Eran Hertzmann, Associate VP, Marketing for Mobile Advertising at Mobixell, argues the case for providing clarity to the mobile advertising value chain
It appears that the economic downturn is creating some interesting possibilities for mobile advertising. According to a recent report by analyst Analysys Mason, the prospects for mobile advertising in 2009 are promising, despite - or perhaps because of - the financial turmoil. More then ever, advertisers will require high-impact media that is highly personal and highly engaging. These days, customers are affected by financial pressure, and are willing to accept ads in return for low cost (or even free) content and services.
By definition, a mobile device is an ideal medium for communicating advertising messages and promoting a brand. Whether by SMS, a voice call or clicking on a mobile website, it is as an engaging starting point to customer acquisition or conversion. Due to the availability of context, immediacy, and personalisation, mobile has significant advantages over other channels as an advertising medium. However, as advertising buyers reconfigure budgets to suit challenging economic conditions, and mobile operators focus on keeping subscribers on board, it is critical that advertising agencies and brands, together with media buyers and technology vendors, agree on a business model that will make it viable for the media buyers to leverage the advantages of the mobile domain for the benefit of the brands.
The mobile advertising market is still highly fragmented, and media access is divided between the many off-deck players and carriers. There is no shortage of available operator inventory, although this inventory can be difficult for third parties to access. This inventory could be utilised for highly targeted and effective campaigns that pinpoint unique user segments in an enriching manner. But the mobile operators approach to the mobile advertising market is often varied and lacks clarity. Perhaps due to the fact that this is not a core function of the traditional operators business, its hard for them to market their inventory effectively, not just as chunks of SMS or MMS, but rather as meaningful audiences for marketers. This struggle to effectively market the inventory is the main reason that the majority of mobile ad budgets are currently spent on WAP banners, targeted only by the context of the hosting site. This clearly does not make the full potential of mobile advertising, where WAP consists of only a small part of available inventory, and where targeting could be personalized, rather than based only on the site context.
The way forward
Therefore, whats required is a model where all parties (operators, ad agencies, brands and media buyers) operate on the same basis. Operators must take the lead in providing access to their user base in a meaningful fashion. This means repackaging it from SMS and WAP to meaningful segments like 16-24 fashion females, or 30-plus gadget geeks. Media Trading systems need to be put in place to provide widespread access to this inventory - starting naturally with large media agencies, but extending to include the growing sector of small and medium sized potential advertisers. This long tail group could be made part of the ecosystem once the digital trading market place is in place, and today it represents a large, relatively untapped, part of the potential advertiser base.
Another factor that needs to be addressed in order to realise the full potential of mobile advertising is to extend ad formats to become richer and more engaging, and to allow interactivity, leading to higher conversion rates. The combination of text and images, animation and high quality video is what is needed to provide an appealing user experience and one that is key for customer satisfaction.
Anonymity and privacy
The third, and most important prerequisite for the mobile operator, if they want to maintain their position as the subscribers trusted provider, is the need to maintain the anonymity and privacy of the user to the advertisers. The operators need to act as the privacy keeper, and form a wall between the advertisers and the users, so as not to disclose confidential information.
Recently, Mobixell provided a Polish operator with an end-to-end ad solution that featured an array of campaigns on its portal. The new service is carrying 20 different ad campaigns. Careful design and understanding of the customers helped generate an impressive clickthrough Rate (CTR) of between 5 and 25%. It is the careful match between customer segments and campaigns that helped achieve these response rates, which are much higher than typically generated by Internet advertising. These results provide an early indicator of what can be done when ad agencies, brands and technology vendors agree on a business model. For each of the participants in the value chain, there are inherent benefits on agreeing to one approach such as this.
In summary, effective participation in the mobile advertising market requires all parties to take action to clearly outline, and place a value on, their key assets for the advertising buyer. These centre on the subscriber data that mobile operators hold; on the trusted and personal relationships that they have with their subscribers; and in many cases, on the mobile brand, which can also be a powerful marketing tool. The more clearly that service providers can define these assets for media buyers, and enable advertisers, both large and small, to use them without impinging on the operatorsubscriber relationship, the greater the chance that the growth of mobile advertising will bring maximum benefits.