On The Cutting Edge — Mobile Advertising - A Tsunami Waiting to Happen

Mobile advertising has been the hottest topic in the wireless industry, with much of the hype driven by the exponential penetration of mobile handsets into the global market. But while problems within the industry have kept a lid on this technology – such as platform fragmentation, memory requirements, media differences, inventory of content, availability of data networks, or complexity in value chain – there has been continued, quiet movement indicating that mobile advertising will become a major force in the near future.

Limbo, a leading market research agency, released a Mobile Advertising Report for the third quarter of 2008 which reveals that mobile advertising awareness grew 33 percent in a nine month span, against a backdrop of six percent growth in cell phone usage. Nearly four out of ten Americans with a cell phone (104 million) recall seeing advertising on the device between July and September 2008.

In other markets, mobile advertising has already become big business. One report estimates that spending on mobile advertising will overtake advertising in magazines in Korea by 2009. The mobile advertising market is forecast to continue growing at more than 60 percent per annum in Korea. The mobile advertising industry will be worth US$1.72 billion in 2008, rising to US$12.09 billion in 2013, according to Informa Telecoms & Media forecasts. Gartner is even more optimistic, saying, "By the end of 2011 worldwide mobile advertising revenue is forecast to surpass $12.8 billion."

Several kinds of advertisements have emerged so far, including:

  • SMS-based advertisements
  • Download of live multimedia ads over data connections
  • Download of multimedia ads while the mobile device is in dormant mode or at predefined intervals and stored on device – these ads are delivered when the phone becomes active or at predefined times.

But as mobile ad revenues continue to grow, everyone in the ecosystem will try to get a piece of the pie. Mobile operators, manufacturers and software developers are all trying to secure a share of the advertising money that flows into the ecosystem, and each is likely to add new methods and advertising channels to the list.

As the service provider industry moves away from the "walled garden" approach to an open one, manufacturers and operators have begun to understand that they need to provide more than just a handset or a connection, leading to an explosion in value added services with mobile advertising as an important factor:

In the UK, Blyk has seized on the mobile advertising opportunity by offering free minutes and text messages to consumers on an advertiser-funded network. This allows advertisers to reach young people using the only channel that they carry with them everywhere. Blyk's advertising products are based on the most dominant pattern of mobile behavior among 16-24 year old consumers: getting a message and responding to it. Its offerings create awareness, build relationships and drive sales.

Other solutions are being deployed that display mobile ads during moments of down time in the course of normal phone use. For example, an ad might be run on the home screen while a call setup is in progress, or on the idle screen when the phone is in idle mode.

Some carriers are starting to look at ad-funded wireless plans

Manufacturers are increasingly getting into service-focused offerings like free music or movies, which create ample new advertising opportunities.

Meanwhile, users who have become used to free content and applications on the Internet want to see the same experience in application downloads in the mobile space. Smart developers have spotted this trend and are starting to create free applications with built-in advertising mechanisms:

  • Browsers can tie ads to search mechanisms, thus generating targeted revenue.
  • Multimedia applications can run ads while a song or video is playing.
  • Email clients can add a line of advertising with a link at the end of a message.
  • Rather than intruding on the user experience, some applications present ads while the app loads – filling time that would otherwise be "lost" in waiting.

Location-based applications can use the location engine on the phone to drive advertising. For example, a user walking into a shopping mall could receive custom coupons, which would then be redeemed through the mobile phone. This solution is still in the hype phase, as there are quite a few solutions available in this area – but the consumer adoption and redemption has not been so good.

Borders in the USA recently ran a Holiday campaign using mobile coupons, where consumers could show various codes on their mobile screen, such as 'Santa' or 'Rudolph,' at the register to redeem the coupon.

Game developers who have seen a lot of luck on advertisements in the internet area are starting to deploy their ideas in the mobile space and generate revenue. Many ad-funded games are starting to be seen.

As creation of mobile widgets and web 2.0 applications becomes increasingly simple – that is, as consumer adoption of widgets gets high - developers are starting to finding ways to provide ads on widgets to generate relatively easy revenue.

As the mobile advertising industry begins to explode, now is the time to come up with new innovations – such as reducing key strokes to access information, or using built-in features like the camera and location to interact with the consumer.

Another factor to consider is that as ads become more common, the winning solutions will be the ones that support rather than hinder the consumer experience. Don't just cram ads in wherever you can. Think about the experience the consumer wants to have, and provide the right advertisements to the right users at the right time. This will encourage consumers to accept the ads, and transform a potentially painful experience into something rewarding.

There is a brand new area of advertising that is evolving called "Call to Action" advertising. This feature allows consumers to get more information or communicate with the advertiser when the ad is playing. Unlike traditional TV ads, on the mobile handset, if you are seeing an ad for a bookstore, you would press the call to action button, and an SMS or MMS could be sent to your mobile with the nearest store location, or the bookstore could send you more information about a sale etc., As life gets mobile - providing the right consumer experience is the key.

A word of caution to tech savvy developers - Mobile advertising in its present form is not very innovative – and still not using the capabilities of the device. Part of the problem has been the availability of data networks. Now that the data networks are becoming more ubiquitous, remember that the mobile consumer needs practical, utility-based mobile applications that are easy to use and well integrated with the device. Though mobile advertising is a way for you to generate revenue – make sure that you get the consumer experience right – without that, consumer adoption of your application will never happen. So, are you ready to ride the tsunami?

– Asokan Thiyagarajan, Motorola Technology Evangelist