Credit crunch hits mobile phone ads

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However, research firm Informa estimates that the revenues derived from placing advertisements on mobiles will be worth $1.72 billion in 2008, rising to more than $12 billion by 2013.

During the past eighteen months, European mobile operators such as Vodafone and France Telecom's Orange have increased investments in mobile advertising, and companies like AOL, Microsoft, Nokia, Publicis and Yahoo have made acquisitions to expand their roles in the mobile advertising market.

According to Informa, the potential return from mobile ads is not sufficient to justify significant investment.

London-based mobile advertising guru, Andrew Grill, has a slightly different view of the Financial Times report.

"While it's true to say that mobile advertising has been slow to take off, it may become even more important in the current economic crisis, as consumers are more willing to reduce their costs through offers and discounts sent to their mobile phone as part of a targeted and permission-based advertising campaign," says Grill.

One key ingredient that is missing from the mix is access to user generated preferences – i.e. consumers who have provided their preferences to an advertiser and are thus willing to receive certain types of advertisements on their mobile phones – in exchange for a benefit.

"The status quo at the moment seems to be to follow the Internet approach, where advertisers buy up a range of impressions across mobile sites that they think a consumer might visit," says Grill."This is all a bit hit and miss, and completely ignores the power of the mobile phone and the benefits of engaging in a conversation with the consumer about what they would like to receive."

Grill is currently advising companies such as Gigafone on how develop such an approach. Interestingly, Gigafone is currently trialling its solution in Asia and Europe, allowing users to control of what sort of ads they want to receive. When a phone call or SMS is received, a full screen advertisement is shown based on these preferences which in no way interrupts what they were doing – and provides the consumer with a benefit in terms of free minutes, content or a compelling offer from the advertiser.

"If mobile advertising is to progress, it is likely to be the smaller companies and agencies that can move much faster than the mobile operators," says Grill. "Operators at the moment don't seem to have a way of easily collecting the sort of information that advertisers need, such as lifestyle, and the types of advertising they are interested in (e.g. motor vehicles, movie tickets, outdoor sports, etc). Companies that solve this problem will start to move mobile advertising forward – regardless of the economic climate."


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