The carriers, after years of resistance, are opening their mobile-phone services to advertising.
Ads on deck
Sprint Nextel this week is expected to announce that it will allow ads on its deck -- the landing page for customers accessing the internet from cellphones on the Sprint network. In February, Verizon Wireless Chief Marketing Officer John Stratton said he's testing a program to open up cell service to advertising using a two-tier model, offering customers one service without ads and a cheaper, ad-supported service. Cingular is considering on-deck advertising, and is likely to have some advertising on its deck as soon as the end of the year.
The ads are hardly an example of the most innovative mobile marketing taking place right now, but they do signal a willingness on behalf of carriers to work with advertisers.
It follows years of resistance by carriers to open their decks to ads for fear that customer complaints would bog down customer-service call centers and eat away at profit margins.
OK if subsidizing content
But concerns over consumer resistance to mobile ads also appear to have abated. Nearly half of consumers ages 18 to 35 indicated they would be interested in mobile ads if they subsidized their "increasing appetite for mobile data/content," said Yankee Group, which estimated U.S. carriers generated $10.7 billion, or about 9% of revenue, from non-voice bills.
Right now ads are available only on off-deck mobile websites, which are often more cumbersome for users to access. According to M:Metrics, of the 190 million mobile-phone subscribers in the U.S., some 166.9 million have phones capable of accessing the mobile web-but only 49.6 million of those subscribers used the mobile web in July.
Sprint and Cingular spokespeople declined to comment, and a Verizon spokeswoman said the carrier "continues to test and trial."
For advertisers, on-deck ads will significantly expand mobile marketing beyond text messages and short-code promos. The ads on carrier decks will boost eyeballs and mobile inventory, which in turn should lower prices, said Maria Mandel, exec director of the Digital Innovation Group, OgilvyInteractive, which recently ran a four-week test of off-deck ads for PC-marketer Lenovo. "The net is a better way to reach more consumers and to develop a more efficient media plan," she said. "It will make mobile far more attractive to our clients."
Spending to reach $150 million
Carriers are starting to smell the money. Advertising on mobile phones totaled only $45 million in 2005, but is expected to hit $150 million this year, according to research company Ovum. Once the carriers allow on-deck ads, they will get a cut of the revenue -- in contrast to off-deck sites, in which carriers don't share ad revenue. "There's money to be made," said Jeff Janer, chief operating officer, Third Screen Media. "The question is who will make it and how."
Other questions remain: Will carriers become media companies in their own right, perhaps sweetening the pie for marketers by doling out additional information about subscribers' locations, mobile habits or bill-paying habits? Will each carrier's customers be different enough to persuade a marketer to prefer one carrier as a marketing partner over another?
Regardless, Ms. Mandel said the mobile phone as a marketing medium is picking up steam much faster than the internet, which took 10 years to come into its own. In a mere two to three years, the third screen could take its place alongside the TV and PC monitor, she said.