Wireless operators testing mobile advertising, no clear model yet

Mobile advertising, with its ability to reach consumers anytime and anywhere, is quickly becoming a critical marketing tool, attendees to the American Marketing Association’s (AMA) May 24 meeting in Toronto heard. This new means of connecting companies with consumers also generated substantial buzz at the Canadian Wireless Telecommunications Association (CWTA) 2006 conference held May 16 and 17. It’s clear why: between widespread wireless penetration, and the opportunity for constant and continuous consumer contact, the potential for profits is great, and largely untapped. While marketers are salivating at the prospect, carriers have tended to tread cautiously. Carriers build their customer base around trust, security, and value – and according to some, advertising tops the list of things people don’t want on their phones. Privacy is a paramount concern for carriers and customers alike, although spam is unlikely to infiltrate the Canadian mobile market. "The whole channel is permission-based," says Jambo Mobile’s Director of strategy Derek Colfer. "There isn’t a single marketing campaign in Canada that involves spamming." Toronto-based Jambo Mobile has been at the forefront of mobile marketing and boasts several successful campaigns, as well as an impressive customer base including, Adidas, CBC, and Buena Vista Home Entertainment. Some companies abroad have attempted to contact mobile users through infrared and bluetooth technology, but Canadian marketers have showed a tendency to rely on SMS. Attracting users to content usually calls for some type of promotional campaign or contest, with users text messaging a code in exchange for a discount or contest entry. At the AMA meeting, Pelmorex Media’s Taylor Emerson, pointed out that "Carriers want to make sure that advertisers are going to provide their customers with value, something they can’t get elsewhere." Free ringtones, wallpapers, video downloads, and contests provide this added value, and are dominating wireless campaigns. Mobile campaigns are often a hybrid of SMS and more traditional mediums such as print ads and commercials. A successful campaign for Kit Kat Chunky Peanut Butter bars by Dose, the web-based daily, involved this fusion of print and web ads, and text messaging. Print and web ads encouraged Kit Kat fans to text in the UPC codes from their chocolate bars, enter a contest and receive free games and ringtones. The campaign showcased mobile’s valuable positioning for marketing, encouraged product consumption, and generated substantial text traffic. Many experts at the CWTA conference and AMA meeting agreed that carriers’ primary source of revenue from mobile marketing is actually through the users. "Ultimately carriers make money on the traffic," says Nokia Canada’s Jeff Offet, "and mobile operators want more." The more often users download content and send text messages, the more carriers can expect in their coffers. But in an emerging market with billions of users, some industry experts believe income derived solely from traffic is inadequate for those who connect companies with consumers. It appears as though carriers have yet to develop an appropriate revenue model for capitalizing on mobile marketing, but the consensus seems to be that they will find a way. While Canadian carriers appear to be unsure how this will shake out, two American wireless operators are going full-steam ahead with advertising as a key part of their models. Virgin Mobile USA is allowing its subscribers to earn up to 75 minutes of airtime in exchange for watching video ads, reading text messages or filling out surveys. Xero Mobile, which plans to launch near the end of this year, will try to lure college students to its service by offering them free phones and inexpensive service in exchange for watching a few video ads per day. Xero is hoping to lock up advertising agreements with music companies, fast-food chains and movie studios. Virgin Mobile has already secured contracts with Microsoft’s xbox, PepsiCo and Truth, an anti-smoking campaign run by the American Legacy Foundation. In the interim, carriers may experience some profitable side effects attributable to wireless campaigns. Only 25% of Canadians with access to a mobile phone use text messaging, and 85% don’t download content. Enticing offers of discounts or contest entries may compel more Canadians to explore their devices’ full capabilities. The exposure will inevitably result in some users adapting these functions into their overall mobile experience. Dean Tseretopoulos, MyThum Inter-active Inc.’s VP of interactive solutions, believes that media marketers and carriers can enjoy a complimentary relationship. "They’re not trying to get a free ride off the carriers’ networks. There’s a lot of value in the marketing, education and content that they bring. " Mobile advertising can serve as a gateway for greater service use, resulting in greater wireless traffic, and greater earnings for carriers.

Wireless operators testing mobile advertising, no clear model yet

News | June 15, 2006

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