Wednesday, March 5, 2008

Is 2008 Really The Year of Mobile?

If 2007 was video, 2008 is mobile—right? That’s the prediction, anyway. Actually, it has been a prediction for several years, but in the US (unlike the rest of the developed economies and many developing ones) it hasn’t happened yet. There are reasons to believe that momentum is building, including the FCC auction of wireless spectrum. The technology is mind-numbing but I found a blog post that has a number of interesting links including one to an interview with Reid Hunt, former chairman of the FCC, who explains some issues in an understandable manner—sort of.

What marketers are looking for is the availability of wireless broadband access that makes a wide variety of applications—including advertising—interesting to mobile users. There are many users in the US—over 255 million according to CITA, the industry trade association. comScore found that mobile broadband use increased by 154% from 2006 to 2007, but that’s on a very small base. According to their press release:

Though mobile broadband access is currently used by about 1 percent of the total U.S. Internet population it is poised for significant growth over the next few years,” said Serge Matta, senior vice president of comScore. “As consumers increasingly demand and depend on portable Internet access, the demand for mobile broadband should continue to increase.

Given the current slow download speeds use of the mobile Internet is heavily skewed toward search, with local listings via 411 and content via a variety of other search methods being the primary activities.

Consumers have become accustomed to free ad-supported search on the wired Internet. Will they accept advertising on the mobile Internet in order to receive free content? Media Post today reported on a study by Nielsen Mobile that suggests they are. Their analysis says that:

data subscribers are more willing to accept advertising in exchange lower costs or better content. In that vein, 32% said they're open to mobile advertising if it lowers their overall bill, while 13% will welcome it if it boosts the quality of their mobile media offerings. And 23% expect to see more mobile advertising in the future, up from 15% at the start of 2007.

A recent article in eMarketer (February 25, 2008) emphasized the continuing importance of search among mobile Internet users and indicated that free content was highly desirable. Free is always good, but a good summary article in WSJOnline points to the growth of the mobile gaming market and the willingness of consumers to pay for popular games.

Up to now most content, like games, has been downloadable. Mobile advertising services firm Medio reports that searches for downloadable content is being replaced by searches for content on the Internet itself. They report high click-through rates for ads delivered with content searches:

Medio calculates the average click through rate on search ads delivered in this way as high as 29%. For pay-per-call advertisements, call-through rates as high as 22% have been measured.

One implication of all this data is that increasing use of the mobile Internet offers an opportunity to deliver ads on mobile devices. While that statement is true, remember that the majority of people like me who have mobile Internet access don’t use it. Those who do use it are heavily skewed to the young and higher income demographics.

The widespread adoption of the wireless Internet in the US seems like an agonizingly slow process. However, it does appear to be picking up speed. For marketers with the right content or products that are targeted to the early adopters of the wireless Internet, this feels like the time to start experimenting with the channel.
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