But Many Fear Alienating Impact of Phone Spam

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LAS VEGAS ( -- Marketing’s role on mobile phones takes center stage this week as the wireless industry today opens one of its largest conferences ever, CTIA Wireless 2006.
High hopes for the growth of the mobile-phone advertising business are tempered by concerns about consumer reaction to phone spam.

“How to advertise on mobile search, mobile video, interstitials, opt-in procedures” -- those avenues are top of mind in a conference usually dominated by discussions of phone features, the wireless spectrum and other technical issues, said Mark Lowenstein, managing director of Boston-based mobile consultancy Mobile Ecosystem.

The new medium
With 200 million phones in circulation in the U.S., and 80% of them capable of downloading video, sending text messages and completing other so-called data-enabled functions, the wireless industry has begun focusing on their potential for marketing, and devising ways to attract more brands to the new medium.

In fact, today led off the announcements at CTIA with news it was testing an ad-subsidized video service for cellphones. In the test, cellphone subscribers will have the option of receiving news and videos, and they’ll have the ability to save stories for later reference. Microsoft’s Windows Mobile and Embedded Devices Division is the ad sponsor.

“There’s still a lot of figuring out,” cautioned Louis Gump, chairman of the Mobile Marketing Association and VP-mobile at the Weather Channel. Mr. Gump led off a day-long session, "Marketing -- The Mobile Channel," yesterday.

Marketing intrusion?
Mr. Gump was concerned with one of mobile’s most ticklish issues. Marketers might be drawn to the mobile phone because the devices are now indispensable to many consumers. But at the same time consumers view the phone as an intimate device and might resent a marketing intrusion. Mr. Gump and others are concerned that if subscribers are spammed with mobile marketing, the medium’s potential will go the way of e-mail as a marketing tool.

The Mobile Marketing Association issues best-practices guidelines requiring double opt-in by consumers before they are charged for new promotions or applications. Mr. Gump said it was “critically important” that consumers “feel they have control over the experience.”

“If we don’t do things right, we’re going to have to live with that for a long time,” said Matt Jones, director-mobile products,

In a positive sign for marketers, two speakers -- Kristen Fox, manager-product marketing, Mobile ESPN Publishing, and Jim Cannella, national director-corporate partnerships, House of Blues -- said they have experienced a very low opt-out rate with their mobile marketing efforts.

So far, marketers have used cellphones as a marketing tool through text-messaging polls, promotions and other short-code marketing programs. Advertising over the phone’s more advanced features, such as mobile Web or mobile video, has been limited.

Out of the Wild West
Tom Burgess, CEO, Third Screen Media, said his company is getting from $35 to $50 cost-per-thousand for mobile advertising with a click-through rate of 3.5%, much higher than Web click-through rates. “We’re evolving from the Wild West to a more stable environment,” said Mr. Burgess, predicting mobile marketing ultimately will grow faster than marketing did on the Internet.

Steven Smyth, VP-media, Reuters, said advertising will take the place of premium SMS (the purchase of ring tones or other content). Wireless subscribers pay extra on their phone bills for premium content. “We decided in the U.S. that ad support is key in driving adoption.”

Todd Anderman, president, Dennis Digital, said enthusiasm for mobile advertising is running so high he has to calm down marketers who want to do things like “a mobile blast” (sending messages to all customers of a carrier), something not possible because carriers wouldn’t allow it and subscribers would be alienated. “It’s 1996 all over again,” he said. He said a lot of his job lately “is about educating, hand-holding and a lot of managing expectations.”

Nihal Mehta, CEO of Ipsh, Omnicom’s mobile agency, said last year 15% of major brands were using mobile marketing. This year, the percentage has tripled to 45%, he said.

Strong attendance numbers
Other aspects of the dot-com era were evident at the show. CTIA spokesman Joseph Farren said attendance boomed this year to a high of about 40,000, up from 35,000 last year. He also noted an increasing international presence at the conference, with a record 20% from non-U.S. nations.

What explains the renewed interest in technology? A number of mobile startups are being acquired by other companies, and venture capitalists are pouring money into the business, said Mr. Mehta. Mobile broadcast software company Roundbox, Florham Park, N.J., announced yesterday it raised $15 million in funding. Last month, VeriSign, making a mobile play, purchased m-Qube for $250 million in cash.

But Mr. Mehta believes that the marketing applications of the mobile phone fueling the funding blitz won’t begin to pan out until 2008 or 2009. Between this year and then, he predicted, “there will be another bubble burst."

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