Analysts: Advertising Will Not Work in the Wireless World

November 14, 2000   |  Comments

Some analysts have reached a consensus that advertising won't comprise a major revenue source for wireless content providers.

With the value proposition behind online banner ads already very much in doubt in the desktop paradigm, most analysts now say that advertising is even less likely to thrive in the mobile world.

This will probably come as a disappointment to the many content providers presently planning to include an ad-based revenue component as part of their wireless offerings.

"Advertising is the one revenue model that everyone is instinctively going towards right now, because it is the easiest," said Eddie Hold, a wireless analyst with research firm Current Analysis in Sterling, Va. "It is an existing model. Everyone understands advertising. They don't quite understand how to do it on a tiny little screen, but they understand the basics of it."

It's that tiny little screen that will be advertising's undoing, Hold contends.

Not only is mobile advertising "an intrusive use of space," he said, the physical dimensions of cell phones and PDAs make it a losing proposition from the start. "The average phone will give you only two to four lines of text. If you use only one of those for a sponsorship space, what does one line give you? Ten characters. That's not exactly a big corporate message. There are a lot of issues out there as to how to make that model successful -- and there are no answers yet."

Tim DePriest said those answers are falling quickly into place, however. A vice president with digital ad distribution company AdForce, and also chair of the wireless advertising association, DePriest said customization is the key to making mobile ads pay.

His firm, for example, did a campaign for client fusionOne, in which a marketing message asked mobile users whether they would be willing to see ads for Father's Day gifts. Those who agreed got an ad for a digital camera, and of those people who received those ads, a whopping 9 percent bought the product.

The key to a successful wireless ad effort is to make the campaign permissions-based and highly personalized. "If people are walking through a shopping center and are able to get coupons and services based on their location -- who's not going to take advantage of that?" said DePriest.

The weight of popular opinion is against him, however.

Gartner Group analyst Bob Egan represents the mainstream of thought when it comes to wireless advertising. He argues that the success of banner ads in the desktop environment has been weak thus far, and that such advertising "is even less likely [to succeed] in the wireless world."

He says users will find ads just a little too obtrusive in the mobile space, when they are (by definition) on the move, and are probably seeking quick and easy access to information.

"Advertisers will see people carrying cell and phones and other messaging devices as the most qualified retail distribution for their advertising. After all, you know a lot about them. You know where they are and you know the kind of transactions they engage in," he said. "But the simple fact is, I don't want my phone going off every two minutes with coupons and offers."

A revenue model based on advertising "pushes a message into the hearts and minds of individuals, and I don't think that is what people want" in the mobile arena, he said. As a result, "I don't think this mobile business-to-consumer marketing is going to grow up to be anywhere near the size that these people in the advertising world are saying it is going to be." --This article courtesy of M-CommerceTimes, an publication. Adam Katz-Stone writes on business and technology from Annapolis, Md.

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