While the industry is abuzz about mobile advertising,
why not throw mobile e-mail into the mix?

Considering the myriad ways advertising can be incorporated into the mobile world – through SMS, WAP sites, video and more – it’s no wonder e-mail companies are thinking about it in their sphere as well.

But among a smattering of mobile e-mail platform providers, reaction to the concept is mixed. Funambol’s research indicates a segment of consumers would probably be OK with it, as long as the e-mail is free and easy to use and the ads are relevant. Others say U.S. carriers already offer e-mail as part of a sticky service in their data bundles, so why bother?

In the enterprise, willingness to pay isn’t so much of an issue because the employers of people who use BlackBerrys or other e-mail devices are paying the bill. But in the wide-open range of the consumer market, which companies like Funambol are going after, it could play a role. Consumers, after all, perceive e-mail as free on their PC.

AT THE FOREFRONT
Funambol, based in Redwood City, Calif., is working with a large online portal that has licensed its technology for a number of things, one of which is the ad-sponsored e-mail approach. Funambol was selected by the unnamed partner because it is an open source company with technology compatible across a broad array of devices, according to Hal Steger, Funambol vice president of marketing. “We’re not the only mobile e-mail software company thinking along these lines,” he says. “We’re not isolated in this respect. I do think we’re at the forefront.”

Frequency of Feature Use, USA

Source: Strategy Analytics

Another one at the front line is San Francisco-based Flurry, which offers a free e-mail service for consumers worldwide. Flurry is testing a variety of advertising platforms in different markets and has been seeing a good response from users, according to CEO and co-founder Sean Byrnes. “It’s our belief that most mobile services will move to an ad-sponsored model, with premium services offered to power users, small business and enterprises,” he says.

A majority of phones can’t support a true “push” e-mail experience, Byrnes says, so the Flurry system was built with SMS alerts to notify users of new messages when they arrive so the user can decide whether to open up Flurry and read/reply/forward messages. The company is seeing relatively high click-through rates on ads as well, but the advertising is only in select markets as it tries to find the right formula. Flurry is working direct with carriers and is in the process of deployments with two of them in Europe.

As for how consumers receive the ads, Steger says text and graphic-based ads each come with pros and cons. Text ads can work on almost any phone and are less costly to distribute, but the text is smaller. The advantage with a graphical ad is it may be more effective in terms of reinforcing a brand, but it doesn’t work on every phone, he says. “This whole field of mobile advertising is like the Wild, Wild West, and there’s a lot of experimentation going on,” Steger says. “We will be flexible.”

USABILITY MATTERS
Although Funambol is not currently working with a carrier, its approach can fit into what wireless carriers want to do as well, he says. Operators want to avoid becoming the dumb pipe, and it’s more severe now with devices like the iPhone, where people are becoming more loyal to a handset. But mobile e-mail offered to consumers needs to be “brain-dead easy” to set up and use, he says.

Strategy Analytics found that 72% of survey respondents who have an e-mail feature on their device have never used it to send and/or receive an e-mail, according to Kevin Nolan, director of user experience research at the research firm. One in six who tried to set up an e-mail client found that it didn’t work, and they just gave up.

Primary Reason for Not Using Features, USA

Source: Strategy Analytics

In some markets, however, where the handset maker and operator collaborate at the point of sale to walk people through setting up e-mail on the phone, the usage figures “go through the roof,” he says. In addition, if users are asked if they want e-mail on their phone, they typically think of their place of employment and take a pass, but if asked specifically if they want Yahoo! or Gmail, which correlate to their personal accounts, the interest level rises.

At Verizon Wireless, for one, sales teams in stores are trained to show people how to set up their e-mail products, which are priced at $5 a month, according to Mike Lanman, vice president and chief marketing officer at Verizon Wireless. For about the past year, the carrier has been working more closely on its user interfaces, and some PDAs come with tutorials on how to set up e-mail. Anecdotally, Lanman’s wife, a non-techie who didn’t use e-mail until recently, set it up on her own LG 8300 handset and found it easy to use, he says. Considering the great majority of consumers do not yet use mobile e-mail, the carrier sees it as a huge opportunity both for customers and the company, he says.

THE GREAT DEBATE
While Flurry and Funambol are encouraged by the idea of free ad-supported e-mail, others are not so sure. “My bottom line is I don’t like it as an end-user,” says Dan Olschwang, CEO of JumpTap, a white-label mobile search company that also works with marketers worldwide on targeted mobile ad campaigns. “I don’t see a reason to get my e-mail crammed with ads.”

Brinkschulte: E-mail is personal and ads could annoy.

Synchronica, a device management solutions provider with a push e-mail offering, has looked at offering e-mail with small ads inserted as text, similar to the messages that say: “This message was sent from my BlackBerry.” That type of message is accepted by millions of business users. But as for ad-supported e-mail, “I wouldn’t say I’m a big fan of it, but there is a possibility for those small ads to be added to the bottom of the e-mail,” says Synchronica CEO Carsten Brinkschulte.

If a search engine were involved and could determine that an e-mail pertained to a certain topic, like cars, the message then could contain a relevant ad from a car manufacturer, but whether that is acceptable is another story. “I think it will definitely hinder the acceptance rate,” he says. “E-mail is a pretty private and personal thing,” and if ads are invading that space, people will be annoyed.

Synchronica offers an ad feature that can be activated or de-activated, but no carrier to date has asked to activate it. The company is offering a free 60-day trial of its mobile e-mail service to get media attention and feedback from users, but the company isn’t planning to directly offer a commercial service. It works with application service providers (ASPs) that will launch the service at the end of the trial.

Services such as e-mail are part of the sticky bundle by which carriers reap recurring monthly data fees, notes Jason Guesman, senior vice president and general manager of the Americas for Seven Networks. Seven works with carriers to tightly integrate its e-mail client into devices, so it works out of the box. In the last year or so, Seven has been concentrating on offering push e-mail services on more mass-market phones. Seven already is on more than 30 phones through Sprint, and the experience is “unbelievable,” he says.

At no additional charge to its data packages, Sprint offers unlimited use of e-mail services, including the push service known as Sprint Mobile Email, which allows 1-stop access to multiple accounts from providers such as AOL, MSN, Yahoo! and Gmail, as well as POP/iMAP accounts. Sprint’s Mobile Media Network provides advertisers the chance to place banner ads on mobile Web pages, but a spokeswoman says she is not aware of any plans to integrate it specifically with e-mail to subsidize the service, given that Sprint already offers e-mail at no additional charge.

Whether ad-supported e-mail catches on in the U.S. consumer market is unknown, but the term “free” does have its followers. “Free is a great price point, in my opinion,” says Strategy Analytics’ Nolan says, but he adds that it likely pertains to a small niche where mobile e-mail is concerned. His research indicates that users are most likely to pay a premium for any service where mobility adds value by making it personalized and tailored to their needs.