Danny Kalish, CTO at Unipier, argues that for mobile advertising to be successful, mobile operators need to adopt an approach that allows them to target specific users with relevant advertisements and at the same time manage the overall ad-related user experience including user privacy and charging aspects.

For many years, advertising has been the driving financial force behind all successful media such as TV, the Internet and newspapers. Nowadays, with falling subscriber voice revenues and fierce competition, there is a growing interest in mobile advertising among mobile operators as a potential new revenue source.
The mobile device is potentially the most effective advertising media ever developed. It is personal, always-on and enables precise targeting of advertising based on contextual information such as location, user profile and usage history. A recent report from Strategy Analytics predicts incredible potential for this market and suggests mobile advertising could account for up to 25% of worldwide Internet advertising expenditure by 2011. Mobile advertising as a revenue stream is rapidly increasing, with the same report predicting that mobile Internet advertising will grow from $1.4 billion this year to $14.4 billion by 2011.
So will mobile advertising be another over-hyped idea, or can it actually deliver genuine value to  consumers?

Mobile advertising is one of the few effective, user-centric
advertising media where user experience is a key success factor that
should be maintained across all delivery channels. Operators need to
ensure they develop a viable and sustainable business model that does
not alienate consumers and damage both their own reputation and that of
the brands using the service.
When TV viewers are faced with a poorly-targeted advertisement during
their favourite programme, it is unlikely that it will damage their
perception of the TV service provider. However, if mobile users
continually receive annoying advertisements on their device, they are
likely to place the blame on the operator.
Deciding when and which subscribers should be exposed to advertising is
complex. It depends on many factors, such as the subscribers price
plan, usage context, opt-in procedures and regulations. An agreement
needs to be reached between customers and their service provider to
reflect the operators obligation to protect users privacy, in
exchange for the subscribers consent to being exposed to targeted
advertisements. Ensuring customer satisfaction can be a complex
process; a negative experience may reflect badly on the service
provider and possibly cause the consumer to refuse advertising services.
In addition to guaranteeing best user experience, mobile operators need
to make sure advertising becomes a win-win situation. This can be
achieved by selectively choosing which subscribers will receive
advertising and serving them with advertisements that genuinely bring
them value. Operators should offer subscribers full opt-in and opt-out
options, and grant them various financial benefits in exchange for
their acceptance to receive advertisements. After all, the willingness
of subscribers to receive ads on their devices is essential. 
Targeting the advertisements to each and every individual user is
important in 0rder to maintain a satisfying experience, but theres
more to it than just receiving a suitable advertisement. The
advertisements also need to be adapted to the mobile device and access
channel so that they are clearly presented, and dont damage the users
experience. Providing intuitive advertising services with interactive
actions, such as context-aware click to call or click for info
options, will further support a positive experience.
If an advertisement is non-intrusive, delivers value, protects the
subscribers privacy, stimulates interest and is relevant to the
consumer, there will be a higher propensity for service adoption. To
achieve this, mobile operators need to be 100% clear how many real
customers they have and ensure that the data they hold on each user is
of high quality. Names and addresses alone simply arent adequate.
Operators need to be well-acquainted with user interests and
preferences to ensure they understand the user in every way possible
and can therefore customise every single interaction. Subscriber
profile information should be collected from all existing sources,
including billing and  CRM systems. Building a dynamic user profile,
which is based on the users behavioural information, including content
consumption and reaction to past campaigns, will further ensure that
subscribers will be exposed only to relevant advertisements that offer
them real value. 
The current mobile content shopping experience is challenging for teens
and young adults, and frequently inadequate when compared to similar
services on the PC. However, there is huge potential for advertisers to
target young mobile customers. This segment is more likely to embrace
personalised advertisements and awareness campaigns, as long as the
content is relevant, and they are offered targeted service benefits for
viewing these adverts on their mobile devices. If this is done
successfully, there are some inherent benefits for the operator, as it
is an excellent way to build loyalty. Service Benefits are also an
effective way to take the usage of mobile services to the next level by
subsidising premium content and lowering the service consumption cost
barrier. 
For example, the number of users willing to pay for Mobile TV services
is a small fraction of the total number of users who want to use the
service for free. Subscribers should be offered benefits for accepting
advertisements in the form of discounts or free services. Using this
approach, operators may increase their users satisfaction and
eventually turn mobile advertising into a win-win situation.
In addition to running targeted campaigns and creating a positive user
experience,  operators need to take a mobile-centric, holistic
approach. Whether using a partner, who would be responsible for media
selling and campaign management, or centralising the core service
system and integration efforts internally, operators still need to use
a centralised advertising system that allows them to protect their
valuable assets and maximise the mobile advertising potential. Only a
centralised system that can handle the operator-side business logic,
communicate with the operators IT systems, including subscriber data,
context information and access channels, and at the same time manage
the rich context, user experience and targeting of the advertisements,
can to achieve this goal. 
Mobile advertising presents a huge opportunity for mobile service
providers. By leveraging their current assets and positioning
themselves as a key player in the advertising value chain, operators
can maximise the mobile advertising business opportunity, while
substantially reducing the risk of failure. To fully exploit its
potential for revenue growth, operators need to realise that user
experience and flexibility are the key success factors. With a high
level of personalisation, targeting capabilities and openness,
operators can realise the rich potential of mobile advertising and
ensure its success.