The past few years haven’t been easy for wireless service providers. With 3G and fee-based data services a flop and a sagging voice business, not much seems to be going right for the mobile industry. But the situation is set to change.
After many false starts, wireless advertising is finally ready for primetime. Startups and major players alike are jockeying to see who can market most effectively through the wireless medium.
Here’s a quick summary outlining seven of the most discussed strategies and their long-term prospects:
1) Marketing via SMS/MMS: This is an easy one. Advertisers like Procter & Gamble work with carriers and companies such as Enpocket to sponsor audience polls. Think American Idol. It’s quick and easy to implement—polls use existing messaging infrastructure—and advertisers establish direct relationships through the mobile phone with customers who opt in to their programs. Unfortunately, there isn’t much excitement here, and the potential is limited. Not to mention that consumers who participate often won’t have any special affinity for the marketer.
2) WAP banner ads: The cousin of the internet banner ad is the grandfather of mobile advertising techniques. Guess what. It’s surprisingly effective. Advertisers know that handset users who look at WAP sites fundamentally have time to waste. They’re commuting by bus, waiting for a friend, or sitting in their doctor’s office looking for ways to kill time. The problem is that WAP advertising inventory remains small because mobile web sites are relatively expensive to build. What’s more, the value chain around WAP banners remains murky. Who deserves what share of the revenue and who really owns the ad inventory? Is it the carrier, WAP site owner, or WAP advertising facilitators like Third Screen Media? It’s not clear, and by the time this one is figured out, the mobile marketing train will have left the station long ago. I think the way to go is off portal WAP banner ads to circumvent the issue.
3) Location-based advertising: Remember all the hub-bub about location-based services in 2000? Mobile phone users will merrily walk down the street as their mobile phone beckons them in to the nearest boutique or café with a well-timed ad. The scenario sounded nice…until you actually thought about it for more than two seconds. Location-based services don’t work unless you have a critical mass of advertisers and willing consumers signed up to participate. Not to mention the considerable privacy issues. Don’t expect this chicken and egg problem to sort itself out anytime soon.
4) Video ads on cell phones: Here’s another extension of common advertising techniques to the mobile platform. Companies like MobiTV and Rhythm Networks are making good progress with carriers, but they face an uphill battle. Currently, only 10% of domestic mobile handsets are video-enabled, and it remains unclear if the average user is willing to pay for video services. Watching a video ad is a known quantity for consumers, but who really wants to pay for the “privilege” of watching low-quality video ads on tiny screens? Witness the recent failure of ESPN Mobile.
5) In-game advertising: Product placement isn’t just for TV shows. Now advertisers are working with startups to insert their brands into your mobile games. Sounds simple enough, right? Wrong. Who owns the ad inventory? The carrier? The game publisher? It’s not clear, and until the value chain is resolved, this method won’t take off. Besides, is a sponsor’s billboard in mobile Grand Theft Auto really going to capture the attention of attention-deprived youth game players?
6) Online coupons: Paper coupons have been around for decades. The problem is you never have them when you’re checking out at the store. Enter mobile coupons. It’s a simple concept. People carry their phones, and their mobile coupons, everywhere. And now that startups like Cellfire have figured out how to eliminate the need for a coupon client on the handset, this is a space that holds considerable promise.
7) Interstitial ads: Of all the techniques I’ve evaluated, the most promising is interstitial ads. Interstitials are ads that play during the dead time during downloads. They’re unobtrusive—watching an ad during a WAP page download is certainly no worse than watching a progress bar. When implemented effectively, they actually provide information that is both useful and immediately actionable. Imagine downloading a WAP-based movie review and getting an interstitial with showtimes and locations for every movie in your town. What’s more, there’s no argument about who owns the deadspace between downloads. It’s the carriers. And with new technologies like Flash Lite (Adobe), uiOne (Qualcomm), and MIDAS (Openwave) that greatly simplify interstitial implementation, you can bet that Verizon, Sprint, and Cingular will be increasingly focused on generating revenue with interstitial advertising
25 Comments
-
Peter Cranstone said:
Hi Ken,
Thanks for the great post. With regard to location based advertising. We’ve developed a technology that allows you to stream real time GPS over HTTP from a mobile phone. We’ve also designed it to support additional user and phone data. All of this is controlled by the user to ensure they only share data when they want to. We can now demonstrate in real time the location of the nearest Starbucks to you, and then send you a time sensitive 1D mobile coupon which can be scanned in directly from the phone itself.
The other advantage of having user, phone and location data is that those ads can now be tailored to the users interests, designed to work on a 320*240 phone with 65,000 colors and location based.
All you need for this to happen is a simple 150K free client.
All the best,
Peter
http://www.5o9Inc.com -
Anthony (A.J.) Bayne said:
Make that 8-Ways.
While “one person per presentation†is fine for areas that are thinnly populated. A more effective means will be to use the mobile phone to present advertising to persons standing near the mobile phone user while he/she speaks in a non-handsfree mode. The mobile phone can have a main screen that can be positioned/rotated/flipped to face outward, or alternatively use the smaller rear-facing screen.
The mobile phone user will not care how much advertising is on the phone, because he will not have to look at it and may receive discounted talk time or other incentives for allowing his phone to be used as a mini-billboard.
I think my way will be best for high-density areas (e.g. New York, India, malls during Christmas). I have invented a mobile phone that does this, as well as a system and method for measuring the effectiveness of a mobile advertising campaign. -
Peter Cranstone said:
GigaOM is right on the money… it’s not if, it’s when. The key IMHO is cracking the relevancy issue. This removes the interruption factor which is tolerable on the desktop, but not on the third screen.
-
Marc Cohen said:
All of the approaches you describe are visual advertising - they require the target to be looking at the phone to receive the ad. Most interaction with the cellphone is through the ear, not the eye. The most successful approaches to mobile marketing will be audio based.
-
Dean Penman said:
very informative and interesting, keep giving us these updates.
-
DoNotReply said:
Funny to see Cellfire being used as an example!
Maybe there should be a vote among VB readers on how many think that Cellfire is a viable technology / business. Maybe the vote can be expanded to all 7 categories above. -
J. Frank said:
“Most interaction with the cellphone is through the ear, not the eye. The most successful approaches to mobile marketing will be audio based.”
I would argue that for younger cell phone users, visual approaches may work just as well. This group uses text and IM a lot more than their parents do.
-
stephanie grossman said:
Nice post Ken, but where is the plug for digital SIDEBAR? Unless I am mistaken, our solution is generally considered to be the one which provides the most positive user experience and the greatest potential for increased ARPU. Our customers - tier one carriers - know us well.
-
Steve Morsa said:
Great insight, Ken…but there’s one brand new type of advertising (as explained in the white paper posted at MatchTo.com and detailed in pending patent #11/250,908) which will best all these seven.
Called Match Engine Marketing, or paid match; by allowing advertisers to bid on their targets’ actual traits and characteristics instead of only on the words they enter into search boxes; will supply phone users with up-to-the-minute ads and offers on the exact products and services these users want at that very moment.
Target people. Not words.
-
Ken Elefant said:
Thanks for the comments everyone. In the interstitial area, I’ve seen quite a few companies but haven’t made an investment (yet). One that I should have referenced in my blog is Digital Sidebar, which several of you probably know.
-
Terry Jackson - CEO, MobVision said:
Ken,
Interesting discussion on WAP Banner Advertising. We [MobVision] operate Admoda ( http://www.admoda.com ), a WAP banner advertising solution.
I agree with you that off-portal does indeed solve many of the issues with mobile internet advertising. Firstly the challenge of sourcing inventory… because off-portal wap sites have been allowed to grow organically over the last few years we have found that we have been able to build a huge off-portal publisher network. Luckily for us we have been in the WAP and mobile content market for 4 years before we launched Admoda so we knew who to sign up, and we already had relationships with many of the top WAP site owners. Our available inventory is now up to about 400 Million impressions per month and growing daily.
We work closely with the WAP site owners and are currently building a number of clever ways for them to integrate our ad invocation code into their WAP sites, in a way that suits them. Many off-portal WAP site owners tend to come from a developer background and offering them fluffy marketing talk does not always win them over.
We provide two things – the Advertisers and Publishers, and the technology to make it all happen. We believe that the inventory is firmly owned by the WAP site owner, and that the advertised content/services are of course owned by the Advertisers. Admoda ‘not-so-simply’ facilitates the ad serving and ad management of the campaigns.
-
ashu mathura said:
.. obviously, the WAP site owner is the owner of the traffic and therefore should get the biggest share in advertising spending. The carrier is just the ISP and get’s 0% of ad spending (unless the ads are on the carriers portal of course, but than the carrier has become content publisher). The facilitator will have either a sales fee or a techical fee % of advertising revenues.
This has all been figured out in the Internet advertising space, so let’s not reinvent the weel for mobile Internet ;)
Ashu Mathura, Managing Director MADS
( http://www.mads.com ) -
Mark Bolen said:
I represent a number of advertisers through my new agency. There are only a couple of postings which are interesting here from people who have actually any real knowledge of the mobile advertising industry. Can we have more comments please from companies who have live real experience of mobile advertising, rather than people simply pontificating widely.
-
Terry Jackson said:
… I should have clarified that I was commenting purely on the WAP advertising section of this article as that is our area of expertise…
[Terry Jackson - Admoda]
-
David W Baum said:
Ken,
Taking CellFire one step forward into wireless targeted ads and promotion in retail, check out http://www.cuesol.com. LBS does make sense when you are in the aisle getting a wireless target promotion from Coke when you are standing in front of the Coke display in Stop & Shop.
[David W Baum - Stage 1 Ventures]
-
Dennis Marshall said:
Ken,
Agree with your outlook - this is a market chasing its tail more than most. User tolerance for ads on their cell phone may be hard to underestimate and early returns (as on the web) may not be accurate indicators once the veneer of novelty wears off. -
James Ryan said:
Responding to Mark Bolen’s request for more comments from people experienced in this industry, I have been involved in selling and creating mobile advertising since the late 90s, first for AvantGo and now for my own company, Mobileplay. Ken’s comments are largely on the money. I think there is certainly a lot of hype about how quickly this market will grow. On the other hand,concerns about user acceptance and effectiveness are red herrings. Banners or interstitials on a phone in exchange for free content are no more or less intrusive or objectionable than in any other media. Click-thru rates have remained at 2-4% for 7 years, way beyond the novelty phase. Key for the advertiser–much less of a problem in the desktop internet–is making sure there is something new and interesting waiting once a customer clicks through on that ad. Helping to come up with that strategy is where we see ourselves providing a lot of value. Three promising areas for what happens when you click that are worth mentioning are driving traffic to bricks & mortars stores, driving social interaction among phone users, particularly if that can involve the brand advertiser, and, finally, direct retail purchases. And I’m not talking about ringtones and wallpapers. I think we are going to see an m-commerce market develop pretty quickly once a couple of minor hurdles are overcome.
-
andy said:
This is perhaps the most uninformed article I have ever read about mobile advertising, and it’s a shame when purported experts in the investment community disseminate such misinformation.
1) Marketing via SMS/MMS: This is currently by far the largest sector by revenue in mobile marketing/advertising, and its importance will continue for at least the next 5 years. To dismiss it so casually without understanding its implications on all other forms of mobile marketing/advertising is simple-minded. Companies like Ipsh don’t get acquired by leading advertising agencies because they have a dieing business model.
2) WAP banner ads. Ken should talk to some of the companies doing WAP banner ads. There’s a lot more than TSM, and while rev shares may not be exactly the same worldwide, there are very well established models. Yahoo has just started selling WAP banner ads, and you can expect Google and MSN to follow suit (they already all do a booming business in WAP text ads). When DoubleClick launches their mobile offerings in the next half year, that will be the definitive statement that the business models in this space have been proven and well-defined.
3) Location-based advertising. LBS is an enabling technology, not an advertising medium in and of itself. There are also many forms of LBS and many underlying technologies. Fine grained technologies like AGPS/UTDOA/ECID are still the cutting edge of LBS, but local advertising in the broader sense has already proven itself. Ever heard of Google local search? Just as dodgeball showed that fine-grained LBS social networks didn’t have to rely on GPS/etc but could work instead based on context-inferred location, local search will continue to evolve based on much more than the slow penetration growth of GPS.
4) Video ads. The whole promise of video ads is that subscribers will pay less or not at all for the video services. The carriers in the end will own this market; to understand the end game, take a look at DVB-H and MediaFLO. As for ESPN Mobile, its failure had absolutely zero to do with the current quality of video ads.
5) In game advertising. Companies like Greystripe and Amobee have created some very well-defined business models in this space. Inventory ownership in this space is exactly analogous to online banner ads (and has much less to do, for example, with the models created by Massive/Double Fusion/IGA). Greystripe alone has dozens of game publisher partners and millions of users, which seems to indicate a fairly mature business model.
6) Mobile coupons. I agree that this should grow into a huge space, but I have doubts that any service that requires manual download and install of a single-purpose mobile application will be able to generate mass consumer adoption in the next two years. At this point, Cellfire is spending a large percentage of their VC money on subsidizing the coupons they offer, and I question the sustainability of that approach. If Cellfire dies, their attempt to jumpstart the market by buying it rather than developing true technological enablers will have been a disservice to the promise of mobile coupons.
7) Interstitial ads. Interstitial ads?? Ken should do some reading on the MMA (and also the newly formed IAB mobile committee). Interstitial ads is a “bad” word. Companies like Sprint, to make note of the carriers that Ken points to, tried to disallow interstitials altogether in the MMA standards. Think pop-ups online. It’s the same thing, only worse, because of the small screen size and slow connections. Carriers are going to stay as far away from interstitials as they can. Meanwhile, this small sector of mobile advertising will be handled by people trying to monetize off-deck content, such as MoPHAP.
Again, please, please, please do some research before writing articles like this!
-
STEVE SCERRI said:
IF YOU COULD DOWN LOAD (WWW.BROADWAYPHONE.COM) OR GO TO (WWW.PHAVE.COM) WE ARE A NEW STARTUPON MOBILE ADVERTISING .WE ARE LOOKING FOR OPINION ON OUR COMPANY.WHEN YOU HAVE TIME.THANKS STEVE SCERRI
-
AAMIR TONKWALA said:
Dear SIR/MADAM,
Routesms Pvt Ltd. provides Bulk SMS having tie up with 12 international SMSC covering most of the countries in the world.Our professional technical team provides 24×7 technical supports which is one of the best in the industry.Our SMS Gateways rates are very economical and competitive.
Some silent features of our service are :
1. HTTP API which can integrate into any website to send SMS.
2. DLL file which can integrate into any of your software.
3. Desktop application which can be downloaded from our website http://www.routesms.com that can be used to send SMS.
4. SMPPPlease feel free to add me in your “MSN- ID†or “Yahoo- ID†chat list to discuss rates and technical queries.
Thanks & Regards
Aamir Tonkwala
Marketing Manager
http://www.routesms.com
Mobile : +919819718702
Office Tel: 91 22 28668202
MSN ID : aamir@routesms.com
YAHOO ID : aamir_routesms@yahoo.com -
replica watches said:
replica watches
replica watches -
uepbokyqtv said:
Hello! Good Site! Thanks you! awynaqmzazylue
-
GreenHorn said:
The place for truly free ringtones. Browse our free download collection of exclusive mobile ringtones and free ringtones information.
6 Trackbacks
10:54 am
GigaOM » Google: Mobile Ads, Free Phones said:
[...] Similar models have been suggested many times before; remember Xero Mobile, the MVNO that was probed by the SEC and then weirdly bought before it even launched — and don’t forget its gaming step-cousin Gizmondo, which literally crashed and burned. Mobile advertising might be on everyone’s minds (and in their readers) this morning, but the question is not will there be a big mobile ad market one day, but how long would it take for the mobile advertising market to grow large enough to support such an environment? [...]
11:59 am
DRTVtechnology.org: blogging the technology of Direct Response » 7 Strategies for Mobile Advertising said:
[...] As mobile networks in the US get faster mobile advertising is becoming a realistic and lucrative business. Mobile advertisers have started to position themselves for a spot at the top so when it hits full force, they can be have the largest primetime audience for this relatively new advertising medium. The mobile advertising arena has 7 major areas for advertisers to consider which are: Marketing via SMS/MMS, WAP banner ads, Location-based advertising, Video ads on cell phones, In-game advertising, Online coupons, and Interstitial ads. Of the seven strategies it remains to be seen which will be most successful Ken Elefant of VentureBeat has a quick summary of these strategies. Link [...]
1:55 pm
ON MOBILE ADVERTISING ALTERNATIVES at WHAT’S NEXT: INNOVATIONS IN NEWSPAPERS said:
[...] Ken Elefant wrote an interesting piece in Venture Beat about the most common mobile advertising platforms and how he sees them performing in the long term. [...]
4:52 pm
Dan Blank: Publishing, Innovation and the Web » Blog Archive » 7 Mobile Advertising Techniques said:
[...] Ken Elefant over at Venture Beat put together a list of mobile advertising techniques, and his opinion of each. On his list: [...]
3:38 am
Advanced Technology Products Interactive » Blog Archive » The seven strategies for mobile ads, and which ones will work said:
[...] This article covers the seven types of wireless advertising. The types are Marketing via SMS/MMS, WAP banner ads, Location-based advertising, Video ads on cell phones, In-game advertising, Online coupons and Interstitial ads. Of all the techniques I’ve evaluated, the most promising is interstitial ads. Interstitials are ads that play during the dead time during downloads. -Ken Elefant (Venture Beat). [...]
2:56 pm
» 7 Mobile Advert Strategies and their Potentials » Blog Archive @ The Feedtext Blog said:
[...] I came across a great analysis of 7 potential mobile advert strategies that we can expect in the near future over at VentureBeat. It briefly defined each strategy and his observations on its possibility of success without missing a beat [pardon the pun]. [...]