Will advertising boost e-mail usage?: Internet giants may beat carriers in offering wireless e-mail


Perhaps no segment in mobile data remains as untapped as wireless e-mail.
Research In Motion Ltd. continues to dominate the market for high-powered users, resulting in millions of CrackBerry addicts hunched over their flashy devices who don’t mind paying a premium – or charging their companies – for the service. And a small army of developers have found a measure of success by offering cut-rate versions of the BlackBerry service, delivering push e-mails to less expensive phones for $5 or $10 a month.
But the industry has had trouble addressing the needs of low-end professionals and consumers who largely appear unwilling to spend even a modest sum to get on-the-go e-mail. So a handful of messaging providers – like so many other players in mobile – are looking to advertising to foot the bill.
Synchronica plc, a London-based mobile e-mail firm, last year began trialing a service that tacked its own marketing messages onto mobile e-mails, and Funambol Inc. earlier this year said it is working with mobile ad firm Amobee to develop free, ad-supported mobile e-mail services. The companies are joining smaller startups such as Flurry Inc., a San Francisco-based outfit, and SingTel, a Singapore-based company that focuses on Asian markets.
They’re all vying for a piece of an ad-supported mobile messaging space that will explode from a $1.5 billion industry in 2006 to generate $12 billion by 2011, according to Research and Markets. Much of that growth will come from consumers who use ad-supported, Web-based e-mail services such as those offered by MSN and Yahoo and will gladly accept ads in exchange for free mobile services – at least, that’s the hope of Fabrizio Capobianco, CEO of Funambol.

Pay-resistant customers
“The portals have users that have never paid for e-mail, and this, I think, is an important reason why consumer e-mail by carrier didn’t take off – you have to pay,” Capobianco stated. “If I have my account at AOL, I want free e-mail on my mobile phone. If you are giving me ad-based Web mail, then give me ad-based mobile e-mail.”
That opinion is supported by a new study commissioned by Critical Path Inc., an 11-year-old mobile messaging company with offices in 15 markets around the world. The poll, which was conducted by the agency Vanson Bourne, indicates 79% of mobile users in the United States and three European nations would accept ads in exchange for free mobile e-mail services; 58% of those polled said they’d try a wireless e-mail service if it were free.
And it’s not just customers that are warming to the idea of ad-supported mobile e-mail, Capobianco said. Even some operators have come around.
“The interesting thing is that if you go to a mobile operator and say ‘advertising,’ now they’re listening,” he maintained. “Before they were, ‘No, no, no, no, no. We’re making so much money with texting that we’re not going to give (e-mail) away free. But if you’re going with an ad-based story, the numbers are impressive. The amount of money is way more than you can make charging (consumers) three bucks, five bucks a month, so they listen to the pitch.”

Putting it in context
That pitch may sound even more attractive – if potentially dangerous – when it comes to delivering contextual ads. Google Inc. has found great success with Gmail, a Web-based application that automatically scans e-mails to deliver targeted marketing messages based on keywords. While critics have blasted the tactic as an invasion of consumers’ privacy, Gmail has reportedly accumulated tens of millions of users who apparently don’t mind receiving ads based on the content of their messages.
Such success bodes well for mobile, according to Synchronica CEO Carsten Brinkschulte.
“Context-based advertising has been proven to be successful on the Internet, and we see no reason why this approach won’t be similarly successful in mobile,” Brinkschulte said via e-mail, adding that Synchronica’s ad-funded service already can select relevant ads based on the content of messages. “However, it is important that both the advertiser and the subscriber are considered when implementing such solutions. Advertising should be non-intrusive, and it should not disrupt the user experience. It must, however, offer sufficient opportunities and exposure to provide a return on investment for marketers.”
Questions remain around the mobile e-mail space, of course. Casual users may not want push services, opting instead to fire up a browser and check servers for messages. And the small screens of feature phones may be enough to encourage consumers to wait until they get to a PC to check messages.
But e-mail services are becoming easier to use on feature phones thanks largely to the fact that technologies such as OMA DS and Push IMAP are being embedded on devices, Brinkschulte opined, and ad-supported e-mail can be more attractive to consumers than SMS. Not only is mobile e-mail much cheaper than texting, it doesn’t limit the user to a paltry 160 characters. And while younger users may prefer instant messaging, even the most casual Internet users have long been accustomed to checking their consumer e-mail accounts every day.
Text accounts for the overwhelming bulk of carrier data revenues, though, and margins from the application are sky-high. So while carriers are warming to the idea of all sorts of ad-supported services, many are unwilling to risk cannibalizing their messaging revenues, Capobianco said. And that hesitation may cost them when – not if – the MSNs, Yahoos and Googles move more aggressively into wireless e-mail.
“I think it’s a bit early (for carriers to embrace ad-supported e-mail); I see Internet e-mail service providers doing this way quicker,” the Funambol CEO said, hinting at the company’s plans. “The big change, in my opinion, is that e-mail providers will be offering free mobile e-mail to their consumers directly. . The good thing is, we’re ahead of the pack. We’re going to get a lot of answers for you on mobile e-mail advertising within a few months.”

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