Mobile advertising primed for take off

Mobile advertising primed for take off
Two years ago, both the mobile and media industries scoffed at mobile advertising - a concept that, despite predictions, continually failed to take off.

Two weeks into 2010, both operators and software companies are scrambling for a piece of a once discarded pie.

Things really started to catch on when Google's mobile ambitions were confirmed earlier this month with the release of what some referred to as the 'revolutionary' Nexus One handset. The smartphone, which boasts a super-fast Snapdragon processor, is the first branded device from the software giant, although it is manufactured by Android expert HTC.

But Google, which was already behind one of last year's most successful operating systems, Android, has ambitions that do not appear to be about the phone itself. The real trump card for the software company is what it might achieve by entering the mobile advertising space, which it sees as 2010's Holy Grail.

CCS Insight analyst Ben Wood says: 'Undoubtedly, Android is about mobile advertising.
'At the press conference for the launch of the Nexus One, the head of Android was asked if Google was looking to make money from hardware. He replied that Google planned to make money the way it always had, from advertising.'

The logic is simple: it is no secret that the search giant has made the bulk of its money from web advertising, and much of the web has moved to mobile.

Mobile advertising revenue reached £28m in 2008 - a 99.2% increase on 2007 - and the industry expects to see more growth when 2009's results are issued.

And Google, which bought mobile advertising platform AdMob late last year, is not alone in its vision. Earlier this year, it was confirmed that Apple had enabled itself with the facility for mobile advertising, when it bought Quattro Wireless.

Wood says: 'They [Google] bought AdMob and clearly see mobile as the Holy Grail of advertising. Of course, the mobile phone is a personal object and they are marketing to an audience of one.'

Take off
Commentators now say 2010 is the year mobile advertising will really break. However, operators argue that they have been in on the game for quite some time now. Orange and O2 have their own media divisions, and 3 announced this month that it had also entered the fray.

Mobile advertising really started to take off in 2008 when the iPhone launched, believes Shaun Gregory, chief of O2 Media - the operator's mobile advertising division. He adds: 'Pandora's box was opened on apps, and you've only got to look at data consumption.'

Gregory says: 'Mobile advertising opportunities started to come from it - you can see that when you look at growth over the last couple of years - and consumers are more accepting of mobile advertising.'

O2 is building a 'personalised media business', says Gregory, something that the operator has 'been clear about since last summer'.

The operator aims to use a customer's data 'for their benefit', Gregory says, starting with the launch of the O2 More targeted text advertising late last year. He is confident the service will work because it is the first of its kind to completely rely on opt in.

He adds: 'If you take Google and AdWord for example, you have to click on the ads, so customers get to choose.'

Both Google and Apple's media plays are totally reliant on the mobile internet, says Gregory. He adds that O2 has already been doing this through its O2 Active portal. 'Where ours differs is that it is personalised,' he says.

And O2 More is just one element of the operator's strategy. 'A good way to look at this is format, Google will put banner ads and search onto the site. O2 More is based around messaging - offers, coupons, click to call opportunities,' says Gregory.

O2 is also planning to use apps and the iPhone. 'We are completely playing across the value chain,' Gregory adds. 'If we can offer customers and brands a wider array of opportunities they will always do the right thing. I don't see Apple as a threat - it's actually a good thing. If you have Apple and Google driving the market, it's going to get a big push.'

Opportunities
Gregory says O2 'will definitely have new opportunities', adding that the network will work with Apple, Google and 'everybody that comes into the market'.

Orange made its first foray into mobile advertising in 2005, when it launched banner ads on its website, and mobile sponsored search on the mobile web. The rest of the industry has since followed that kind of model, according to Steve Ricketts, Orange's head of mobile advertising.

He adds: 'We did some customer research on this and 50% said they would like to see more advertising on their phones - we were expecting nothing like that.'

Orange launched the web service as free to browse and since then has released applications using the home screen [the Orange World portal].

Now, the operator's mobile advertising capabilities have expanded. It does ad funded content such as free video downloads funded by advertising in between, as well as ad funded games and music.

The fourth category is the Monkey tariff, says Ricketts, which offers free music streaming in exchange for targeted text messages. Around those are cross-platform deals.

The Monkey tariff was made possible by Orange's acquisition of ad funded MVNO Blyk's technology in August 2009.

The network then acquired advertising agency Unanimis, and now sells its mobile advertising through the new business. 'It's about ownership,' says Ricketts.

Orange's strategy is to make sure things work for its customers, to keep ads relevant not intrusive, and to provide a trade off with content such as offering videos for free.

'Also, it is having things that work for the brands,' Ricketts says. 'The barriers are the cost of interacting with the advertising, which is why brands pay the data charge to take it away from the customer.'

People are adding mobile into their campaigns because it works, says Ricketts, adding: 'It's throughout the entire demographic. The operators have worked with the industry body the IAB and we have the Mobile steering group. The GSMA also has the mobile media metrics. We are working together to assess how much time people are spending on the mobile internet.'

And although operators like to say they were there first, Google and Apple's push into mobile advertising in 2010 can only be beneficial. 'Google and Apple coming in raises awareness,' says Ricketts.

Gregory agrees, adding: 'Apple and Google coming in with such aggression will mean mobile advertising will happen. It will change the media landscape and it will change the way that media is viewed in the future. It's efficient, and it's accountable.'

How is Orange's Monkey tariff sold?
Orange's animal tariff, Monkey, is a prepay deal and the first of its kind to offer free music streaming.

Customers can purchase a Monkey Sim card through the operator's retail and telesales channels.

They must then activate the Sim online and a series of welcome texts will be sent explaining the text offers that will follow.

At this point, the customer can opt out of the targeted texts; however, according to Orange's prepay team, only 0.5% of users choose to opt out at this poin
Written by Mobile Today
Mobile Today

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