HolidayBuyer's Guide

Mobile ads take baby steps to reach consumers

Potential audience for ads is 3 billion people worldwide but advertisers are cautious about being intrusive to potential customers.

Consumers may be receptive to advertisements on their mobile phones in exchange for free calls or content, but operators remain cautious about intruding on the intimate space of a customer's cell phone.

For now, consumers do not have to fear that walking past a supermarket will trigger messages to their mobiles, advertising special offers inside, or have banners burst onto the tiny screen while they check their e-mails on the go.

"Advertising is not just a straight move from the PC to the mobile phone," Marco Boerries, head of Yahoo's mobile business, said in a keynote speech at the Mobile World Congress in Barcelona.

"We're trying to invent mobile advertising," he said.

Ad companies and operators see it as an opportunity to generate new revenue streams. According to a number of studies, the mobile ad market is expected to generate revenues ranging somewhere between $1 billion and $24 billion within four years.

The problem is that while surveys show that 80 percent to 90 percent of customers are more than willing to accept advertisement on their mobile phones if they can get free music or video, the market is still in its infancy. There are few proven models of what a mobile advertising campaign should look like to be successful.

"As with online, there is no rulebook for mobile advertising. It is uncharted territory for us all," U.K. Internet Advertising Bureau (IABUK) said in a 2007 study.

A number of companies are experimenting, however.

Social-networking Web site MySpace offers a free, ad-funded mobile version, and U.K. mobile network Blyk gives 16-to 24-year-olds free phone calls and text messages in exchange for agreeing to receive advertising.

While some see banner advertising as it is currently done on the Web sites as a possibility, others said online ads cannot work on mobile displays.

"I said, 'Get rid of all the banner ads'," said Masayoshi Son, chief executive of Japan's Softbank.

"When you have a big screen, that's OK. When you have a very small screen, too much advertisement is no good," he said.

Either way, advertisers want a share of the market because of the sheer scale of the potential audience--3 billion people worldwide use mobile phones--and because it is also very personal.

It lets companies target consumers according to location and allows advertisers to reach consumers at times when they are difficult to reach through other media.

But because it is so intimate, advertisers and operators tread lightly in fear of being seen as intrusive by customers.

"I'm really undecided about mobile. It is clearly a huge opportunity to have brands in people's pockets but the intrusive nature of pushing messages into a highly personal space is a major barrier," IABUK quoted an advertiser as saying.

Timo Ahopelto, head of strategy and business development for Blyk, said timing can be tricky.

"The devil is in the details," he said. "You don't want to send an ad when a person has just sent out a text message to their friend...just imagine you have texted 'Do you still love me' and you then get an ad."

Story Copyright © 2008 Reuters Limited. All rights reserved.

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