On advertising: Pitching via cell

Eric Pfanner
(c) International Herald Tribune
Published: August 27, 2006

PARIS The mobile phone, the pitch goes, could be the most powerful marketing tool ever invented. Until recently, however, cellphones have been mostly about talking the talk (or texting the text). Now, from an advertising perspective, there are signs that they may be starting to walk the walk.

Worldwide, there are twice as many cellphones as PCs, and in developed countries, at least, most new phones can provide access to the mobile Internet. For advertisers who want to know more and more about their audiences and how they spend their days, cellphones can even one-up the old-fashioned, wired Internet: Not only can they track users' online clicks, they can trace their steps, too, making it possible to home in ever more closely on target audiences.

Despite the obvious potential, however, advertising via cellphones has been slow to develop, except in Japan and South Korea. One reason is the sluggish take-up of content services delivered via high-speed wireless networks. Also, analysts say, cellular operators have been reluctant to yield the equivalent of television or Web-site ratings for their mobile media offerings, frustrating marketers who crave "measurability" when buying advertising space and time.

SMS-based campaigns inviting consumers to request product information or to register for contests via text messages have proved effective in reaching niche audiences in Europe. Because of a fear of spam, however, regulators and mobile operators have required advertisers to limit this to customers who "opt in."

If text campaigns have dominated the first phase of mobile advertising, then recent weeks may have brought a new stage of development, analysts say. Several big European mobile operators, including France Télécom's Orange and Hutchison Whampoa's 3 unit, have started selling banner ads on their wireless media portals.

Several U.S. cellular carriers, including Sprint Nextel and Verizon Wireless, which initially resisted such advertising for fear of offending customers, have also been testing banner ads on their mobile Web portals. Operators are also experimenting with short video ads, called bumpers, to accompany video clips and mobile TV.

Meanwhile, operators like T-Mobile of Germany, Vodafone and 3 have made deals with online search engines like Yahoo and Google, promising to expand the lucrative world of search-based advertising into the mobile realm. While the search engines already operated mobile sites, the new deals bring them into the European cellular operators' "walled gardens," within which most mobile Web traffic has been confined.

Interest in so-called text-based campaigns also seems poised to grow. Jonathan Bass, managing director of Incentivated, a mobile marketing company in London, said his company expected a five- or six-fold increase in such activity next year from the levels of this year.

Analysts acknowledge that forecasts for the growth of mobile marketing and advertising are just educated guesses, but Jupiter Research sees a €700 million, or $895 million, market in Western Europe by 2010, up from less than €100 million now. Ovum, a telecommunications consultancy, forecasts a $1.3 billion U.S. market by 2010.

Some telecommunications executives are skeptical about the potential, warning that consumers will resist efforts to intrude on their intimate relationships with cherished mobile phones.

"It's not something that will revolutionize our industry, not something that will change our business model," said Boris Nemsic, chief executive of Telekom Austria.

Mobile operators are testing business models that would allow consumers to receive free content or discounted services in exchange for agreeing to receive advertising.

The Mobile Marketing Association, a trade group, is trying to smooth the development of mobile advertising by creating uniform standards for ads, making it easier to run campaigns across a variety of operators' networks. Working with media owners, media-buying agencies, mobile operators and companies like M:Metrics, a firm based in Seattle that tracks mobile use, the group is also trying to solve the problem of measurability.

"It's definitely a promising market," said Nicki Walton, senior research analyst at Informa Telecoms & Media. "But quite a lot of issues need to get resolved before it steals advertising dollars from radio, TV, outdoor, print and online."

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