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The Shape Of Ads To Come
The Shape Of Ads To Come

Fred is strolling down Fifth Avenue when he suddenly hears several loud beeps from his cell phone. He quickly reaches for it, only to discover that it's Starbucks, offering 10% off lattes purchased within the next 30 minutes. Well, it just so happens he's right in front of Starbucks, and his meeting is still an hour off, so he decides to step in and take advantage of the offer. Is such a scenario so far-fetched? Absolutely not.

Despite mounds of hype surrounding wireless marketing and the Holy Grail it promises advertisers, early tests show that it has definite possibilities. It remains uncertain, however,  whether the majority of wireless marketing will resemble the Starbucks example.

A recent report by Forrester Research predicts that mobile ads could account for 18.2% of online ad budgets by 2005, amounting to $4.8 billion. But user experiences pose challenges.

"This is like Prodigy in 1988," says Forrester's lead analyst, Jim Nail, about initial consumer confusion over the new technology. "Consumers are unclear how to use the wireless Internet."

Context-Based Research Group, Baltimore, MD, conducted a global behavioral study on wireless usage, and Robbie Blinkoff, principal analyst there, says what consumers expect doesn't match the reality. "People think they'll get the same experience as with the wired Web, but that's far from true," he explains. "Marketing from wireless providers needs to match the reality. This may not happen and a backlash could result."

For now, most wireless ads are one-way text rather than the elaborate audio- and graphic-enhanced ads for which the wired Web is known. While wireless marketing faces a slew of challenges, many companies are already testing it in an attempt to discover if it really works or if it's all just bunk.

The WindWire Tests
During September and October 2000, Morrisville, NC-based WindWire, provider of the only wireless ad network, delivered more than 2 million text and graphic ads to PDAs, WAP phones, and pagers nationwide. Twenty-two different campaigns and 105 different ads were used. The majority was pull advertising, delivered when consumers surf relevant Web sites, as opposed to push advertising, which is similar to the Starbucks example used earlier.

According to David Wilson, executive vice president and cofounder of WindWire, test results prove that wireless is an effective ad medium."Our tests show you can generate revenue from wireless ad inventory and monetize content since companies are willing to pay for wireless ads," he explains.

Overall, the ads generated 10-15% click-thru and call-thru (prompting the user to respond with a phone call) rates with an average recall rate of 46%. More than 85% of recipients said they liked the idea of free content with ads, and the rest had reservations about having to view ads as opposed to paying fees with no ads. As might be expected, graphic ads outperformed text, and click-thrus outperformed call-thrus. Some ads were used for branding while others drove traffic to stores. "We're taking what made the regular Web explode - free content - and using advertising to do the same thing for wireless," says Wilson.

Preliminary SkyGo Findings
Northern California-based SkyGo, a leading wireless marketing firm, has been conducting a wireless ad study in Boulder, CO, since September 2000. The company gave away 1,000 WAP phones to users who agreed to receive three ads per day

Users must also participate in five simple surveys about their wireless usage. Rewards are being offered, such as an entry to win a vacation package for each ad viewed. All ads are targeted based on opt-in interest categories. Ad formats are varied, including branding, sales alerts, coupons, incentives, and audio ads.

For example, a Kentucky Fried Chicken ad asks how many chicken sandwiches the chain sold in 1999, and a correct answer is rewarded with a free drink. Another ad for the Boulder Theater, a music venue, prompts users to click on a link for a 10-second music clip and to buy tickets.

Daren Tsui, CEO of SkyGo, says test results are encouraging. "We didn't go into the trial with any notions of what would work," Tsui points out. "Consumers say they'll pay attention to ads that are targeted, compelling, convenient, and interactive." Sixty percent of recipients found ads valuable, and 50% asked for more than the minimum number of ads they were required to receive. The study found that ads with more interactivity tend to be more effective. Tsui believes that wireless ads could drive wireless usage by subsidizing content and access.

Lot21 and Intraware/CNET
Lot21, an Internet marketing agency based in San Francisco, CA, conducted innovative wireless campaigns for Intraware, a B2B software publisher, and CNET, the popular technology information firm. For Intraware, Lot21 created the first ads to run on AvantGo's Mobile Information Portal. The 32-character text message appeared on AvantGo's home page and ran for two weeks in May 2000. A "click here" button brought up a several-screen ad asking for the user's e-mail address at the bottom. Lot21 representative and Wireless Advertising Association board member Barry Peters says the ad reduced customer acquisition costs by 97%, and 500,000 users received the message.

Lot21 created their first color wireless ad for CNET, involving a sweepstakes for lead generation. While Peters couldn't provide specific details or results, he says it was a success. "It's a challenge to present users with a targeted message that portrays the full story," Peters explains, adding that his firm is focusing on the Palm and PDA markets since they have larger screens.

Vicinity Goes Local
Vicinity, a northern California wireless marketing innovator, is taking a different approach. Rather than slam users with "in-your-face" advertising, Vicinity's Brandfinder allows people to find nearby store locations, nationwide, by searching branded categories. The Brandfinder appears on the menu of most major carriers (phones and PDAs). Firms including Wal-Mart and McDonald's pay fees to be listed in the directory so they can be found by users looking for a particular store name or type.

"The Brandfinder allows brands to put marketing messages in the hands of consumers when they're looking for them," explains Eric Winkler, Vicinity's vice president of marketing. "It doesn't change people's behavior. It's the way they've always shopped." While specific ROI figures weren't available, Winkler says companies paying for Brandfinder listings know the average amount consumers spend per store visit, and that the number of people searching for a specific location can be tracked. So far the service has shown impressive results. He estimates that half the consumers with Brandfinder on their phones and PDAs use it.

Roadblocks and DoubleClick are preparing wireless ad testing programs that may shed even more light on the viability of the medium. However, it's clear that many barriers stand in the way of widespread adoption of wireless marketing. "There's no infrastructure, no decent devices to display ads, and privacy issues are much greater with wireless, especially with location-based marketing," explains Forrester's Nail.

"Opt-in is the only way this will work, and we must continue to build standards for ad types," notes WindWire's Wilson. As Lot21's Peters says, "You won't have the phone ringing every time you pass a store due to the annoyance. Companies will damage their reputations with advertising that isn't accepted by consumers."

Vicinity seems to be in a good position on the privacy front since consumers must ask for store locations when they're looking for them, and since his firm doesn't collect any personal information. However, Vicinity's Winkler notes, "The interface is a big barrier in trying to type on a phone, but the introduction of speech recognition technology later in 2001 may help solve that problem."

Of course, speed is also a major issue. "3G will have a huge impact, which will allow for much more creative ads including video," says SkyGo's Tsui. This new standard for high-speed access is still several years away, however. Peters adds that expectations of 3G must be set lower than anticipated, as with most new technologies. Perhaps above all, compelling content must be offered to drive wireless Internet usage in the first place.

So if that Starbucks latte seems a bit cold, no need to worry, since better wireless marketing is on the way. Whether it will continue to be as effective as it appears to be now remains to be seen, and depends at least somewhat on the long-term novelty of the medium and messages not vaporizing.

About David Cotriss
David Cotriss is a freelance writer covering e-commerce and new media topics for many local and national publications. He specializes in wireless and interactive television marketing and advertising.

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