A Billboard In Your Pocket

Cell phones and iPods may be the next frontier for product placement

The current vogue is for advertisers to lunge toward audiences wherever they gather, be it myspace.com or msn.com's (MSFT ) home page. But this notion is so 2005, says a small but influential coterie of producers and executives who integrate brands into movies and TV shows. To them, the real next thing is something that barely exists: Video on mobile devices and cell phones.

If they have their way, brands and products will be woven into mobile programming to an even greater degree than they have already invaded movies and TV. The cell phone and video iPod, they insist, are the next frontiers for what they like to call branded entertainment.

Their optimism is touching, providing you like programs with plenty of shout-outs to advertisers. It also sounds farfetched since big obstacles loom. We may be 15 million downloads into the video iPod age, but producing and watching programs specifically for mobile devices are behaviors that are nascent at best in the U.S.

And the technological state of this art is not awe-inspiring. Cell-phone provider Cingular advertises that its network gives consumers "the fewest dropped calls," which Tim Hanlon, senior vice-president of Denuo, the media strategy arm of ad giant Publicis Groupe (PUB ), translates to mean "we suck less."

BUT THIS UNCERTAINTY, and getting in on the ground floor of a new media form, is what excites these producers and dealmakers. The terrain is wide open, unlike with TV, where branded entertainment advocates contend with long-established business models. Mobile-minded executives harbor hopes that they may be allowed to write some rules of engagement for this platform -- which will grow up without the public service demands placed on TV in its early days. "Unlike television, where [networks] funded the content, and owned and exploited it, here the distributors aren't funding the content," says Ben Silverman, founder of independent production company Reveille LLC and executive producer of NBC's The Office. In mobile, there may be no middleman between programmer and advertiser.

Strange as it sounds, product placement on TV has matured. After years of brand-friendly hits from Extreme Home Makeover to American Idol, executives no longer fret about viewers rejecting ads embedded into shows. Now such broadcast-TV deals come with big price tags. It can cost $4 million to get a brand on The Apprentice. And big network deals often require substantial ad-buy commitments on top of product placement fees. "Sooner or later, we will find out how much the corporate world can sustain the kind of pricing the networks are putting out there," says Patti Ganguzza, President of AIM Productions, which does product placement deals for Unilever (UL ) and Wendy's (WEN ).

That such ads would be cheaper on mobile platforms is but one draw. Mobile is also a more malleable technology. On mobile platforms, advertisers "can change the user interface," says Daniel West, marketing vice-president at mobile programmer Nellymoser, and even insert animations or other graphics into the programs themselves. On cell phones, "any frame could be the start of an interaction" with an advertiser outside the confines of the programming itself, says Mark DiMassimo, CEO of DiMassimo Brand Advertising. (As in: click here.) There's also the ubiquity of cellular, with 225.4 million users projected for yearend by research outfit eMarketer, and the way these devices are treasured by hard-to-reach young consumers.

So where are the deals? Good question. West says Nellymoser has pacts "locked up" with major brands, but nothing that can be disclosed yet. Presumably those might show how brands and shows will intersect in this space. But even cheerleaders suggest it will be months before the deals truly start happening. Given consumer behavior and the newness of the terrain, that time frame may be -- how to word this politely? -- completely nuts. But should the medium take off, their broader predictions will too. If there's one takeaway from the recent history of American media, it's this: Those who have bet against ads worming their way into content in ever-more flagrant ways haven't won many wagers.

For Jon Fine's blog on media and advertising, go to www.businessweek.com/innovate/FineOnMedia

By Jon Fine

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