Carriers not yet credible advertising partners

The worldwide mobile advertising market is estimated to be worth over $12bn by 2011, according to research released Tuesday.

But industry analyst Gartner warned that carriers are not credible advertising players at present and must rise to meet some key challenges in order to realise their ambitions.

But operators do have inherent strengths that will enable them to fulfil their advertising ambitions, Gartner said, citing assets such as relationships with customers, knowledge of local markets, extensive customer databases, network control and multiple channel access.

“First and foremost, telecom carriers need to differentiate their approach to the advertising market,” said King-Yew Foong, research director at Gartner. “This is particularly important, given the fact that advertising money is being pursued by their immediate telecom competitors, consumer device manufacturers such as Nokia, and Internet-related companies like Google, Yahoo, MySpace and Microsoft.”

Foong said carriers must take advantage of their access to multiple delivery channels, including SMS, MMS, email, fixed and mobile internet search, location based services and IPTV portals. However, he warned that they will also have to strike a balance between their ambition to increase advertising revenue and the need to control spam and user privacy.

Gartner’s figures are in line with those released by industry analyst and telecoms.com parent Informa Telecoms & Media in June. But while Informa found that around 80 per cent of today’s mobile advertising revenue (from a total of $1.72bn) is generated by mobile content providers, the majority of early adopter big brands are yet to transfer more than 0.5 per cent of their advertising budget onto mobile.

Analyst Nick Lane said: “The situation will change, but the plethora of companies looking to get a slice of the revenues must remain patient. Releasing the big brands’ spend is key to unlocking the potential of mobile advertising.”

Lane believes there is an absence of innovation in mobile advertising that has enabled the industry to accept internet-based models devoid of the functionality and capability that mobile technology delivers. “True mobile advertising does not exist today; what we are referring to is ‘advertising on mobile’. When mobile advertising combines user profiling, location and communication with unique mobile inventory, the industry can justify charging a premium rate over existing immeasurable advertising channels,” Lane said.