The whole point of advertising is to efficiently reach the right people. And throughout the history of media, the ability to deliver the right audience has commanded a premium from the advertiser. Within online advertising, for example, we see costs per thousand (CPMs) for undifferentiated audiences selling for a few dollars, whereas the CPMs for highly qualified audiences are still worth 10-30 times that amount. The same principle holds true for all forms of media.
Most advertising exists within some type of contextual environment that makes sense for reaching the advertiser’s target audience. Think cleaning products during soap operas, computer ads in PC Week, and toy commercials during Saturday morning cartoons.
But when you translate this thinking to wireless, what actually constitutes a contextual environment? And of the many types of players I introduced in my last article, which is responsible for creating this editorial environment?
On the surface, the opportunities for creating contextual environments for wireless appear to be pretty limited. What can you do, after all, with an editorial environment of nine lines or fewer? But if you look closely enough, it’s easy to see contextual differences worth noting. (I’ll also be looking, in future articles, at other ways to create qualified wireless audiences beyond editorial context.)
The wireless carriers, of course, are largely responsible for creating the first level of editorial environment for wireless cell phone users. Through their “walled garden” of sites, they act as portal aggregators, typically striking deals with the biggest and best brand-name content providers to populate their wireless home pages.
At the next level are the traditional portal players and brand-name content sites. The portal leaders from the online space, including AOL, Yahoo, and MSN, as well as the major content brands, such as The Wall Street Journal and ESPN, have created wireless versions of themselves and struck deals with various carriers for inclusion in their walled gardens of wireless sites. This creates the second level of editorial context — their portals offer many of the same categories (money, sports, news) as the |ber walled-garden portals, and the brand content providers allow deeper cuts into their categories.
Third are the online content providers that didn’t have enough clout to make it into the walled garden but went ahead and created wireless versions of their sites anyway, hoping that people would somehow find their way to their sites. As you would expect, some of the smaller, more niche sites have gone this route, creating the potential for high-premium audiences once wireless volumes pick up significantly and technology such as voice command makes it easier to navigate the wireless Web.
On the personal digital assistant (PDA) front, without the dominance of the wireless carriers, the situation looks quite different. Specific content-aggregator players, such as AvantGo and Vindigo, have sprung up to aggregate content for wireless PDAs, thereby creating a first-level editorial context for this market. Vindigo, by virtue of its focus on local m-commerce, has created its own editorial context; users expect to find rich local information on its platform. (Again, as I noted in my last article, these companies may need, or want, to play many different roles beyond content aggregation as the market matures). Beyond the content aggregators, the second and third levels described above also apply to the PDA market.
So what does this all mean for wireless advertising and m-commerce?
First, the good news. The potential for targeted audiences based on contextual environment is already present in the wireless medium. When we look at the bloodbath in online advertising over the last year, this is very good news. There is no doubt that the masses of undifferentiated inventory drove down CPMs dramatically. Hopefully, the complexities of getting people to a wireless site will take most of the less-professional players out of the running.
Now, the not-so-good news. Wireless audiences are still far too small for publishers to bring in significant revenue from their wireless efforts. And the further you go down the editorial levels, the smaller the audiences become. So the level-three niche site that can’t get a spot within the walled garden is seeing very little wireless traffic, and even the total portal traffic within the walled gardens is very modest in terms of ability to provide broad reach. That regulates wireless advertising to an experimental mode for most advertisers today.
But there is no doubt in my mind that wireless advertising and m-commerce will have their day. And the ability to deliver highly targeted audiences will be the key to their effective role within the marketing mix.