Very small screen advertising

Mobile marketing has been the preserve of a limited number of forward-thinking brands until recently, but the ubiquity of mobile phones is making it more difficult for companies to ignore the medium as an increasingly important marketing channel.

According to a report from Informa Telecoms & Media, the market for advertising on mobile phones will be worth more than £6bn a year within five years – a significant increase on the £457m forecast for 2006 (MW last week). The report says consumers will be persuaded to accept ads on their mobiles with the offer of free content such as TV channels, games and music.

Its author, senior research analyst Nicky Walton, believes mobile advertising will develop in three phases. She thinks the first is three-quarters complete, based around SMS marketing campaigns. Phase two will begin next year, she says, when there will be an increase in banner ads and advertising on the operators’ portals. Walton believes sponsorship of content on mobile TV will be the third and final phase and says this will be mainstream from 2008/09.

She adds: “It is being driven by good content that brands can advertise around. There’s been a huge uptake in data services like music and games, and that’s been made possible by investment in 3G networks and handsets.”

The report says that providing consumers with incentives for watching ads is key. Recent research from mobile content service Pitch found that 38% of consumers are concerned about being bombarded by advertising, while 33% worry they will be unable to unsubscribe from a service.

However, the survey found that 46% of 16- to 25-year-olds were happy to receive ads in exchange for free content and 48% would pass advertising messages onto their friends. Some 32% of those aged 26 or above said they would be happy to receive ads in certain circumstances.

Subscription fee Walton thinks consumers are in a favourable position: “They are going to control what they receive and how they receive it in line with the new model of consumption brought about by PVRs. The personal nature of mobile phones, which is the very thing that makes them attractive to advertisers, is the same thing that’s going to give consumers control.”

The two key models being considered are a fully advertiser-funded model and a pay-TV based model, which involves charging users a subscription fee as well as providing them with advertising. One exponent of the first model is Virgin Mobile in the US, which gives free minutes to customers who agree to watch its ads.

Amobee, set up last year with the objective of bolstering the mobile industry through advertiser funding, has developed a system used by Vodafone which allows ads to feature in games on the operator’s portal.

Broadcast TV Patrick Parodi – Amobee’s chief sales and marketing officer and global chairman of the Mobile Entertainment Forum – says: “We’ve got to move from the notion of mobile marketing and mobile advertising to the notion of advertiser-funded mobile services. Brands will be able to engage with consumers in exchange for some kind of value.”

At present, most mobile advertising is via SMS and MMS. Walton says messaging accounts for 72% of revenues set to be generated this year, but the figure will fall to 24% by 2011 as mobile TV advertising takes over.

However, there is ambiguity about what form mobile TV services will take. The major operators have started to develop broadcast TV services, but the executive chairman of mobile transaction company mBlox, Andrew Bud, says: “It’s by no means clear that the market wants a broadcast TV model. Trials have suggested it – but trials suggest what companies want them to suggest.”

Parodi agrees, saying that simply replicating TV schedules on phones is “short-sighted”. He adds: “When WAP came out everyone was talking about it being mobile internet, but it wasn’t. As an industry, we over-promised but under-delivered. The beauty of mobile TV is that we have an opportunity to do the exact opposite.”

Robert Lester

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