Mobile advertising appealing to consumers

Mobile phone users are seeing more ads on their phone and many don't mind having marketers attached to their hips. In fact, incentives-based mobile advertising where users watch or listen to ads in exchange for a gift certificate or free airtime could soon have a larger presence in Canada as Virgin Mobile considers introducing its Sugar Mama program north of the border. Virgin Mobile's Sugar Mama program credits users with free airtime for watching ads online or on their phones. After watching an ad, users are prompted to provide feedback and are credited with one free minute of talk time. "We have a whole roster of ads, whether it be ourselves or like-minded companies like XBox. It's basically a nice way to educate customers and get some real-time feedback," explains Virgin Mobile Canada's Andrew Bridge.While not yet available in Canada, Bridge is optimistic about a Canadian launch. "We're looking at that quite seriously now," he offers. "We're looking for ways to deliver advertising that is not only engaging, but that also gives customers the opportunity to customize the ads they get or opt out if they're not interested in receiving any ads." A recent study by Harris Interactive found that there is considerable support for incentive-based advertising with 35% of American cell phone users over the age of 18 willing to watch these types of ads on their mobile phones. While 75% are looking for cash rewards, most were willing to accept more realistic benefits, ranging from free ringtones and applications to discounts on airtime.But not everyone is convinced discounted airtime is going to fly. "Carriers are struggling to keep profitable and I don't think free minutes is the way to go," says Joseph Porus, one of the study's authors. "But there is always some form of incentive for viewing ads. There are things like ringtones or game time and I think kids are going to eat this up." Revenue potential for mobile advertising is expected to grow considerably over the next several years, according to two respected research firms. ABI Research predicts the worldwide mobile ad market will reach US$3 billion this year. US-based research firm Informa Telecoms & Media estimates the US market reached $871 million in 2006 and predicts the market will climb to US$11.35 billion by 2011. While it's not yet clear what type of numbers the Canadian market will generate, growth is expected to be similar. There are possible roadblocks to the broader adoption of mobile advertising, however, particularly as it relates to spam. As a permission-based platform, Canadian consumers are safeguarded from mobile spam; enabling them to receive only the messages they've expressed an interest in. But according to the Harris Interactive study, the potential of increased mobile spam doesn't faze American wireless users. The Harris Interactive study showed that 70% of respondents who were open to receiving mobile advertising were also willing to provide their carriers with personal information in exchange for an ability to customize the services to their needs. "We were surprised by willingness to provide profiling information about themselves so that the ads could be more meaningful," says Porus.But good marketers and aggregators aren't. Steve Irvine, founder and CEO of Toronto-based 80/20 Solutions has worked on several high-profile mobile campaigns, including Pepsi Access and the World Snowboarding Championships in Whistler. "Our one piece of advice that we always deliver to our marketers is make sure that your message is relevant to your target audience and make sure you have permission to send out these communications. I think this is where people tend to go wrong," he explains.In order to truly resonate with consumers, Irvine explains, carriers have to know their customers. "They should understand the consumers' profile, interests, age, where they live and which products they use. You really have to build that into your plan," he says. Gearing ads to specific users and niche marketing is paving the way for more advertising-centred models. "Just as Google.com is the homepage on most people's desktop browsers, a lot of people are trying to be the gateway for consumers on the phone," Irvine adds.And when it comes to the Canadian market, Google Inc. is falling behind. Google's AdWords service for mobile, an offshoot of its ubiquitous desktop search engine, is operating in 13 countries, but unlike Yahoo Inc.'s oneSearch, it isn't available in Canada.OneSearch works along the lines of Yahoo's desktop search engine, with ads running along the top of Yahoo's homepage. Users are presented with a variety of solutions to their query, including text links from advertisers or graphical ads. Michael Bayle, Yahoo's GM of mobile monetization, concedes that users end up paying to view the ads in data charges, but insists they try to keep the cost-to-consumer charge down. "We're very conservative with our graphical ads. We limit our campaigns to less than 1KB, so it's not a rich media experience. But over time, I think you'll see more flat rate data pricing, just as they have in Europe," Bayle explains, adding this opens the door for more elaborate images.Although Bayle could not provide usage numbers, the program has attracted national advertisers like Home Depot. The service, he explains, not only benefits advertisers, but also carriers and consumers. "What we're doing with oneSearch is opening consumers' eyes and showing them that they can do a lot more with their mobile phones," he says."I hope both consumers and carriers profit. I hope consumers can feel more confident in what they can do with their mobile phones and that it's a better experience for them. As carriers understand that they can make a revenue stream from advertising this can ultimately be a benefit to the consumer because of lower tariffs for them," Bayle adds.Carriers benefit not only from increased traffic and revenue, but also from an increase in customer awareness of mobile features and services. The hope is that this product knowledge will translate into more regular use, and it looks like it already has. According to the Canadian Wireless Telecommunications Association, Canadians sent out 4.3 billion person-to-person text messages last year, nearly triple the 1.5 billion sent in 2005. At least some of this growth is attributable to text-savvy television programs like Canadian Idol, and campaigns like Pepsi Access."Carriers want as many peer-to-peer text messages, as many messages sent to short codes as possible. But they really want to get data usages up," says Irvine. "The more active consumers are with their phones, the more carriers make. It's in their best interest to try to encourage more marketers to view mobile as a viable channel."Upinder Saini, VP of new products and content development at Rogers Wireless, agrees. Rogers, much like other carriers, takes advantage of its seven million strong subscriber base, sending them SMS-based messages. "We don't bombard our customers with marketing messages but they are used on an opt-in basis. It really is your ticket to get to those customers," he says. While Saini would like to see more mobile videos being watched, Rogers has "no plans to offer incentive-based viewing," and offering free airtime isn't on the horizon. Instead, the company is banking on content and partnerships with firms such as YouTube to drive usage."It seems to me that a lot of people are developing business plans that are advantageous from their particular perch," says Porus. "How it all works out, well, that'll be fun to watch."

Mobile advertising appealing to consumers

News | June 27, 2007

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