Mobile advertising--battle lines are drawn

The gold mine of mobile advertising has been somewhat over-promised for more years than I bother to count. Accepting that it has existed in a variety of forms for some years, the platform, content, handsets and advertising agencies have been raggedly out of step with each other to really make it appealing to the various industries involved - let alone the consumer.

The announcement from Alcatel-Lucent (Alca-Lu) that its new mobile advertising platform is designed to make the whole thing easier comes at a time when powerful players--namely Google and Apple--are wanting to dictate the shape of the opportunity in their favour.

However, Alca-Lu's VP of mobile adverting, Thomas Labarthe, claims that a key component, that of ad agencies having meaningful budgets for mobile campaigns, is healthier than ever before." I see a consistent message from the aggregators and agencies that they are ready to spend--I don't see any hesitation. There is also consistent survey data that consumers will accept these messages as long as their preferences and privacy is respected."

However, Labarthe warns that operators need to decide how they want to approach this opportunity. "The major issue is speed of decision and which route to take--do everything themselves, partner with someone like Alca-Lu or do nothing and let others take up the chance." The exec believes that operators need to choose a direction this year or lose the option to participate.

The company said that its partnership approach, where it runs the service on behalf of the operator in return for a share of the revenues, had already attracted Orange Austria and E-Plus in Germany to sign up, and expected to be working with around 10 operators in Europe by the end of this year.

It believes its Optism service provides real benefits to those in the value chain by hosting a service that can be used by operators, ad agencies and brand advertisers, aggregating inventory from multiple operators and making that available to the agencies.

However comfortable this might sound, Apple and Google are fighting each other to become the leading global player in mobile advertising and caring little about partnering with operators or sharing revenues.

Those operators that offer the iPhone have already been frozen out of the in-app advertising game by iAd and the Android platform will go the same way if Google's acquisition of AdMob goes through.

According to Ovum, Apple will undoubtedly do a good job of addressing the complexity of in-app advertising and has an ecosystem that puts it in a leading position. It has a fast growing base of devices--Jobs says around 50 million iPhones have been sold, and then alongside this is the iPod touch and new iPad (450,000 shipped already). Apple has the largest application store on the market with 185,000 apps and 4 billion downloads to date.

Google has indicated its intent by spending US$750 million acquiring AdMob, one of the largest mobile advertising networks in the industry, and is a far more experienced mobile advertising player than Apple, with a wider portfolio than just in-app advertising. Its ad solutions are not slick but they are cost effective for advertisers with an easy, self-serve interface.

How Alca-Lu or mobile operators can withstand the onslaught of these giants will be interesting to watch--and very painful for some.

Two other industry giants that seem uninvolved--Microsoft and Nokia--either don't care, or are hatching cunning plans to make a surprise, and unexpected, entrance.

They will be as welcome as the Spanish Inquisition.-Paul