The mobile advertising sector will be worth $18.5 billion by 2010, largely because advertisers want to take advantage of the most exciting channel for delivering targeted messaging in the history of advertising, but also because operators want to supplement their traditional business with an additional revenue stream says Cathal O'Toole
Mobile advertising presents a huge opportunity for both the relatively young mobile community and the well-established advertising and media industry. For both, there is the chance to be in at the start of something big. For mobile, it is expected to be one of the most important revenue-generating opportunities presented by mobile technology. For the advertisers this exciting means of mass-audience targeting and message delivery will, as Telefonica O2's CEO, Peter Erskine predicted in 2007, grow even faster than Internet advertising, which has already surpassed radio. He added: "It seems inevitable that the mobile screen - just as cinema, TV and PCs before - will be used for advertising, and when you consider that there are a lot more mobiles than any other device, the rise and rise of mobile advertising is unstoppable."
In the context of the wider world, mobile advertising is something which will soon positively affect everyone who has a mobile phone, so it is important that both the advertising and the mobile telecoms industries make its design successful from the start. Through a co-operative, considered approach, they can create an optimum mobile advertising ecosystem from the beginning.
There are, however, a number of difficulties that must be overcome in order to take advantage of this opportunity. Firstly, the lack of mutual understanding that exists between the two sectors must be addressed through co-operation. Historically, advertising and mobile communications have evolved at different times and in very different ways, resulting in very different industrial cultures, languages and approaches to doing business. For the mobile operators to take advantage of the rise of mobile advertising, they will need to implement solutions that speak the language of the advertising community - Cost per Impression, Cost per Click, Cost per Acquisition rather than Messages per Second, Transactions per Second, and so on. And these solutions once implemented must allow the easy placement of advertisements by media and advertising agencies, using similar interfaces as they are used to for the Internet or, indeed, for traditional media.
Secondly, the technical fragmentation and complexity presented by the mobile channel offers a potentially confusing variety of options as to where to place an advert, such as: text message, multi-media message, ringtone, during an interactive voice menu, during browsing or downloading, or on-line chat sessions. In addition, there is a bewildering breadth of terms to describe these options - SMS, MMS, RBT, IVR, IM, etc - and technical restrictions on the nature of the advert that can be displayed on these different options in terms of such variables as size, timing, and ease of response. A text message, for example, offers a very basic text experience but is compatible with all handsets, while a multi-media message offers a much richer media option but it is not compatible with every mobile device. Each of these technical options offers different possibilities for the delivery of advertising campaigns. Some will be suited to one type of campaign whilst others will be ideal for different types of campaign.
As a result of this complicated picture, it will be crucial for the mobile industry to guide the advertising world through this maze in order to achieve optimum results. Operators must work with the advertising industry to simplify the use of these technologies. Organisations like the GSMA and MMA are already working to assist in setting guidelines and advisory statements to guide the development of this business and they will be instrumental in designing the best mobile advertising way forward. In 2007, the GSMA announced its ‘Mobile Advertising Programme' to ensure the establishment of guidelines and standards in support of this new sector of the industry. The operators must continue to support this work and to develop an environment that encourages advertisers and agencies to deliver campaigns over mobile networks.
Thirdly, there is the challenge of commercial unfamiliarity on both sides. Continuous debate is taking place about how to price an advertisement on a mobile and how to adjust this price based on the degree of relevance, the timing, the media content and the ability to respond. For their part, the operators are afraid of losing out due to inexperience of the market and what the value of their assets is to the advertising community. The advertisers, on the other hand, are afraid that the ‘unproven' advertising channel offered by mobile communications will be ineffective and so they are hesitant about committing large percentages of their marketing budgets to this embryonic vehicle.
Overcoming these obstacles will only happen with time and experience in the form, perhaps, of some early trial agreements. But it is even more important that all parties enter into a co-operative atmosphere conducive to learning what will or will not work for all involved. If the above three difficulties are addressed then the advertising industry and the operators can quickly take a strong position.
Mobile advertising can take many forms, each of which has its own characteristics that makes it suitable for specific campaigns. Broadly, the advertising media can be broken down into three categories: advertising over messaging, advertising during browsing, or advertising using media or VAS applications.
Advertising over messaging is where advertisements are sent using SMS, MMS, Instant Messaging, or other messaging media. Mobile subscribers have been experiencing push advertising over SMS for a number of years but this has taken the form of unsophisticated, outbound, and untargeted marketing messages. Still, SMS remains an extremely powerful vehicle for mobile advertising delivery. Indeed, SMS delivery alone is projected by some industry sources to account for US$9 billion of mobile advertising revenues by 2011.
For SMS and MMS options to work in the delivery of a mobile advert, the operator's mobile advertising platform, or advertising engine, needs to communicate with the network nodes. For Peer-2-Peer messages coming from the sender/originator, the SMSC recognises the sender as an advertising subscriber, or not, and if recognised the SMSC then alerts the operator's advertising engine, which selects the appropriate targeted advert for the subscriber. This selection is based on specific user profile criteria, for example time, sender profile, receiver profile, and then inserts the advert into the SMS/MMS and sends it back to the SMSC (or MMSC), which then completes message delivery to the recipient.
The specific campaign being run by the advertiser will determine the exact content of the messages. Consumers targeted by the ad message might, for example, be asked to send a text to a 5-digit short code promoted through existing TV, radio, online or print media, in order to receive the offered product, service or other brand information. In this way, traditional standalone forms of advertising, such as outdoor billboard and TV, are being turned into interactive media through the power of text messaging, enabling the target audience, for example, to text in for free samples of any number of products, services and consumables.
In addition, some of the larger mobile operator brands are eliminating the use of direct mail and using multimedia messaging instead. This enables the marketing teams to create graphically rich messages incorporating animations, audio, images and streaming video. Not only will such campaigns be more cost effective without print and mailing charges, but they will be also be rapid in their execution and more effective in eliciting a response from the audience than other means. With phone in hand the willing recipient can respond immediately to an advertising offer with calls to call centres (or requesting in-bound calls to the handset) or click-throughs to mobile Internet sites.
Secondly, there is advertising via an Internet browser offering a similar experience, though in miniature, to advertising on the Internet. With a huge surge in the number of mobile Internet sites available to advertisers, typically as companion sites to traditional web pages, combined with the continuing rise in numbers and sophistication of mobile audiences, it is becoming more and more viable for advertisers to consider the positioning of display-type ads on such mobile sites.
As with traditional online banner ads, mobile Internet ads consist of text and/or graphics, and offer the target consumer a variety of response options. A simple click-through, for instance, may reach a product registration page, or there may be a click-to-call option initiating an outbound call to a call centre. A click-to-buy option is also one possible route, with a mobile Internet purchase appearing on the consumer's normal phone bill. There may also be a simple click requesting a text message reply for further product or service information. At present, mobile Internet display advertising has been shown to be up to ten times more effective than Internet banner ads in terms of response rates.
Thirdly, there is Media/VAS-related advertising and handset/content related advertising. The Media/VAS-related advertising is where an advert will be inserted into a service experience of, say, Ringback Tones or Interactive Voice Response (IVR), on mobile TV or using idle screen time on a handset. An IVR message, for example, may say to the caller, "before entering your PIN to retrieve you messages did you know that ‘Brand Name' is on offer..." or similar promotional messages.
The methodology behind this option is similar to messaging domain advertising although the advertising message is received via some form of application such as Voice Messaging or Ringback Tone service provided by a third party content provider outside the network.
Although the media/VAS domain, as a vehicle for mobile advertising, is the newest option, one major brand has already utilised this method using idle screen time to great effect in the Far East last year. Targeting subscribers on the AIS network in Thailand, an interactive content campaign was run on behalf of the Honda motor company, with messages broadcast twice daily appearing on millions of users' phone screens but only when they were idle. Offering tips about motorcycle safety and fuel efficiency, the campaign's main aim was to promote the brand and encourage user response through the incentive of a click-through prize-draw.
Within three weeks, more than three million unique impressions, targeted at subscribers in the Bangkok area, were generated, and more than 100,000 users clicked to participate in the prize draw - and receive more information from Honda. These results show the ability of the mobile phone to be a truly mass-market advertising vehicle.
It should be noted, however, that any mobile advertising campaign may draw on a number of the above mobile possibilities combining, say, idle-screen with SMS, mobile TV and non-mobile advertising media. And each module of a campaign may also afford interaction by the user with another form such as offering short codes to viewers of a TV delivery to seek, via their mobile, the next leg of the ad campaign journey.
It is important that the mobile operator moves quickly to discuss the mobile channel with a solution provider that has experience building advertising solutions, and with a media agency that has early experience or understanding in the delivery of advertisements on the mobile channel.
It will then be essential to set up trial advertising campaigns in order for the advertising side to begin building experience and understanding of the operator organisation. O2 Telefonica ran trials earlier last year with "encouraging signs of customer receptivity" and "no negative impact on overall customer experience or brand perception".
Once all operators take part in such evaluation they will find that the opportunities for driving advertising revenues will grow and revenues from unprofitable traffic on the network will start being realised.
Cathal O'Toole is Product Manager, Jinny Software www.jinny.ie