Mobile advertising still eludes developers

LAS VEGAS--Mobile advertising remains a revolution in waiting--or at least that's the takeaway from a series of advertising-themed industry executive panels here in advance of CTIA Wireless 2010. By now you've heard the lofty projections for future mobile ad revenues, as well as the logic behind them: Conventional wisdom suggests that because phones are always with consumers, and because the mobile channel delivers a more personal and interactive experience than rival platforms, the potential for user engagement is off the charts. But it's not happening yet, especially for developers who remain uncertain how to most effectively incorporate ads into their applications.

"I feel the market is really early," said Motorola vice president Ingrid Kelly during one of Monday's pre-conference sessions. "Developers still don't know what to do, or who to partner."  Later in the day, on another panel, Nielsen Company vice president of mobile media Jerry Rocha was asked whether mobile advertising could create a sustainable revenue model for developers: "The short answer is you're not going to be profitable," Rocha said. "The issue comes down to how many applications are out there and the absence of a standard way to measure [mobile advertising metrics]."

There's also concern over exactly how location-based technologies will play into mobile advertising. Early last month, Apple warned iPhone developers that applications built with features based on user location must provide "beneficial information," adding it will reject apps that incorporate location solely to deliver targeted advertising. A Feb. 3 post on the iPhone Dev Center website encourages programmers to enhance their iPhone and iPod apps via the Core Location framework, which enables software to pinpoint users' whereabouts and deliver information like local weather and restaurant recommendations, but adds "If your app uses location-based information primarily to enable mobile advertisers to deliver targeted ads based on a user's location, your app will be returned to you by the App Store Review Team forum  modification before it can be posted to the App Store."

Apple's rival Google has issued no such warnings, however. During a January earnings call following the company's Q4 results, product SVP Jonathan Rosenberg called local services "hugely important" to Google's evolution, and said he believes location-based technologies will more deeply integrate with mobile advertising and commerce services in the "not too distant future." Google director of mobile advertising Diana Pouliot was on hand Monday to further outline the firm's vision: Noting that its mobile search traffic has increased five times in the last two years and that Google Maps for Mobile solution now boasts more than 50 million active users, Pouliot made it clear that location-enabled mobile ads represent the logical next step. In addition to existing ad services like sponsored listings, click-to-call and Near Me Now, Google is currently in beta trials on ad units that allow local advertisers to show their phone number or address as click-through items in search results. "Our initial tests show we're not cannibalizing other clicks," Pouliot said, noting that click-through rates to advertiser URLs increased between 5 percent and 30 percent in trials.

The schism separating Apple and Google is emblematic of the differences of opinion across the mobile segment. "There are a lot of different application areas and different OS's taking different approaches," said Valhalla Partners principal Saj Cherian. "We're still in the experimental phase of trying to figure out the value of the location component. The marketplace needs to figure that out." In other words, location-based advertising is still a victim of fragmentation--a phenomenon that developers know all too well. -Jason

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