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Mobile Advertising: Finding Gold Before the Rush

Sun, 09/30/2007 - 10:27am
Mike Baker

Mobile advertising is gaining steam with brands around the world. Big names like Ford, Pepsi and P&G are testing the waters to see how the medium can help them increase brand awareness and reach new customers.

Mobile operators are testing the waters as well, and finding that a lot goes into transforming a mobile storefront or portal into a viable ad media channel. But while operators seed the market for brands to purchase and run ads on their portals, they can harvest the low-hanging fruit of the mobile advertising proposition by efficiently advertising their own content and services to their subscriber base.

Mike Baker 

Mike Baker

Despite strong early results, there is a significant educational barrier when it comes to advertising on mobile, and most brands and agencies are still in a test phase. As a result, only a percentage of the operator's ad inventory gets sold, while the remaining inventory can be all but forgotten. But smart operators are realizing that this so-called "unsold inventory" represents a huge opportunity to efficiently guide subscribers in the discovery and awareness of personally relevant services.

Operators' storefronts are crammed full with more offerings than ever. But most subscribers complain that it's too hard to find content on the small screen, with studies suggesting that navigation to desired content takes an average of 17 clicks on an operator's deck. Obviously, this negatively affects the growth and profitability of the business.

Indeed, according to Strategy Analytics, "[o]perators are missing out on over $100 million in revenue as a result of inferior usability. Improving usability across the purchasing process from content discovery, preview and billing approaches is required."

Enter mobile advertising. Simply by running graphical banner ads that promote a specific game, ringtone or wallpaper, for example, a subscriber can click directly through to that content, greatly alleviating the ease-of-navigation and content discovery problems.

Moreover, if the ad platform can recognize and track users reliably, promotional content can be rotated dynamically so the same promotion ignored by a subscriber is not displayed time after time, as is the case with most operator storefronts today. Simply capping the number of times a subscriber sees a promotion dramatically increases the response rate, while also increasing the amount of available space on the small screen to promote the long-tail of mobile content offerings. This represents an instant efficiency gain that improves profits.

Operators can take it a step further by integrating predictive analytics into their mobile advertising initiatives. Carriers are sitting on a potential gold mine of demographic, behavioral and transactional data that can be leveraged to predict consumer behavior, including future purchase activity. By collecting and analyzing consumer data, behaviors can be linked, predicted and affected in near real-time through ad-insertion within the media services on the device.

For example, savvy carriers have found links between certain consumers' messaging activities and a likelihood to buy monthly browsing plans; between a handset model and demographic cluster and a likelihood to buy games; and between an individual's purchase of a map application and a likelihood to buy the latest Fergie song download. While using analytics to glean consumer insights has become a competitive necessity in more mature industries such as consumer financial services, the difference here is that the mobile operator owns a communication channel to its subscriber and can act on the insight instantly and cost-effectively.

In fact, in a trial to test the efficacy of predictive analytics in mobile advertising, one operator found that targeted promotions, where a customer was served a promotion based on past purchases and likelihood to buy, out-performed standard "broadcast" promotions and resulted in 400% more content revenue. The results are not surprising, considering that lack of awareness of mobile content and discovery are the major reasons people don't buy content. The power of predictive analytics in mobile advertising is personalizing media for the consumer, who is more likely to use more services when they are just a click away.

The mobile advertising gold rush is about to hit, with Strategy Analytics predicting the market to reach $14.4 billion by 2011, and there's no better time than now for mobile operators to define a strategic roadmap for a high value offering. Even in the brave new world of ad-supported services, the goal is still to efficiently monetize the subscriber relationship. By integrating data targeting and predictive analytics into mobile advertising plans, operators will drive more mobile content sales today and create a truly differentiated advertising proposition for brands tomorrow.

Baker is president and CEO of EnPocket.

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