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More Web traffic, more on-deck friction: Carriers could force smaller content providers to work with ‘official’ marketing firms

Like real estate, mobile advertising is all about location. And carriers are scrambling to cash in on the most desirable territory in wireless data: the deck.
Network operators are hastily choosing mobile marketing partners and developing strategies for placing banner ads, clickable links and other come-ons on their home pages and other navigational sites. As mobile advertising begins to generate real money, though, they’re likely to muscle in on some new territory: the pages of their on-deck publishing partners.
On-deck content providers have long enjoyed substantial latitude in monetizing their mobile Internet sites. Popular destinations such as The Weather Channel and ESPN have typically struck their own deals with mobile marketing firms and brands looking to buy ad space, sharing a little of the revenue with carriers in exchange for placement on the deck.
Some content providers fear that’s likely to change, though, as carriers and their marketing allies begin eyeing ways to manage and monetize advertising on the wireless Web. Wireless service providers are already inking exclusive deals with mobile marketing companies-witness Sprint Nextel Corp.’s pact with Enpocket and Verizon Wireless’ partnership with Third Screen Media Inc.-and could demand their content partners do business with those firms or lose deck placement.
“The carriers are choosing their solution for mobile advertising,” said Thomas Burgess, CEO of Third Screen. “Even the MVNOs are choosing their players; we have two (MVNO partners). There’s no doubt the carriers are stepping up and making those choices. That’s a fact.”
How they choose to leverage those relationships, of course, remains to be seen. And network operators aren’t likely to take on well-known media companies that have struck arrangements of their own with mobile advertising agencies. But small and mid-sized publishers may be forced to work each service provider’s “official” agency.

Tracking traffic, demographics
“It comes down to who owns that traffic” to on-deck Internet destinations, said Fred Ghahramani, co-founder of AirG, a Vancouver, British Columbia-based developer of social networking applications. “There’s a bit of friction out there. . That’s a debate the entire industry is having.”
Of course, carriers are very well positioned on the field of mobile marketing. Not only do they control the shelf space of the deck, they also have access to invaluable data that can’t be found anywhere else. Network operators have complete demographic outlines of each subscriber, and can track browsing behaviors, spending habits and even-as GPS becomes more commonplace-the location of their customers.
In a world where few devices have “cookies” to monitor wireless data usage, that information alone is enough to guarantee the carriers a vital place in the wireless advertising value chain, according to Enpocket CEO Mike Baker.
“Because they run the environment, when you buy a mobile ad through an operator, as an advertiser you have a much better ability to measure the reach of the campaign and the frequency of the campaign,” Baker said. “And reach and frequency are sort of the coins of the realm in advertising.”
Of course, carriers have some compelling reasons for doing as much business as possible with one mobile marketing company-or, perhaps, handling the advertising business itself. Such a move would make it easier to control marketing tactics that could be off-putting to consumers, such as pop-up ads or interstitial messages that would surely raise the ire of subscribers. And it could streamline the value chain by cutting out publishers’ mobile advertising partners, leaving more revenue for both network operators and content providers.
While network operators probably don’t have the leverage to force all their on-deck content providers to play ball, some service providers are likely to offer less-established publishers a deal they can’t refuse when it comes to mobile advertising partners.
“I do understand (some publishers’) concerns; I can see how they might see that that’s a goal of the carriers,” Third Screen’s Burgess said. “This industry is in its infancy. What the carriers are trying to do is secure their place in the value of the marketplace. And I think that’s a smart thing to do.”

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