The search for the golden goose

Advertising on mobile devices and over wireless networks is pegged as a can't-miss proposition, but the sector's killer app is nowhere to be seen -- yet

For followers of the Web advertising market — which swept along Google and a slew of smaller players to create today's $28 billion market — the evolution of the mobile advertising sector really must feel like “déjà vu all over again.”

That famous Yogi Berra aphorism fits particularly well today. On the Web, advertising has gone from early promise to premature disappointment (and very real disaster in the popping of the tech bubble), followed by waves of consolidation and the emergence of a few spectacular success stories.

Mobile advertising seems to be following a similar path. We've seen the massive revenue predictions and are dealing with the early struggles. We might be heading toward economic trouble — that's still to be seen — but without a doubt we are in the phase where hundreds of vendors are testing out new approaches, with the winners likely swallowed or rolled up into a few big winners.

While noting that mobile advertising today still remains “a wild West market,” Michael Wolf, director for ABI Research, also said that “mobile is no longer off-limits in the minds of advertisers.”

That's good news for mobile operators, who are hoping that ad revenues can help counteract downward pricing pressure on core minutes and add-ons such as text messaging, helping to keep average revenue per user humming right along.

Recent research from ABI Research touts both the promise — and potential land mines — in mobile advertising. The firm sees mobile marketing revenues growing to $24 billion in 2013, up from $1.8 billion last year. But much of that growth depends on consumer acceptance of mobile ads, which remains an uncertainty.

For instance, a recent ABI survey found that 54% of respondents were opposed to receiving a mobile marketing message, but such resistance totally flipped to 70% approval when an incentive — such as a ringtone or free song — was added to the mobile advertising mix. Marketers are leery, too; 59% of ad execs at the recent iMedia Agency Summit said they have no plans to move a “meaningful portion” of their marketing budgets into mobile this year.

Navigating those user preferences while keeping marketers happy will be key when adding advertising to that most personal of user devices, the mobile phone. To cross that chasm, vendors are launching and operators are experimenting with a slew of new and innovative approaches to mobile advertising — mainly to see which ones stick.

Alltel Wireless, for instance, is now working with upstart search and advertising vendor JumpTap to power an on-device search button for its users, said Scott Moody, director of multimedia content for Alltel. The carrier is deploying or investigating other mobile ad options as well, including traditional wireless application protocol banner ads and newer approaches such as idle screen advertising, where users see an ad when they are not actively using their phone.

Moody said Alltel is currently in a heavy trial mode, actively looking for content-driven solutions that will drive user value — not just deliver ads for ads' sake. For instance, while Alltel is considering ads targeted by location or demographic, “we'd only go in that direction if our users agree to share that information with us and we can provide a service to marketers while ensuring user privacy,” Moody said.

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