Can We Ensure a Future for Wireless Advertising?

Wireless advertising was part of the last batch of great buzzwords/concepts of the Internet bubble. If I remember correctly, “wireless” came right after “B2B” (business-to-business) and right before the rut we are stuck in now — “profitability” (the least graceful buzzword of them all).

Don’t get me wrong; I think wireless advertising (like B2B commerce) will grow to be a viable industry. There is little doubt that millions of us will someday get advertising-supported content on wireless devices of some shape or size (many already do). But right now the industry is at a sensitive moment; it has to prove that consumers will accept advertising on personal digital assistants (PDAs), cell phones, and the like. That is proving to be a large, albeit surmountable, hurdle.

Like all great Net concepts, wireless advertising has its collection of aggressive projections. Depending on whom you ask, by 2004 or 2005, wireless advertising revenue will grow to $700 million (Jupiter Media Metrix), $891 million (Forrester), $3.9 billion (Strategis), or $6 billion (The Yankee Group). Those certainly seem like large numbers to me.

But the growth of the wireless advertising industry depends on a number of factors. One of the most important is whether people will accept, or reject, advertising on their wireless devices.

Consumer Acceptance

To my knowledge, no one did extensive polling to see whether people would accept television, radio, or newspaper advertising. But companies that want wireless advertising to grow know that if consumers find it intolerable, growth will be jeopardized.

Many studies have been conducted to gauge consumer acceptance of wireless advertising. Most of them have been sponsored or conducted by companies that have a vested interest in their success. Here’s a quick survey of some results:

  • WindWire, a U.S.-based wireless infrastructure and media company, asked 260 users who took part in a trial about their attitudes toward wireless advertising. Some 86 percent of respondents said they preferred free or ad-subsidized wireless content to fee-based content.

  • In Sweden, Ericsson found that 60 percent of the users in a large trial said they liked receiving short message service (SMS) advertising messages when they were targeted to their profiles and interests.

  • Early this year, U.S.-based SkyGo reported that 27 percent of trial users said they like ads so much they would switch access providers to receive them!

Many of the studies (such as the SkyGo example) are probably skewed by the fact that respondents were given cell phones to participate. Jupiter Media Metrix, an independent research company, found that 46 percent of consumers who already owned wireless phones and PDAs said they want no advertising at all, even if it pays for all or a portion of their service or device.

Learning From Our Mistakes

Overall, however, the research indicates that consumers will accept wireless advertising if they get something in return — whether it’s free or subsidized access, good content, or other incentives. The problem, of course, is that the “let’s give them something free” business model has been all but refuted on the Web. It’s hard to make more money than you spend (hence our current buzzword).

Location-based targeting and the personal relationship people have with their phones and PDAs offer enormous opportunity for marketers. But they also can be abused; and if they are, the future of wireless advertising will be damaged. To avoid severely damaging the future of wireless advertising, we will need more discipline than was exercised in the case of, say, email advertising.

For those who are developing the wireless space as an advertising platform, the current slowdown in growth of Internet advertising should give some needed time to consider the best way to proceed. A quick look at the Internet, where quality content and relevant ads coexist with spam and junk direct-response pitches, should be enough to pretty clearly frame the choice about the direction of wireless advertising.

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