The mobile ecosystem is evolving with advertising acting as a driver of a new revenue stream and the uptake of data services simultaneously. Operators understand this and are working hard to develop viable advertising strategies. But are they the right ones asks Bena Roberts, founder, BKI Media?

No-one is debating that there is huge potential for mobile advertising. But you have to admit, there is a great deal of misinformation flying about the industry.

For instance, it is often claimed that the widespread use of basic handsets are an inhibitor to the take-up of data services and, by extension, a brake on advertising. Yet in the US , Cricket Wireless (www.mycricket.com) and Metro PCS (www.metropcs.com) all but give data usage away and consequently generate shedloads of data traffic, even though the majority of their users do not have smartphones (or contracts).

Also, advertising is often portrayed as the saviour of mobile data, with some pundits arguing that it will make up for income lost through the generally poor take-up of data services. In fact, it is more telling to consider that the UK mobile network operators collectively have annual revenues of £19bn, which by coincidence, is also roughly the amount spent every year on all types of advertising in the UK , Europe ’s largest advertising market. At the moment Internet advertising is still only worth about £2bn – just over 10 per cent of the total. It is probably generous to reckon that 5 per cent of the total advertising budget will be spent on mobile in the next three to five years.

This is substantiated by the table (see inset): claims that mobile ad inventories (the amount of capacity that various publishers make available to advertisers) are sold out are frequently misleading in the extreme and more often than not, value is left out of the equation. Pundits talk about relevance, context, personalisation and profiling being the killer attributes of ads on mobile, but in fact the dearth of advertisers means that the few participants can mostly gain the top spot due to a lack of competition. So much for the open market bidding mechanism. Car manufacturers like BMW and mega-brand mobile advertising pioneers such as Coca-cola pretty much have the place to themselves.

And as though all this were not enough for operators to grapple with, two of their most powerful partners, Google (www.google.com)  and Nokia (www.nokia.com), have launched themselves into the fray in their own right. Additional revenue is not their primary motivation, they are far more concerned with  having a direct relationship with customers and are striving to create sticky communities that keep the consumers coming back for more, regardless of the service provider concerned. Put another way, they are out to capture larger segments of the mobile value chain.

Until recently, the way was barred to Google and Nokia by ludicrously high data charges, but these are steadily being eroded all over the world. Now the way is open and the two have embarked on a buying spree to help them make the most of it.

Google is to purchase Zingku (www.zingku.com) which offers ‘supercharged’ that is, ad-funded messaging services; it already owns YouTube (www.youtube.com) and wants to acquire DoubleClick (www.doubleclick.com), the web’s biggest banner ad broking service. The European Union is holding up the transaction while it investigates whether it would be anti-competitive. The search giant also plans to launch Google Mobile Adsense (www.adsense.com) and is exploiting Google Maps to interconnect portals, the web and mobile.

For its part, Nokia has bought Navteq (www.navteq.com) the mapping company, Gate5 (www.gate5.de) the location-based services specialist and Enpocket (www.enpocket.com), the mobile advertising firm. On top of this, Nokia has partnered with Yahoo! and Windows live! for search services and the Chinese search engine cgogo (www.cgogo.com) for a white label, idle screen search on Nokia S40 and S60 devices. In combination, these acquisitions enable Nokia to pose a threat to mobile operators and Google like never before, while Google is still desperately searching for a device strategy.

Google has a habit of wanting to leap into bed with its fiercest competitors – it’s strategy with operators is evidence of this – they all want the Google search box on-deck and Google is delighted to oblige. Which begs the question what would happen if Nokia and Google collaborated? To some extent, they already are. Google Talk (the VoIP service) is available all of the Nokia 770 and 800 Internet tablets. Also, the world’s biggest device maker has said its strategy is to act as an ‘umbrella’ for mobile search, which sounds tantamount to an invitation to Google to be included on its platform. BKI Media predicts that Google and Nokia will collaborate on search before the end of 2007.

Collaboration between the two might, at long last, end the rumours about Google coming up with a Gphone. Nokia allows lots of operators to put their brand on its handsets, why not Google? In fact, why not make a phone exclusive to Google and finally wipe the iPhone-inspired smile off Apple’s face?

Nokia now owns a white label search platform and an ad agency, the next logical step is to integrate advertising and content. The manufacturer has huge amounts of own content, but is weak in the social networking area where Google is strong. So the premise of a partnership is there. YouTube user generated content on Nokia youth-branded devices would be sweetened by the presence of a Google-branded offering and help Nokia win new customers in the Asian markets, aided by its partnership with cgogo.

TABLE
Who’s Doing What
Operator      Initiative
Vodafone Germany
(www.vodafone.de)
Partnered with Gruner & Jahr – only one campaign for Daimler Chrysler cars – running at the time of writing.

Vodafone UK
(www.vodafone.co.uk)
Launched adverts from Nissan with Yahoo!

Vodafone Italy
(www.vodafone.it)
DaDa is pushing adverts on live! in Vodafone Italy .

Sprint  (www.sprint.com)
In-house campaign only available on a limited number of devices.

Alltel (www.alltel.com)
Using JumpTap services for advertising.

Bouygues (www.bouygues.com)
Teamed up with Miyowa for game-orientated advertising, TF1 for ad serving and CellCast for managing the service.

Orange (www.orange.com)
Launched ads from Renault.

Source: The Mobile Search Analyst

 

> class=MsoNormal style="MARGIN: 0cm 0cm 0pt"