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Mobile advertising - next great hope or flash in the pan?

Written by  Eran Hertzman
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Author's PictureIssue:Asia-Pacific I 2009
Article no.:9
Topic:Mobile advertising - next great hope or flash in the pan?
Author:Eran Hertzman
Title:AVP Marketing for Mobile Advertising
Organisation:Mobixell Networks
PDF size:230KB

About author

Eran Hertzman, AVP Marketing for Mobile Advertising, is the head of marketing for Mobixell Mobile Advertising, a business that includes a range of ad-serving, multi-channel ad-delivery and behavioural mobile marketing solutions. Mr Hertzman previously worked at Adamind - later acquired by Mobixell - where he was responsible for the company’s production and mobilization solutions for the content industry. Prior to Adamind, Mr Hertzman worked for Comverse heading the Product Group in Comverse’s Instant Communication Division. Eran Hertzman co-chairs the Messaging Subcommittee of the Mobile Marketing Association (MMA) Advertising committee. Eran Hertzman holds an MBA from Tel Aviv University’s Reccanati School of Business.

 

Article abstract

Mobile advertising will generate US$14.4 billion in revenues by 2011. The question is who will get these revenues, the operators or the Internet search providers. Properly used, ad funded content can provide a welcome revenue stream. If operators are to succeed, they need to offer advertisers a well targeted audience and reliable statistical feedback. They must also respect the subscriber’s interests and not intrude excessively upon the content. Viral advertising forwarded by friends and colleagues is likely to be a big success.

 

Full Article

Strategy Analytics predicts that mobile advertising will represent a fifth of global spending for Internet advertising by 2011 and will generate US$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 learned by ISPs in failing to exploit the Internet advertising wave, and make sure that they don’t become just dumb bit pipe vendors whilst 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 ads 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 mergers and acquisitions (M&A) activities such as Microsoft’s acquisition of ScreenTonic, Nokia purchasing EnPocket and Google snapping up DoubleClick, to buy their expertise in the mobile advertising arena. One thing is 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 survey commissioned by mobile marketing company Pontis found that UK consumers consider that 70 per cent of all mobile marketing offers they receive are irrelevant. 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 focus for mobile advertising has been on mobile web banners. Indeed the Mobile Marketing Association’s only guidelines on mobile advertising exclusively focus on this approach. It is my belief that other rich media experiences such as MMS, WAP, In-Game or Video on Demand offer greater promise for mobile ads and the opportunity to vary 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 No debate on mobile advertising would be complete 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 seeks 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 access 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 YouTube on the mobile. Users have expressed reluctance to pay to receive these services, but the option of enjoying them free at the advertiser’s expense is likely to prove more enticing. But what about the advertiser? How compelling a medium will mobile prove to be? What will advertisers 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 with sufficiently high quality to satisfy the most discerning marketing VP. Unlike the Internet, the mobile medium has a huge diversity of devices with different specifications and capabilities. The operator will need to be able to convince the brand owner that his/her 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 to ensure that their message is accurately targeted based on behavioural, geographic, demographic or age-based criteria and that they will obtain reliable measurable results. Since the mobile medium doesn’t have ‘cookies’ to provide this service, the challenge of providing brand owners with reliable usage statistics represents a significant challenge for many operators trialling mobile advertising. 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 We have heard mixed reactions from users, but there is yet little industry-wide regulation governing the do’s and don’t of mobile advertising. One area where I firmly believe we will see dramatic growth is 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 to other members of their group. This can 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 a friend or colleague than from the operator or advertiser. Enforcing user policies So why hasn’t mobile advertising already taken off in a big way? For operators, particularly, there is a lot to win or lose. If they get it wrong, they risk alienating their customers, if they get it right it could bring a new revenue stream. In the Internet environment, the focus has been primarily on reaching the largest number of potential customers anonymously. Mobile is different - it is 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 is not 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. So that the advertising subscribers receive is relevant, operators can interface with their existing CRM solutions and other internal services such as Location Based Services. Operators also need to consider offering 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 prices up to ten times higher a price than an external ad seller or off-portal aggregator. Protecting the user What, then, 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 to the highest bidder. There are, as we have seen, some interesting lessons to be learned from the Internet advertising experience. Nevertheless, 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 to be investigated for 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. Mobile operators should recognise the goldmine they are sitting on - and make sure that they, not the Internet search engine providers, are the ones to reap the rewards.

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