Wireless ads could be next value-add

The wireless Web might be young, but consumer privacy has already become an issue for some companies exploring the technology. Like the wired Internet before it, the wireless Web has inspired numerous e-commerce opportunities, creating a new forum for advertising. Although offering personalized ads could boost a wireless carrier's bottom line, content providers and carriers should heed the lesson learned in the wired world: ensure security and privacy before throwing services into the marketplace.

A couple of months ago, the San Francisco Chronicle ran an article about a consumer who, after surfing Sprint PCS' wireless Web, determined his cell phone automatically was transmitting his phone number to every Web site he had visited while using the wireless data service.

That is why AdForce, the 3-year-old company responsible for getting thousands of advertisements onto the Internet and to consumers' PCs, formed the Wireless Advertising Industry Association. "If we get off on the same foot we did with the Internet, we will have the same privacy problems," said Dee Cravens, vice president of marketing for AdForce.

AdForce built a business model for wireless a year ago. "We wanted to accommodate the advertising service over any digital device, so we offer a definitive platform to go over any media," Cravens said.

The company delivers advertising content and manages and maintains an inventory of the content so it can create reports for carriers. AdForce claims to work with 40 different wireless companies.

Sprint PCS was tight-lipped about whether it would consider pushing advertisements to its wireless Web customers. However, customers could drive the carrier to bring an advertising element to its Web offering, a Sprint PCS spokesman said. "We would not blindly bring things to them without permission," he said. "We are still learning about what the customer wants."

Customers will want privacy, as evidenced by the San Francisco Chronicle article. Sprint PCS held focus groups to explore consumers' opinions about forwarding their wireless phone numbers to the Web sites they visit, but most people didn't see it as a problem, the spokesman said. The sites customers can access via their wireless phones are under contract not to use the customer's wireless phone number. However, customers could link from a contract site to a site that does not contract with the wireless carrier, he added.

Before launching into advertising, Sprint PCS and other operators may wait for general guidelines. "We had to [form WAIA] because there are a lot of cowboys out there who just throw ads into the marketplace, which can set back the industry," Cravens said. The association, which had its first meeting in April, includes device manufacturers, carriers and content providers.

"We hope that there will be a definitive consumer-based outlook on privacy, and we hope the members of WAIA will abide by them," Cravens said. "If carriers don't, the government will do it for them. No one has figured [the wireless Internet] out, but the industry has to explore this now and not three years later."

For advertising to proliferate successfully via wireless, these providers muse ensure consumer privacy before offerings go to market. The sooner the industry tackles an issue such as privacy, the sooner carriers can take advantage of the opportunities the wireless Web has created. So far, they haven't been able to do that.

"No carriers have a line that says `advertising revenues' on their earnings statements," said Troy Tyler, president and CEO of smartRay. "[If they did, it could] boost customer attention, loyalty and usage of the device."

smartRay, which calls itself a mobile media network, recently signed a deal with Showtime Networks to deliver entertainment-related content - such as program schedules, behind-the-scenes information and movie reviews - wirelessly. Though smartRay has offered an integrated suite of Internet-based services to mobile devices for about a year, the deal marked its first entrance into advertising. The company currently works with medium-sized carriers that want a sticky offering, Tyler said.

Although it values the importance of privacy, smartRay is not worried about its service because consumers only receive the information if they want it, Tyler said, adding that the company hasn't received any complaints regarding privacy.