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Wireless advertising shows promise despite glitches

Zapping ads to wireless devices will be big business in a few years once the technical details are worked out, a group of industry hopefuls reassure each other at a conference.

SAN FRANCISCO--Zapping ads to cell phones and other wireless devices will be big business in a few years once the technical details are worked out, a group of industry hopefuls reassured each other this week at a conference here.

Advertisers, content providers, wireless carriers, application service providers and ad agencies convened Thursday at the Wireless Advertising Association (WAA) conference to share what they've learned so far about an industry that analysts say is a long way from success.

Executives from companies such as 24/7 Media, SkyGo, SF Interactive and Vindigo are eagerly trying to learn how wireless advertising will work best--and how to make money from it.

The industry faces high hurdles in the United States because consumers have yet to accept the idea of receiving promotions through the limited and captive space of a handheld device. In addition, many wireless carriers have not opened their gateways to accept mobile advertising, causing start-ups to circle patiently for chances to deliver ads to wireless users.

SkyGo and others are hoping to touch off the market by showing positive results on consumers' experiences with mobile ads. The San Francisco-based company tested in Boulder, Colo., over the last four months for the effectiveness of ads delivered via wireless devices, paying for the trial by signing up national advertisers including Kinko's and Hewlett-Packard, which were charged about $25,000 each. It also turned local advertisers on to the test for nominal fees.

Preliminary results of SkyGo's study, which will be released in March, show that consumers responded well to time-sensitive coupons from local restaurants and national chains such as Kentucky Fried Chicken. A regional concert hall garnered high response rates from Boulder's music lovers with ads linked to an audio clip from a band. Interested parties could click to buy tickets from their browser phones.

Nearly 60 percent of those tested said that they thought advertising was helpful through their WAP (Wireless Application Protocol) phones, according to SkyGo. A big draw for consumers was the ability to determine when they would receive ads and how many at that time.

But selling local advertisers on such opportunities is difficult. The sales force needed to dig into local markets would far outweigh the potential profits from such a venture.

"No one figured out how to do it through the Internet," said Perry Allison, SkyGo's vice president of sales and chairman of the WAA's Global Wireless committee.

Unlike Americans, Europeans and Asians have become accustomed to wireless advertising because their access to the Web is often through handheld devices. Akihisa Fujita, chief executive of Japan-based D2 Communications, which sells ad space through NTT DoCoMo's I-mode browser phone service, predicted widespread use of a "third generation," wide-screen browser phone available in May from NTT DoCoMo. The phone will let advertisers promote their services via high-speed, in-color access.

For example, he described movie studios advertising their latest films via a streaming media video clip. Consumers could click the films to see a local listing of theaters playing the movies. Another page would let a visitor buy a ticket and use a confirmation code on the device's screen to get into the film.

Fujita's company has tested banner ads and e-mail-based ads through the I-mode system, which with 17 million subscribers is the most popular service in Japan. Response rates to wireless banners were typically 3.6 percent; e-mail ads resulted in nearly 25 percent, Fujita said.

The greater response rates come because consumers are receiving highly targeted ads and the browser has limited real estate--although bigger than that on browser phones in the United States--that commands consumer attention.