Not a day goes by when I don’t receive a news story about how many millions of dollars will be spent on mobile advertising in the coming years. Worldwide mobile advertising revenue is set to surpass US$2.7 billion in 2008, a healthy jump up from US$1.7 billion in 2007, but the market has developed slowly and obstacles remain, according to IT research company Gartner. Market analysis firm ABI Research forecasts search-related advertising via mobiles will evolve from US$813 million in 2008 to US$5 billion by 2013. Every analyst seems to have jumped on the bandwagon predicting massive growth and unlimited market acceptance of advertising pushed through this remarkable new channel – the mobile phone!
Maybe it’s time for a bit of realism. Mobile advertising is nothing new, our industry has been talking it up for years. The overriding theme at this year’s Mobile Content World in Barcelona (held in conjunction with the European Pickpockets and Notebook Nabbers Convention) was mobile advertising. One of the keynote speakers from Europe’s largest media buyers admitted it was hot but went on to highlight the massive difference between the telecommunications and advertising industries and how little had been achieved to bridge the gap. Telco operators see advertising dollars as the magical panacea for declining ARPUs and helping them deliver more services to their customers while getting somebody else to pay the bill. Advertisers see mobile phones as a means of getting their message direct to the consumer in a number of forms ranging from simple SMS to banner ads and video clips. As handsets become more sophisticated so does the advertising medium, a point illustrated brilliantly in Barcelona on an iPhone delivering film shorts, background info on the production, star profiles and linked to an online booking capability with the nearest cinema using the phones location capability.
That’s all well and good but do the consumers want it? Previous efforts at providing free landline services linked to forced ad messages have failed so what will be different with mobiles? The early novelty of getting something for free soon wears off when one gets the same ad ten times. Advertisers and media buyers are also very astute and will not be willing to part with their advertising dollars unless they see a tangible and relatively immediate return on their investment. Their experience with the internet world taught them that a click-through does not necessarily translate into sales revenue. In order for telcos to raise confidence levels in the advertising community they will need to invest some serious dollars in systems that profile their customer base and be able to accurately track results. This is not an area that mobile operators excel at now and most don’t even know who their pre-paid customers are, let alone what demographic they belong to.
It seems that mobile operators have started to do something about their lack of understanding of the advertising industry and its requirements. Some have hired key advertising people as advisors but find their recommendations on profiling, in particular, hard to swallow. Frustrations are already appearing on both sides. Telco system vendors, always quick to seize an opportunity, have suddenly become “media and communications suppliers” as if to make them sages overnight. Advertisers are watching closely to see what comes out of all this and what actually works before they shift their vast marketing budgets from the established channels. They rely on specialist media buyers to place ads for them based on demographics and years of experience in getting the ‘best bang for the buck”. Media buyers, in turn, are yet to be convinced by merely the promises of mobile advertising and are expecting the operators to provide them with the demographics they need before they spend their customers money and risk their own reputations. It looks like a vicious circle already, doesn’t it.
That leaves us with the mobile customer blissfully unaware of the machinations going on in the background. They will soon be offered a plethora of “free” services and content in return for their acceptance of ads pushed to them via their mobile devices and handsets. Undoubtedly, the early adopters will probably be the section of market with the least money to spend and anything that is free is very appealing, so the early results may be disappointing. If the higher-spending demographic takes up the offer they will probably grin and bear it then opt out after being deluged with ads offering them who knows what. The fear of being swamped with ads ‘a la internet’ promising remarkable growth of body parts and enhanced libido may be enough to turn many people away. What happens if operators offering ‘free’ service run out of advertisers willing to fund the ‘freebies’? Will they just turn off the service to their customers or grin and bear the cost? If mobiles really do become the great new channel to consumers analysts suggest then I can see the day when users may actually have to pay NOT to receive ads on the phones! I tremble with anticipation.