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Mobile Advertising: Not as Bad as You Think

Early adopters indicate reluctance, but may warm to discounts – with choice and privacy

by rebecca diercks
July/August 2001

Advertisements appear on virtually all media now–radio, TV, print and the Internet–you probably thought it would stop there, but of course it won’t. The next wave of advertisements is already on its way to you now–on your mobile phone!

This is a fairly new phenomenon in the wireless industry and advances in wireless Internet technology will foster the market. You might wonder how wireless companies are going to broadcast an ad on tiny phone screens. No problem. Today, they can send you a text message that contains a link to a WAP site–click on it and you’re in! They can also send you a voice message so that you can listen to the ad. In the future, the next generation of WAP, 2.0 or NG, will support pop-up menus and graphics. Displays are also getting larger and more colorful to enhance the experience. In the future, wireless networks will be able to detect when you are in the vicinity of certain stores and beam you an ad–perhaps with a coupon or a discount offer–to entice you to step in.

Sound good? Actually, to some people, it sounds downright intrusive. Cahners In-Stat Group recently surveyed its panel of mobile phone and wireless Internet users to determine their interest and opinion towards mobile advertising. Take note that panelists tend to be early adopters.

As expected, respondents did not warmly embrace the new technology. Only 15 percent of mobile phone users said they “definitely” or “probably” would be willing to listen to a short advertisement on their wireless phone. This compares to 18 percent of wireless Internet users. Both mobile phone and wireless Internet users agreed that they would be most receptive to messages for specific products and services with special offers or discounts attached. However, 34 percent of mobile phone users and 43 percent of wireless Internet users said that ads would also be acceptable if no discounts were involved–if they received timely notification of certain offers such as tickets to an event going on sale. Additionally, they would like the ability, in advance, to choose the firms sending them ads.

In general, both mobile phone and wireless Internet users were most interested in receiving mobile advertising from restaurants, retailers for home goods such as food, clothing and other products, and ticket sellers for entertainment such as movies and sporting events. Some sports enthusiasts noted that “golf, and only golf” would be acceptable on their mobile phones. Users also were interested in ads from business retailers such as rental car and hotel companies.

When given a choice, wireless users willing to listen to a short advertisement said they would prefer to receive ads as a text message (33 percent), rather than as a banner ad on a handset (22 percent), listening to a brief ad (17 percent) or in a pop-up window on a handset (9 percent).

Advertising doesn’t have to be a blatant sales job and some companies are working on making their message palatable, even covert. For example, Pepsi Co. launched a new game called ‘Pepsi Foot,’ for wireless phones. The game is a fantasy soccer game where players build a virtual team based on real-life soccer players and challenge each other’s teams to cyber face-offs via SMS. Advertising made fun? Obviously Pepsi hopes so.

Panelists noted the importance of having the ability to “opt-in” for mobile advertising. Fifty-eight percent of mobile phone users and 77 percent of wireless Internet users found it important to have this ability. Last but not least, nearly all panelists wanted to ensure the privacy of any data collected on their responses to wireless advertising.

Several federal laws have been proposed to address privacy concerns, which could address users’ concerns and provide guidance to advertisers. Most legislation proposes creating a system to secure mobile phone owners’ permission before a company could market services to them. Most wireless carriers are pushing for rigorous opt-in requirements, and CTIA also has advocated this approach. The carrier position is not surprising given that customers might respond to spam onslaughts by changing their carrier. The wireless industry realizes that it is in its own best interest to protect its customers from unwanted advertising. Carriers are highly protective of their customer’s information due to their desire to prevent other companies from using it to wrest “ownership” of their customers.

Whether you welcome wireless advertising or not, it’s coming. The good news is that carriers and advertisers have incentives–perhaps soon, regulations as well–that require them to respect users’ interests.

Rebecca Diercks is director of wireless research at Cahners In-Stat Group.