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Executive Interview: Paul Palmieri, CEO, Millennial Media: Wireless veteran discusses landscape for mobile phone advertising

Few people in mobile marketing can leverage both the online and wireless experience Paul Palmieri commands. The CEO of Millennial Media was an executive at Advertising.com before becoming a driving force at Verizon Wireless during mobile data’s infancy, heading up the carrier’s value-added services in the early part of the decade and then moving to oversee its gaming efforts. That experience, along with a stint as venture partner with Acta Wireless, has helped Palmieri guide Millennial Media in a turbulent space where many firms are still finding their sea legs. We talked with Palmieri about advertising on the wireless Web and the outlook for mobile marketing in a struggling economy.
The gap between inventory on the mobile Web and ads to fill that inventory continues to increase. Will rates continue to fall in 2009 as inventory increases and the economy plods along?
I think, yeah, average rates will continue to decline, but there was not a big decline in 2008. I think rates were fairly steady. But as rates do have a subtle decline, segmentation and targeting of the inventory will continue to improve. When you’re able to have precise data pass on – things like (users’) age and ZIP code – mobile is rich with that, and that leads to a collection of inventory where there’s competition and rates remain strong, where you can cultivate a base of inventory that’s in demand.
For example, cost-per-click rates in the U.K. are very competitive at this point. There’s strength for location-based impressions or any impressions that have geographic information that is not indexed but precise. I think overall average rates may see a decline and continue to have this imbalance of inventory and demand, but those companies that have aggregated the demand and are proficient at packaging up segments of inventory and audience, rather than one particular proposition or another, are in a very strong position.
You said “mobile is rich” with data that can help deliver targeted ads. Can you be more specific? What kind of data are you using?
There’s much more information available than in the early days of online. Mobile has had some pretty rich targeting out of the gate, while it took years on the Internet (to leverage such data). MySpace, Facebook, they have not only very specific information about the consumer, but very specific permission from the user to use it to make the experience better and more relevant.
But I continue to hear other players bemoan the lack of usable targeting data, especially the information that carriers own and are trying to figure out how to monetize. Wouldn’t it help immensely if the industry found ways to responsibly share consumer proprietary network information for subscribers willing to accept ads on their phones?
I will be delighted when our carrier partners come to the table with consumer permission of data that can be passed on the call. Some of the carriers are working on it. Some carriers will make separate and, I’m sure, great efforts to generate targeting data, but when that data comes to fruition the data will be no more useful than the data that already exists with many of the publishers today. Precisely knowing that someone is an 18- or 20-year-old female with a particular ethnicity in a particular ZIP code, that is available today. You can target only to those consumers. As a matter of fact we have, in a Disney campaign we did for (the animated film) WALL-E. We just targeted females with children in the household, and it was age-targeted.
So I don’t think we’re waiting on anything. We have rich data today; the purveyors of that data are the publishers. Many of them have it, so I don’t know that there’s anything to be waiting on from the carriers. This is the strength of the mobile ad network. We see somewhere between 28 and 30 million unique users on a monthly basis.
Millennial is one of the companies backing .mobi, a top-level domain exclusively for mobile Web destinations. As traffic on the wireless Web ramps up dramatically, is .mobi necessary, or have the concepts of a dedicated top-level domain and a standardized format for mobile URLs become obsolete?
I think 2009 – just like ’08 – for a publisher is going to require that they think about mobile as its own separate site. I think it’s clear that consumers want a specific mobile experience, so I do believe .mobi is relevant. I do think it remains to be seen whether (another format such as) m. or a new top-level domain is the real answer here. We’re involved (with .mobi) because we think any organization that is promoting mobile-specific versions of any media product is positive for the industry, and is what consumers want. But I think the answer to “Are they necessary?” probably lies within the search environment for mobile, which is still nascent.
Why do you think consumers want a specific mobile experience? Others argue that there should be only one Internet regardless of the device being used to access content.
You can buy milk in a convenience store or in a supermarket. The convenience store looks very different than the supermarket when you walk in, but both drive demand for milk.
What we’re seeing in mobile is that consumers really do demand a separate experience because they’re in a different mode in mobile, and there does need to be an accommodation for the size of the screen. There’s a migration of users off of the Web and onto the mobile device for things that are bursty and immediate – things like sports scores, stocks and weather. There’s been quite a migration, and Nielsen has some great data that shows that there is a migration that’s happening in certain categories.
Are publishers responding to that and creating mobile sites that offer different content and features than fixed-line sites?
I think that it will take time for brands to migrate. I think about a company that has a magazine in hard copy – translating the magazine in hard copy to a Web site that draws a user in and keeps them engaged in a session for a long time is actually quite a challenge. But magazines translate very well to mobile because there are short, bursty little features that translate very well.
Conversely, a site that’s more research-oriented, more story-oriented, might be hard to bring into mobile. There might be a great angle: a cooking magazine moving to mobile could be a great place to put mobile ads, but it might take some time for that publication to really dive deeply into things like an SMS recipe list. I’m not frustrated by that. Actually, it happens more and more because doing things that are mobile-specific really works.
A lot of insiders believe 2009 will be the year location-aware mobile marketing finds an audience. Are consumers ready to accept or even embrace ad campaigns based on location?
I think that the acceptance and embrace piece is not as relevant. What I mean by that is I think consumers will love location-based advertising; it’s so relevant I don’t think there is an acceptance. I do think it requires a critical mass of local advertisers to truly reach its potential, though, and it’s not there yet. Even when the technology is there, the demand has to be aggregated out there.
Companies have been using ZIP code-level marketing, particularly at the retail level and with restaurants, and I think that’s very positive. For us, there’s pent-up expectation that with more personal advertising, the ads will be more relevant, and location is the easiest relevance test to pass when the data is available.
Some ad agencies and brands have complained of a lack of visibility in the mobile-ad space that prevents advertisers from truly determining ROI on mobile campaigns. Has a lack of standardized measurement and analytics tools hindered the market?
Compar
ed to the early days of online, we have a lot of
definitions in place as we build out this market, things like ‘What is an impression?,’ things the Web really solved. We’re in a much better position today than in the early days of the Web.
I don’t agree that ROI is difficult to measure, but I do think the industry needs more standardized measurement, and the IAB and MMA are starting to tackle these head-on.
There has been a lot of consolidation in the mobile-ad space over the last two or three years. Do you expect that to continue in 2009?
I think what we see is that over the past year there has been a little bit of a clear line drawn between the very few companies that have scale in the space and can provide that scale to advertisers, and those who haven’t achieved that yet. Companies like Millennial who can provide brands the scale they want continue to win business, while others are doing things like jumping on just the iPhone bandwagon, which has an inherently limited audience, or they’re caught up in a spending spree running a diffuse business that’s part technology company and part ad network.
Will there be consolidation in 2009? I think there may be some, but I’m not sure how that’s going to occur. If these were the capital markets of two years ago, they would have taken another round of funding before the shakeout happens. Now, with the way the markets are, campaigns that have scale are in a very good position (to ride out a struggling economy).

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