Sitting on a Goldmine

Avichai Levy VP Marketing at mobile multimedia and advertising company Mobixell, urges mobile operators to take the necessary step to ensure they profit from the boom in mobile advertising

Strategy Analytics predicts that mobile advertising will represent a
fifth of global spending on Internet advertising by 2011 and will
generate $14.4 billion (7.2 billion) of revenue, so its 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. Id 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 dont become just the dumb pipe vendor, while the other players
run off with the major spoils.
At present, the winners and losers
are hard to predict. At Mobixell, 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 Adwords 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 M&A activities, such as Microsofts acquisition of ScreenTonic,
Nokia purchasing Enpocket and AOL snapping up ThirdScreenMedia, in a
bid to buy in expertise in the mobile advertising arena. 
thing is for 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

Proceed with caution
Yet in this rush to capture the hearts and minds of the mobile user,
mobile operators are right to approach the matter with a degree of
caution. A recent Forrester Research report discovered that although
79% of consumers find the idea of mobile ads annoying, consumers will
happily engage with them, provided that marketers deliver valuable
information or content. So, while advertisers celebrate the mobile
medium 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 ad becomes intrusive or
annoying, or spoils the users enjoyment of the music track they are
listening to, or the video they are downloading, it could be
counterproductive, and actually cause customer churn. 
Until now, the main focus for mobile advertising has been on text ads
and mobile web banners. Indeed the Mobile Marketing Associations only
guidelines on mobile advertising focus exclusively focus on this
approach. Its our belief that other rich media experiences such as
video (live and on demand), MMS, rich media WAP or in-game advertising,
offer greater promise for mobile ads and the opportunity to enrich 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
Any debate about mobile advertising would be incomplete without
considering the ad-funded model, and Id like to examine it from the
operators, the advertisers and the users perspective. Firstly, from
the perspective of the operator, who has the chance to supplement
subscriber revenue with advertising revenue. As we know from other more
traditional media, 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 consume 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-like services on the mobile. Users have
expressed reluctance to pay to receive these services, but the option
of enjoying them for free at the advertisers expense is likely to
prove more enticing. 
But what about the advertiser? How compelling a medium will mobile
prove to be? What will they 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 in sufficiently high quality to satisfy the
most discerning VP of Marketing. There is a huge diversity of mobile
devices out there, with different specifications and capabilities. The
operator will need to be able to convince the brand owner that his
brand will be represented in sufficiently high quality, irrespective of
the users device.
Another key requirement of the advertiser will be the need to ensure
that the information is accurately targeted, based on behavioural,
geographic or demographic criteria, and that they will obtain reliable,
measurable results. Since the mobile medium doesnt have the simplicity
of the cookie to provide this service, the challenge of providing the
brand owner with reliable usage statistics is a significant one for
many operators trialling mobile advertising services today. 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 wont take off.
From the users perspective, weve heard mixed reactions. But as yet,
there is little in the way of industry-wide regulation governing the
dos and donts of mobile advertising. One area that we firmly believe
has potential for 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
on to other members of their group. This offers the potential to extend
the impact of a campaign beyond the operators own captive audience and
identify people with similar interests, who could in turn be targeted
by that operator with offers linked to that subject matter. After all,
the recipient is far more likely to react positively to a message from
a friend than from the operator or advertiser.

Enforcing user policies

So why, you may ask, hasnt mobile advertising already taken off in a
big way? For the 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, however, it could offer a welcome new revenue stream. In the
web environment, the focus has been primarily on reaching the largest
number of potential customers in an anonymous way. Mobile is different:
its 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 ad should arrive on a users device, its down to the
operator to ensure the user isnt deluged with ads, 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, by interfacing with their existing CRM
solutions, as well as other internal services such as Location Based
Services, so that the advertising customers receive is relevant to
them. The operator also needs to consider the ability to link to other
off-portal content. Offering an advertiser the ability to combine
access to off-portal content with accurately targeted behavioural,
contextual and demographic information would be an alluring prospect
and enable the operator to charge a price up to ten times higher than
an external ad seller or off-portal aggregator.
So in summary, what are the key opportunities and risks associated with
mobile advertising? For the mobile operator, protecting the privacy and
interest of its subscribers is paramount. They are legally bound to
maintain their users confidential data in-house and not sell it on to
the highest bidder. There are, as we have seen, some interesting
lessons to be learned from the Internet advertising experience. But 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 requirement is the need to ensure a high quality experience
for the user, and to fulfil the brand owners specifications of how
their logo or brand should be represented. There are numerous
opportunities out there to be investigated using multichannel, 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. We only hope that the mobile operators
recognise the goldmine that they are sitting on and are ready to make
sure that they, and not the Internet search engine providers, are the ones to reap the rewards.