US cell phone advertising is booming
Mobile: Spending on mobile advertising in the U.S. totaled $45 million in 2005, but is expected to exceed $150 million this year.
Mobile Spending on mobile advertising in the USA amounted to 45 million dollars in 2005, but is expected to exceed 150 million dollars this year. This increase in spending on mobile advertising has been estimated by the research company Ovum. Mobile advertising seems to be entering a boom phase in the USA. Three of the largest wireless carriers - Sprint Nextel, Cingular and Verizon - have now started to include video clips and other forms of advertising in their mobile content offerings. Years ago, the marketing industry in the U.S. had already prepared for advertising on mobile platforms to take off. "We launched our mobile service in 1999 and waited for the advertising boom that didn't happen," says Louis Gump, vice president of the Weather Channel, which today offers one of the most popular services and is accessed by 20 percent of all cell phones in the US.
Three years ago, the company even considered leaving the mobile sector altogether, as the low turnover did not seem to justify the high investment costs. However, Gump now believes that the time is right, as the Weather Channel has been recording double-digit growth rates in mobile usage since April. "Alongside e-mail, weather is the entry point for mobile use," he believes.
Cheaper, but with advertisingThe main reason for the initially sluggish spread of mobile advertising was the wireless providers' fear of offending their already advertising-saturated customers. "We have to make sure that the products being advertised are relevant and useful to users," says Suzy Deering, Director of Media Sponsorship at Verizon Wireless. "If the consumer doesn't want it, we won't continue to push it."
However, according to a study by Mercer Management Consulting, users are not so allergic to mobile advertising as long as it ensures that their cell phone bill is lower in the end. According to the study, 50 percent of all video content customers prefer an ad-free payment model. However, the other 50 percent prefer low prices, with advertising if necessary.
Mobile content such as sports highlights, movie trailers or even individual episodes of popular TV series are the tidbits with which telephony providers want to attract new customers. Exclusivity plays an important role here. "Our calculation is that a consumer will say: I'm a huge fan of 'Lost' and I want to be able to watch the new episode whenever I want, so I'll switch to Verizon," says Deering. In this way, content becomes just as important for the purchase decision as the reception quality and bandwidth of a provider.
In response to this need, Sprint launched a free additional service for its Sprint Vision customers in September, offering sports news and clips from various current football matches. For an additional fee, customers can even watch complete game films on their cell phones. Short advertising clips, usually only a few seconds long, are played in between.
SMS advertising still leadingThe most frequently used form of mobile advertising in the USA is still text messaging, which accounts for around 70 percent of mobile advertising. Banner ads account for a further 25 percent, and only a fraction of mobile advertising currently consists of video ads, although their share is set to increase dramatically in the coming year. "The problem is that no one is designing campaigns specifically for mobile," says Brent Breen, Director of Strategic Development at the Interpublic Group. "So far, the same elements are being used for different platforms."
The most attractive aspect of mobile advertising is the ability to precisely locate a certain target group. "Everyone is talking about hyper targeting," says Breen - a form of advertising in which a clip can be tailored to the individual customer.
Search functions are particularly popular with users, such as the "Find It" function at infospace.com. Here you can find the nearest movie theater, restaurant or locksmith in a matter of seconds.
McDonald's mobile advertising, for example, is based on this feature when it offers hamburgers at a special price. The coupon that appears on the cell phone can then be redeemed directly at the nearest branch, which the customer can also locate by cell phone. Google's mobile search service also offers local search functions.
Even futuristic versions of such localized advertising are already being considered: if, for example, a clothing store advertises a special offer that might appeal to a particular customer, a message can appear on their cell phone that makes the special offer appealing to them at the exact moment they walk past the store.
Production costs are risingIt is clear that advertising clips for cell phones must not be too elaborately designed so that they remain clearly visible on the small screen and can be downloaded quickly. Nevertheless, the costs for a sophisticated video campaign are many times higher than for simple text messages. While a mobile campaign that ran for four to six weeks only cost 25,000 to 35,000 dollars a few years ago, it now costs around 150,000 dollars.
"It's clear that there's a lot of money to be made here," says Jeff Janer, COO of Third Screen Media, an agency specializing in mobile advertising. "The only question is who will earn it and how."
Gerti Schön
Three years ago, the company even considered leaving the mobile sector altogether, as the low turnover did not seem to justify the high investment costs. However, Gump now believes that the time is right, as the Weather Channel has been recording double-digit growth rates in mobile usage since April. "Alongside e-mail, weather is the entry point for mobile use," he believes.
Cheaper, but with advertisingThe main reason for the initially sluggish spread of mobile advertising was the wireless providers' fear of offending their already advertising-saturated customers. "We have to make sure that the products being advertised are relevant and useful to users," says Suzy Deering, Director of Media Sponsorship at Verizon Wireless. "If the consumer doesn't want it, we won't continue to push it."
However, according to a study by Mercer Management Consulting, users are not so allergic to mobile advertising as long as it ensures that their cell phone bill is lower in the end. According to the study, 50 percent of all video content customers prefer an ad-free payment model. However, the other 50 percent prefer low prices, with advertising if necessary.
Mobile content such as sports highlights, movie trailers or even individual episodes of popular TV series are the tidbits with which telephony providers want to attract new customers. Exclusivity plays an important role here. "Our calculation is that a consumer will say: I'm a huge fan of 'Lost' and I want to be able to watch the new episode whenever I want, so I'll switch to Verizon," says Deering. In this way, content becomes just as important for the purchase decision as the reception quality and bandwidth of a provider.
In response to this need, Sprint launched a free additional service for its Sprint Vision customers in September, offering sports news and clips from various current football matches. For an additional fee, customers can even watch complete game films on their cell phones. Short advertising clips, usually only a few seconds long, are played in between.
SMS advertising still leadingThe most frequently used form of mobile advertising in the USA is still text messaging, which accounts for around 70 percent of mobile advertising. Banner ads account for a further 25 percent, and only a fraction of mobile advertising currently consists of video ads, although their share is set to increase dramatically in the coming year. "The problem is that no one is designing campaigns specifically for mobile," says Brent Breen, Director of Strategic Development at the Interpublic Group. "So far, the same elements are being used for different platforms."
The most attractive aspect of mobile advertising is the ability to precisely locate a certain target group. "Everyone is talking about hyper targeting," says Breen - a form of advertising in which a clip can be tailored to the individual customer.
Search functions are particularly popular with users, such as the "Find It" function at infospace.com. Here you can find the nearest movie theater, restaurant or locksmith in a matter of seconds.
McDonald's mobile advertising, for example, is based on this feature when it offers hamburgers at a special price. The coupon that appears on the cell phone can then be redeemed directly at the nearest branch, which the customer can also locate by cell phone. Google's mobile search service also offers local search functions.
Even futuristic versions of such localized advertising are already being considered: if, for example, a clothing store advertises a special offer that might appeal to a particular customer, a message can appear on their cell phone that makes the special offer appealing to them at the exact moment they walk past the store.
Production costs are risingIt is clear that advertising clips for cell phones must not be too elaborately designed so that they remain clearly visible on the small screen and can be downloaded quickly. Nevertheless, the costs for a sophisticated video campaign are many times higher than for simple text messages. While a mobile campaign that ran for four to six weeks only cost 25,000 to 35,000 dollars a few years ago, it now costs around 150,000 dollars.
"It's clear that there's a lot of money to be made here," says Jeff Janer, COO of Third Screen Media, an agency specializing in mobile advertising. "The only question is who will earn it and how."
Gerti Schön
