mocoNews.net - @ Mobile NW: Mobile Advertising Is More About Action And Marketing; Less About CPMs

With an unstable economy brewing, the wireless industry may be even more reliant upon advertising as consumers cut back on spending and tighten their belts. But the challenge for the industry is to identify ways mobile advertising can work since the sector is still in its infancy. During multiple panels today at Mobile Northwest 2008 in Seattle there was a general consensus that most advertising on the phone is more correctly labeled as "marketing," and that the bigger opportunity is getting users to take actions like, click to call, or redeeming coupons, rather than solely focusing on ad impressions and click-thru rates.

-- On the infancy of mobile advertising: Chetan Sharma, president of Chetan Sharma Consulting, said mobile advertising this year will be a $700 to 800 million industry, and today, 20 percent of that goes to carriers. When compared to the other advertising mediums, such as TV, radio and print, mobile makes up a tiny percentage at .4 percent. Even in Japan, which can be considered the most advanced mobile advertising market, it's about 1 percent. But with the uncertainty in the economy, advertisers will be reducing their budgets in radio and print, and focusing on the Internet and mobile. He said there's two camps: some advertisers will stick with what they know, but others will make the determination that print and radio won't work, and although mobile is new and more difficult to understand, they'll be drawn to it by the promise of better ROIs. Last year mobile advertising revenues doubled, and it probably will again this year, with revenues estimated to hit $1.5 billion in the U.S.

More after the jump?

-- On types of mobile advertising: Sharma said 50 percent of mobile advertising is coming from SMS, which is more like mobile marketing than it is mobile advertising. After SMS, 25 percent comes to display and 10 percent to mobile search. The remainder is going to mobile TV, audio and couponing in US, "and that will stay the same for the next 4 to 5 years."

-- On mobile marketing: Ivan Braiker, CEO of HipCricket, which helps radio stations do SMS promotions, said: "We are creating a new revenue channel for the radio stations we work with. Through mobile, we created an additional $1 million in revenue by creating a mobile aspect to the traditional advertising methods. There's a call-to-action, rather than the traditional banners and those types of elements."

-- CPAs vs. CPMs: Victor Melfi, SVP of Voicebox Technologies said: "It's best to get away from CPMs, and lean towards CPAs [based on actions]. It's a richer economic model. Most of the CPMs you are talking about is finding restaurants, which is probably worth 3 cents, and then on the high-side it's a mortgage broker lead, which is like $90, but you aren't going to be on a phone looking for mortgages."

-- On the agency side: Ken Wilner, Zumobi's CEO: "A number of mobile agencies have created specifically on mobile marketing, but what's happened over the last six months is that those capabilities are being integrated into the traditional agencies. I'm dealing with the agencies in New York frequently, and they are starting to understand how to integrate that across the entire mix. Mobile will naturally be part of the mix of agencies. Now we have people saying 'Hey, we are planning our 2009 budget, and are planning on putting mobile in there,' rather than us having to work with mobile agencies."

-- On CPMs being overpriced: Medio's GM of Advertising Barry Chu said: "The critical mass isn't there yet. There's a couple of companies out there, saying they are getting billions of impressions per month, and at that stage, you have a lot of competition for inventory...Some of the CPM rates in mobile are overpriced because you can get that same money in the Web space. It's not something we wanted to play in and bank our relationships on by selling a product we know is overpriced. We started focusing on ROI, and are looking at very targeted examples. Because of that our conversions are better, or about double that of broad-based mobile buys."