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The trouble with mobile advertising

18 Dec 2008
00:00
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Conventional wisdom has it that Microsoft takes three attempts to get a new product right. The average time for a new mobile segment seems to be eight years.

Mobile data, on every operator's radar since GPRS arrived eight years ago, is only now filling up network pipes. Location-based services have been in the pipeline a similar length of time. We're now at just the first stage - decent maps on the handset - but none of the other apps.

Mobile TV was hyped through the roof a couple of years ago, and nowadays it barely rates a mention at industry events.

The same applies to another much-blogged concept that has been kicking around since the start of the decade: mobile advertising.

As the world's most popular electronic device, mobile is a natural advertising platform; it's always-connected and always with the user, who has a billing relationship with the operator.
Yet it's ironic that one of the obstacles is the lack of information available to advertisers.

The mobile industry body, the GSMA, has been running a trial with UK operators to tackle this. They've been trying to figure out metrics to measure the effectiveness of mobile ads and were supposed to come up with a 'proof of concept' by year-end.

So far, no sign of that, and even with that solved, mobile advertising suffers from plenty of other shortcomings.

Pushkar Sane, a general manager at marketing firm Starcom Mediavest, cited a few at the Mobile Asia Congress last month: in particular that mobile ads are sold in silos, unconnected from other advertising, and that operators can measure eyeballs and clicks but not user intentions - how likely they are to buy, read or download content‾

Sane also argues that operators will have to choose between making money from ads - where they market their services for free - or increase revenue from value-added services. His view is they can't have both. Operators will surely dispute this.

All of which helps to explain the absence of mobile ads.

But the good news is that customers are much more accepting of the idea of ad-supported mobile content.

Mobile ad boosters have been saying that for years, I know, but there is credible proof, courtesy of the Annenberg Center for Digital Media. The center has led a massive worldwide survey on household digital media usage over the past eight years, with panels in some 30 countries of 2,000 people each.

Director Jeffrey Cole says in the coming years most media will get smaller: that is, we'll see smaller aggregate sales of movies, digital music and newspapers.

But the one medium that will grow is TV.

'Our work shows conclusively - and I don't use the word 'conclusive' very often - that people will watch television on small screens in their pockets. Not just short clips, but 30-minute shows, sometimes in ten or 12 parts,' he told the Monaco Media Forum in October.

 

This is helped by a couple of things. One is a drift away from P2P services because of online threats and because users acknowledge that free pirate downloads are not sustainable.

Spending limit

More importantly, households have reached their spending limit. US households are typically spending $260 a month on communications services that didn't exist a generation ago, i.e., internet, mobile, pay TV, PVR.

But the signs are, no doubt encouraged by the economic slump, that they want to spend no more. 'People are now starting to say, I don't want to spend another $30-$40 month on digital subscriptions,' says Cole.

'Most will subscribe to two or three digital services and maybe not even that,' he says.
The upshot is that attitudes to mobile ads have shifted, particularly in the last nine months. 'People are now willing to make the same deal with the web and mobile that they made with television a generation ago, which is advertising as the price of free content,' Cole says.

Operators and mobile ad firms have waited eight years to hear that. The recession might be just the opportunity they've been waiting for.

Robert Clark is a technology journalist

Related news and analysis:

Google developing mobile ad network for iPhone

Realizing the potential of mobile advertising

Telcos tread lightly into mobile advertising

Tailoring options for interactive mobile advertising

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