Advertisers Calling on Cells

Nov 15, 2006  •  Post A Comment

The small screen of cellphones is poised to become a bigger advertising medium, according to a new report from JupiterResearch.
Jupiter projects that advertiser spending on mobile messaging and display ads will grow from $1.4 billion in 2006 to $2.9 billion in 2011.
That growth is tempered by consumer intolerance for messages on their cellphones. Nonetheless, about 22 percent of online advertisers are already using some from of mobile marketing. Among the early adopters are media companies; wireless companies; some automakers, including General Motors and Toyota; financial services companies including American Express; packaged-goods companies, including Coca-Cola and Pepsi; and food services such as McDonald’s and Burger King.
JupiterResearch based its findings on public documents, executive interviews, survey data and other sources.
More than 25 percent of Fortune 100 consumer product companies have conducted at least one campaign. The brands using mobile marketing “tend to be youth-oriented, but not exclusively so,” the report said.
A third of all online advertisers and agencies are expecting to run at least one mobile campaign by the end of the year, but budgets remain small, the report said: “Funding for mobile campaigns is being carved out of interactive budgets and is no more than a rounding error for many large corporations.”
The most often stated objectives of mobile campaigns are marketing basics, such as increasing brand awareness, building customer loyalty and increasing short-term product sales. But other campaigns also aim at specific mobile marketing goals, the report said. Some campaigns enable direct response to advertising via mobile phones. Others enable real-time audience participation. Mobile phones enable a marketer to target an audience based on location. Some marketers are simply looking to sell mobile content or cellphone applications.
The report also notes that while interoperability among wireless carriers in the U.S. for text message delivery has boosted consumer adoption of the medium, lack of cooperation among the carriers for delivery of campaigns inhibits the growth of mobile marketing campaigns.
A key to driving interest in mobile marketing campaigns and increasing the number of consumers who opt into campaigns will be educating consumers, protecting their privacy and allaying their concerns about the cost of commercial text messages and other forms of mobile “spam,” the report said.
“Consumers will be more inclined to opt in for mobile marketing if they can set the terms,” the report said. “Advertiser and carrier care with respect to consumer privacy has paid off to date.” In 2005, only 21 percent of mobile subscribers were willing to provide the kind of personal information needed to allow more targeted mobile marketing. That percentage increased to 34 percent in 2006. Among younger adults (ages 18 to 24), 47 percent were willing to provide information.
The display side of the mobile marketing business will grow from $56 million in 2006 to $224 million in 2011, JupiterResearch said. Prices of display advertising on mobile phones is expected to drop from a cost per thousand of $41-more than television in most cases-to a CPM of $23 by 2001. While targeting on cellphones will improve, the supply will increase, depressing prices, Jupiter said.
To be successful, cellphone ads must be entertaining, exclusive and utilize rich media, according to the report. There’s a lot of opportunity for growth with video on cellphones. To date, 11 percent of cellphones are video-ready, but only about 1 percent of consumers have mobile video subscriptions. Video channel sponsorships cost about $30,000 to $100,000 a month, depending on the size of the audience. “Despite the small screen, interest in ad-subsidized models is significant, especially among younger audiences,” the report said.
The main reason advertisers give for not using mobile video is a lack of expertise. Some advertisers also say they lack time and other resources to dedicate to the channel. About 17 percent of marketers don’t think the medium is appropriate for its target market.
“Wireless carriers can use their credibility, market sustainability and budgets to help educate advertisers on the benefits of the mobile medium,” the report said. “Moreover, they can minimize the exposure of advertisers concerned about resources with fixed-price campaigns and lower pricing on messaging.”
This article is part of TVWeek.com’s Media Planner newsletter, a weekly source of breaking news, trend articles, profiles and data about media planning edited by Senior Editor Jon Lafayette.


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