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Wireless Advertising Goes on Trial

by aleah mickelson
July/August 2001

When it comes to the revenue potential for wireless advertising, widely disparate views of m-advertising’s potential are being bandied about. At the low end, skeptics doubt that consumers will accept it at all. From there, the picture brightens. Jupiter Media Metrix suggests $700 million in the U.S. market over the next four years. The Kelsey Group’s projections are more than five-fold: $3.9 billion in the United States in the same period. The Strategis Group expects the same $3.9 billion in location-based wireless advertising revenue in only three years for North America.

Has anyone spoken to potential users? Yes. Proponents of wireless advertising have attempted to study precisely what types of wireless advertising will work, and on whom. Two major recent studies have provided a glimpse at consumer behavior, but few answers. The studies differed markedly in methodology, content and demographic samples.

SkyGo, an m-advertising firm based in Redwood City, Calif., solicited 1,000 participants in Boulder, Colo., adjacent to metro Denver. SkyGo paid third-party research groups Kelsey Group and ConStat to produce its report and limited its advertising to people who signed up for the trial. The participants were given a free Ericsson R280 LX phone and AT&T PocketNet service for the four-month period last fall that tested a variety of ad types: sales alerts, coupons, incentive ads and audio ads. SkyGo focused on opt-in, permission-based “push” advertising–often seen as the most intrusive delivery model–whereby information was sent to devices as “alerts” without the user specifically requesting the data. Final findings concluded that 64 percent of all ad alerts were opened and 3 percent of participants followed through on a purchase.

Research Triangle Park, N.C.-based WindWire conducted its two-month nationwide trial last fall, serving more than 2 million wireless advertising “impressions” to 1 million current wireless Web users. WindWire did not provide participants with any financial incentives, and it conducted its own study. The company primarily tested the effectiveness of “pull” advertising–which involves placing ads on browsed wireless content–with simple text ads as well as formats that involved enhanced graphics and interactive features. WindWire did not limit the device type.

In December WindWire reported a pull-advertising response rate of 10 percent to 15 percent, and a purchase likelihood after viewing ads of 24 percent to 86 percent.

SkyGo’s results imply that a high percentage of users checked out push ads, regardless of format–although few followed through. WindWire’s results suggest that pull advertising generated few responses, but that follow through was relatively high.

Analysts say that study methodology, content and the demographics of respondents are crucial to credible results. Both the SkyGo and WindWire studies hit and miss on several points. SkyGo funded its own study, but contracted with credible third-party research groups to conduct it. That’s kosher, according to Rebecca Diercks, senior analyst with Cahners In-Stat Group, which has the same parent as Wireless Internet Magazine. Dierck notes, however, that findings from a local study–such as the Boulder-based SkyGo trial–don’t necessarily apply to the entire U.S. population. Plus, the enticement of free phones and network airtime may imply, as other studies have, that subscribers will demand freebies in exchange for enduring ads.

WindWire’s in-house study, however well-intentioned and carefully constructed, may not have had the same rigorous safeguards against bias that a third-party approach might have.

Still, the results of these two studies are encouraging to those who would like to believe that m-advertising will fly.

Not everyone agrees that it will. A third study deserves attention. Conducted by Driscoll-Wolfe Marketing & Research Consulting and partially funded by 21 wireless companies, including AT&T Wireless, Cingular, Lucent, Qualcomm and Palm Inc., it shows consumer hesitance toward m-advertising. “Our focus group findings confirmed that consumers generally are resistant to wireless advertising unless incentives are provided,” says Clem Driscoll, senior partner of the marketing firm.

The Driscoll-Wolfe study also is limited, in that it surveyed the general public about unfamiliar technologies.

“Unless people are using the technology, you can’t just call them up and see if they like it or don’t like it,” says Dr. Gary Ozanich, senior analyst at the Kelsey Group. “You have to put it in their hands and let them try it.”

Still, the Driscoll-Wolfe results are worth pondering because they reveal that m-advertising has significant attitudinal hurdles to overcome, including privacy concerns and general disinterest.

Advertisers are perhaps most interested in hard data before plunging ahead. Derek Kerton, senior manager of Disney Internet Group’s wireless development, says his company is playing wait-and-see. “[Wireless] advertising is a risky adventure right now,” he says. “We’re willing to let others push the envelope.” Kerton specifically notes the obtrusiveness of push ads and the lack of high-quality ad forms. But he notes Disney isn’t entirely opposed to wireless advertising: “If it proved to be something that consumers don’t find totally objectionable, we hope to [eventually] make it one of our revenue streams.”