Changes in customer behaviour as well as more targeted campaigns, drove mobile advertising growth in 2008, says David Adams. And there will be more to come in 2009
Overall, and particularly when one considers the wider economic context, 2008 was a good year for mobile advertising. There were some eye-catching campaigns, useful innovations in technologies and business models, and important developments in establishing effective methods of measuring success. Advances in handset technology provided further encouragement. And among the striking examples of the power of mobile as a marketing channel that could be seen in Europe and further afield, were the campaigns that helped galvanise American voters to elect a new President.
Analyst predictions about this market differ only by degrees of optimism. By 2011 mobile advertising will generate $14.4 billion of revenue, and account for a fifth of global internet advertising, according to Strategy Analytics; while Informa Telecoms suggests that the global mobile advertising market will be worth $12 billion by 2013.
The Mobile Marketing Association's Global President, Laura Marriott, says, "2008 has been year of growth for mobile marketing. More and more brands are actively evangelising the use of mobile as a marketing channel, and in 2008 we've seen them working with many other MMA stakeholders to contribute to the guidelines and best practices that govern our industry."
Many of the biggest players in internet advertising, like Google and Yahoo, could be seen visibly warming to the mobile channel during 2008. There was also evidence that longer established corporations were taking mobile more seriously: Alex Moukas, CEO at mobile marketing specialist Velti, claims clients that were spending £25,000 to £50,000 per month a year ago are now spending five or ten times as much.
Charles Sword, director of mobile monetisation for Connected Life at Yahoo Europe, believes these changes have been driven in part by the growing mobilisation of social networking. That has helped increase mobile web usage significantly, as illustrated by a huge upsurge in the use of Yahoo Mail and Messenger on mobile, which doubled in the first nine months of 2008.
"A lot of agencies have been a little sceptical, and these numbers are beginning to change their perspective," he says. "We've seen a much greater level of participation by brands, and more repeat business. But it's the change in customer behaviour we've seen this year that is really fundamental to the opportunity for mobile advertising going forward."
Sword also notes technical improvements and key moves in corporate strategy which have boosted mobile advertising within Yahoo, such as the implementation of Mobile Marketing Association (MMA) specifications for ad content, and the development of advertising relationships for search and display with major mobile operators, changes that make using the same advertising material in different places much easier.
Marriot says that a desire to achieve an improvement in the quality of the user experience has been evident in 2008.
"As we look back at 2008, , we have seen all players striving to strike a balance between increasing reach and improving the quality of the mobile marketing experience. Traditionally, the focus was about trying to achieve a high volume of click-through and interaction with consumers via the mobile channel. Now, operators, brands and digital agencies alike are focusing on the quality of this interaction, and are working on building sustained dialogue with consumers," she says.
Throughout the year, imaginative campaigns demonstrated that advertisers are learning to exploit the flexibility of the mobile channel. Sword highlights the summer campaign for the Warner Bros film The Dark Knight, which included animated characters from the film taking over parts of the Vodafone Mobile home page. He also picks out a Yahoo campaign for the Citroen C5 which highlighted how mobile can spur consumer engagement through the use of demographically targeted banners and interactivity.
Elsewhere, the MMA award-winning ‘Get In There' campaign from Lynx employed various downloadable mobile applications that used sound in a variety of ways to amuse a target audience with suggestions on how to impress members of the opposite sex.
Alex Moukas says he sees evidence that advertisers are starting to understand the role the mobile channel should play in integrated multimedia campaigns. "A lot of people view [mobile advertising] as an additional brand awareness channel, but in our mind you should use TV for that, and mobile is about targeting, interactivity and measurability," he says.
He cites a Velti campaign for Johnson & Johnson that began in August 2007 and ran throughout 2008. In the mobile arm of the campaign pregnant women were asked to text their due dates to a shortcode, after which they were sent information and offers corresponding to the stage of their pregnancy. The campaign had a month on month growth rate of 250% in the first six months and only a 9% drop-out rate.
"The Johnson and Johnson campaign is interesting because of the use of integrated media and the retention rate," says Moukas. "If people are willing to participate in marketing campaigns it will be because of what's right for them, as opposed to what's right for the operator or the brand. Mobile interaction has to be up to the consumer."
Another key technology theme of the year was an increased use of widgets, mini-applications that can be used in several different ways within smartphones. "A widget provides a direct benefit to the user, so it's about finding ways that we can associate the brand with that utility," says Charles Sword. He suggests the hypothetical example of pollen count forecast services provided in association with hay fever medication. Yahoo has already used a widget virtual bartender who offered cocktail recipes as part of a campaign for Smirnoff.
Amobee's Patrick Parodi can also see scope for more use of downloadable games as a medium for advertising and marketing. "We're now seeing developers and operators engaging in a model where you reduce the prices of these games in return for the embedding of ads," he explains. "You have inherent in this business model an incentive to make a better game: you get more revenue per play, not per download. And because the ads are tied to the number of times the game is played and can appear several times, the overall revenue is higher."
SMS?the potential winner?
The year also saw solid progress on the Ad-funded Mobile Entertainment (AFME) reports being produced by the Mobile Entertainment Forum (MEF), with support from Alcatel and Amobee. These reports are intended to help the mobile entertainment and advertising industries work together more effectively, and form part of ongoing work by the MEF that aims to discover how significant mobile advertising is going to be in future.
Meanwhile, despite the development of impressive new technologies, the humble SMS remains the most important tool in mobile advertising. The virtue of its simplicity, consumers' familiarity with the technology, and the fact that it can be used on any handset are helping SMS campaigns flourish in a number of European countries. In Switzerland, Orange ran a trial using Amobee technology in which advertising content was embedded in left over space at the bottom of inbound texts received by consumers who had opted into the scheme in return for a discounted service. "The results were very positive," says Patrick Parodi. "We believe that SMS peer to peer has the potential to be the best form of mobile advertising in reach and efficiency. It has the potential to be what search has been to the web in pushing forward ad revenue."
If mobile advertising is going to exploit the mobility and flexibility of the technology to the full, there will have to be a change in the types of goods and services that can be purchased using mobile devices. "The mobile entertainment industry is still probably the only industry that sells significant amounts of content via the mobile phone," says Andrew Bud, global chair of the Mobile Entertainment Forum (MEF) and executive chair of the mobile transaction network mBlox. "Until other industries become active in actually selling things over the phone the opportunity for pay per click [advertising] buyers to come into the market is strictly limited."
Charles Sword believes the important change will be a stronger link to mainstream retailers. The development of mobile phone-based payment systems based on NFC technology would help, but for various reasons that's unlikely to be a mass market proposition for a few more years in most European markets.
Even so, it's hard to believe mobile advertising does not have a successful future. "Everyone knows mobile is central to peoples' lives," says Charles Sword. "I think there's been an unfair degree of scepticism about how much people are using [mobile internet]. With the advent of things like the G1 phone, the BlackBerry Storm and the iPhone, the penny's dropping that this really could fundamentally change the way people engage with media." Recession or no, mobile advertising is definitely an area to watch in 2009.