Agencies Describe Hurdles Facing U.S. Mobile Ad Market

At the Mobile Advertising & Marketing USA event in San Francisco this week, agency execs blamed the slow progress of mobile ads in the U.S. on a combination of carrier constraints, the plethora of devices that all need individual coding, and a basic lack of understanding by their clients of what the mobile space can provide them.

Agency execs also point to the Apple iPhone as a trailblazing device that may open new mobile advertising opportunities, while causing developers additional headaches in the short run.

Angela Steele, vice president, global account director for Starcom USA, told event attendees her company conducted interviews with iPhone owners following the handset’s release. Compared to other mobile phone users, iPhone users often like their devices so much they hold a special affinity for any brand that has created advertising material to run on the device.

“It heightened the interest in mobile and the awareness of what is possible in the space,” Steele said of the iPhone and what it may mean for mobile advertising.

However, Dan Rosen, director of AKQA Mobile, stressed that the iPhone has seen limited market penetration and represents yet another platform agencies must spend extra time and money on as part of their campaigns, to make sure images will appear correctly. Rosen also indicated the iPhone is one of many mobile devices used by consumers, and each device requires a level of integration work by agencies to remain compatible with their advertising applications. In combination with U.S. carriers’ predominately closed and proprietary operating systems, mobile ad developers often have difficult obstacles to overcome with campaigns.

“Problems with carriers and their closed systems, and the phones and what they can do, has stymied us in the U.S.,” agreed Joshua Spanier, director of communication strategy for Goodby Silverstein & Partners. “The education part of it is also critical. A lot of clients don’t know what to do with mobile.”

At the event several agency directors described campaigns run in Europe and Asia with a deal of success, including Ogilvy Interactive’s Motorola campaign for the Hong Kong airport that allowed travelers to send video messages of soccer star David Beckham to friends, and AKQA Mobile’s “bar-finder” application campaign for Smirnoff in London. Those campaigns were successful due not only to prolific number of mobile users in Europe and Asia, but also to advertisers in those markets approaching mobile with the same level of interest as other mediums, said Maria Mandel, senior partner, executive director of digital innovation at Ogilvy Interactive.

“When I speak to my counterparts in Asia, mobile is seen as a key part of a campaign. When you come to the U.S. mobile is an afterthought,” she said. “That’s what we’re facing today and have to overcome. From a U.S. perspective it’s about educating the marketplace.”

Mandel also warned, often marketers want to attempt mobile video campaigns, geotargeted messages, or other mobile advertising experiments before they are familiar with what works on such devices. She recommended the use of short message service (SMS) marketing campaigns in the U.S. as a kind of “walk before you run” process before attempting more complex campaigns.

At the same time, Richard Ting, executive creative director at R/GA, warned that even SMS campaigns should not be tacked on at the last minute, noting on occasion advertisers asked for SMS codes to be included two weeks before a campaigns launch, when procuring those codes from carriers is a minimum 12 weeks process to complete. He also grudgingly admitted that his agency is currently looking to hire two employees whose primarily roles will be to deal with carriers and their complex processes in place to procure SMS short codes for campaigns.

When asked if 2008 would be the year that mobile advertising really takes off in the U.S., speakers agreed that there’s still too much work and education to be done before mobile advertising is common place in America, predicting instead that 2009 or 2010 will see more traction.

“I’ve been hearing this year is the year for mobile ads for several years in a row now,” joked Spanier.

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