Ads, Coming Soon to a Phone Near You

Tim Bajarin

PCMag.com

August 15, 2008

Through ties to your GPS and smartphone, the mobile advertising platform could soon explode.

Last week marked Digital Hollywood's Building Blocks 2008 conference, which hosted a broad range of panels on everything from the future of the digital living room and the state of DRM to mobile and video advertising. All of the panels had merit, but I spent most of my time in sessions that dealt with advertising, especially mobile ads. At the moment, the industry sells around 1.2 billion cell phones worldwide each year; I estimate that by 2012, at least 70 percent of the phones sold will be smartphones or multimedia phones. These could represent the most important advertising platform we have ever known, and all types of companies in all types of industries are even now trying to figure out how to include mobile advertising in their overall campaigns.

One important benchmark is the fact that today, companies spend approximately $50 billion a year advertising on television, and only about $20 billion via the Internet—and much, much less to mobile. But given the transformation of viewing habits, it's clear that a sea change is in the works. In the future, ads will need to spread beyond the TV and onto all types of Internet-connected devices, especially mobile ones.

In the early days of Web advertising, the holy grail was banner ads. More recent ads have become contextual, thanks to search engines like Google that tie them directly to search results. But the cell phone brings an interesting element to mobile advertising: the GPS. That tiny chip lets contextual ads become much more meaningful to the user, as well a more powerful advertising medium.

How so? Some examples can put this into perspective. The first ties the GPS chip to a phone's weather application. In this case, an airline could extend its brand by sending the user a message like "It's 50 degrees warmer in Maui. Why not consider our airline the next time you take a vacation?" The phone knows you're experiencing a cold snap, possibly dreaming about being someplace warmer.

Another example ties the GPS to a person's calendar. Your phone knows you're in San Francisco and that you have nothing scheduled for Friday night. The SF Giants could send out a note saying that they are playing the Dodgers Friday night. Why not come out to support the local team? If done right, the ad could allow you to choose seats and buy tickets immediately.

One last example ties the GPS to your music collection and your calendar. Since your phone knows you have two Social Distortion albums in your music collection, and since it knows your general location, it could have the band (or Ticketmaster) send you an alert about a performance in San Francisco on Saturday. So if you have nothing scheduled on your calendar….

For this to really work, you'd need to subscribe to a set of preferences of things you like or want to get information about. People already opt in for personal advertising when they buy magazines that focus on their personal interests. I'm an avid scuba diver, and I buy scuba magazines as much for the ads that show new equipment as I do for information about diving and dive resorts. I'm also a cook, and I subscribe to all types of food-related magazines to get stories, and yes, ads that might be of interest to me.

But I'm a realist as well, and I know that in this day and age, getting the attention of mobile users takes creativity. One panelist at Digital Hollywood suggested that ads might need to be integrated with content: Ray-Ban should have actors tout its sunglasses as part of the script. Another panelist pointed out that advertising's virus-like nature can be quite effective. He cited a German automaker that created a free ringtone of its car's horn honking. It turned out that kids liked this "sound" and began sharing it with their friends; now phones all over the world blare out this ringtone. A third panelist suggested that we go so far as to share ad revenues with the user. Someone pointed out that social networks and user recommendations are also key ways for a company to get their brand before these mobile customers.

There's a concept in mobile advertising known as "call-to-action" advertising, a feature that allows one to get more information or to communicate with the advertiser while a spot is playing. If you see an ad for a motorcycle, you could press a button and an SMS text would be sent with the nearest location that sells that particular bike.

Market research firm Multimedia Intelligence believes that "call-to-action" advertising will exceed $1 billion by 2012. The company points out that while a mobile device is an inferior entertainment platform, it's superior at portable communications. Multimedia Intelligence believes that call-to-action leverages the handset's built-in return channel to move advertising beyond the capabilities of the living-room experience.

Today, most ad spending is still focused on broadcast television, which strives to cast a message to all types of customers. It's becoming clear that the most effective medium for one-to-one marketing will be the cell phone. And if advertisers and the industry find the right mix of personalized ads in context, advertainment, and the opt-in and call-to-action models, overall ad spends could shift to the mobile platform over time—and make it the best place for advertisers to get their message to the right customers.

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