While mobile video penetration is still low, the time is right for advertisers to begin experimenting with sponsorships in this new medium.
That’s the conclusion of a recent Jupiter Research report that found 42 percent of consumers said they would be interested in watching free, ad-supported video on their mobile phones.
Although fewer than 2 percent of cell phone users even have mobile video on their phones, the potential interest in ads is strong enough that advertisers should begin testing the medium, said Neil Strother, lead analyst with Jupiter Research.
Advertisers who would benefit most at this early stage are brands targeting younger consumers, since the 18 to 24 demographic expresses the highest degree of interest in mobile video.
“If you are a brand manager and your target is 18 to 24, this is a good time to get in even though audience is limited,” Mr. Strother said.
“If there is no lift, then don’t worry about it,” he added. “If you want to be a part of what we think will be big in a few years, then it’s a good time to dip your toe in and see what works and what doesn’t work, and you can help the programmers and the broadcasters and network operators to experiment with things that haven’t really been tried or exploited, like interactivity or voting.”
However, relatively few advertisers are trying the new medium. Jupiter found that less than 1 percent of advertisers said they bought commercials in mobile video, though that number will rise to 2 percent in the next 12 months.
The ad model is critical to mobile phones, because over time most consumers won’t want to spend $10 or $15 for a monthly subscription to mobile video services, Mr. Strother said. “In my humble opinion, it needs to be $3 to $5 or free,” he said.
Even so, mobile video won’t take off as a medium until a big hit surfaces on cell phones, as NBC’s “Lazy Sunday” clip did last year for YouTube and online video. A similar sort of breakout property will drive adoption of mobile video.
In fact, advertiser-supported video may be the very thing that pushes mobile TV into the mainstream and spurs growth rates for the medium.
Consumers have grown accustomed to the advertising model over the years with commercial television. “The key takeaway here is no surprise: American consumers are open to ad-supported video and television,” Mr. Strother said.
With penetration rates at less than 2 percent, early advertisers will need to adjust their expectations; in the initial phases, mobile video advertising will be more about learning and less about reach.
Some programmers already are experimenting with ads in mobile content. MTV Networks became one of the first programmers to test the medium when it struck a deal with Intel and Pepsi in April to sponsor mobile video across MTV’s brands. Ads from those marketers ran across mobile video and mobile-enabled Web sites.
“One of the things we are seeing happen is that people are buying packages and developing creative across all the different mobile platforms,” said Greg Clayman, executive vice president of digital distribution and business development at MTV Networks. “So you will see ads across mobile clips, linear and online.”
Ads currently running on MTV Networks’ mobile video content come from Ford and Air Force.
But advertisers, programmers and carriers will need to cross many hurdles for the mobile ad medium to grow. Currently, the process of linking from an ad in a video clip to a Web site on a mobile phone is clunky and cumbersome. That process needs to be more seamless so viewers will be more inclined to click through on ads, Mr. Clayman said. Look for mobile carriers to make improvements by the end of next year.
Another issue is standards. On the Web, for instance, the Internet Advertising Bureau has developed standards for online ads. But such guidelines don’t exist yet in mobile video, and they are sorely needed given the sheer number of handsets and carriers, Mr. Clayman said.
Once the industry crosses these technological hurdles, the opportunity is great in mobile to reach consumers with targeted ads.
Down the road, consumers should be able to watch an auto ad and then click to look up the nearest car dealer based on their location at that moment.
Consumers also could receive ads for discounts, specials or coupons based on their location. Movie theater times and ads also are a good fit for mobile phone users.
Discovery Mobile has begun to reach out to advertisers about its mobile video programming, positioning mobile as part of a larger buy.
Advertisers from all major categories have shown interest in mobile advertising, including automotive, packaged goods, financial, entertainment and technology, said Doug Craig, senior vice president of programming for new media at Discovery.
“We are in the marketplace right now talking to advertisers about getting ad messaging in our mobile content. There are a lot of clients interested in multiplatform campaigns, and we think mobile is an important part of that,” he said.
As advertisers and programmers negotiate their first deals, questions about the medium remain, such as whether consumers prefer long- or short-form content and whether they like ad-supported or subscription mobile video.
Jupiter’s report found consumers are more interested in long-form content than most programmers originally expected. The study found 26 percent of adults 18 to 24 would be interested in watching full-length movies on their cell phones. In addition, 15 percent of that group expressed interest in watching live TV shows on mobile while 10 percent were interested in prerecorded shows.
Interest dips for the 25 to 34 age group. Among those consumers, only 12 percent are interested in watching full-length movies, though 16 percent do want to watch live TV shows.
“It’s interesting that longer-form programming is at least an acceptable thing to do,” Mr. Strother said.
Mr. Craig expects that consumers will start seeing some ads in Discovery Mobile early next year. He said the barriers to widespread adoption of mobile video are similar to video-on-demand and include the need for dynamic ad insertion, to let advertisers insert fresh ads into content, and standard reporting across carriers.
Advertisers will want some sort of common metric. The players involved will need to work together to devise commonalities in reporting ratings and usage, he said. “Each carrier has a different reporting system,” he said.
Carriers for the most part have been reluctant to release any data on mobile video usage. However, cell phone technology evolves quickly, and most experts expect these early issues to be ironed out.
“We know this is a growing platform, and we have every reason to believe in three to five years it will become big,” Mr. Craig said. n