Cell Phones Ring for Marketers

Mobile advertising is rushing to find its way into handsets everywhere. While the effort is still in its infancy, the audience is too big to ignore

By Sarah Lacy

At a hip singles bar in Las Vegas earlier this year, attractive urbanites were busy typing messages into their cell phones. But messages like, "Who's the hottie at the end of the bar?" weren't just going to friends -- they were being posted on a giant video screen as part of a promotion at several events organized by Anheuser-Busch (BUD ) and Maxim magazine.

These kinds of promotions have become rampant at sporting events, concerts, and ultra-trendy bars in the latter part of 2004, and they're poised to explode next year, say marketers like Alex Campbell, CEO of Vibes Media, a small interactive marketing firm that put on the Vegas event. Idle cell-phone users are being encouraged via big-screen TV, or video scoreboard, to text messages to one another, answer trivia questions, or enter sweepstakes. Sometimes, participation is as high as 30%, Campbell and others say.

It may seem like just a gimmick for restless audience members and barflies. But it's the beginnings of the much-hyped, much-anticipated rush to mobile advertising, in which marketers connect to consumers in a variety of ways via their cell phones. And industry watchers say 2005 is set to be the year a lot of big brands finally give it a shot -- despite the difficulties that still loom. At this early stage, it's still hard to predict a how much will be spent on mobile advertising since the cost of these campaigns can range from thousands to millions. But like spending on video ads online in 2004, this new category looks poised to go from virtually nothing to millions in pilot investments in 2005, agencies say.


  How is text messaging advertising? In some cases, companies like Anheuser-Busch or Coca-Cola (KO ) are sponsoring such promotions as branding moves. In others, advertisements are flashing on the big video-display screens in-between the audience members' text messages to one another. In promotions where people enter a sweepstakes or trivia game by phone, they have essentially opted-in to a marketing campaign. Participants are often shot back a coupon or promotional offer.

These aren't your typical Madison Avenue campaigns, but mobile phones aren't your typical medium. Even though most Americans' wireless handsets can't yet support media-heavy games and video, some 170 million of them in the U.S. are capable of receiving text messages -- and that, marketers say, is a way in. In the U.S. cell-phone users now send some 2.5 billion text messages per month, according to data from the Mobile Marketing Assn. released last summer. And that's sure to grow: 80% of people carrying those devices have still never sent a text message.

Making the demographics more attractive, the biggest texters are the teenage to late-20s audience that marketers are usually trying hard to reach. Says Karim Sanjabi, executive vice-president for innovation at Carat Interactive: "They look at the numbers themselves and say, 'There are 170 million mobile devices in the U.S., and we're spending zero on reaching those people?'" Carat is an interactive agency that's working on about a dozen mobile ad campaigns right now -- most of them rooted in opt-in text messaging.


  Other marketers are reporting similar excitement. Says Tom Ajello, vice-president and group creative director of New York-based Agency.com: "It's like the Flash phenomenon several years ago. No one knew what it was, but people were asking for it by name. [Mobile marketing] is the buzzword right now."

It's not just the demographics that have consumer-product companies, big retailers, and entertainment outfits in a tizzy. Mobile devices also carry the promise of a new era in advertising -- one where a marketer is not only virtually guaranteed that its message will be read but one where it can usually control when the message will be read. A Hollywood studio can send a message pumping up a big release around the time most people are making their Friday-night plans. A restaurant can send a discount offer just before lunchtime. Or the corner bar can send happy-hour coupons as urbanites are getting off work.

Despite all the enthusiasm, this bandwagon faces a bumpy ride. Promotion- and event-based marketing campaigns, like one last year that had thousands of Chicago White Sox fans voting on the sexiest player on the team or one where you could text-message in the UPC on Hershey's Chocolate Milk to win a skate-date with pro skater Tony Hawk, can be lucrative, but they're unlikely to be the holy grail for this medium. What is? No one really knows yet. But it won't look like traditional marketing or even typical e-mail marketing.


  One problem is the wireless carriers. Even with megamergers like the recent tie-up between Sprint (FON ) and Nextel Communications (NXTL ), too many of them are still around, and they're using too many transmission-technology platforms with little standardization among them. In the last year, however, the major U.S. carriers did agree to deliver text messages carrying a common five-digit short code, no matter what the phone or platform it was sent from.Marketers, too, need to consider standards. "One of the essential things is to get focused on common [advertising] standards or guidelines," says Greg Stuart, CEO of the Interactive Advertising Bureau. Otherwise, he says, "it's going to restrict growth."

Then there's mobile spam, which is carriers' and customers' greatest worry. And to them it includes not only bogus offers, but any unsolicited e-mail. The last thing wireless providers want is anything that prompts subscribers to defect to competitors, especially in an age of number portability.


  Carriers are even wary of opt-in campaigns. Say Gap wants to add a line to a print ad encouraging people to enter a sweepstakes to win khakis by texting "KHAKI" on their mobile phones. Right now, the retailer has to get clearance from every major carrier to have that code recognized over their networks. If one provider doesn't like the campaign, it can demand changes, marketers say.

Most marketers are savvy enough to know direct e-mail blasts wouldn't work with mobile phones anyway. The same immediacy that makes mobile advertising so appealing also makes it dangerous. "It cuts through the clutter so effectively, it's a double-edged sword," Campbell says. "If [cell-phone users] are in a meeting and the phone goes off because you sent a message, they won't be angry they left the phone on. They'll be angry the message says something like, 'Drink Pepsi.'"

So what forms might more sophisticated mobile ads take in the future? Subtle ones, most likely. Carat Interactive has been among the more proactive agencies. For Adidas it came up with a soccer game that Nokia (NOK ) users can download, and for UPN Network, Carat created a campaign that lets texters send and receive messages from characters on the network's popular show Veronica Mars, Sanjabi says. Other Carat Interactive clients are simply advertising on mobile versions of popular sites like ESPN.com (DIS ).


  Some advertisers look forward to the day when they can use video and other rich-media images with cell phones, the way they've been doing online in the last few years. The key to that in the near term may be the nascent multimedia messaging service, or MMS, the hipper cousin of the now ubiquitous SMS, or short messaging system, used for sending and receiving text. MMS allows for pictures, sounds, graphics, and some video. Few cell-phone users have this ability now, but their numbers are expected to grow to some 68 million U.S. subscribers by 2007, estimates research firm IDC in Framingham, Mass.

Still, even though advertisers dub mobile marketing The Next Big Thing in interactive marketing, they also admit that lots of unanswered questions surround it. Like the simple Web-site banner ad was in 1999, mobile marketing is now just at the beginning of its evolution. And advertisers will need years to figure it all out.

But figure it out they surely will. After all, ads have already made the leap from print to broadcast to the Net and even to video games. And as people spend more and more time using their cell phones, you can bet that ads will follow them there as well.

Lacy is a reporter for BusinessWeek Online in the Silicon Valley bureau

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