Thursday, October 25, 2007

Mobile Advertising - The Road Ahead

Mike Baker, CEO of Enpocket, in one of its articles talks about the three possible ways of mobile advertising - SMS, MMS and WAP (http for mobile phones). SMS, which has primarily been popular in Europe and Asia, has recently gained serious momentum in North America. In the last 2 years, total SMS messages sent has increased 4 times from 7 billion to 28 billion per month. Also, unlike MMS and WAP, almost all the phones support the capability to send and receive SMS, making it one of the primary vehicles for advertising.

The idea of advertising via SMS works on the simple push/pull method. Advertisement is pushed to the user and if the user is interested, user pulls the more information possibly making a purchase. MMS also uses the same method, but it delivers a rich media interactive ad to user and has a much stronger impact than SMS, having a much higher click through rate and purchase rate (sometimes as high as 20%). WAP, the third channel, provides richer colors and more interactive experience and further, avoids the need for opt-in or user initiated reply message. However, the click through rate and purchase rate is not significantly different than MMS.

Despite the method, daunting challenges remain the same in all channels: finding the right customer, impressive ads presentation (as the same layout will not look impressive on all phones, colored phones have different resolutions and display size), and deliver the right content which created the spark to view the advertisement in the first place. Mike argues that marketers can't just blast out the advertisements to users without opt-in. Regular media channels are used for promotion leading to user selection, typically asking to send a message to a short code (normally 4-5 digit number). Interested users send the message and advertisement is pushed to the user. If the user remains interested, he clicks through to reply to the message or reach the wap site of the brand- sometimes making a purchase, downloading promotional content, calling the toll free number, opting to participate in further ad campaigns or accessing the brand information at a later time through internet.

Mobile advertising companies like Enpocket are just one part of the whole picture. MMA, in one of its papers, presents the whole picture and calls it mobile marketing ecosystem. According to MMA, the ecosystem is comprised of four interconnecting spheres-Product & Services (brands, content owners and marketing agencies), Applications (discrete application providers and mobile ASPs), Connection (aggregators and wireless operators), and Media and Retail (media properties, “brick ‘n’ mortar” and virtual retail stores). Brands want to advertise, marketing agencies help brands create the ad campaign, applications are created to show these ads, telecom providers to send these ads to the subscribers. Retails are used to create awareness and promote using its traditional channels. The ecosystem coherently works to create the best experience for the end user.

Mobile advertising has clear advantages over all the other channels, the most obvious is that the user is accessible to it all the time, unlike internet, TV or print media and the user can respond to the advertisement instantly and does not need to preserve the spark. Also, since the phone screen is small, typically there is only one advertisement per page, getting the maximum attention of the user.

However, a close look at the case studies presented at Enpocket suggests that mobile advertising still delivers a very very specific goal, unlike other mediums of advertisements. With the limitation of 160 characters and no graphics (SMS), the content and relevance become the only motivating factor for a user to participate. In such a situation, unlike TV, print media or even internet, the advertisement cannot be just pushed to all the users.

But as we will see more people using enhanced handsets and data services, the face of mobile advertising will change and become more like traditional media. While mobile advertising will continue to serve a very specific purpose, the user selection process will become much more flexible and user's opt in will be highly derived by the sites and contents downloaded by the user. This will, to an extent, reduce the role of retail and media that it currently plays to popularize the mobile advertisements and help brands find the right users. But that day is still at least a couple of years away.

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