytics services. "Some say mobile will eventually be just another way of accessing the internet, so we don't need to worry about it. Others believe mobile has lots of other advantages that need to be addressed."
Dan Rosen, head of mobile for digital agency AKQA and vice-chairman in the Europe, Middle East and Africa region of the Mobile Marketing Association (MMA), says: "The user experience is getting richer but the number of platforms to develop for is growing, too."
This could mean higher costs for businesses wanting a mobile presence. "It has become more complex to advertise on mobile," says Mr Pinakatt of Coca Cola. He says some of the most successful mobile campaigns his company runs are simple ones, built on SMS, in which customers send texts to numbers given on bottles, to enter prize draws. On average, these get a response rate of 4 per cent, equating to around 6m entries per campaign.
Velti, the mobile marketer is trying to meet the challenge of higher costs by offering a selection of 70 "templates" for businesses to use for mobile marketing campaigns. "We're trying to save money and pass that down to our customers," says Alex Moukas, Velti chief executive.
Advertising agencies say brands will become more interested in the mobile internet once usage data becomes more sophisticated.
"We can provide third party research around consumer response, we can measure ad delivery, but frankly there isn't one standardised way of doing this. It's a barrier to overcome to get mobile on to that next level," admits Theo Theodorou, Emea sales manager for ScreenTonic, the mobile advertising company owned by Microsoft.
Industry organisations are trying to overcome this. The MMA announced, this month, a set of "ad currency definitions" that, if adopted, would help create more consistent metrics used by media buyers and measuring agencies.
A recent campaign for Renault Twingo cars underscores some of the problems. Yahoo and Vodafone, which developed a banner ad and microsite and ran them on the operator's "Live!" portal, found the mobile campaign increased brand awareness by about 20 per cent.
But gains in positive brand view and purchase intentions "failed to meet statistical significance", says Vodafone.
Gartner says $2.7bn will have been spent worldwide in 2008 on mobile advertising. This includes messaging, banner, and search-based ads. Figures provided by Yahoo are more modest: the leader in internet display advertising estimates that, in the UK, the mobile advertising market is worth no more than about $25m for display and $6m for search-based ads.
For businesses willing to spend, rewards can be higher than for other media, says Mr Theodorou. "Getting on to the mobile web is not as easy as getting on the internet on a PC, but that means users are really motivated."
Mobile operators are also playing an increasing role. Vodafone and Visa recently completed a trial with travelling customers, in which they sent two messages to 150,000 users when the phone was first turned on abroad: a standard welcome message, and then a text about using Visa cards abroad for a chance to win tickets to the Beijing Olympics. About 74 per cent of users read the second message and approximately half said they would be open to future promotions if relevant to them.
Richard Saggers, head of mobile advertising at Vodafone, says the operator is taking on more of a consulting role. "We are being invited to work alongside agencies to help them understand the mobile channel," he says. "Because of our footprint, we can help them understand the different dynamics and opportunities of different clients." He says the Visa trial will "move into a commercial model" in future.