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Are Wireless Ads For You?

A new type of mobile marketing is catching on fast. Will it make your customers bite?

When GearDirect.com sent out wireless ads to 1,000 consumers late last year, the Boulder, Colo.-based sports retailer saw an amazing 50% visit its Web site. Better yet, some even visited its store. "We had people coming in off the road and buying something," says John Siewerski, GearDirect.com's president. "We picked up at least 30 purchases."

GearDirect.com's campaign was simple: the consumers, who'd volunteered to participate in a five-month trial by SkyGo, a wireless marketing company in Redwood City, Calif., received a special code on their mobile phones that allowed them to get a discount on an online purchase or at the company's store.

To be sure, this was a voluntary trial. And the odds were in favor of a quick response. "It was probably because they were selling snow gear in Boulder, but a 50% click-through rate is extremely high," says Rachel L. MacAulay, a senior analyst for voice and wireless commerce at The Kelsey Group, a research firm in Princeton, NJ, that monitors communications, local media and electronic commerce.

But like Geardirect.com, a growing number of small businesses are starting to take a chance on the relatively unproven medium of wireless advertising. In a study of 700 wireless users conducted this past fall by The Kelsey Group, 50 percent said they would be willing to receive wireless ads if their phone bill was subsidized by advertisers. Throw in a free Palm Pilot, and who knows what might happen to consumer interest?

Indeed, although Internet banner advertising has disappointed, analysts are comparatively bullish on wireless campaigns. Jupiter Communications predicts the North American market for wireless advertising could grow to $700 million in five years; worldwide sales could reach $3.3 billion, says Dylan Brooks. Jupiter's prediction, he says, is "driven both by the number of Internet-enabled handsets out there and by the maturity of the platform."

"Right now," Brooks adds, "a lot of the wireless carriers are afraid of turning users off of the whole wireless Web experience by putting too much advertising on it. I think further down the line there may be the expectation that when you go out for free content, as you would expect it on the Web, that you get some advertising. Right now you have limited screen real estate and the networks are slow or you're paying for it. But looking toward greater capability of the devices and flat rates, those issues go away and you're likely to see much more advertising that isn't opt-in."

How fast will wireless catch on with small entrepreneurs? That depends. So far, it's offered by a hodge-podge of companies spread out across the country. Big phone companies have yet to come up with a simple, inexpensive way to market it to small business. But when they do, this medium could give local newspaper ads a run for their money.


Eilene Zimmerman, Fortune Small Business. June 15, 2001

Copyright © 2001 Time Inc.. All rights reserved.