Android is growing fast as an ad platform

Web giant Google is waxing lyrical about the potential for mobile advertising, predicting that 44 per cent of UK searches for last minute Christmas gifts in 2011 will be from mobile devices, up from 20 per cent this time last year.

Over the last few months, Google also found that mobile is accounting for an increasingly larger proportion of online shopping, with an analysis of UK search on desktop versus mobile finding that mobile search for products towards the end of the year represented just under 15 per cent of the online total, compared to ten per cent in 2010 and just two per cent in 2008.

Moreover, around 24 per cent of UK consumers use their mobiles for in-store comparison of products and Google has noticed that retailers are beginning to embrace this phenomenon, with UK department store John Lewis recently activating free wifi in its shops.

Simon Morgan, head of mobile advertising for Google UK said: “As more and more consumers use their mobile phones to do their holiday research and shopping, there is a great opportunity for businesses to reach their customers where they are; on mobile. Advertisers can take advantage of innovative mobile ad features to drive people to their web properties, increase footfall, or even grow phone traffic. For example, hyperlocal provides useful information to users such as an expandable map, driving directions, distance and contact information with the option to click-to-call, making it easy for customers to find and navigate to your store.”

A newly activated feature on Google’s mobile advertising platform, AdMob, allows advertisers to serve ads specifically to newly activated mobiles. Accounting for Android growth alone, there are around 550,000 Android devices being activated each day globally.

In related news, mobile advertising player Blyk has announced the departure of its co-founder, Antti Őhrling, who has moved on to work on “emerging opportunities”.

Őhrling co-founded Blyk as an MVNO in with Pekka Ala-Pietilä in 2006 and helped refocus the company as a mobile ad platform shortly after. He was also instrumental in the firm’s partnership with Indian carrier Airtel.

The free wifi offering will target short term users

Finnish handset vendor Nokia has teamed up with wifi network operator Spectrum Interactive and location based media firm Selective Media, to trial a free wifi offering on the streets of London, UK.

The trial project, which runs from Tuesday until the end of 2011, takes advantage of 26 London hot spot locations from Spectrum Interactive’s portfolio of real estate, most of which will be based on payphone boxes.

The two-month trial is intended to assess both the demand for free wifi access and the browsing behaviour of consumers using the service across the British capital. The hotspots are typically fed by a 20Mbps DSL backhaul link, while individual users will allowed a 1Mbps connection in order to keep bandwidth hogging down.

Usage will be unrestricted across devices, browsers and apps, with users confirming a terms and conditions check box before access is granted. Following a successful trial, Nokia said plans are in place for a large-scale rollout across London from early 2012.

Simon Alberga, executive chairman of Spectrum Interactive, said the venture was targeting short stay users in high footfall locations, like those just wanting to check Facebook, their email or a mapping application. These types of use cases are becoming more popular on mid-range devices and wifi only tablets, and are no longer restricted to high end smartphones.

Out of the 77 million or so mobile subscriptions in the UK at the end of September, just over 38 million of those are prepay subscriptions, which would make them less likely to be heavy data users.

The question remains as to how this initiative is monetised, which is where Chris Bull, founder of Selective Media, comes in, saying that mobile advertising is on the agenda. Presumably the reason for allowing open access to start with would allow Selective to build up an idea of who is using the service and what they’re using it for. The firm would then be able to use its ad network to serve appropriate ads to popular sites. Pre roll advertising at the wifi login stage is also an option according to the company’s web site.

Mobile advertising opportunites are growing globally

There has been more consolidation in the mobile advertising sector, as UK-based mobile ad agency Fetch Media this week moved to acquire local rival Lucidity Mobile for an undisclosed sum.

At two years old, Fetch Media is a privately funded business, which in the wake of its new acquisition will open an office in the US later this year.

The company is looking for opportunity in a fast growing market. Data released by market research agency eMarketer this week predicts that mobile advertising spend will top $1bn in the US for the first time this year as smartphone adoption and rising data usage make the market more attractive to advertisers.

Advertisers will spend nearly $1.23bn on mobile ads in 2011, up from $743m last year and by 2015, the US mobile advertising market is set to reach almost $4.4bn, eMarketer said. The big ticket items will be display ads such as banners, rich media and video, search and messaging-based advertising, and tablet targeted advertising.

This year, messaging-based formats still take the largest piece of the pie, accounting for $442.6m in spending. But in 2012, banners and rich media will be even with search, each getting 33 per cent of spending, or $594.8m. That will put them ahead of messaging, which will fall to just 28.2 per cent of all mobile ad spending next year. By 2015, banners and rich media and search will dominate further, and messaging will have shrunk to 14.4 per cent of the total, but will still be growing in terms of dollars, according to eMarketer analyst Noah Elkin.

Video is the fastest-growing mobile ad format, but from the smallest base at $57.6m this year. It will grow at a compound annual rate of 69 per cent between 2010 and 2015 to reach $395.6m.

Global mobile advertising network InMobi recently said that it experienced a 25 per cent growth in global ad impressions over the three months to the end of August, serving 126.7 billion mobile advertising impressions in that period. Smartphone growth continues apace, representing more than two fifths (42 per cent) of mobile ad impressions since May.

The continuing rise in Android’s popularity, up 1.7 share points to 17.9 market share, now means that it takes Symbian’s place as the second highest performing mobile platform after S40, which is down 1.9 per cent since May to 18.2 per cent.

James Lamberti, VP of global research & marketing at InMobi said: “Android is demonstrably moving toward becoming the top mobile platform, having taken Symbian’s place in the league table. Indeed, at this rate of growth, it may well take the number one slot before year-end. However, four of the top five handsets are Apple devices.”

In related news, Google has launched a useful tool, allowing anyone to create custom charts based on the full set of data from its Global Mobile Research: The Smartphone User & The Mobile Marketer investigation it conducted earlier this year with Ipsos and the Mobile Marketing Association.

Our Mobile Planet is targeted at marketers, app developers, and techies, to answer their strategic questions through an extensive, far reaching standardised survey on smartphone user behaviour.

Rory Sutherland, Ogilvy

Rory Sutherland began his career in advertising and marketing at Ogilvy in 1990, working on a then obscure US brand called Microsoft. In the 21 years since he’s risen to the position of vice president of Ogilvy Group and creative director of UK arm OgilvyOne and has seen a lot of change come about through the rapid adoption of technology.

Sutherland doesn’t refer to what he does as marketing or advertising, instead he calls it the application of behavioural economics across the marketing media and tech industries—a discipline which has led him to champion the mobile phone as the single biggest tool for inciting behavioural change.

“Mobile and digital media are very good at lots of things, which caused people to think that digital media and the web would destroy all traditional media and advertising,” he says, adding that this outcome would indeed have been likely if the marketing industry didn’t understand the idea of comparative advantage.

Comparative advantage, in Sutherland’s example, takes two islands: one island better at growing corn and even better at making bicycles than the other. Yet the best way to maximise the commercial value of the whole ecosystem is for the one island that is substantially better at making bicycles to do so, while the other country grows corn. The philosophy being that they should focus not just on what they are good at, but what they are remarkably good at. Even if one island is more efficient in the production of all goods, it can still gain by trading with a less-efficient island, as long as they have different relative efficiencies.

“We should ask how each media available to us can play to its own strengths as in to its comparative advantage, not just everything its good at. We are only just realising that TV still has the advantage of certain qualities in that it has emotional reach and the ability to create fame and buzz,” Sutherland says. “Mobile on the other hand is quite different. Its context is timeliness, the ability to engage people in sophisticated dialogue. Its advantage may actually be closer to customer service than advertising. You can’t substitute reach in one place with an equal amount of reach elsewhere. Different media are complimentary.”

Sutherland expands on the importance of context, with the notion that the value of something, while subjective, is also contextual.

“The decision you make on any issue depends on when you make that decision. Such as your decision to book a [city hire bicycle] depends on when you make that booking. If you do it in advance your attention is on high minded things like exercise, but if you make it at the last minute your attention is on low minded things like how late you are and whether it’s raining,” he says. “So you need a pricing scheme that caters to both.”

The same application of behavioural economics could be used to leverage yield management to a company’s advantage, an airline for example. “If you told customers which of ten flights to New York was the emptiest perhaps they could be tempted to pay extra,” Sutherland says. “The key is you’re generating value not through the requirement of extra resources, but through the better understanding of individual human preference. Better understanding people can help you deliver more incremental value without changing the material thing you offer.”

We all like to think that we follow through on our high minded intentions—all those charitable donations should we win the lottery, but the decision we make and the way we compare things depends where we are and at what point in the decision making process we are in. Humans can only concentrate on one thing at a time, we focus on one arbitrary metric, and make the decision on that. For years the one comparative metric for digital cameras was how many megapixels it had. It was an accessible numerical value. But we’ve recently hit the wall where ten megapixels or so is probably enough for most people, forcing the camera manufacturers to re-evaluate their situation.

“Someone might decide to move 20 miles out of town to get an extra bedroom on their house, because the attraction of an extra bedroom is very high in their consciousness at this time. But once you move, the extra room loses its novelty very quickly while the pain of the longer commute is experienced every day.

“This is how human attention distorts decision making,” Sutherland explains. “Advertisers don’t just have target audiences, they also have target moments. It’s the context in which I can persuade someone to take a bicycle rather than a car or the train. It’s one way in which mobile enjoys a significant strength, due to the fact that it is such a timely tool for communication and context.

“If you provide people with the means, then the attitudes will follow,” he says. “The mobile is the single most potent way of creating behavioural change over the next 20 to 30 years, yet our adoption of technology has already leapt ahead of our understanding of it. “Over the next ten to 15 years we will see a slowdown in technological progress.”

Sutherland disagrees that all things technological progress at an exponential rate and claims instead there are bursts of change punctuated by periods of relative stability, with perhaps small levels of incremental improvement. “What I’d like to see is the discussion move away from what is technologically possible now and towards what is the proper human use to be derived from these technologies,” he says.

Ian Carrington, Google

There’s no denying the impact Google has had on the mobile industry in the last few years. The web giant has its fingers in many pies that at one point constituted large parts of the operators’ lunch. At Google’s second annual Think Mobile event, held in London in June, Ian Carrington, mobile advertising sales director at Google, talked us through present and future opportunities the firm sees in the mobile space.

Carrington opened with a quip originally made by Eric Schmidt, then Google’s CEO, who said: “If you don’t have a mobile strategy, you don’t have a future strategy.” Although Carrington said this is not absolutely true of every single business, it is true for most of them, as the future is using mobile to engage with your brand.

“Lots of people are failing to capitalise on mobile, and the mobile market is succeeding in spite of itself. There are still lots of opportunities left to capture,” he said. Carrington highlighted the famous prediction, made in the first quarter of 2010, by Mary Meeker—tech futurist, venture capitalist and ex-Wall Street securities analyst, known to many as “Queen of the Net”. Meeker predicted that in two years’ time, the first quarter of 2012, mobile phone sales would surpass PC sales. The surprise wasn’t in the prediction itself, which came to pass, the surprise was in how far out Meeker’s forecast was in terms of timeline. Mobile phone sales surpassed PC sales for the first time in the fourth quarter of 2010, just nine months after Meeker made her statement.

“This epitomises the pace of change. Very soon over 50 per cent of UK users will have a smartphone,” said Carrington. “And this is something they have with them, and use constantly. The vast majority of mobile usage is incremental. Mobile usage peaks in the morning then at lunch then in the evening.” Carrington highlighted Google’s own UK research, which found that 44 per cent of UK users go to bed with mobile phone at their side and 53 per cent are ‘dual screening’ at home—using a mobile device and watching TV at the same time. This phenomenon lends credence to Carrington’s recommendation that advertisers have an integrated campaign across all forms of media.

“Google sees 12 per cent of all its search queries coming from the mobile phone, and there is some great data that can be gleaned from Adwords or Google Analytics about what’s happening, but few people are looking at this data,” he said.

“A mobile optimised site removes a big barrier on one enabling device between you and users. So develop and integrate you mobile strategy, incorporating both apps and the web. Often the big disconnect is that there is no mobile optimised website. Brands need to make it easy to by stuff.”

Google’s research shows the green shoots of opportunity in this space. According to the firm, 28 per cent of UK mobile phone owners have used the mobile to buy goods or service, while 13 per cent of all mobile search queries are retail related.

Google, of course, has made a big splash in this area, unveiling in May a plan for NFC mobile payments via the handset. Google Wallet is in the field trial phase and won’t become a commercial reality until later in the summer, but at that point is supported by the Nexus S 4G (WiMAX) handset on the Sprint network in the US, with the 3G version of the Nexus S, also sporting an NFC chip, expected to follow soon after.

Citi, MasterCard and First Data are the launch partners, supporting two payment solutions: a PayPass eligible Citi MasterCard and a virtual Google Prepaid card. The retail side will be based on the MasterCard PayPass network—a merchant point of sale service covering more than 124,000 PayPass-enabled merchants nationally and more than 311,000 globally. The first Google Wallet field tests are focused in New York and San Francisco, where many retailers, Coca-Cola vending machines and even taxis are PayPass-enabled, including major outlets such as CVS, Jack in the Box, Sports Authority and Sunoco.

Google, naturally, will also be involved in the delivery of relevant deals, promotions and loyalty rewards as it steps up its presence in the buoyant coupons and vouchers space. “We’re seeing an eight per cent year on year increase in the usage of mobile coupons,” Carrington added.

At present, entertainment is the biggest vertical the web giant deals with on the mobile. Over 40 per cent of all tweets are made via mobile and there are 200 million mobile views on YouTube every day, accounting for 10 per cent of the site’s total traffic. Meanwhile, travel is the fastest growth sector. Around 65 per cent of UK respondents use a mobile phone to aid them on their journey while travelling.

But does an integrated marketing strategy mean apps, mobile web, or both? According to Carrington, people using apps and the mobile web for different things. Brands should be using apps to drive customer retention and loyalty: consider that Apple App Store downloads have rocketed to 14 billion from five billion last year. While Android has gone to 4.5 billion downloads, a four fold increase in 12 months. “The last billion took 60 days, the first billion took four months,” Carrington said of Android. “But the mobile web, via a mobile optimised site, is all about customer acquisition and commerce,” he said.

Jonathan Milne, general manager of Europe, Celtra

As mobile adverts progress beyond basic buttons and banners, location enablement is at the forefront of that evolution. Jonathan Milne, general manager of Europe at Celtra, a web-based platform for creating and tracking mobile ads, believes that location has the opportunity to be seen as “the most important thing in rich media advertising.”

Milne identifies the biggest problem with most advertisements as the lack of relevancy to the viewer, and as a result claims that his business is seeing unbridled appetite and demand for location capabilities. “The purpose of location enablement is to make the ad relevant to the consumer,” he says.

“We get involved in around 50 per cent of campaigns created on our platform and use our own tools for embedding store finders and dealer locators and we’re seeing growing interest in check-in functionality too.

“The broadest use of location will be through ad targeting, where the ad server decides which advert a viewer will see depending on their location. But in the future, most ads will be location aware in some sense, either by GPS or through triangulation of the user’s location. Then we can look inside the advert and add location services like a map to find your nearest store or check in services like Foursquare. The big questions are ‘where am I right now and what can I do here?’ Or ‘how can I get there?’” Milne says. In another example, he highlights the popularity of location sensitive content, in that ads are dynamic and able to show different content based on location, such as an automotive advertisement for a car with an image gallery that shows a user in California a cabriolet but a user in Alaska a 4×4.

But on a wider scale, the greater use of smartphone capabilities are around messaging, that is to say advertisers can craft a call to action to the local culture, making for more effective and efficient ads. “Unless brands can specifically target the right content relevant to each market, it’s like dropping a needle into a haystack. But as the guys who sell the ad inventory concede, the ad buying market’s only just getting to that point and at present, location sensitivity is working best on regional or city basis rather than on a micro granular level.

Check out more comment from Jonathan and other mobile advertising experts in our feature: Death of a salesman?

Will King, head of product development at Orange's Unanimis

Will King, head of product development at mobile ad agency Unanimis, joined the company when it was four years old, and five years before it was acquired by France Telecom in 2009. The French carrier had previously tried to establish a presence in the UK by itself, with varying levels of success, but post acquisition, Unanimis incorporates Orange’s UK network and Orange Mobile Portals, which in turn incorporates the Blyk-powered Orange Shots initiative, into its own ad network offering.

As a digital ad sales house, Unanimis sells web inventory, advertising campaigns and mobile inventory under the Orange brand, giving the carrier specialist knowledge of the sector. Knowledge that may comes in useful given the promising start the sector has had.

“When you consider the (traditional) web versus the mobile, it’s clear that mobile is still nascent,” King says. “There’s a certain nervousness with advertisers, because you have an advertising schedule that makes use of established channels and brands. But look at mobile and you need some convincing. At this stage in the market we need to do a good job of explaining these benefits to brands, by helping them to understand what the channel looks like for them and how we can help them extend their digital activity. Mobile is a very natural extension of the web and brands are very comfortable online now.”

Following a familiar thread of conversation in the mobile advertising space, King notes that digital media got people very excited and there were expectations that it would swallow up other advertising budgets. But brands are now realising they need to play the strengths of the different channels available to them against the audiences they want to communicate with.

“Were trying to talk to marketers in a language they understand,” King says. “As the market matures we will see a mobilisation of peoples’ digital activity overall and there are very specific benefits that mobile can bring around hyper-localisation, next generation services and point of sale interaction. However, today it’s about educating people about how mobile can be used, so it can become a natural and obvious channel for digital marketing.”

Read our feature on mobile advertising

In July, Orange announced an exclusive partnership with online video provider Dailymotion to deliver integrated display functionality allowing advertisers to target specific audiences with localised content on Dailymotion’s platform. With 20,000 videos added daily to the site, the Orange advertising network will have the exclusivity to monetise Dailymotion’s video advertising inventory across the UK, Spain, Poland and Latin America.

“Video inventory is finite and marketing is maturing and developing to include new kinds of marketing. Dailymotion gives us a strong window into selling video display advertising to video advertisers against Dailymotion content, and gives us the opportunity to distribute content,” says King. “Brands are using the web to seed and distribute good content globally to their consumers as well as using the traditional ‘user interruption’ model. Dailymotion encourages user generated content and virilisation. It’s how advertisers have embraced the social environment to distribute their content. It’s part of their schedule.”

But it may be some time before localisation and hyper-localisation really becomes part of the advertising agenda. “The key thing with localisation is that mobile is personal and localisation is key to advertising growth, but there is also the question around users opting in to these services,” says King. “You have to bear in mind what it is appropriate for advertisers to know about users. Hyperlocalisation is a capability unique to mobile, but it needs tempering. In the web space we are in the middle of a process of legislation around privacy, about what can and can’t be used to deliver an advertising message. So a similar code of conduct should be expected for advertisers in the mobile space,” he says.

O2's Priority Moments makes good use of location

While location used to be viewed as the carrier asset most ripe for exploitation, the majority of mobile operators have done little to successfully harness it. Over the top players have proven themselves the more adept providers of appealing applications that have exploited data on subscriber whereabouts, while the carriers have sat back, focussed on other areas of their business.

O2UK is one of the more proactive operators in its approach to location, keen to use it to add value to its media business, which looks to create connections between brands and the carrier’s customer base. And according to O2’s director of new business development, Tim Sefton, services such as its You Are Here location-based marketing solution, launched in 2010, and a new offer called Priority Moments, can deliver benefits in terms of new revenue streams as well as customer retention and acquisition.

Priority Moments, launched in July, is an extension of the carrier’s existing Priority loyalty scheme. Over the past two years, O2 has become one of the UK’s largest vendors of tickets to popular music events, using its sponsorship of a stable of music venues—including the 23,000 capacity O2 Arena in East London—as a means of delivering discounts and exclusivity to its network customers. The firm has sold 600,000 tickets in 24 months and Priority Moments sees it moving into a number of other environments, including fashion, food and high street retail.

While Sefton, like most operator executives, stresses the superiority of network-based location solutions, the flagship, smartphone incarnation of Priority Moments harnesses handset-based GPS. (There is a WAP-based version of the service for non-smartphone users, based on geo-fencing technology from PlaceCast, as well.) When the subscriber fires up the app, they see a list of offers from O2’s partners, ranked by proximity. The offers might range from discounts on books to a free class of wine at an Italian restaurant chain. The user needs only to show the offer on the screen of their handset in order to redeem it at the partner’s outlet.

The programme hit the market with 30 partners, among them high-end department store Harvey Nichols, newsagent and bookseller WHSmith, restaurant chain Zizzi and the Odeon cinema network. Sefton says that some of the partners were existing customers of the firm’s media arm while others were approached for the first time with the new offering. “The beauty of Priority Moments is that it’s enabling us to build out the client base for our O2 Media business as well,” he says.

Sefton plays his commercial cards close to his chest, unwilling to reveal detail about the specifics of the relationship between O2 and the Priority Moments partners. One of the key questions arising from the launch was whether or not there is any cost to the partners for involvement in the scheme—outside of the discounts that they offer—or whether O2 is in any way subsidising those discounts. It’s conceivable that both may be true, as Sefton says each deal is unique.

“The commercial models are confidential but at the high level, I can tell you that the partners are investing in the offer and we’re investing in the promotion of Priority Moments and creating that channel to our customers,” he says. “We’re exchanging reach to our customer base in exchange for them investing in exclusive offers for our customers.”

It’s certainly clear that the involvement of the partners that O2 paraded at the launch event is more than an idle dalliance. Sefton says that the top tier of partners have committed to involvement in the project for a minimum period of three years. The partners have to undertake to provide offers that are exclusively available to O2 customers, and those offers have to be the best that the partners are making available across all of their marketing channels.

Exclusivity is crucial with any scheme of this nature, especially if, as O2 clearly believes, its competitors will bring similar services to market in the wake of the Priority Moments launch. And that exclusivity works both ways. O2 has committed to Odeon as the only cinema partner for the scheme “for the foreseeable future,” Sefton says.

While carriers are pursuing exclusivity, however, they are also being forced into partnership. For any brand with products, marketing messages or services to sell to the end user, reach is the most important metric. In a market with five carriers and a healthy mass market MVNO, for example, one operator partner is only going to deliver a portion of the potential subscriber base the brand is chasing.

In June this year, the leading UK operators announced a collaboration to this precise end—but does Sefton not have concerns that the necessity for collaboration might threaten the very differentiation that a project like Priority Moments is designed to enable?

“The spin-off benefits around increasing the potential client base for O2 media will be great news for the joint venture we’ve got with Vodafone and Everything Everywhere,” he says. “It’s all about building relationships between mobile operators and brands so that they’re placing more of their advertising on mobile. We’re setting up the infrastructure and the capability for brands to do that. But on top of that there’s nothing to stop any of us competing on how we can create more differentiation for our respective customer bases.”

O2 does not want to give any indication of how it expects the number of partners in the programme to grow, but Sefton describes the 30-strong stable with which the firm went to market as “a small start”. New partners can be brought aboard within a few days of expressing interest, he says, and he expects the programme to attract new partners at a decent rate. “As soon as we start advertising, as soon as the service breaks and we see the success of the various partners in the scheme, I think it’s going to be self-fulfilling, with others wanting to join. It’s going to get significantly bigger.”

If mobile operators are troubled by new players and platforms offering competitive products then it is interesting that two of O2’s Priority Moments launch partners, Odeon and WHSmith face similar issues. Both have products that are increasingly being consumed on other platforms, and provided by other players. And both had speakers at the launch event who said they really need to drive more footfall into their premises. “We need to get people coming back into cinemas,” said the gentleman from Odeon. “We’ve got to get people into these stores,” said his counterpart from WHSmith.

And footfall is probably going to be the first parameter by which the partners judge the success of their involvement in the scheme. O2 will also be supplying its partners with numbers around downloads of the Priority Moments app and levels of engagement, as a backup proof of performance.

For the operator, levels of engagement are everything. “We have a number of KPIs for this, but first and foremost it’s about engagement,” says Sefton. “It’s about the number of people that are using this app because this is about retention. The more customers using these products and services the better because that creates the relationship that we can then build on to sell them more products and services.”

So how many users does he expect to sign up? “Well we already have one million customers or more on our Priority ticketing programme and we expect to exceed that with Priority Moments. Clearly we’re talking about millions of users. We also need to understand the effects this proposition might have in enabling us to acquire customers from other networks. Because we’re seeing that the better our retention offers are, the more they attract customers from other networks that are not offering the same benefits.”

O2 claims to have the highest loyalty and the lowest churn in the UK industry. One of the metrics the firm uses to assess its appeal to potential customers is brand consideration. Customers of other networks are quizzed as to which network they would choose if they were to churn. O2 says that its existing Priority programme has increased the frequency of its selection as the first choice operator in this scenario by ten per cent over the past two years.

Whether O2 will continue to lead in this regard will depend as much on the strategies of its competitors as its own plays. And while the use of location for these kinds of schemes is still relatively restricted (although Sefton points out that it is more advanced in the USA and some Asian markets than it is in Europe) it seems likely that other carriers will follow suit; competing not only with one another but also with platform providers like Google and Apple.

“I think we’re in the vanguard of something that’s going to gather momentum,” Sefton says. “Obviously operators generally have lost some ground to the smartphone players. But I don’t think the game’s over. I think this is the beginnings of quite a significant push by the operators to reclaim some of the value in this world.”

Is the speculation about the death of traditional media premature?

It’s seen a number of false dawns, but with the activation of every new smartphone or tablet, the world’s digital media advertising inventory gets a little bit bigger.

Today, mobile is still a small if fast growing part of the advertisers’ arsenal. But forecast figures from Informa Telecoms & Media predict that annual revenues generated by mobile internet display advertising will grow strongly over the next four years, from $779.4m in 2009 to $7.54bn in 2015, at a CAGR of around 46 per cent.

So towards the latter end of the forecast range, the future gazers can finally herald the ‘year of mobile advertising’ with confidence.

Will King, head of product development at Unanimis, joined the internet and mobile advertising network when it was four years old, which was five years before it was acquired by France Telecom in 2009. Unanimis now incorporates Orange’s UK network and Orange Mobile Portals, which in turn incorporates the Blyk-powered Orange Shots initiative, into its own ad network offering.

“When you consider the (traditional) web versus the mobile, it’s clear that mobile is still nascent,” he says. “There’s a certain nervousness with advertisers, because you have an advertising schedule that makes use of established channels and brands. But look at mobile and you need some convincing. At this stage in the market we need to do a good job of explaining these benefits to brands, by helping them to understand what the channel looks like for them and how we can help them extend their digital activity. Mobile is a very natural extension of the web and brands are very comfortable online now.”

Rather than digitalisation swallowing up other advertising budgets as expected, brands now appear to want to play the strengths of different channels against the audiences they want to communicate with.

“Mobile advertising is growing very quickly but it’s still at a very early stage,” says Rob Jonas, VP & managing director for Europe & Middle East at mobile ad network InMobi. “The core advertising business in mobile is still around relatively straightforward text and display advertising and maybe a bit of search. Advertisers are still understanding how to make this work for them at scale in order to harness the power of the mobile device.”

Jonas picks up on the often referenced blue skies advertising techniques portrayed in the likes of the film Minority Report and calls it out as just that—science fiction. “Everything around location-based targeting, timeshifting and the multi screen advertising experiencing are all really interesting discussions, but it’s still too early for advertisers to have an appetite for this. They are still learning the basics,” he says.

“The core advertising business in mobile is still around relatively straightforward text and display advertising and maybe a bit of search. Advertisers are still understanding how to make this work for them at scale in order to harness the power of the mobile device.”

Even the hype about in-app advertising needs some tempering. InMobi claims the second placed spot in terms of mobile display advertising network size behind Google, with almost 105 billion ad requests during the second quarter of 2011, up 23 per cent sequentially. Although smartphones and tablets were the driving force behind this increase, delivering 39 billion requests, in- app advertising, while growing quickly, still only represents 17 per cent of all ads. By and large, mobile web browser advertising is still the favoured medium and WAP-based web browsing is still going strong.

“Browser-based ads are still the global, high-level leader versus in-app ads. And we still see a clear distinction between the mobile web and traditional web. Publishers may not have a mobile app strategy but they may well have a mobile web strategy as the mobile web gives you freedom across more platforms,” Jonas adds.

But that’s not to say adverts aren’t evolving beyond basic buttons and banners, with location enablement at the forefront of that evolution. Jonathan Milne, general manager of Europe at Celtra, a web-based platform for creating and tracking mobile ads, believes that location has the opportunity to be seen as “the most important thing in rich media advertising, its purpose is to make the ad relevant to the consumer.” Milne identifies the biggest problem with most advertisements as the lack of relevancy to the viewer, and as a result claims that his business is seeing unbridled appetite and demand for location capabilities. “We get involved in around 50 per cent of campaigns created on our platform and use our own tools for embedding store finders and dealer locators and we’re seeing growing interest in check-in functionality too.

“Brands are using the web to seed and distribute good content globally to their consumers as well as using the traditional ‘user interruption’ model.”

“In the future, most ads will be location aware in some sense, either by GPS or through triangulation of the user’s location. We can look inside the advert and add location services like a map to find your nearest store or check in services like Foursquare. The big questions are ‘where am I right now and what can I do here?’ Or ‘how can I get there?’” Milne says. In another example, he highlights the popularity of location sensitive content, in that ads are dynamic and able to show different content based on location, such as an automotive advertisement for a car with an image gallery that shows a user in California a cabriolet but a user in Alaska a 4×4.

Due to the increasing digitalisation of parts of the market, video makes for an obvious companion to marketing and is another content channel experiencing explosive growth—just look at YouTube. “Stuff like VOD (video on demand) set the agenda for digital marketing around video, and now we’re starting to see it grow,” says King from Orange’s Unanimis.

In July, Orange announced an exclusive partnership with online video provider Dailymotion to deliver integrated display functionality allowing advertisers to target specific audiences with localised content on Dailymotion’s platform. With 20,000 videos added daily to the site, the Orange advertising network will have the exclusivity to monetise Dailymotion’s video advertising inventory across the UK, Spain, Poland and Latin America.

“Video inventory is finite and the situation is maturing and developing to include new kinds of marketing. Dailymotion gives us a strong window into selling video display advertising to video advertisers against Dailymotion content, and gives us the opportunity to distribute content,” says King. “Brands are using the web to seed and distribute good content globally to their consumers as well as using the traditional ‘user interruption’ model. Dailymotion encourages user generated content and virilisation. It’s how advertisers have embraced the social environment to distribute their content. It’s part of their schedule.”

Indeed, larger brand advertisers are doing more cross-platform campaigns, using the PC, the web, offline and increasingly, mobile as well. It’s not uncommon for brand performance campaigns to have multi channel capability. And while there are experiments with NFC and Bluetooth-enabled advertising schemes, the high spend today in terms of mobile is about using the scale of the channel to deliver compelling ad formats, according to InMobi’s Jonas. “Smartphones increase the intensity with which users browse the web and give us the ability to serve more rich media capable advertising to consumers, such as the market’s first 3D advertising campaign we did for Samsung with CoolIris.”

As Celtra’s Milne adds, on a wider scale, the greater use of smartphone capabilities are around messaging, so advertisers can craft a call to action to the local culture, making for more effective and efficient ads. Unless brands can specifically target the right content relevant to each market, it’s like dropping a needle into a haystack. But as the guys who sell the ad inventory concede, the ad-buying market is only just getting to that point.

“We have the capability to do hyperlocalisation, but we’re led by advertisers and they’re not there yet,” says Jonas. “The most granular level of targeting is the major metropolitan area. Urban residents behave differently to non-urban residents and that’s about as granular as we get today. Yes, we have conversations about being able to target a male in a certain postcode who’s done these three things on their phone in the last six months. This is all theoretically possible, but it’s not really the reality for where the majority of advertising spend is going today.”

Orange’s King is in agreement: “As the market matures, we will see a mobilisation of peoples’ digital activity overall and there are very specific benefits that mobile can bring around hyperlocalisation, next generation services and point of sale. But today it’s about educating people about how mobile can be used so it can become a natural and obvious channel for digital marketing.”

There are of course, exciting opportunities involving the oft mentioned treasure trove of subscriber information the operators have access to, with regards to more granular targeting of adverts. “Operators have a very rich amount of information that could be layered into the advertising network to help with targeting, but historically they’ve been reluctant to allow access to this,” says Jonas. “Although there does seem to have been a change and we’ve seen more movement in that direction over the last six months. It’s an observation that appears in several conversations beyond the advertising sector operators are simply coming to terms with the fact that they need to work with third parties. “Effectively the operator is a media owner so they have inventory and, depending on how effective they are on selling that inventory, there’s potential to work with them. We’re seeing this more in markets in the Middle East and Asia where operators are more open to third parties,” Jonas adds.

But some operators, like France Telecom, are keen to keep their advertising initiatives in house through the acquisition of specific skill sets, as was the case with Unanimis, perhaps giving them more control over the very careful steps that must be taken through the minefield that is user privacy.

“The key thing with localisation is that mobile is personal and localisation is key to advertising growth, but there is also the question around users opting in to these services,” says King. “You have to bear in mind what it is appropriate for advertisers to know about users. Hyperlocalisation is a capability unique to mobile, but it needs tempering. In the web space we are in the middle of a process of legislation around privacy, about what can and can’t be used to deliver an advertising message. So a similar code of conduct should be expected for advertisers in the mobile space,” he says.

Several acquisitions, including Google’s $750m purchase of AdMob, appear to have validated the case for the mobile ad industry, but the case for more granular targeting of adverts through localisation and hyperlocalisation is still yet to be proved. “Location is still a small part of the market today but it has huge potential for the future,” says Jonas. “It’s just that you can’t force a new advertising format on a market that is not ready for it. You need to wait to introduce it at an appropriate time or in an appropriate way.”

Breon Corcoran, Paddy Power

Rob Define, eBookers

Jay Altschuler, Unilever

Fiona Hall, Waitrose

Fiona Hall, Innovation manager, Waitrose

We very much wanted to understand the role of mobile prior to establishing a strategy, so we commissioned customer research into mobile to better understand users and their shopping behaviour and found a focus on m-commerce, in-store recipes and content.

We also found three categories of mobile users: People who don’t get it; people warming to it; then people who cannot do without it. They have very different needs but also some common ground. So in July last year we launched a mobile site and an app focusing on recipes and branch information offers on the iPhone and Android. We also allowed customers to interact with the main campaign, which focused on a TV ad featuring a QR code used throughout the campaign.

One in three scans of the QR code resulted in download of the app and we had half a million downloads, which contributed to one of most successful years ever. Apps are definitely part of our strategy going forward and now we see our customers are hungry for e-commerce too.

Back to the main feature and more interviews on advertising