Mobile advertising is starting to move

Advertising through mobile phones is at a crossroads. The horrors of SMS spam have made the industry cautious about a medium which seemingly offers advertisers the ideal marketing opportunity – targeted, one-to-one communication with consumers.

But others see text messaging – a form of communication so popular that up to 1 billion messages are sent every month in the UK – as an untapped market for advertisers.

Allegra Strategies calculates that advertising through mobile messaging will be worth £11.8m this year, with an extra £1.18m through WAP advertising. By 2005, Allegra estimates wireless advertising will account for two per cent of all ad spend and be worth £439m, of which £263m will come from text messaging.

At present, advertisers have to devise messages that are 160 characters or fewer. But, as technology advances, enhanced messaging – using simple graphics, jingles and bar codes – will become generally available through GPRS (general packet radio service). Software company Magic4 has already signed deals with Philips and Motorola, allowing the handset manufacturers to use its barcode technology. Theoretically this will allow advertisers to send messages to consumers with a barcode “voucher” which can be saved, taken to a retailer, scanned in and redeemed against the advertiser’s product.

Theoretically, third-generation (3G) mobile phones will allow for TV-style ads to run on mobile screens.

BT Cellnet has teamed up with sales house Engage to run a research programme into how advertisers can make the most of the new technology (MW last week). Advertisers will pay up to £18,000 to take part in a trial using existing GSM phones, GPRS-enabled (or “2.5G”), and 3G phones. They will be able to test the new formats and be able to set research costs off against future media spend.

PHDiQ director of interactive solutions Ben Christie says: “We don’t know what type of messages people are prepared to receive and – in the case of multimedia ads – what they are going to do with them. Perhaps they’ll send them on to friends as a form of viral marketing.”

There are a number of ways of eliciting a response from a consumer who has received an advertising message – the two most successful being “call-back” and “text-back”, both of which allow for an immediate response. Other mechanisms direct consumers to a website or WAP site.

Industry experts agree that messages which are witty or give relevant information – for example a sponsored weather update – are the most successful in eliciting a response or high brand recall, but warn against using text slang unless it fits the brand.

But the real issue is how many commercial messages consumers are prepared to accept and from whom.

A mobile Internet user study by NOP found that 24 per cent of respondents were likely to agree to receive text-based advertising on their mobiles. Half of experienced mobile users said they would be more inclined to accept message ads if they were rewarded. Of those willing to accept mobile messages, 70 per cent said they would opt for one to five ads per day.

But acceptance levels could fall if there are incidents of “spamming”. Three months ago some mobile users were sent what looked like a personal message asking them to call someone “urgently”. Those who replied were hit with a marketing message.

There are a number of trial schemes where consumers opt to receive messages. One is ZagMe where mobile users can register to receive messages within Lakeside shopping centre. Another is the Mobile Channel, which aims to register 250,000 mobile users by the end of the year, rewarding them with charity donations, mobile airtime or retail vouchers in return for receiving messages.

Chris Havemann, joint managing director of the Mobile Channel, says: “Our system costs more than sending random messages – that comes to about 3p a message. It is comparable with buying a targeted TV audience and a lot cheaper than targeted direct mail, where the average cost is 50p.”

Havemann adds that, during the first trial, text ads received a response rate of between ten and 20 per cent, compared with DM where he says a response rate of three per cent is regarded as a success.

But Channel 5 head of marketing David Bainbridge points out: “The creative opportunities with direct marketing are so much stronger.”

He claims that although recall levels were high when Channel 5 used the Mobile Channel to tell mobile users about film showings, the scheme was not cost effective.

Even with opt-in schemes consumers can delete messages without reading them, whereas they are unable to avoid print and poster ads.

One industry insider says: “There’s a danger that when the novelty wears off, messages become wallpaper and that is the last thing advertisers want.”

But opt-in systems do allow consumers to avoid getting bombarded with irrelevant messages. Moves are afoot to establish a set of industry standards. The Wireless Marketing Association (a self-regulating body of mobile marketers), the Wireless Advertising Association and the Direct Marketing Association are all looking at the issue. But any codes of conduct established may be overtaken by forthcoming European legislation.

Bainbridge says: “Wireless advertising is in its embryonic stage, comparable to when the Internet launched and everyone was talking about fantastic marketing opportunities. Ultimately, it is not about what is technologically possible, it is about what is relevant to consumers.”