Despite what the mobile operators would have us believe, mobile has yet to become a major platform for advertisers. Agencies and their clients remain cautious about the medium and are still looking for justification to move budgets into mobile.
Research house Informa projects that total global mobile marketing spend will stand at a healthy £5bn ($11bn) by 2011. However, within that, mobile advertising spend remains a small and undeveloped part of that total pie.
Mobile marketing agency Incentivated puts current UK annual mobile ad spend at a tiny £10m. To put that in context, UK online ad spend was £1.5bn last year, while even cinema took in £143m, according to ZenithOptimedia.
The UK is a little further behind other markets. Vodafone Australia, for example, expects to make A$10m (£4.2m) from mobile advertising in the current financial year, A$30m (£12.8m) next year and A$100m (£42.7m) the year after next.
As Robert Thurner, commercial director at Incentivated, points out: "[UK] advertisers are cautious. It is a new channel and is, as yet, unproven."
Joy Whitehead, board director at Zed Media, says clients are still approaching mobile advertising as an experimental element of their businesses. According to her experience, clients spend as little as £2,000 on mobile ad campaigns.
Automotive and entertainment companies are most willing to consider the medium and around 45% of Zed's clients have tested out mobile ads over the past 12 months. However, she highlights, even these limited mobile ad forays are generally existing creatives, rather than made-for-mobile campaigns.
Observers stress that mobile ad content needs to be right for mobile users. Zed's Whitehead says: "People don't want mobile ads to look just like the internet. People use their mobiles personally and are engaged by them and this is key - we need to think creatively, such as using video pre-roll and post-roll."
Vodafone insists customers can see benefits in sponsored mobile microsites, accessing free content and entering competitions. Vodafone this year sent pre-roll ads to customers in return for free Big Brother content.
Vodafone Group's head of advertising Richard Saggers says: "It is about getting the right balance - a pre-roll 30-second ad would be seen as intrusive, but a short ad is acceptable. People want to engage through their mobiles.
"Clicking on banners on Vodafone Live! can take users to sponsored microsites, such as one we did with Intel, and then we can provide benefits to the individual."
And consumers are highly receptive to receiving relevant ads and content on mobiles. Thurner says that click-through rates for mobile ads average around 3%, vastly better than those on the internet.
It appears that brands are now moving from experimental spend to a budgeted spend for mobile. Saggers says: "We are seeing brands rebook, which is a sign that they are pre-planning mobile budgets. Mobile is competing for a share of spend, but it does not need to come from the above-the-line budget."
Mobile operators are making moves to expand advertising revenues and currently use third-party sales houses to sell ads. New developments include AOL approaching third parties about selling ads on its mobile sites, Virgin Media's push into cross-platform advertising and moves by Johnston Press and Trinity Mirror to target mobile subscribers with on-screen ads.
Vodafone's Saggers notes that mobile operators in conjunction with the Mobile Marketing Association are doing significant work on best practice in mobile advertising: "A year ago there was huge fragmentation, but now there are moves towards standards and we are working through the menu of items of which the first is sizing (of banner ads)."
Incentivated's Thurner expects mobile ad spend to comfortably double to around £25m next year. "The challenges brands face are how easy ads are to buy and how easy is it to measure," he says.
And the Internet Advertising Bureau's head of research, Laurence Bird, adds: "The prevalence of more advanced mobile technology in the near future will offer advertisers the chance to reach large numbers of consumers with more sophisticated marketing communications."
"But mobile advertising is potentially potent, as they can be highly targeted and interactive. In future, it can become more targeted by location or demographic and we need operators to release data (about their customers) so that we can target those people."
MOBILE OPERATORS' PLANS
- Orange is targeting the mobile ad market with new "idle screen" formats - displaying traffic or weather updates with branding or sponsored links. It is developing sponsored games and product placement
- A core element for Vodafone's UK mobile ad activities is search, which has been developed in partnership with Google. Though expected to move more of its ad sales efforts in-house, Vodafone currently has a UK deal with Yahoo! to provide non-search ads and branded sites
- T-Mobile has a partnership with Rhythm, which supplies ads for ad-funded content. It also has an "out and about" section on its web'n'walk home page that offers information on eating out and entertainment
- 3 is set to relaunch Planet 3 to meet the increasing demand from brands for mobile advertising - adding up to five times its current advertising inventory. Ads will be targeted according to the genres on the portal, which include music and sport
- O2 is running banner ad trials through O2 Active to gauge consumer views and is investigating mobile search and ad-funded games
- Virgin Mobile has been working on microsites, including the film Night at the Museum, and key-word search advertising, and is planning to launch banner ads and rich media content next year.