Advertisers see big bucks in little phone

The Baltimore Sun

CHICAGO -- For many of the 255 million Americans with cell phones, the gadgets are indispensable for everything from tracking appointments to taking photographs to telling time. Now, advertisers want their piece of the mobile phone.

As consumers increasingly use their handsets to browse the Web, it is no wonder that advertisers see mobile screens as valuable turf. In the United States, cell phones have not yet proved to be the same kind of advertising bonanza as the Internet, mostly because of the wireless industry's more controlled nature and the slower adoption of text messaging and mobile Web services.

But momentum is gradually building, especially behind text-based marketing campaigns.

According to research firm eMarketer, worldwide spending on mobile advertising totaled $2.7 billion last year and is expected to hit $4.6 billion in 2008, rising to $19.1 billion by 2012. In contrast, eMarketer projects that Internet advertising in the United States alone will reach $25.9 billion this year.

"Consumers are becoming more receptive to using wireless data on their device," said Laura Marriott, president of the Mobile Marketing Association, which has rebuilt its membership in the past several years after a decline in 2002. "[But] I think there's mixed feelings in regards to receiving advertising-related messages."

Mobile advertising takes many forms. Banner ads run on the Web pages displayed in cell phone browsers, and consumers can either click on those ads or "click to call" a phone number associated with the promotion. Companies can push so-called premium content such as ring tones and wallpapers, often associated with entertainment brands.

There is also message-based marketing, where consumers may be strolling by a billboard or watching a television commercial that encourages them to text a code to a number to receive a coupon or enter a sweepstakes. According to eMarketer, this ad category is the largest by far for mobile phones and will reach $4.2 billion in 2008.

In the U.S., wireless customers typically pay for text messages they receive. This model has made text-related promotions slower to catch on. But texting is rapidly becoming a routine part of cell phone communication, especially among younger consumers. CTIA, the wireless industry trade association, reported an average 1.6 billion messages per day in December, more than double the traffic of a year earlier.

In addition, operators are encouraging their subscribers to sign up for packages that allow a certain number of messages or unlimited texting for a flat monthly rate.

Even with texting costs falling, most advertisers recognize that cell phone users don't want to be bombarded with spam. Industry guidelines call for opt-in procedures, whereby consumers must send in their agreement via text message if they want to receive additional promotions on their phones or enroll in loyalty clubs. Other recommended practices include easy ways to opt out of promotions via text, and clearly asking for permission to send offers from affiliates.

Some large corporations are doing early experiments with mobile marketing. McDonald's Corp. is conducting a limited promotion in Utah, where through April 27 customers can get a free iced coffee with a cell phone coupon.

Cellfire, which specializes in mobile coupons, is making the vouchers available via its Web site and text message.

"We feel like the market is here," said Cellfire chief executive Brent Dusing, whose firm is doing national campaigns for Sears Portrait Studio and Hollywood Video. Cellfire started in 2005, and "when we started, we were just educating consumers. ... Now that we're here in 2008, we feel pretty good about market adoption."

For mobile advertisers, the experience of the Internet offers both promise and cautionary tales. Although cell phone users in the United States are starting to mimic such PC-like activities as Web browsing and media downloads, handsets are a far more sensitive issue than computers.

Another key difference between the wireless industry and the Internet is the presence of the carriers. Operators are especially careful in letting advertisers on their networks because the service providers would catch much of the backlash if consumers get irritated by too many ads on their mobile browsers or confusing charges on their bills. For the carriers, the opportunities to draw in greater revenue are promising, but not at the expense of customer defections.

The aim is to maintain an "uncluttered environment," said Richard Williams, executive director of digital media operations at Verizon Wireless. "From that standpoint, we wanted to make sure we didn't interrupt the customer experience. ... When you look at the mobile Web and our overall lowest churn rate in the industry, we didn't want to jeopardize that."

Not all types of Internet-like advertising work on cell phones. The wireless industry avoids pop-up ads and "interstitial" ads that play before displaying content the consumer has requested. Instead, advertisers prefer to appear on the "deck," or the introductory page that subscribers see when they access their browsers.

AT&T; spokesman Mark Siegel said even deck ads appear on "a very limited basis."

Some industry players have experimented with subsidized service, "where in exchange for a lower rate, consumers would have to wade through some ads before making a call," Siegel said. But he was skeptical about that model gaining widespread acceptance.

Looking ahead, advertisers are eager to seize on the popularity of location-based services that allow phone subscribers to map their whereabouts and get localized content. But industry players say the focus will remain on protecting privacy.

Wailin Wong writes for the Chicago Tribune.

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