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Tuesday, January 31, 2006

Mobile - the holy grail of advertising?

(The IMS Insider Global Online IMS Attitude Survey. Closes midnight tonight GMT. Final chance to have your say. It takes 10 minutes to complete. Full free report to participants-only in a few weeks' time. Go to: http://www.surveymonkey.com/s.asp?u=909631592609.)

As part of the market study we're running with the Converged Service Practice of STL (www.stlpartners.com), and following my post below about innovative mobile business models, I had a very interesting call today with David Tymm, the CEO of a small but highly innovative UK company called i-Movo (www.i-movo.com).

Together with i-Text they have created a service that allows sales promotion vouchers to be delivered to mobile phone users and redeemed via any channel (handset, credit card, EPOS system, kiosks, PDAs). In return for receiving targeted advertising, consumers get free text credits ('text for free').

This is great news for advertisers and consumers, but (today) the operators get virtually nothing from it. Below I describe why it's important and how it works. In this month's edition of the IMS Insider report we describe what operators need to do to take advantage of this and other innovative service models (to receive the report subscribe at

Why is this interesting? Mobile operators are looking for content around which they can create sticky services. Content is expensive. Premium content (TV, print) is funded primarily by advertising. But advertising is costly and, with increasing media fragmentation, is wasted and/or unmeasureable. DVR technology (like Tivo) already allows consumers to filter advertising. So, is the mobile phone is the answer?

Last year the Financial Times ran a piece suggesting that mobiles will soon replace TV as the prime ad medium. Recent studies have shown that 75%+ of mobile phones are kept switched on over sixteen hours a day (mine certainly is), and two-thirds of mobile users claim that if they had to make a choice, the mobile phone is “the device they most want to keep” (only 12% opted for TV).

Online advertising has had a resurgence recently, but compared to the potential of mobile even that looks very hit and miss. Pay-Per-Click models (from Google, MSN, Yahoo, etc) are open to difficult-to-detect “click-fraud” (I was warned by Google to tell my employees not to click on the ads on the top of this blog). Pay-Per-Call models (Skype/eBay) are an improvement, but it is still nearly impossible to distinguish a “sale” from “enquiry”. Pay-Per-Action models (provided by the SNAP search engine, well worth a look at
http://www.snap.com/about/about.php?last_link_type=about) is interesting because advertisers only gets pay SNAP when the user completes a purchase or other action.

So, The Economist in September described 'pay-for-sale narrowcast advertising over the mobile phone' as “The holy grail of advertising". Here's why:

•Customers are rewarded for active participation in marketing promotions
•Advertisers are charged only when their message is viewed
•The market sets the rate-card
•Each element of the process is measured
•The ROI for marketing campaigns can at last be calculated

It works like this:

1.) The advertiser selects a target customer segment (by Age Group, Lifestage, Region, Gender).
2.) The advertiser “bids” the amount of free texting customers can get for each “viewing” of the advertisement (they are listed in order of generosity to consumer)
3.) The customer views advertisements of interest (the message may include the offer of an i-movo voucher for redemption online, at a store, at a kiosk, etc)
4.) i-text “credits” customers' accounts of sponsored texts
5.) The customer creates texts using standard phone functions (Editor, Address Book, T9 etc; messages are sent over GPRS data channel at a cost of £0 - £0.02; customer may also send texts from their PC for free).

Consumers get a good deal (free texting and vouchers for discounted goods), the advertisers get highly targeted promotions that they can measure, the aggregators get paid for delivering the texts through different networks, but...today the poor old mobile operator gets a tiny inter-charge fee.

Clearly, there is a big opportunity for mobile operators to play a bigger role here.... We'll be describing what this can be and how to do it in this month's IMS Insider report (www.ims-insider.com).

The Editor, IMS Insider

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