Mobile ads: Slow to take off

Olga Kharif
14 Mar 2008

Even as ads on cell phones become more common, advertisers are holding off on a full-blown embrace of the tiny screen as a marketing tool.

There's no denying cell-phone users are seeing more ads. A Mar. 4 study by Nielsen found that 58 million U.S. wireless subscribers had viewed an ad on their cell phones in the past month. The problem is that advertisers don't know what users are doing, if anything, when they see the ads. And until advertisers find out, they may hold off on committing more precious marketing dollars to the mobile medium. 'Advertisers that are used to full accountability are left in the dark,' says Farhad Divecha, director at London-based ad agency AccuraCast.

The hesitance is understandable. In the online world, determining how well a campaign is performing is easy. Web sites embed tracking software known as cookies on your personal computer. Those cookies monitor your browsing activity and pass the information to advertisers and the ad-placement networks that distribute their ads across the Web.

A consistent yardstick

The wireless industry has refused to facilitate this tried-and-true approach. Most wireless service providers block cookies before they can ever get to cell phones, arguing that to allow them would open a hole in their networks for computer viruses. They also say they worry that a flood of new data traffic"”cookies are programmed to report back to their masters"”could degrade service quality by clogging wireless networks.

Complicating matters, what little data the wireless service providers do pass back to advertisers varies widely in terms of what they measure. Mobile-advertising networks, in turn, crunch the disparate data in different ways to gauge the audience response to ads. One ad network might report the number of phones that received an ad, while another might report how many users actually viewed the ad. The distinction is subtle, but important for advertisers. Without a consistent yardstick, it's hard to compare the results of a campaign that ran through Yahoo's ad-placement business with one placed by a rival network such as AdMob.

Wait and see

In the end, ad agencies find themselves creating complex spreadsheets in a bid to reconcile the data from various campaigns. 'They are doing more manual processing of data than strategic planning for their clients,' says Scott Ferris, a senior vice-president at Microsoft (MSFT), which has been testing software to help agencies compare mobile-ad data from different sources.

Even Google (GOOG), which is determined to extend its dominance in Web advertising to cell phones, has no reliable analytical tools customers can use to gauge the success of mobile marketing campaigns. 'The mobile-ad space is nascent, and we are currently working to figure out the best ad formats for our advertisers and users,' Google spokesperson Daniel Rubin wrote in an e-mail.

As a result of these obstacles, there are doubts whether the mobile-advertising market will fulfill robust predictions (, 12/13/07), such as a Gartner (IT) forecast for $11 billion in global ad revenue by 2011, up from less than $1 billion last year. After all, ad metrics are crucial to creating cost-efficient campaigns. 'We can then optimize campaigns on the fly,' says Benjamin Ezrick, a senior strategist at OgilvyInteractive.

'If one [ad] network performs better than another, we can shift the budget,' he says.

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