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“It’s a ‘Brave New World’ out there.”

“Advertisers are terrorized their brand is going to be bastardized.”

“I don’t think [a mobile phone] is a great advertising device.”

These less-than-optimistic thoughts about mobile video and rich media advertising came out of Digital Hollywood’s Building Blocks 2006 conference in San Jose this week.

Video and rich media ads on mobile phones and devices, long touted as being just around the corner, may not be so close after all. The topic came up during several panels focusing on the “next big thing” for interactive marketing.

“It’s a ‘Brave New World’ out there” when it comes to creating ads that won’t offend cell phone users, said Ira Becker, SVP of 1UP Network, a division of Ziff Davis’ Game Group, referring to the 1932 novel by Aldous Huxley that portrays a sinister world that embraces technology. “It’s like [cigarette maker] Philip Morris having ads saying ‘go to Philip Morris for tips on how to stop smoking.'”

The idea that using rich media for mobile phone ads won’t happen anytime soon was echoed by Jeff Doiron, president and co-founder of Fuel Industries, an Ontario, Canada-based interactive shop best known for advergames and branded content. Doiron believes advertisers are wary of moving onto cell phones, because they don’t want to upset users, and because there’s no protection on how content could be reused by consumers. “Advertisers are terrorized their brand is going to be bastardized,” he said.

Of course, there were proponents of media-rich advertising on mobile phones, but they appeared to be in the minority at this conference, and even they hedged their bets. One advocate is Martijn Lopes Cardozo, SVP of corporate development for VOD provider Tandberg Television.

“Mobile ads are going to be very, very big,” he predicted. “It’s an untapped market right now.” But even he admitted, “Advertisers are moving forward cautiously. As soon as content finds its way on devices, advertising is not far behind.”

Tandberg recently partnered with Atlas to get more interactive advertisers to advertise on its cable VOD platform, which could prove to be a gateway to video ads on mobile devices.

Chet Kanojia, co-founder and chairman of Navic, a cable VOD ad provider, also doesn’t see a big rush to mobile phones by advertisers. At best, “a phone is a device for text,” he said. “I don’t think it’s a great advertising device.”

Still, Kanojia does see where cell phone advertisements might come into play, as long as advertisers don’t spam customers with lots of meaningless ads. Research has shown that some users are open to viewing ads on cell phones if they are relevant, and if the user gets something in exchange, like content. “There are some good things being sent to cell phone users, like coupons,” or the use of text ads that direct users to Web sites, he said.

The shift away from using mobile phones for interactive marketing was summed up by Will Griffen, CEO of DoD, an interactive production company, “Mobile companies don’t always want to work with content providers. I don’t think it’s going to catch on big for advertising.”

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