Wireless communications could be the next great virtual marketing medium.
Or maybe not.
The uncertainty for advertising, however, is not deterring media companies from getting their broad and diverse content into this new space with subscription models, sponsorships and other schemes. But advertising, which generates the revenue on many Web media sites, may not play the same role in wireless.
"The cell phone is an advertising dead end," says Matthew Nordan, senior analyst at Forrester Research. "Today, no one is advertising on phones. The best use for mobile Internet services is PR value. Amazon is not selling books on the phone, but it is getting a lot of coverage from the news media because it has a site on the Sprint [PCS] Wireless Web."
In addition to smacking of Big Brother, most types of advertising are too complex to display on cell phones, pagers and digital organizers such as Palm. Plus, many media executives say, consumers will resist wireless ads because they consider these tools to be very personal.
Unlike free content on the Internet, consumers pay for most of the wireless content they download.
At Reuters, this means consumers--mostly financial professionals--buy a subscription to access real-time information on Palm Inc.'s Palm organizer and Microsoft Corp.'s Windows CE devices. The two-way service delivers data, graphics, charts and stock quotes and lets users trade stock. The service costs $79 a month for software, plus $7.50 in other fees. There's also a $69 activation fee.
For cell phones and pagers, Reuters offers a service for $75 a month that provides news and data to about 2,000 subscribers.
Neither service, however, sells ad space.
Landmark Communications' Weather Channel also is a player in the wireless realm that does not sell ads. The company is testing a service that allows digital cell phone users to receive weather information almost instantaneously by punching in certain codes. Deeper weather data is available to users of Palm VII and Sprint PCS devices, who can get forecasts and current conditions as well as national weather news.
Consumers can request a "tiny e-mail that shows up on your phone each day" delivering weather information customized to the ZIP code, says Tom Flournoy, director of business development for wireless for Weather.com.
While its wireless service has no ads, Mr. Flournoy sees potential.
"The opportunity is that we have an incredibly highly targeted, top-end demographic piece of ad inventory to sell the convergence of the Internet demographics with cellular demographics," he says. "I don't know if there is a better [demographic target] out there other than purchasers of jet airplanes."
Audience also is very much a consideration for Devin Wenig, exec VP of Reuters.
"It's very much a different model from the one that has developed on the Internet," says Mr. Wenig. "The quality and depth of these products are for professionals or serious traders. In that market, we think subscriptions are appropriate whereas, on the public Internet, we have made information available for free. A professional financial person would rather pay a premium price and not see any ads. Consumers want a lesser fee and will take ads."
There are other ways users pay for wireless content besides subscriptions. For example, users of electronic organizers who want Wall Street Journal Interactive Edition stories can download headlines, article summaries or entire stories from the day's top news. The articles are heavily edited because consumers pay for the number of characters of information they download.
"Because of that same set of issues of how the consumer is paying for the cost of downloading, advertising becomes interesting," says Neil Budde, editor and publisher of the WSJ Interactive Edition. "Right now, there is no advertising in that product, and I'm not sure how it will show up."
While the Journal's wireless content includes no ads, Mr. Budde is convinced there is a future for things such as sponsorships or interactive marketing e-mails.
The Dow Jones & Co. arm is reaching out to the wireless market by partnering with AvantGo, which provides content to mobile devices. AvantGo has teamed with other media sources including The New York Times and Bloomberg to deliver personalized content to wireless devices.
While AvantGo can't currently offer ad-tracking for advertisers, it will be able to by yearend, says James Ryan, director of marketing. AvantGo advertisers include Electronic Data Systems Corp., Hilton Hotels Corp. and IBM Corp. AvantGo channels accepting ads include Salon, MapQuest and Lycos' Wired Digital, which ran its first ad on a handheld device in October 1998 when it posted a text-based promotion for Hilton.
Mr. Ryan says most of the interactivity comes when users synchronize their devices to PCs connected to the Net. But as the installed-user base on wireless devices has grown, Mr. Ryan says, he's seen an increase in interest from agencies. Lately he's gotten two to three calls a week from agencies interested in advertising.
Gannett Co.'s USAToday.com considers the wireless market to have enormous potential, one in which the site's page views are growing 20% per month, says Director of Marketing Susan Lavington. USAToday.com content, including summaries of the day's top stories updated every 10 minutes, already is available on Palm devices, and work is under way to create a service for cell phones and pagers.
In December, she says, users viewed more than 28 million pages at USAToday.com from Palm organizers. But those do not include ads. "There are a lot of page views and traffic, so we want to somehow harness that [with ads], but haven't figured out the way to do that yet."
She and other media executives say the goal now is to use wireless communications to bolster Web sites and traditional media venues.
'KEY TO OUR MISSION'
Says Scott Woelfel, senior VP-general manager and editor in chief of Time Warner's CNN Interactive and CNNfn Interactive, "We can reach users who want our news anywhere at any time, wherever and whenever they want it. That is key to our mission."
CNN licenses content to Page-Net, a U.S. provider of alphanu-meric pagers with 1.6 million users. CNN Mobile, meanwhile, delivers news to wireless service providers that offer it to 41 million users worldwide. CNN also has an arrangement with AvantGo that lets Palm organizer and Windows CE users download content from the Net.
Mr. Woelfel says customization is wireless advertising's biggest challenge. "If you are paying a mobile phone service for so many minutes per month and an ad message sent over that takes up one to two minutes, people are going to be resistant. Anything that smacks of any kind of advertising or promotion, people will be quick to raise a fuss about.
Copyright March 2000, Crain Communications Inc.