Mobile marketing insights, an update on mobile search behavior, and a few choice stats were among the highlights at last week’s meeting of the Telecom Council of Silicon Valley at Hewlett Packard’s headquarters in Palo Alto. The event, which brought together an exciting cross-section of industry movers and shakers, is the subject of a special two-part post.

Is this a banner year for advertising?

No pun intended, but it’s not a laughing matter for Ari Paparo, group product manager for advertiser products for DoubleClick, a division of Google. As he pointed out during the Telecom Council of Silicon Valley event last week, the tools companies use to optimize ad dollars online–such as advertising metrics and planning and executing ad campaigns at scale and across multiple channels– don’t carry over into mobile. To make matters worse, frequency capping, the technique used to control the number of times a user sees a specific ad, is limited.

Paparo said he’s also not satisfied with creative capabilities in mobile advertising. In fact, he described the MMA’s guideline for an extra-large image banner ad as unexciting. It “won’t move dollars,” he said. And his company is still not seeing the type of ad server capability needed to streamline the publication, distribution, and data reporting of mobile advertising at large scale. But it’s not all grim. Paparo said that DoubleClick is encouraged by the availability and adoption of cookie-enabled high-end phones and the better creative delivered over these devices. And Paparo said that in the next 12-18 months, he expects publishing technologies and ad serving, as well as the ability offer even better and more-targeted ads, will all improve substantially.

While mobile advertising tools, technologies and all-important analytics have their shortcomings, there is mounting proof that mobile advertising can pay-off, particularly for the network operators who – like broadcast operators – stand to gain the most.

Kevin Kim, senior director of corporate development at SK Telecom –South Korea’s leading operator and a well-known innovator of data services– showed that Korea is, as he put it, a “test bed” of a viable and growing mobile ad market. Mobile advertising sales revenues in South Korea were $70 million in 2008, nearly double the revenues from 2007. And a breakdown of the $70 million in 2008 showed that mobile ads garnered a 5.9 percent share of the new media advertising market, not an insignificant figure. (To put all of this data in perspective, Kim reminded us that that South Korea’s advertising market is about 1/18 that of the US.)

SKT has offered mobile advertising since 2000 and has built a growing business because it understands advertiser requirements. In addition to offering attractive mobile data services, SKT has set up an in-house ad agency and advertising platform to help its partners develop and distribute ads. To round out the offer it also helps businesses offer mobile-commerce applications.

SMS- and MMS-related ads offered the greatest opportunity for SKT and its partners initially, but non-messaging ads are growing at a fast pace, increasing from only 16 percent  of ads in 2006, to 28 percent  in 2007 and reaching 37 percent in 2008. Kim said he expects non-messaging ads in the country as a whole to capture more than three-fourths of the market (76.3 percent) in 2010, when mobile advertising in South Korea is expected to exceed $200 million. These non-messaging ads will driven in part by flat-rate data plans, which 40 percent of customers will be using in 2010 (up from about 15 percent today). However, the popularity of SMS ads “will be short-lived,” he said. “It is not a long-term business model.”

Metrics may be a stumbling block for some, but Kim isn’t stymied by this. As an operator, SK Telecom can compile granular data on customer data usage, though Kim did acknowledge that the company has not been able to fully utilize this information and is therefore investing in creating tools to better facilitate this. But ultimately, he said, “the best metric is sales of products.”

To give this point extra emphasis, he offered a very positive and exciting look at mobile coupons – an area of marketing and advertising just beginning to take off outside Korea and Japan:  SKT’s numerous campaigns (conducted in partnership with major brands to attract customers to stores, often with a combination of banner ads, SMS ads, and short codes and other techniques and often integrated to point-of-sale terminals) are proving highly successful, he said, in some cases producing redemption rates above 96 percent.

Paid search was also a hot topic, and we were treated to some fascinating observations on mobile search and advertising usage from early-adopter markets such as Japan and Southeast Asia.

Paul Feng, Google senior product manager for mobile advertising, said Japan is one of Google’s best markets for mobile search. Comparing mobile and desktop search usage and patterns, Feng pointed out that Google is observing a bump in favor of mobile search in the morning during commute hours, an increase in mobile search versus a drop in desktop search during the lunch hour, and more mobile than desktop search in the evening hours.

Further, he said that Google Maps usage on mobile phones increases on weekends, while the use of that application on desktop systems goes down. While all this is favorable for mobile, he acknowledged that early morning mobile search was not as meaningful as his company had hoped. “Commuting is not as big a factor as we expected,” he said. His message for advertisers: Consider mobile and desktop search as complementary to one another and when targeting your ads, keep in mind daily traffic trends.

But could it be that morning mobile search is a significant trend that doesn’t play in favor of Google mobile search?

Phyllis Reuther, CTO of Mobile Content Networks (MCN)–a company that began by providing a platform for federated mobile search and has since extended its reach to providing a combination PPC content promotion and vertical paid search program – stated that MCN is observing a significantly higher jump (than Google) in search traffic in the early morning, around 7:00 to 9:00 a.m., in the company’s Japan and Southeast Asia markets (her data for the two markets is combined). She said the early morning jump on MCN is similar to the lunch-hour peak. Usage begins picking up again around 5:00 p.m.

Reuther attributed the better early morning traffic to MCN’s ability to present search results according to vertical channels, such as music, games and comics, direct from the content provider (as opposed to a link to the content delivered by other mobile search services). In her view, the early morning users are in the under-30 age group and highly motivated to find the latest ringtones and other products before beginning their daily work and school routines.

Another view on the best times of day to advertise came from Cirius Technologies, a Tokyo-based company whose AdLocal service (available in Tokyo) displays local ads to users based on their current location. A Tokyo case study showed some interesting differences in the number of ad impressions delivered during specific hours of the day. In short, ad impressions go up beginning at 7:00 a.m., at lunchtime, and beginning again at 4:00 p.m.  Cirius also delivers substantially more local ads during the weekends than on other days of the week.

For sure, these companies’ observations underscore the extent to which the type and personalization of service impact take-up of search and advertising services and the degree to which “know your customer” must really be understood.

While context and advertising are intertwined, communications – in the form of mobile email–also offers an excellent vehicle for delivering a marketing message.

Funambol, a company that offers a cross-platform, ad-funded white-label push email solution and synchronization technology for mainstream mobile phones, used the Telecom Council event to release findings from a recent survey of 600 users.  (The company began offering its ad-funded email services in October to Nokia 60 willing handset users. The service offers email micro-banner ads supplied by one of its partners, Smaato.)

Hal Steger, vice president of marketing at Funambol, said the company surveyed users after the first month of service. It found that users viewed an average of about 500 mobile ads each, clicking on about 1.5 percent of those ads. The company calculates that on the basis of CPM and CPC, the service generated about $10 per user per month.

Most were generally happy with the service, he said. About two-thirds (63 percent) recalled seeing the micro banner ads. Nearly three-quarters (74 percent) said the adds did not interfere with their ability to access email and 85 percent said that ads did not affect usability of the email client. About 21 percent said they had “clicked” on ads to visit mobile sites. And 84 percent said they would recommend the service to others.

Funambol users also said they’d be willing to pay about $6/month, inclusive of data fees, for an ad-funded mobile email service in order to help subsidize the cost of mobile email. Steger believes the service is ideal for mobile phone customers who want the convenience of push-based email but who may not be able to afford the types of devices or data plans associated with the BlackBerry and similar devices.

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Peggy Anne adds: The market opportunity for ad-funded email was also the subject of a recent white paper I wrote on behalf of Funambol, aptly titled Free For All: The Untapped Opportunity For Mass Market Mobile Email. In it I present some intriguing evidence that an ad-funded or ad-subsidized go-to-market model is the only approach that will drive service adoption among cost-conscious mass market users. Put simply, an ad-funded business model is the only approach that gives people the service they want at minimal or no cost, while allowing mobile operators and service providers to generate significant revenue. You can download the white paper or listen in to the podcast Hal Steger recorded with me here.

Tags: ad-funded, Cirius Technologies, DoubleClick, Google, Google. Funambol, MCN, MMA, Mobile Advertising, Mobile Search, SK Telecom

This entry was posted on Thursday, February 12th, 2009 at 11:26 pm and is filed under Location-based services, Mobile Advertising, Mobile Research, Mobile Search. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.