Mobile Marketing Hits Its 'Terrible Twos'

Antsy Third-Screen Players Have Abundance of Early Hurdles to Overcome

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NEW YORK ( -- Not that it's insurmountable. Not that there hasn't been considerable progress. But despite all the hype, mobile phone marketing is one testy toddler.
For marketers, there are many 'potholes on the road to the magic kingdom of mobile,' beginning with the consumer, says one exec.
For marketers, there are many 'potholes on the road to the magic kingdom of mobile,' beginning with the consumer, says one exec.

"At the moment, it's the terrible twos," said Maria Mandel, partner, executive director-digital innovation, Ogilvy.

"We're just going to have to fumble our way through this," said Jeff Kagan, an independent wireless analyst.

'Potholes on the road'
For marketers, there are many "potholes on the road to the magic kingdom of mobile," said Will Hodgman, president-CEO, M:Metrics, begining with the consumer. Recent surveys found that 90% of consumers say no when asked if they wanted advertising on their cellphones.

"Consumers are at a loss as to how this mobile marketing thing is even going to work," said Dorrian Porter, CEO, Mozes, a text-messaging marketing platform. They think it is "spam me, and it will cost me money," in the form of higher wireless bills, he said.

Text messaging is by far the most popular mobile activity, used by 35% of mobile subscribers in the U.S. Only 11% browse the mobile web and a scant 3% consume video -- activities that would allow marketers to buy banner ads or commercials. "The first and biggest challenge is consumer adoption and use of underlying technologies beyond voice," said Charles S. Golvin, principal analyst, Forrester Research. "The challenges are less about phones and capabilities and more about changing consumer behavior."

Reluctant to seem intrusive
Marketers have other concerns, particularly around restrictions on any effort that would be perceived as push-based campaign rather than as an opt-in effort. "At this stage, we're all very reluctant to do things that are very intrusive on the cellphone," said David Roman, VP-worldwide marketing communications, Hewlett-Packard.

Marketers are often confused about exactly what they want to do in mobile: Advertise on a publisher's site, or build a community? Offer ringtones and games? Provide incentives to a user to go to a physical store? Few marketers have on-staff mobile experts to shepherd mobile programs along. And creative development for the tiny screen poses another challenge. The price isn't exactly cheap, either. Ms. Mandel said the cost of mobile ads range from $10 to $50 with a $30 average cost per thousand.

Case in point: of the $4 billion-plus the top wireless carriers spend in measured media, a nano amount is spent on their own mobile campaigns.

It can still take weeks for a marketer to put a common text campaign in place, and there are issues with assessing results. There's also the question of reach and targeting. "The reach is substantial, but it is not the Super Bowl yet -- it's definitely Oprah," said Mr. Hodgman, whose firm plans to launch tools to deal with some of these issues.

Landing decks
Carriers, too, are conflicted when it comes to mobile marketing's business model. At first concerned that ads on mobile phones would cost them subscribers or incite complaints, when mobile marketing's revenue potential became clearer, a few began to place ads on the phone screen where the mobile web is accessed, what's known as the carrier deck. The deck's walled-garden approach is akin to the early days of the internet (think America Online). And carriers make money off the advertising on the deck -- but not when a subscriber steps outside and goes off-deck onto the mobile web.

Carriers view it as "it's my real estate, my customer. I'll take the lion's share," said Anil Malhotra, senior VP-marketing, Bango.

The launch of Apple's iPhone might speed development and adoption of the mobile web because it allows consumers to jump onto the mobile web with a simple tap on a touch screen.

And as for that long-fabled coupon on your mobile phone for a discount on a hot Starbucks latte on a cold day, well, it's a way off. While targeting is still a great mobile promise -- "welcome ads are so much more value [to marketers] than unwelcome ones," said Roger Entner of IAG Research -- there is indeed a question of how much is too much targeting.

Citing that tension, Omar Hamoui, founder-CEO, AdMob, a mobile advertising marketplace, said, "Our assessment is that advertisers targeting one or two city blocks -- they wouldn't find anyone there."
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