ONLINE ADVERTISERS ARE INCREASINGLY LOOKING to deliver highly targeted come-ons to consumers on their cellphones.
Indeed, the wireless advertising market is expected to explode in the next few years as marketing firms learn how to address the mobile market. But all that prosperity will come with some serious growing pains.
Web sites and online advertising companies have seen a flurry of protests recently as consumers and legislators begin to understand that they’re being followed on the Internet. Facebook infuriated thousands of its users-and garnered some negative press-with Beacon, an ad platform that automatically informs members about their friends’ purchases from dozens of online retailers. Google Inc. has come under congressional scrutiny due to privacy concerns regarding DoubleClick, an online ad company the Internet giant hopes to acquire for a whopping $3.1 billion. A coalition of consumer groups has called for a do-not-track list that would let users opt out of online tracking programs, and the Federal Trade Commission last month held meetings to determine how much control consumers should have about their Internet activity.
Moving in on mobile
That kind of backlash has yet to reach mobile, where advertising is still in its infancy. But marketers and software developers are scrambling to find ways to track consumers’ mobile behavior and compile demographic data in order to help advertisers present the best pitch to the right user at the right time. And that is sure to spark some fury.
“In some sense, with mobile, carriers and companies such as ourselves are able to get a lot more detailed information than you’re able to get on the Web,” said John Puterbaugh, founder and strategist of Nellymoser Inc., a mobile media company. “On the Web, unless someone remembers to log in and log out (of sites), you don’t really know who’s actually on the computer at a given time; it’s a shared machine. The phone is with you, it’s always on, and it’s very personal. Even spouses don’t share phones.”
Some of that information can be very personal-and sharing it can be very controversial. Verizon Wireless discovered that several weeks ago when it quietly sent a letter to subscribers notifying them of a new policy regarding customer proprietary network information (CPNI). The carrier is requiring users to opt out of a program that allows Verizon Wireless to share calling records with “affiliates, agents and parent companies (including Vodafone) and their subsidiaries.” While the policy may not violate FCC policies, the effort was blasted in the blogosphere as an underhanded attempt to cash in on subscribers’ sensitive calling activity.
Information gold mine
Of course, it’s not just CPNI that’s at stake. Carriers hold valuable information such as users’ ages and addresses, and can track a subscriber’s movements with every call. What’s more, Pudding Media Inc. recently introduced technology designed to deliver ads based on phone conversations. Just as Google’s Gmail automatically scans e-mails to add contextual ads, the eavesdropping application listens for keywords and presents video clips, photos and text ads based on those cues.
But while Pudding’s offering may seem intrusive-and perhaps even unsettling-it underscores the important role advertising dollars will play in wireless. Some premium services will thrive, to be sure, but consumers have grown accustomed to ad-subsidized content on the cheap. The most effective ads-which is to say, the most lucrative ads-are targeted ads.
“Consumers complain the most when (advertisements) look like spam,” said Carl Ludewig, founder and CTO of mobile marketing firm Ad Infuse Inc. “On my mobile phone, I have no interest in seeing ads for feminine hygiene products. But roadsters, I’d appreciate that. And I think there is a value to the consumer there.”
So while consumer protests against some mobile marketing tactics may be inevitable, they may not be very threatening. The current controversies surrounding online advertising have made for good headlines, but they don’t appear to have slowed that industry much. Most consumers understand the rules of the game, and would rather give up some privacy than pay top dollar for service.
“There will be a backlash,” Medio Systems co-founder Michael Libes said, “but there’s no underlying reason for it. There’s no logic that says, ‘I would rather not have ads,’ when without targeted ads there is no free service.”
