Livewire

The ability to directly target hundreds of millions or even billions of pre-qualified potential customers with specific messaging is an advertiser’s dream. With the mobile phone being a highly individualized device that is typically not shared, this promise should be a quick reality by simply mining some existing data owned by the mobile operator. Eric Schmitt, the CEO of Google, has even recently said in an interview with CNBC that “over time we will make more money from mobile advertising” than with online ad serving.  If we take the scenario further, the promise of location based technologies will create additional value by quickly serving up contextual advertising just in time as you pass by the shop that is trying to lure you inside. Analysts have put the value of serving those ad avails for the mobile advertising market in the range of billions to hundreds of billions of dollars. At a time when mobile operators are struggling to maintain margins, is seems that they are sitting on a goldmine, right? Well, not so much.

There are a number of factors to consider, the first being the assumption that good and accessible customer data exists for each mobile device. As you move out of the western and in particular the US market, the number of prepaid customer dramatically increases which means that reliable customer data to which to match to a psychographic [definition] profile for ad targeting may not exist. Additionally, if the data does exist, it is often stored in a myriad of different customer systems owned by the mobile operator which makes a common extraction scheme more difficult. Second, due to a diversity of mobile handset operating systems and device characteristics, the rendering of the ad to ensure a common look or branding experience is challenging. Mobile rendering technologies exist, but you will still have issues between viewing an ad on a smartphone with a large screen and a mass market feature phone. Nokia has taken some steps in the right direction to address these issues with their Nokia Advertising Alliance, but again you are limited to phones served by the Nokia Media Network. This complexity is also another reason Google is launching their Android platform. Third, it is highly unlikely that mobile operators will share customer data so the launch of any pan-operator ad campaign would be limited by the customer base of a single mobile operator and need to be repeated with other mobile operators in that region. Fourth, the assumption that people are breathlessly awaiting advertising as they move around town is a bit off base. Granted, opt-in profiles can be exploited; however, we have not seen a good model in which to do so. Partially for this reason, location based services have been long on promise and short on delivery for quite some time. We also have already seen the legal issues internet service providers have faced with the NebuAd deployments where users were served advertisements based on web surfing behavior without any opt-in, so having approval of the targeted customer is vital. I feel the best opportunity here would be location linked to mobile search e.g. show we restaurants in my vicinity when I search for restaurants. Last (certainly not the final complexity to this problem), would be the maturing of the mobile operator’s role in the advertising value chain. They are just starting to develop models to exploit this opportunity and will need to become more efficient in operation for ad agencies to appropriately be able to execute advertising campaigns.

So where does that leave us? We have issues with data access for appropriate ad targeting, ad rendering across mobile devices is complex, ad serving across multiple operator’s customer bases implies replicated effort, location based targeting may not be an advertising boon and the mobile operators are still developing their own models to even efficiently operate in the advertising value chain. My colleague Bryon Morrison, the president of Ipsh! whose company executes mobile campaigns on behalf of big brands, equates some of these growing pains to the early days of the internet where the promise existed, but it took a while for monetization mature. If we start there, ad serving on the mobile internet has good short term potential since it bypasses the issues of data access and device rendering, but provides relatively small screen space and weak usage penetration. Serving ad campaigns via SMS is currently the simplest and most effective manner due to ease of management across operators and devices in addition to relatively good click thru success. The most significant new wild card in some regions has been the use of image recognition via the integrated camera on the phone which has met with significant success by again creating significant click thru and taking the complexity out of rendering mobile websites via url input by automatically navigating the user to the ad landing page once the image is captured.

To sum it all up, I am not yet completely sold on the current ad market projections since I feel too many obstacles still exist. However, I do value mobile as an advertising channel and am encouraged by the efforts of those like Bryon at Ipsh! who continue to exploit this evolving market. Additionally, I am very bullish on image recognition as a game changing technology to completely change the way we interact with print or display advertising. What are your thoughts?