Study: Unlike Users, Ads Slow to Move from PC to Devices

“Two roads diverge in a yellow wood…” Well, not exactly, but as marketers search for ways to improve banners, are they missing the point? Internet content and services are beginning to move off the PC and onto a plethora of devices. Perhaps they should follow.

In the next five years, 40 percent of the global market for Internet services will be attributable to multiaccess services, the delivery of content and services to multiple devices over multiple networks, according to research by Ovum. And while this phenomenon will change the face of the IT, telecom and new media industries, and create lucrative markets for new products and services, companies wanting to capitalize on opportunities must radically alter their business practices.

“This evolution of the Internet will stimulate the convergence of applications and services, and allow them to reach well beyond their usual domains,” said Neil Ward-Dutton, research director at Ovum. “The introduction of interactive digital TV services, media streaming and the announcements of wireless strategies from IBM, Microsoft, Sun, Hewlett-Packard, and Oracle are just some examples of the early moves that are being made towards making Internet services available any time, anywhere. PDAs, mobile phones, TVs and even cars will be able to access digital content and services by 2005.”

But what of the marketing opportunities that are sure to follow the content and services to the devices? According to Jupiter Media Metrix, they shouldn’t follow too closely. Small and fragmented wireless and interactive television (iTV) audiences in the United States will limit advertising opportunities on post-PC platforms, according to Jupiter, making them secondary digital marketing vehicles. The post-PC audience (wireless devices, iTV and Internet kiosks) will reach critical mass by 2005 — however, the PC will continue to dominate with a 74 percent Internet household penetration and 68 percent Internet individual penetration, a Jupiter report found.

Jupiter’s analysts expect advertisers will be slow to allocate dollars for campaigns on post-PC platforms as they struggle to gain and control the key benefits of advertising on these devices. Jupiter recommends marketers view the post-PC audience as “modal targets” — or distinct groups of individuals with similar behaviors and attitudes that stem closely from their use of any Internet-enabled device (see table below)– as opposed to the more traditional audience segmentation characteristics, such as demographics, geography and gender.

According to a Jupiter Executive Survey, 77 percent of advertisers spent no money on wireless advertising in 2000 and 82 percent spent nothing on iTV. Thirty-six percent plan do to the same in 2001 for wireless devices, and 57 percent for iTV. Therefore, Jupiter expects to see only modest revenue increases for post-PC platforms in the near future.

Jupiter projects online ad revenues to reach $16 billion by 2005, but post-PC advertising revenues will climb slowly and trail behind. iTV will reach only $4 billion, and wireless $700 million, by 2005. While wireless ads have the advantage of immediacy (reaching consumers closer to when and where they may actually purchase), Jupiter analysts think the lack of standards, audience fragmentation and unclear ROI will inhibit the growth of marketing on these platforms. Consumers may also demand a high price from advertisers looking to reach them on their mobile phones. A Jupiter Consumer Survey found that consumers willing to accept advertising on their mobile phone or PDA said they preferred subsidized content and access (36 percent), followed closely by subsidized devices (35 percent). Nearly half (46 percent) of all users, however, said that no form of compensation would persuade them to receive advertising on their mobile phones or PDAs.

“Marketers that believe they can overcome the limitations of interactive and wireless devices as branding vehicles miss the point. To maximize ad campaigns on these devices, advertisers must isolate and understand the attributes of modal targets, and match the marketing message to the objectives of the consumer using the device — not their demographic profiles,” said Marissa Gluck, senior analyst at Jupiter. “Post-PC ad opportunities are a need-to-have for a few categories of advertisers and only a nice-to-have for most.”

There is some hope for advertisers bent on placing messages on new platforms. After all, advertising found its way onto the radio, television and the Internet, to say nothing of sports arenas and highways. According to a study by International Data Corp. (IDC), consumers aren’t as burned out with advertising as conventional wisdom would lead us to believe. The study found some forms of commercial advertising in emerging media — such as the dreaded Web pop-up — are despised, but consumers will readily accept many emerging forms of advertising when they can call the shots.

“Deep resistance to certain types of advertising delivery will force advertisers to assess expectations about and demands of commercial messages inserted in new media,” said Tom Kiersted, research manager for IDC’s Telecommunications Business Brands program. “The fact is consumers are pretty willing to entertain some of the latest new media advertising models, but the more they can control the way advertisers reach them, when they reach them, how often they reach them, where they reach them, and in what context they reach them, the better they like it.”

Banner ads are the most tolerated form of advertising in emerging media, IDC found, and most participants said they thought Web advertising was generally “a good thing” from which you can get “valuable information.” The majority said they wouldn’t use ad-blocking software even if it were offered to them for free.

The most pronounced hesitation, however, centers around receiving any kind of advertising on their wireless telephones or those phones’ Web interfaces. Most participants opposed advertising on wireless phones as overly invasive, but there was some evidence that users might find it less intolerable if they could control when and how much they received (verging on a pull model), if it were very well targeted, or if it lowered their monthly bills, was more interactive, linked them to a product or service, or provided instant access to a meaningful transaction with the advertiser. The study found participants are less resistant to advertising on their PDAs, although they still want to control where and how the ads are displayed.

Post-PC Devices and Their Marketing Hurdles
Device	Value to Consumers	Challenge to Marketers
Wireless	Members of this audience are united by their need for time-sensitive and location-sensitive information.	Users are likely to ignore and perhaps resent marketing messages that are not relevant to the next few activities they may engage in.
iTV	People use this device primarily to be entertained.	Users have only 30 seconds to respond to commercials and will resist being taken away from compelling video content.
Kiosks	Found in shopping malls, retail outlets and other public spaces, Internet kiosks provide the opportunity for users to receive transaction-oriented and brand-oriented marketing messages.	The transient nature of this platform makes complex or lengthy interactions and transactions relatively unlikely.
Source: Jupiter Research

Michael Pastore is managing editor of internet.com’s CyberAtlas, AdResource and InternetPRGuide.