Editor's Note:This article is an excerpt from RCR Wireless News' March Special Edition, "The Perfect Storm – A Focus on Mobile Messaging, Marketing, Content and Apps." The 80-page special edition is available here.

Following years of promises, and highlighted by the annual claim that the upcoming year was finally its year, 2010 actually is starting to shape up as the year mobile advertising could have its chance to shine. Sure, there have been mobile advertising and marketing campaigns in the past, but most have been half-hearted attempts that failed to garner significant traction, or if they did show promise, it was often of limited scope in the big picture of advertising.
The Kelsey Group reported late last year that the worldwide mobile advertising market could be worth more than $3 billion by 2013.
However, recent deals by some of the biggest technology names in the world have shed new light on the space. Google Inc.'s reported $750 million acquisition of Admob was followed by Apple Inc.'s reported $275 million buy of Quattro Wireless, placing both companies in a prime spot to foster the true blossoming of the mobile advertising market. These deals were followed more recently by Opera Software's purchase of AdMarvel Inc. for an undisclosed amount.
These deals alone will not make 2010 the year mobile advertising and marketing campaigns take off, but they show that the industry is getting very serious about mobile marketing initiatives and that they are willing to invest in them.
"I don't know if anyone ever wondered what the year of television was or the year of radio," said Edward Kershaw, VP of mobile at The Nielsen Co., during a panel discussion at the recent Mobile World Congress event in Barcelona, Spain. "Things can run on hype for quite a while, but at some point the industry needs ... to deliver us the media and combined tools that we all expect."
 
Making the connection
For mobile advertising and marketing to really take off, companies that deal with selling the idea and advantages of mobile need to be sold on the idea. The advertising industry has dramatically shifted its considerable spending over the past several years from "old" outlets like print media toward "newer" outlets like the Internet and other Web-based outlets. The big challenge now is to convince those advertisers that mobile needs to be included in that discussion.
The dilemma of mobile is that everyone on the media planning side wants to do something new, said Michael Bayle, VP of monetization and marketing at Amobee Inc. during the same discussion panel at MWC. To get any real return on their investment or worthwhile engagement though, scale matters most, he added.
Amobee recently announced plans to acquire mobile advertising agency RingRing Media for an undisclosed sum. Amobee said the deal will help it round out its offering to network operators, which include Telefonica SA and Vodafone Group plc, and help sellers "monetize mobile display inventory." London-based RingRing's dedicated mobile advertising platform handles more than 4 billion impressions per month.
Mobile assuredly has unsurpassed scale on the whole, but reaching across wide swaths of that user base similar to how print, TV, online and radio do is still almost impossible to imagine and difficult because of many legitimate reasons, like privacy, customer experience and others.
The traditional direct-marketing approach that the advertising and marketing worlds have built their empires upon does not apply to mobile, Kershaw said, and therein lies the problem. Mobile companies not only have to encourage a purchasing shift among digital marketers, but also a mindshift. Therefore it's incumbent upon mobile companies to help redefine the rules of marketing under the mobile lens – an entirely different animal than even its digital brethren in online media.
"It's just understanding where we compete and where we might collaborate," said Tim Sefton, customer director of Telefonica O2 U.K., adding that areas of collaboration should run along the lines of what the marketing industry needs to justify spend. Those include reach, targeting, engagement, results and measurability and loyalty.
 
SMS still king
These rifts explain why nearly 60% to 70% of all mobile marketing spend is via SMS. Sefton said SMS will definitely grow as the entire pie of mobile marketing grows, but the "amount of customers that are actually engaging in SMS advertising is quite small." Indeed, richer formats will drive more engagement, he added.
Kershaw jumped in to add that SMS marketing is very sophisticated outside of the Western world, particularly because those markets are less careful about the type of engagement they want to have with their customers.
But, the real challenge for SM-based marketing, and all marketing in general, is relevance. Mobile advertising is only welcome if it provides a value to customers, and if it fails to do so it's considered spam and will leave consumers with a bad taste in their mouths.
"No one ever bought the Starbucks text coupon model because there is no context," said Scott Seaborn, head of mobile for advertising, marketing and public relations firm Ogilvy Group U.K. "If you walk by a Starbucks on a hot day and get a coupon for hot coffee that is spam."
 
Devices remain a challenge
The issue of smartphone adoption is also paramount to the potential rise of mobile marketing. While the device segment was the darling of the industry in 2009, posting strong sales and witnessing a never-ending slew of new launches, it still remains a relatively small percentage of the overall market With forecasts suggesting around 30% of consumers will have smartphones by the end of 2013, that still leaves more than two-third of all consumers lugging around considerably less-robust devices.
Many have noted that the issue of device penetration should not be an issue with basic advertising and marketing campaigns utilizing text messaging. However, feature phones do limit the appeal and availability of more colorful and interactive options.
And even with those 30% or so of consumer expected to sport a smartphone, the diversity of mobile operating systems and platforms on those devices could further limit the adoption and growth of mobile marketing and advertising campaigns. This is most important to those brands looking to reach out to consumers through application-based campaigns that a consumer can download through an operating system's application store.
 
The Google effect
No discussion of advertising or marketing would be complete without a look at Google, which has revolutionized the mobile content and search market and has more recently set its considerable glance towards the mobile space.
Its recent acquisition of Admob is only the latest in a string of moves the company has made in advancing its mobile efforts, which are of prime importance to Google, according to Chairman and CEO Eric Schmidt.
Admob joins Google's vast wireless assets that are centered on its well known search capabilities and more recently its open source Android operating system. The latest version of its OS includes navigation capabilities that when merged with its search engine are expected to provide a powerful option for advertisers.
"The beauty of Google's navigation initiative is that its offering, while free, will result in profits via mobile search and advertising," said Jagdish Rebello, director and principal analyst at iSuppli. "These moves by Google are intended to drive the increased use of mobile searches and prompt new social networking behaviors that leverage cloud storage and mobile advertising. Given its overwhelming dominance in the Internet search application market, Google is now poised to leverage its search capabilities with location-based services (LBS) to drive mobile search results targeted at the location of the mobile consumer. Clearly, Google's strategy is to expand into areas where it has a competitive advantage due to its dominance in search and advertising. This, coupled with mobile advertising and mobile commerce, has the potential to unlock tremendous value for the mobile user and to drive new revenue opportunities for Google."
Advertisers appear in favor of this integration, noting that such efforts will simplify what is still seen as a very complicated process of getting a brand in front of the right audience.
"We are organizing our company so that we just don't buy television or search anymore, we are buying a one-stop shop," said Jakob Nielsen, managing director of GroupM U.K. Interaction. "We want to buy an audience and not just an impression. Google with Admob can bring a one-stop shop for us."
Similar expectations are forecast to Apple following its purchase of Quattro. Apple has a strong ecosystem of integrated services and hardware based on its iPhone and iTunes platforms that the addition of Quattro is set to enhance.
According to the Mobile Marketing Association, Quattro Wireless has been a force in the mobile marketing industry, and with the backing of Apple, it will no doubt shift the industry to new levels. Apple has never before acted as an advertising provider in any medium, which shows a significant amount of confidence that this industry leader is putting in mobile marketing.
"They've never done this before. Apple is one of the most innovative technology companies in the world, and it is significant that they chose to do this in the mobile marketing space," said the MMA's Interim CEO and Global Board Chairman Federico Pisani Masomormile earlier this year. "With the investment of solid industry thought leaders, we are expecting consumers in this decade to not only accept advertising on their devices, but embrace it and ask for it. Existing players like Quattro Wireless and market entrants like Apple, who focus on consumer experience, industry best practices and globally accepted guidelines will be leading the race."
 
So is 2010 really the year?
Obviously there are still numerous challenges to overcome before mobile advertising and marketing can fulfill their lofty expectations, but with the pieces slowly falling in place and those with the deep pockets seemingly willing to invest, it appears that success is set to rise.
Tracy Ford and Matt Kapko contributed to this story.

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SHENZHEN, China--As ZTE Corp. pursues smaller carriers to advance its position in the United States, the company is also trying to expand its alliance with Qualcomm Inc. for broadband services on airlines beyond the United States.
Like its sister Chinese network vendor Huawei, ZTE realizes the U.S. marketplace is complex, said Xu Ming, VP, during its annual Global Analyst Conference here last week. ZTE believes smaller carriers – tier-two and tier-three operators – are the best place for the carrier to get a piece of the U.S. wireless carrier business. These operators are small but they have sound business models and their customers have an allegiance to them, he said.
While the U.S. market remains difficult to crack, the Chinese vendor can count quite a bit of success around the rest of the world. ZTE advanced to the No. 5 spot in global handset sales, surpassing Motorola Inc. Secondly, the company's networks business pushed past Alcatel-Lucent to sit at the no. 4 spot worldwide in that business.
"Our wireless business grew more than 100% in each of three last three years," Ming said. While much of that success came from the deployment of 3G equipment in China, substantial gains were made throughout the world, Ming said.
Indeed, the vendor now believes that in the future, there will likely only be three powerhouse infrastructure providers, a theory ZTE calls the Two plus One strategy. Whether it is supplying wireless networks, core networks or wireline equipment, ZXTE believes the top three vendors will be one Western company (think Ericsson) and two Chinese providers (Huawei and ZTE.) The Chinese vendors will be chosen for their prices and the Western supplier will be chosen for its leadership position in the space, as well as its technical expertise. Operators are tired of dealing with a myriad of providers and spending money on interoperability testing, he said.
In developed countries, ZTE has found success by supplying equipment to a major operators "branch" operations, rather than trying to deploy equipment into its core operations initially. In developing countries, the vendor can get in because it can deploy a solution quickly and help the operator with deployment costs, even to the point of helping build the shelter at the tower shelter, said another ZXTE executive.
ZTE had less than 5% of the Chinese market share for 2G CDMA services, but has managed today to gain 35%, even though the vendors supplying equipment remain the same, Ming said.
ZTE has been partnering with Qualcomm Inc. and Aircell to deliver a CDMA EV-DO solution for American Airlines, enabling the airline to offer wireless broadband to its in-flight customers, first deploying the solution in 2008. Ming said the companies are now hoping to expand that business model outside of the United States with other airline providers.

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SHENZHEN, China—While Chinese operators are still working to get more subscribers onto their 3G networks, the world's largest operator, China Mobile Communications Co. Ltd., is trialing a fourth-generation technology called TD-LTE. Once dismissed as an unlikely 4G choice, two recent events are giving the protocol some momentum.
With more than 500 million subscribers, China Mobile's enthusiasm to test TD-LTE has forced equipment manufacturers to commit to building products to the standard because there is simply too much potential to ignore the market segment. Further, chip company Qualcomm Inc. is planning to bid in India's upcoming broadband wireless access licenses with a local Indian partner. If the Qualcomm venture won a 2.3 GHz license, it would deploy a TD-LTE network, giving more credence to the technology.
At ZTE Corp.'s Global Analyst Conference here last week, company executives said there are global opportunities for the technology because there is unpaired spectrum available in many regions that would be well-suited to the technology, including Europe.
The recent hype behind TD-LTE is making WiMAX proponents nervous, said Tony Brown, senior analyst at Informa, during a TD-LTE panel at the conference. WiMAX enthusiasts "view TD-LTE as the bogeyman," Brown said. Indeed, the BWA auction in India for 2.3 GHz licenses, has been a given for WiMAX deployment up until Qualcomm's announcement to bid for the spectrum.
The FDD bands, which require paired spectrum, are overcrowded, said ZTE's Ming Liang, marketing director of ZTE's TDD product line. TD-LTE can use 2.3-2.4 GHz bands, the 2.5-2.6 GHz bands as well as the 2.9 GHz band, he noted. ZTE plans to have equipment available to support the 2.9 GHz band next year, Liang said. The 3GPP standards body is working to incorporate TD-LTE at 2.6 GHz. There is speculation that WiMAX operator Clearwire could use TD-LTE technology at some point, although for now, Clearwire has said it is using WiMAX technology for its go-to-market strategy.
China Mobile is conducting TD-LTE testing in three cities –Quingdao, Nanjing and Xiamen. The operator is testing indoor coverage, seamless handovers and interoperability testing for chip vendors. Chip vendors are testing a dual-mode TD-LTE and FDD-LTE cards for interoperability today, and in the third quarter, field testing should be conducted with commercial versions available in the first quarter of 2011, Liang said. Like other new protocols, dongles will be the first available devices, but Liang said Qualcomm's roadmap calls for embedded devices in 2012.
If China Mobile pushes forward with a TD-LTE deployments soon, that could spur deployments around the rest of the globe because a healthy ecosystem of equipment providers will already be in place, said Dr. Xiaodong Zhu, CTO of ZTE's Europe marketing platform. A combined TD-LTE and FDD-LTE solutions will simplify the technology roadmap, Zhu said. ZTE contends it unified RAN solutions will help operators because they can switch out technologies easily. ZTE, which has WiMAX deployments around the world, said a WiMAX operator may want to deploy that technology initially, and change to TD-LTE if and when it makes sense to do so. The decisions will vary operator by operator, Liang said.

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A few recent developments have made me believe that Cox Communications' wireless offering can be a game changer for the industry. First, I started to watch the TV shows I wanted to watch a few months ago. Second, I watched a Huawei demonstration at CTIA about how the TV remote control can do a lot of fancy things that people often predict a wireless handset can do. Third, I listened to AT&T talk about how its U-Verse customers can program their DVRs from their handsets.

I've always thought Cox certainly had the potential to pick up some wireless customers once it made the $500 million commitment to buy 700 MHz wireless spectrum. I've bought the argument that cable companies need a wireless play to remain relevant in an industry that increasingly offers service bundles to keep customers. But in my own world, I use Qwest for my Internet service and wireline phone service and Comcast for digital cable, and they both do a fine job, but I don't feel any allegiance to either company. The status quo is fine for me. I do feel bound to my wireless provider, but more because of in-network calling between family members than anything else. So I figure Cox's wireless service will appeal to people like my friend Lori, who constantly switches service providers based on the best bundle, or people who are unhappy with their wireless carrier or those who like the idea of a broadband stick for Internet access as part of their bundle. (After using Clearwire's WiMAX service at CTIA, I could easily be part of that group once Denver is built out.) But is that segment of the population enough to make Cox a powerhouse in the markets where it operates? I don't know.

However, a few months ago, we finally broke down and got a DVR. I maintained with four TVs and four people in the house, we watch too much TV anyway, etc. But really I was the one sacrificing my TV time because "The Office" and many of the other shows I like are completely inappropriate for my kids. Thus, if we watch TV together, we are stuck with the likes of "American Idol" and "Dancing with the Stars," or sports or cartoons. More often than not, my husband heads to the basement to watch sports and my son heads upstairs to watch Cartoon Network. Once we got the DVR, it took all of about one minute for everyone to fall in love with it. We rewind, we fast-forward, we record, we erase each other's shows to record our own and we buy movies. For better or worse, the TV is back as the centerpiece of family time many nights at our house because we can all watch "American Idol" as a family, knowing that our other favorite shows are being recorded. AT&T's new ads for U-Verse underscore all of the cool ways you can watch TV these days.

At CTIA's big show last month, Huawei, which is building Cox's CDMA network, demonstrated an offering that lets the TV remote do all sorts of amazing things like share programs with friends, chat with people on your buddy list while watching TV, video call (which I don't get, but some people might like) and a bunch of other stuff that connects the TV, wireless devices and the PC. Huawei was showing the demo to highlight the services that can be offered using LTE and an all-IP core – and for the record did not comment on Cox's plans for the service. But certainly Cox plans to battle in the hyper-competitive wireless space using its strength in TV.

AT&T's U-verse offering makes my DVR service look dated. It can record four shows at once and you can pause a recorded show on one TV and start to watch it on another, among other things. Again, this wouldn't have resonated with me a few months ago, but last night I was peeved I couldn't watch "Dancing with the Stars" while recording "Big Bang Theory," "Life Unexpected" and "Total Drama Island." (It seems everything we like to watch is on at 8 p.m., and nothing is on an hour later.)

Of course, none of this is offered in my market yet, and sticker shock could be a deal breaker, but all other things being equal, the company with the best bundle – whether it's primary business is wireless, cable or something else – will thrive going forward.

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The unemployment rate in the telecommunications sector stood at 8.5% in March, better than the overall unemployment rate of 9.7%, according to the most recent data from the U.S. Bureau of Labor Statistics. However, the figures can be misleading as the unemployment rate dropped .1 percentage point from February to March, but the sector actually lost 3,800 jobs. All of the information is preliminary and seasonally adjusted. About 943,000 people were employed in telecom in March. Twelve mass layoff events took place in the sector in February, with 893 people filing unemployment claims.

However, the more telling statistic in the telecom sector is the year-over-year comparison; 46,000 telecommunications jobs have been lost from March 2009 to March 2010. Drilling down further into the information, wireless employment actually ticked up by 200 positions from January to February, now employing 195,400 positions. Employment data by subsector is reported a month behind overall employment figures. The segment is down 1,100 jobs from one year ago. It appears wireline employment is taking the brunt of the hit in the overall telecommunications segment, however, with another 2,400 positions lost between January and February, and a year-to-year loss of 40,200 in wired telecom. The Labor Bureau counted about 612,500 positions in the sector in February. The good news in telecom is the average hourly wage increased while the hours worked dropped a bit. Employees averaged $28.70 an hour in February and worked 39.1 hours a week vs. earning $28.12 an hour in January and working 39.4 hours per week.

Looking at the employment information by states, California lost 600 telecommunications employment positions from January to February, with employment at 109,000. Telecom employment in Florida added another 200 positions to employ 58,200. In Georgia, overall telecom employment was stable momth to month at 50,800, with wireless employment making up 10,900 jobs in the state. One hundred telecom jobs were lost in Kansas from January to February, with 20,000 jobs in the sector in February, but the state does not break out wired vs. wireless employment. Telecom employment in New Jersey was flat at 37,200. In New York, 700 positions were lost from January to February, with telecom employment at 49,800. Texas added another 100 positions, accounting for 89,800 positions in February.

Employment in the computer and electronics products sector remained unchanged from February to March, with 1.09 million people employed in the segment. The unemployment rate increased to 12% in March, from 10.5% in February, however. More than 84,000 jobs in the sector have been lost in the last year. Employment trended downward by 400 jobs to 157,400 jobs in computer and peripheral equipment but increased by 600 jobs the semiconductors and electronic components sub-segment to 361,800 jobs, and another 600 employees were added in the communications equipment subsector, to 119,200 people employed. This was offset by 1,200 positions lost in the electronic instruments subsector, which employs 405,500 people. All numbers are seasonally adjusted. Eighteen mass layoff events took place in February, with 1,538 people filing initial unemployment benefit claims. Average hourly wages dropped slightly from $32.59 per hour in February to $32.04 in March, while the average number of hours worked increased from 40.1 hours to 40.3

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Telecom infrastructure giant Ericsson said it has signed a $1.3 billion contract with Indian operator Bharti Airtel to expand and upgrade the carrier’s wireless network in 15 telecom circles in India.

As part of this contract, Ericsson said it will supply its portfolio of energy efficient 2G/2.5G radio base stations, circuit and packet core, microwave transmission and Intelligent Network. Ericsson noted it will also work to ensure that Bharti Airtel's core and transport network is 3G-ready in order to reduce time to market and enable the fast rollout of 3G services at a later date. The expansion covers introduction of technologies designed to provide better quality voice to end users, support more users in using one base station, enhanced data rates using Evolved EDGE technology and other new services.

Ericsson earlier this week signed contracts with China Mobile and China Unicom to expand the carrier’s 2G and 3G networks. The China Mobile deal is valued at $1 billion, while the China Unicom deal is valued at $800 million.

Under the agreement with China Mobile, Ericsson will provide a radio access network including a multi-standard radio base station and mobile soft-switching technology designed to boost the capacity of the network and evolve it into an IP network. The equipment is set to be implemented this year.

In the agreement with China Unicom, Ericsson will provide HSPA Evolution technology to support higher network speeds. Ericsson also said it will supply IP routers, fiber access technologies and IP multimedia subsystem (IMS) in support of the carrier’s broadband plans.

"The signing of the significant frame agreements is a manifestation of our continued strong cooperation with our Chinese customers,” said Mats H Olsson, head of Ericsson Greater China. “We are confident that we will do an even better job in supplying the latest technology and best-in-class services in time to support Chinese operators in fulfilling the demand of this tremendous market growth.”

China Mobile is the world’s largest wireless operator and currently serves more than 522 million customers, while China Unicom is approaching 150 million customers on its network.

Domestically, Ericsson has been selected by both Verizon Wireless and AT&T Mobility to provide the country’s No. 1 and No. 2 carriers with equipment for their respective LTE deployments. Verizon Wireless is in the midst of rolling out its network with plans to cover 100 million potential customers in up to 30 markets by the end of the year. AT&T Mobility said it plans to begin rolling out LTE services beginning in 2011.

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