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.