28 Dec, 2007
In the weeks leading to Christmas, an online wine retailer gave 15 percent discounts to anyone who sent in a photo of its newspaper ad snapped with a camera phone.
SnapTell Inc., the company helping Wine Enthusiast and other merchants offer such services, uses image-recognition software to determine what offer, video clip or other content to return to the phone. In the coming months, the same technology could deliver movie reviews and discounts to anyone snapping a picture of a movie poster or billboard.
It's one of a number of emerging approaches to mobile advertising, an industry still in its infancy but showing promise. More than 80 percent of Americans now own cell phones — a statistic Jupiter Research analyst Neil Strother equated with "carrying a potential advertising channel in their pocket."
Fast-food chains, carmakers and TV reality shows have run contests and other promotions in which consumers participate by sending text messages. Wireless carriers have begun letting companies run banner ads — mini-versions of what you might see on a PC. Google Inc. and Yahoo Inc. have brought lucrative search ads to phones.
Advertisers have been spending a little money here, a little there trying to gauge what works on mobile phones. The efforts so far are best described as trials and pilots, lacking in comprehensive strategy.
"It's the Wild, Wild West right now," said Rick Sizemore, chief strategy officer for the tech consultancy Multimedia Intelligence. "This is an interesting and compelling vehicle, but they don't necessarily know who to work with. There are so many options out there — a lot of hype with no substance, and then a couple of gems."
SnapTell is among Sizemore's favorites.
Gautam Bhargava, SnapTell's co-founder and chief executive, said the company considered the phone's unique qualities — its lack of regular keyboards in most cases, and the ubiquity of built-in cameras. Rather than require someone to punch in a brand name using a clunky keypad, the company decided to accept picture messages.
"We wanted to make it simple for the end user," Bhargava said. "There's nothing to install on your phone. You don't need to pre-register. We do not have to worry about whether you are with Carrier A, B or C."
Another of Sizemore's favorites is Single Touch Interactive Inc., which plans to unveil in February a program that lets customers activate electronic coupons at drug stores and other retail chains simply by dialing the pound sign on the phone followed by "SAVE." Discounts are automatically applied at the register.
"I don't want to increase the line and have customers be frustrated because someone's fumbling trying to find a coupon" in a text message, said Anthony Macaluso, Single Touch's chief executive. "What we need to do today is not change the behavior of the retail point of sale or the behavior of the customer."
There are still a number of hurdles before mobile advertising can truly take off.
Advertisers now have a good idea what a typical desktop computer can do. Handsets, however, vary in screen size and features — even the same model can be configured differently depending on a customer's carrier.
And there are also big differences among users: Some people use phones only for calling, some have dabbled with text messaging and others are comfortable surfing the mobile Web and watching video.
"In mobile you can't assume anything," said Derek Handley, chief executive of The Hyperfactory, a mobile ad company. "You need to build programs and campaigns around this fact."
In addition, many users pay for services by the minute, message or kilobyte. Seven ads via text messaging could hike a phone bill by a dollar.
The uncertainty has led to some experimentation in business models, as some wireless carriers and ad companies bet that consumers will embrace ads for free minutes or ring tones.
Virgin Mobile USA LLC, which offers prepaid mobile services, said more than 10 percent of its 5 million customers have signed up for Sugar Mama, a program that lets customers earn up to 75 minutes of free airtime each month simply by watching ads or responding to mobile surveys. PepsiCo Inc., the U.S. Navy and Nintendo Co. have been among the brands participating.
Expect the experimentation to continue in the new year and beyond.
"That's how a new market is being created," said Dan Olschwang, chief executive of JumpTap Inc., an ad-technology company. "People adopt all kinds of stuff they know from other medium and gradually the industry learns how to utilize the best in this new medium that's called the mobile phone."
