INDUSTRY ISSUES NEW CELL PHONE ADVERTISING GUIDELINES

Debate Over Spam Users Must Pay for Gains Steam

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SAN FRANCISCO (AdAge.com) -- In a move intended to facilitate the mobile phone's evolution from a voice medium into a multimedia marketing tool, the nation's leading cell phone service providers have adopted the first set of guidelines for mobile marketing.
The new guidelines cover the use of mobile phones as advertising delivery devices.
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Consumer advocates fault the measures as inadequate to stop cell-phone spam.

The "Consumer Best Practices Guidelines for Cross-Carrier Mobile Content Services" covers unsolicited messages, advertising and promotional programs and opt-out requirements, especially those requiring subscriptions. The guidelines do, however, allow the selling of opt-in lists to third parties in certain cases.

'New form of spam'
"Good luck," said Gary Ruskin, executive director of Commercial Alert, a Ralph Nader group monitoring advertising. "The purpose of the Mobile Marketing Association is to safeguard this new form of spam that is literally in your face. That's the ugly fact."

Mr. Ruskin predicted that the proliferation of advertising on cell phones, especially when they are costing Americans money, will cause a consumer backlash in the U.S. as they have in Europe. He was particularly concerned about the industry's failure to ban the sale of cell-phone information to third parties.

According to the new guidelines, "selling of opt-in lists to third parties is discouraged, and can only occur if the content provider/aggregator" has the prior approval of the wireless carrier, has a publicly available policy stating personal information will be sold and subscribers are offered the ability to contact the content provider or firm aggregating the content to stop the sale of their personal information.

"All the major carriers were the driving force behind the guidelines," said Mark Desautels, vice president of wireless internet development for CTIA, the wireless association, formerly known as the Cellular Technology and Internet Association. The guidelines were jointly developed with the Mobile Marketing Association.

Unknowingly running up bills
Mr. Desautels said customer service concerns have led carriers such as

Gary Ruskin, the executive director of consumer advocacy group Commercial Alert predicts a backlash against cell phone-based advertising.
Cingular Wireless, Nextel, Sprint, T-Mobile and Verizon Wireless to abide by the guidelines because they do not want to have situations where "people are running up $500 for services they didn't realize they subscribed to." Additionally, every customer service call costs as much as $15 or more and carriers don't want to be dealing with those issues for products or services generating a couple of dollars in revenue.

Safeguarding the emerging mobile phone business is of prime concern to the wireless industry. Text messaging and other cell phone services that go beyond making simple voice calls are starting to generate major revenues for carriers, between 5% and 10%, Mr. Desautels said. Overall, cell phone carriers had revenues of $4.6 billion in 2004 for non-voice-calling features, more than double 2003 revenues, he said. Products sold by carriers or other parties over cell phones range from ringtones and wallpapers (screen savers for cell phones) to daily alerts about weather or sports scores.

The guidelines include many specifics concerning the sending of text messages, including a double opt-in for premium subscriptions. The rules went so far as to list the exact words that consumers should be able to use to opt-in to services, (including yes, go, OK, yep and yeah) and opt out (stop, quit, end, cancel and unsubscribe). The rules note that consumers should not be charged for opt-in and opt-out messages.

Double opt-in
For consumers using the Internet to opt-in to mobile marketing, the guidelines require carriers to get a double opt-in from the phone's authorized users to ensure they want to buy the offer.

The guidelines have been issued just as a number of studies have found some consumer interest for advertising on mobile phones. Consulting firm TMNG yesterday released a study that found interest among young male consumers for advertising by way of an expensive form of mobile content, video clips. "Although the segment of consumers that are most likely to pay for a video clips service is, at most, about one in five, the base of users would double if they were commercially supported," suggesting an opportunity for advertisers to reach the elusive young male audience, the study found.

Commenting on the potential for widespread consumer interest in such ads, Mr. Ruskin cited an April 2004 Yankelovich study that found consumers were resisting the growing intrusiveness of marketing and advertising.

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