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The Wireless Challenge

What does the wireless trend mean for advertising?

For all the talk about wireless advertising, there aren't many advertisers actually doing any of it. At least not yet.

Godiva Chocolatier, the upscale chocolate chain, has offered a store locator to wireless users, Red Envelope has offered a digital golf scorecard to a thousand Bay Area cell-phone users, and Procter & Gamble has tried a general ad for its Tide detergent.

Yet a pervasive attitude of optimism regarding wireless advertising is infecting the entire advertising industry, from creative folks who love playing with the latest mobile gadgets to heads of interactive agencies that are pinning their futures on the rapid development of wireless as an advertising vehicle.

"The hardest thing to understand about wireless advertising is that it's not really advertising," asserts David Dallaire, general manager of McCann Relationship Marketing (MRM) and Asia-Pacific regional manager, Tokyo. "This is an entirely new communications vehicle, and one that we need to do more experimenting with ... before we begin throwing ads at people."

Have palm, will travel

It's Dallaire's point - that one has to experiment with the devices themselves before any kind of branding communication strategy can be formulated - that has industry executives scrambling to get hold of the latest and greatest devices. "The intriguing thing about wireless advertising is that it brings advertisers one step closer to the consumer, the end-user," says Keith Alexander, manager of wireless and mobile technologies at BBDO New York's @tmosphere interactive unit. "I myself am never without my cell phone and hardly ever without my Palm. If an advertiser can get their tools on these devices, they'll always be with me."

J.G. Sandom, president-CEO of Rapp Digital, the interactive arm of Omnicom Group's Rapp Collins Worldwide, has been through so many incarnations of wireless devices that he's lost count. But each time he gets a new appliance, he says it advances his understanding of just how powerful these devices are.

"I'm not disappointed at how this market has developed, not at all," Sandom says.

"In fact, I'm thrilled because it gives us more time to understand what works and what doesn't. There are so many new ways to distribute information now ... It's well worth it to do the analysis of what people want and how they want it to come to them."

Chan Suh, chairman and CEO of Agency.com, New York, a five-year-old Internet professional services company that he co-founded, hands out wireless devices to everyone in the agency, from creative and account management to the finance and administration departments. What he expects in return are some good ideas about how these mobile appliances can be used as branding and advertising tools.

"Wireless, from this point onward, is going to be a powerful component of any advertising and interactive relationship," he says. "We need to know, sooner rather than later, what each technology can do, and how that might translate into [advertising] opportunities for our clients."

Scott Crawford, senior partner and executive creative director at Howard, Merrell & Partners, Raleigh, N.C., admits he has adopted a number of wireless tools and is always looking to acquire more. These devices allow him to roam the agency and work on location, he says, whether it's answering e-mail from clients or surfing the Web for that crucial piece of information, all without being physically in any one place.

And the more Crawford experiments with wireless applications, the more clearly he can articulate what all this might mean for advertisers. "The ability to communicate as though I were hooked up to a PC means that advertisers can reach and target people wherever they might be, wherever they are in their day," he says. "These are incredibly personal devices, and there are issues of privacy and how advertisers might approach this invasion of private space."


From the amount of news coverage about wireless devices, it would seem that everyone in America is carrying a cell phone, pager, PalmPilot or Visor, and laptops with wireless modems. For all the hype over technologies that promise "anytime, anywhere" connections to the Internet, consumers, particularly in the United States, have been slow to adopt more than cell phones in any great numbers. Even among those who do carry multiple devices that allow wireless Internet access, most have not connected wirelessly to the Web, according to a survey conducted by the consulting company Accenture.

The survey, released in February 2001, was conducted entirely online of 3,189 residents of the United States, Britain, Germany, Finland, and Japan. It found only 15 percent of consumers who owned a cell phone or other portable device were using it to connect to the Internet. However, there are big differences from country to country. The survey found that 72 percent of Japanese cell phone owners used their devices to connect to the Internet, compared with just 6 percent in the United States. Less than 1 percent of those surveyed were shopping online with their wireless devices, touted as one of the biggest expected uses for Web-enabled appliances. While most of those surveyed by Accenture said they liked the idea of a wireless Internet, they found it easier to access the Web from a personal computer. The most often cited objections were the cost of wireless services, and that the small screens on most wireless devices made it difficult to read the messages. Others simply said the service was too slow.

In Japan, McCann's Dallaire keeps close tabs on how teenagers and young adults are using the wireless Internet devices. "Young people are taking these devices and using them in ways no one has ever thought of - and the results are beyond expectations," he says. "Who would have thought that pagers, designed originally for businessmen, would instead be used by high school girls messaging each other?"

Dallaire cites statistics culled from various Internet consultancies, including Jupiter Media Metrix, that show the click-through rates on wireless ads and banners to be about 3.6 percent - about where Internet banner ad click-through rates were three years ago. But Dallaire believes much of that high interest is due to the novelty of the delivery. "For many wireless users, this is the first time they've been able to access the Web," he says. "Just think back to the first time you clicked on your Web browser and found yourself staring at pictures of Arctic wildlife. It's much the same situation with wireless ads."

There have been some early success stories, Dallaire says, noting the response that video-rental chain Tsutaya received when it sent out electronic coupons to wireless users who had registered for such offers on their Web site. "That one offer brought in 200,000 people," says Dallaire. An offer from Matsushita for one of its household appliances received some 220,000 responses, 55,000 of which were from wireless users.

Based on this kind of response rate, "companies here are talking up very bright forecasts for the future of this medium," he says. "Last year, it was estimated that $10 million was spent on mobile ads in Japan. This year, it's expected to rise to between $50 million and $100 million." Regular Internet banner ads, he notes, are also expected to reach $100 million this year.

"I do believe they're hyping this way too much," Dallaire adds. "There is still a mentality here of treating these Internet and wireless phone ads as a mass media, mass communications tool ... and I think that kind of strategy will be modified. Quickly." Dallaire also points out that he doesn't believe the experience of wireless users in Japan will necessarily translate into similar usage in the United States. "In Japan, people don't drive to work; they take trains. They stare into their phones, with those tiny screens, pushing buttons. In the U.S., people drive to work. It might be difficult to stare into your phone while you're driving."

It's all about the messaging

Rapp Digital's J.G. Sandom isn't surprised by the hype. Nor is he overwhelmed by any backlash from those using these first- and second-generation wireless devices. "There has been more backlash in Europe, especially, because there were expectations that providers could deliver the full Web experience on a six- to eight-line digital appliance," he says. "The reality is that wireless and wireless advertising is not about the Web and it's not about advertising. It's about sending highly relevant messages at the right time and in the right place to stimulate a particular consumer behavior. Just look at the increasing number of teenagers that are using these devices to chat. That's the future."

Sandom, recently returned from a business trip to São Paulo, Brazil, found that "every cab I jumped into, the driver had an IP- [Internet protocol] or WAP [wireless application protocol]-enabled phone," he says. "They were checking for messages constantly. That has to be a huge opportunity."

Rapp is working with a Brazilian pharmaceutical marketer, exploring ways in which the Internet, cell phones, and wireless devices could be used as vehicles for branded messages about daily pollen counts and pollution counts.

"We are notifying users who have opted in of what these daily counts are, and we're sending it to them as an e-mail, or a wireless message to a Palm or other e-mail-enabled device, or via IP-enabled voice," he says. "This is potentially a huge opportunity for a marketer to send a branded message."

The potential of branded messaging also has BBDO's Alexander hooked. "In Europe, in January alone, there were 12 billion SMS [short messaging service] units exchanged," he says. "But it has to all be opt-in. The minute someone gets spammed, the advertiser hears about it."

"The mobile device is a very private device," says Ogilvy Interactive's Bob Henrick. "The spam on e-mail is something we all hate but live with. But if I send a message on a cell phone and it wakes you up or if the phone is going off in your pocket, and you're continually getting offers without having opted in, that could do a lot of long-term damage to a brand."

Henrick envisions wireless advertising evolving into opt-in, push-only information that users will set up on the Internet before downloading into their mobile appliances. "There are definite sponsorship opportunities, such as Nike bringing you sports scores, but it also should be considered as part of a larger branding campaign. This is not a stand-alone platform by any means," he says.

What advertisers - and their partner agencies - must be careful to avoid "is quickly cooking the goose" with wireless advertising, says Howard Merrell's Crawford. "You've got to think about whether the offer is something the recipient is going to truly benefit from - that is, whether it's a welcome intrusion. We have to provide something very valuable to the user, or advertisers will be taken to task for the invasion of privacy." Crawford believes ad agencies won't be the drivers of wireless advertising, but will serve more as brand stewards and consultants about the new communications paradigm. "We help clients figure out what to use and when to use it," he says. "It's all dependent upon whether a particular medium is the appropriate communications vehicle."

Matt Mizenko, chief wireless architect of Fry Multimedia, New York, says today is the right time for agencies to "stick a flag in the ground and own the wireless advertising territory."

Just as Fry put a simple store locator program together for Godiva, when delivering information to cell phones and Palm devices, "you have to try things because that's the only way to really know what's going to work in this new medium," he says. "It's one thing to ask people what they might like to see on a wireless device, but quite another to ask them that same question after they've actually experienced a message or an ad on that device. We think initially people are not going to be very receptive to these messages. But that doesn't mean advertisers should ignore the segment. It just means that we're all going to have to leave the world of pure advertising and enter an entirely different world."


Laurie Freeman, Agency. Spring 2001

Copyright © 2001 American Association of Advertising Agencies. All rights reserved.