Monthly Columnist Gerry Purdy offers his analysis of the mobile media market
Why mobile will be the largest media market of all time
I was asked recently by a journalist what I thought about mobile as a media market and the eventual role that advertising will play with mobile devices. I thought about it a minute and replied, "Mobile will be the largest media market for advertising of all time." While that's a rather profound comment in light of the billions of dollars spent in advertising for print, TV, radio and Internet, mobile is destined to be very important - likely the most important - media market of all time. Here's why.
The entire concept of media markets is to provide valuable content to people while advertisers pay the publishing organization for the rights to "ride along" and get their message out about their product or service. Some times the "ad" is overt and separate from the content (like a TV or radio commercial) while at other times, the "ad" is included in the content (like you see on an Internet Web page) and still other times the ad is done via a product placement in the program itself (like what Ford did in the show "24" where most of the cars driven by the stars were Ford products).
The problem with most advertising is that it's a "disconnected" process: Advertisers really don't know who is receiving the message or often don't have any direct feedback from a specific ad. Rather, you hear things like "we received xx replies from this mailing." This was particularly true in print as well as radio and TV. But, with the introduction of the Internet and broad based advertising to millions of people, along came the concept of personalization, i.e. where the ads that are presented to the reader are tied directly to the reader's interest.
This small concept - narrowcasting of advertisements - resulted in Google making billions of dollars. Their thesis (as well as for Yahoo, Microsoft and others that provide a search application) is that you only provide ads to people about the very things they are looking to find. If I search for notebook PCs, then I'm only given ads about notebook PCs or if I'm searching for a particular gift, I'm presented with resources that should help me find the right gift.
Now, think for a moment about the opportunity that presents itself in mobile. There are around two billion subscribers to cell phones today going to three billion by the end of this decade. Then, realize that the location of each phone will be known to the network, the user and to the applications that reside in the network/phone. If I search for a bank ATM, then the system can detect where I am and automatically show me the ATMs that are closest to where I'm located. If I search for information on fly fishing, I can be shown nearby resources including streams where I might be able to do fly fishing.
When ads were created to run on radio and TV or in a magazine, the entire process has to build in a very high overhead to cover messages going to most of the audience that simply were not relevant. If I heard an ad for a car or new home development, but if I'm not in the market for a new car or home, the ad is truly wasted on me and most of the target audience.
Now, think what advertisers can do with the mobile environment: for the first time, advertisers (both the companies paying for the ads and the media companies that generate and distribute the ads) will be able to directly tie each outgoing message to a specific user. This is the ultimate in advertising: only advertise to people who are interested in hearing your message thus making them relevant a high percentage of the time. Advertisers get a higher effective response rate for the same funds spent. And, with mobile phones going into just about anyone in the developed world, it's easy to see how mobile could become the largest media market of all time.
There are some issues, however, that need to get addressed in order for mobile to become a large, successful media platform. First, the mobile industry needs to ensure that only the ads that people want to see actually happen. This is because mobile phones have small displays and every ad is, therefore, somewhat of an insult to the user. It's best if the mobile phone user "opts in" to the advertising process so that they affirm the ads that they want to see.
Mobile also offers a number of different ways for advertisers to reach their target market, including:
· Direct ad images in the general us of phone navigation.
· Results from a search request.
· Inside a game or other application (via "sponsorships")
· Messaging via SMS or MMS.
gerry.purdy@frost.com[1]650-248-9366