Mobile Ads Need Special Treatment

High-value mobile advertising will be a major reason that the market for interactive advertising will be worth $83.24 billion within five years, according to a report by Ovum, which also cautions against turning users off to the idea of mobile advertising.

According to the report “Interactive Advertising: New Revenue Streams for Fixed & Mobile Operators,” Internet advertising, from banners to logos to email messages, still represents a tiny portion of the advertising budget, and the promise of a high-value market for advertisers will not be fulfilled until advertising becomes increasingly targeted and interactive, and is delivered to a range of Internet devices.

“The key is convergence,” said Rosalie Nelson, senior Ovum analyst and author of the report. “Mobile advertising will complement Internet and interactive television advertising. It will make it possible for advertisers to create tailor-made campaigns targeting users according to where they are, their needs of the moment and the device they are using.”

Broadband Internet access, whether via the PC, interactive TV, or mobile handset, is what will deliver this interactivity to the ad market. It will allow for more creative, rich media campaigns, and will encourage user response. But if these new forms of advertising are to justify the cost and investment required, a major shift in mindset is required from the advertisers themselves.

“Advertisers have to move away from the old passive, high-volume model,” Nelson said. “On the whole, today’s consumer sees advertising as a low-value, mass-market experience, which cannot be avoided, and standard banner ads simply reinforced that perception. The industry cannot simply replicate this experience on new platforms — it could kill the very services advertising is supposed to be funding.”

In its report, Ovum advises potential mobile advertisers to use a highly targeted, low-volume, high-value model where users have a strong element of control over the number, type, and timing of ads received. Data privacy concerns mean users’ cooperation in accepting advertising will be critical. However, this means the advertising must support services that are vulnerable on an ongoing basis to users, and it will require a trade-off.

“The quickest way to alienate users is to flood them with messages,” Nelson said. “Mobile advertising must be carried out with a basic intention to offer something of value to the consumer, for example, sponsored news updates that users find useful. There is the potential for targeted advertising to ‘piggyback’ on that information. A sponsored anniversary alert from the diary could be accompanied by an offer to send flowers or a gift, with a discount voucher. The pay-off is greater take-up of goods and services, this means an exclusive, premium market for advertisers.”

Ovum’s report predicts it will take two to three years to build a fully personalized mobile advertising infrastructure, but even so it forecasts that by 2005 mobile will generate nearly 20 percent of total Internet advertising revenues. Global Internet advertising as a whole will grow from $8.34 billion in 2000 to $83.24 billion by 2005. Advertising over fixed networks will dominate, generating 80.24 percent of the total at $66.8 billion. Mobile advertising will not begin to reach critical mass until 2002-2003, generating 19.7 percent of Internet spending at $16.4 billion by 2005.

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