Advertising gets mobile

 

Friday, March 6, 2009 

William-Arthur Haynes

 

 

Jayant Kadambi, co–founder of YuMe, which specializes in broadband video advertising, says more clients are asking about mobile advertising opportunities.

Marketers and advertisers, looking to reach new consumers, see mobile devices as the latest way to spread their message.

 

The explosive growth of mobile devices and the increased use of data services such as mobile search and content downloads are catalysts for this new advertising opportunity.

 

Sources say more and more brand managers are approaching ad agencies with an interest in tailoring their advertising toward the cell phone audience, comprised of people who are likely to have their phone with them at all times.

 

Jayant Kadambi, co–founder and president of broadband video advertising network YuMe Inc. in Redwood City, said in the past six to nine months more advertisers have begun exploring mobile opportunities. From a revenue perspective, mobile advertising still pales in comparison to Web video advertising, but the advent of Apple Inc.’s iPhone and Google Inc.’s Android technology are driving interest.

 

“People like the fact that if they have a $100,000 media campaign, $95,000 is running on traditional Web sites and $5,000 is running on a phone,” he said. “It makes them feel cutting edge. They’re doing something that’s new, and the clients and the brands like it a lot.”

 

1Cast Inc., a Washington–based company that aggregates news content from national broadcasters and cable networks, is days away from announcing a partnership with YuMe. 1Cast’s service is available on Apple iTunes and Google Android, and subscribers can build personalized video news feeds, and advertisers can reach the company’s growing list of consumers.

 

Anthony Bontrager, 1Cast’s president, said the company recently closed an advertising deal with Nissan Motor Co. for a broadband campaign on the Infinity G sedan. 1Cast placed the ad on its mobile platform.

 

“They were just ecstatic,” Bontrager said. “They had no idea we were going to offer this up for them. They’re very interested in moving into the mobile space.”

 

The ‘Wild West’ market

 

Exiting 2007, ABI Research estimated the worldwide mobile ad market — encompassing text messages, mobile Web and in–application advertising — at $1.8 billion. ABI Research analyst Jeff Orr said projections for 2009 are still weeks away, but the New York–based technology market research outfit forecast growth to reach $24 billion by 2013.

 

“It’s fair to say that the market right now is very much like the Wild West,” Orr said.

 

Scorecards and metrics for what works and what doesn’t are lagging, Orr said.

 

AdMob Inc., a San Mateo–based company that serves billions of targeted and personalized ads on the mobile Web each month, is one of the few companies that releases its monthly statistics.

 

According to AdMob’s January Mobile Metrics Report, mobile device users made just shy of 6.8 billion requests for content. The numbers pertain to AdMob’s network of more than 6,000 mobile Internet publishers and 400 application developers. The United States led the way with about 43 percent of the total requests.

 

AdMob pairs numerous content and application publishers — including CBS News, CNet and Tapulous Inc. — with a variety of advertisers. Those advertisers want to reach the content and application users, and AdMob profits from a revenue share arrangement with the content publishers.

 

Jason Spero, AdMob’s vice president for North America, said the company began publishing statistics when it saw the need to attach real numbers to the mobile advertising opportunity.

 

“(The January) report demonstrates the strong growth the mobile advertising industry has experienced over the past year,” Spero said. “From January 2008 to January 2009, the number of worldwide ad requests in AdMob’s network almost tripled. We believe that this growth will continue in 2009 driven by a number of factors, including increasing sales of smart phones and truly compelling mobile Internet experiences.”

 

Working out privacy kinks

 

Although the cell phone industry hasn’t been totally insulated from the global economic slowdown, the market has been “fairly resilient,” and there remains opportunities for profitability and growth, said Derek Kerton, principal analyst at the San Jose–based wireless consultancy The Kerton Group.

 

On a global basis, the wireless market has been selling close to 1 billion phones annually for the past few years, Kerton said, with the lion’s share of growth coming from the developing world.

 

With the advances in data services and people’s willingness to subscribe to them, one of the biggest selling points for marketers is the ability to target consumers with location–based ads and promotions.

 

For instance, if someone uses a phone to search for a nearby coffee shop, ads using GPS or cell–proximity technology could be sent based precisely on the user’s location. Not only would users see a list of local businesses, but also they might see coupons to nearby businesses.

 

Privacy, however, remains an issue, so much so that Kerton said it may be the reason mobile advertising hasn’t gained momentum sooner. Commercial services have been slow to reach the market as federal regulators work through the privacy issues.

 

Kerton said there’s reason to believe that any backlash from the consumers “won’t be ruthless.” In fact, consumers have indicated they’re willing to get some forms of advertising on their telephones.

 

“When ads are done the right way, they’re being either tolerated or encouraged,” he said. But in most cases, users have to request advertisement–laden content, or else be given a method to opt–out.

 

“The carriers have considered how they’re going to deal with these sensitive issues and how they’re going to be conscious of customers’ will,” he said. “As the gatekeepers, they’re trying to make sure no content provider abuses people’s privacy because they’re going to be in the blame chain if someone gets angry.”

 

William–Arthur Haynes can be reached at 408.299.1829 or whaynes@bizjournals.com.