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Cellphone Ads May Take Off Soon

Advertising on your cellphone?

Yes, and soon.

Already, ads are creeping onto cellphones around the globe. At this rate, experts say, it will not be long before the 2.2 billion mobile phone users around the world consider it natural to tune into a 15-second spot before watching a video, sending a message or listening to a downloaded song between phone conversations.

Or so they hope.

“This is the year that advertising breaks out worldwide,” said Laura Marriott, executive director of the Mobile Marketing Association, based in Boulder, Colo., which represents more than 400 advertisers, phone makers, wireless operators and market research companies. “Previously, there were not enough of the right phones and fast networks to support good advertising.”

Ms. Marriott spoke yesterday in Barcelona, Spain, where 60,000 people are gathered this week for the 3GSM World Congress, the cellphone industry’s main event of the year. Several companies at the exposition are promising to meld advertising with the mobile phone in a way that respects people’s privacy while bringing in new revenue to offset sagging growth in voice services for phone carriers.

Yahoo, for instance, began displaying ads Sunday on sites accessible to subscribers with advanced cellphones in 19 countries. Mobile phone users with data as well as voice subscriptions would see the ads when going to Yahoo’s home Web page on their phones. They could then click on an ad to dial a company directly or to get more information and special offers.

The advertisers that Yahoo has signed up include Pepsi, Procter & Gamble, Hilton, Nissan, Singapore Airlines and Intel, and the 19 countries include the United States, Brazil, Britain, France, Germany, Italy and India.

By the time such advertising becomes a mass-market phenomenon, most people in countries with developed economies will have advanced phones that can browse the Internet and play video, according to Nick Lane, an analyst with Informa Telecoms and Media, based in London.

The very nature of the mobile phone gives operators information about their customers that Internet and television advertisers can only dream of having.

Carriers know not just where their clients live, but where they are at the moment the ad is seen, how much they spend on phone services, whom they call and when, their age and sex, what games and music they play on their phones — and how to bill them.

People in the industry say they know that the personalized nature of cellphones is a double-edged sword: it is what makes the medium appealing to advertisers, but many people consider the medium too personal to be invaded by outside interests.

Some executives warned that success was not guaranteed, especially because the industry lacks common technical standards that would make it easy for advertisers to sell to many operators at once.

“The mobile phone can reach everybody and it’s always on, but we need to rapidly define our industry standards to be able to benefit from this opportunity,” Arun Sarin, chief executive of Vodafone, said in a speech yesterday in Barcelona. Vodafone is the largest mobile phone operator by revenue.

“If we don’t work together, our suppliers will see a fragmented medium and a fragmented user base, as opposed to a single, valuable medium,” Mr. Sarin said. “We need to seize the moment and work together to help ads move to mobile. It won’t happen well if Vodafone does it differently than Orange and T-Mobile.”

The United States members of the Mobile Marketing Association — which include Verizon Wireless, Sprint Nextel, T-Mobile USA and others — have agreed to guidelines that would limit advertising to those phone customers who “opt in,” or choose to receive the ads, usually in return for cheaper or free services. The organization is completing guidelines for the European market.

“Privacy is a big issue, and that has to be solved for mobile advertising to be successful,” Ms. Marriott said. “I don’t think people will opt in 24/7, but maybe they will opt in for certain times of day and for certain types of advertising.”

A recent report from Informa forecast that the market for mobile advertising will rise to $11.3 billion in 2011 from almost nothing just two years ago. It is too early to tell whether one type of advertising will be dominant in developed countries because the market is still in its nascent phase, though banner ads and short video spots are sure to be big, Mr. Lane said. Text-message ads will dominate in developing countries, he said.

Lowering the costs to consumers is especially appealing to the companies that produce media content for mobile phones.

“If you can get something for half-price or for free if there is a bit of advertising, and that can be done in a noninvasive manner, that’s compelling,” said Chadd Knowlton, general manager of the content access and protection division of Microsoft. “We’ll continue to see richer and better mobile advertising across all kinds of content.”

Patrick Parodi, chief marketing officer of Amobee Media Systems, which helps carriers bring advertising to their clients and showcased a new service at the Barcelona event, said reducing consumer media costs was an important outcome.

“Mobile is the last remaining medium where the user has to bear the entire cost of the content,” he said, “and that risks stunting the growth of many new and innovative mobile services that clients might be willing to access if the costs were lower.”

While the Mobile Marketing Association and other industry groups are laying down some ground rules, other basics are still being ironed out, including how best to deliver the ads. Analysts said to expect companies to introduce various styles of advertising, with possible methods including banners, text messages and multimedia messages, as well as video spots before, during or after a clip.

“The mobile phone is a pristine media,” Mr. Parodi said, “and we have to be sure not to ruin that.”

 

Eric Sylvers, The New York Times. February 14, 2007

Copyright © 2007 The New York Times Company. All rights reserved.

 

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