Spam, to Go

Perhaps it was too good to last. Although it has been nearly 30 years since the first commercial cellular-phone network was launched, advertisers have yet to figure out how to get their messages out to mobile-phone users in a big way. There are 2.2 billion cell-phone subscribers worldwide, a total that is growing by about 25% each year, according to the Mobile Marketing Association (MMA). Yet spending on ads carried over cellular networks last year amounted to just $1.5 billion worldwide, a fraction of the $424 billion global ad market.

But as the number of eyeballs glued to tiny screens multiplies, so too does the mobile handset’s value as a pocket billboard. Consumers are increasingly using their phones for things other than voice calls, such as text messaging, downloading songs and games, and accessing the Internet. By 2010, 70 million Asians are expected to be watching videos and TV programs on handsets. All of these activities give advertisers fresh options for reaching audiences. During soccer’s World Cup last summer, for example, Adidas used real-time scores, highlight reels and games to lure thousands of fans to a website set up for mobile-phone access. “Our target audience was males ages 17 to 25,” says Marcus Spurrell, Adidas regional new-media manager for Asia. “Their mobiles are always on, always in their pocket—you just can’t ignore [cell phones] as an advertising tool.” Says Geoffrey Handley, director of new business for The Hyperfactory, a Shanghai-based ad agency focused on handsets: mobile-phone marketing “has become as vital a platform as TV, online or print.”

Not yet, perhaps, but corporate spending on handset advertising is expected to soar to $13.9 billion by 2011, according to marketing-research firm eMarketer. The field got a boost on March 27, when Yahoo! became the first major Internet firm to introduce a mobile-ad network, a service that allows companies to more easily place text, display and video ads on mobile-phone websites in 19 countries. Also leading the way are blue-chip brands including BMW, McDonald’s and Proctor & Gamble, companies that are experimenting with mobile-marketing campaigns to find cost-effective ways to tap the medium. When BMW launched new models in China last year, it tried mobile-video ads as well as downloadable screen “wallpaper” and ringtones. “The click-through rates were unbelievable,” says BMW marketing manager Alan Yang. “It’s the most effective brand-building tool we’ve tried.” To promote its bB minivan in Japan, Toyota offered concert tickets to those who took snapshots of the vehicle with camera phones. For the World Cup, Adidas fielded a game that allowed players to pimp digital sneakers on their handsets.

Advertisers say mobile-phone marketing allows them to target customers efficiently because cellular carriers know who their subscribers are. And as Yang of BMW notes, consumers appear to be receptive. When Johnson & Johnson recently introduced a new contact-lens line in China, it sent an “m-coupon,” good for free samples, to tens of thousands of young, urban women via text messages. Nearly 10% of recipients redeemed their coupons by showing the message to store clerks. That’s a far higher response rate than the average 0.2% rate for e-mail ads, says David Turchetti, head of the Shanghai-based mobile-marketing firm 21 Communications. Turchetti says more than 9 out of 10 people open and read unsolicited text messages. “With e-mail ads, you’re lucky if 20% do so,” he says.

Still, the industry faces a host of technical obstacles. Handset technology, network bandwidth and even screen sizes differ among phone manufacturers, countries and carriers, so campaigns must be tailored to individual markets. “It is virtually impossible for a brand or its agency to make a cross-carrier media buy for mobile,” says eMarketer senior analyst John du Pre Gauntt. “Brands, agencies and carriers will need to cooperate or risk losing out on one of the world’s most prevalent interactive platforms.”

The biggest barrier may turn out to be consumers, who could become hostile if their personal phones are suddenly barraged with pitches. Nearly four out of five Americans surveyed by market-research firm Forrester Research last year said they found the idea of ads on their handsets “annoying.” Network operators, wary of getting caught up in spam wars like those that plague the Internet, say they’re concerned about keeping subscribers happy. “Unwanted or unsolicited text-message spam to our customers’ handsets is unacceptable,” said Steve Zipperstein, a Verizon Wireless spokesman, after the U.S. carrier in February successfully sued tour company Passport Holidays for spamming. The U.S., Singapore, India and China are just a few of the countries now considering regulating such communications. “People won’t invite you into their pocket unless you offer them value,” says Sandy Agarwal, managing director for Asia at mobile-marketing firm Enpocket.

Ultimately, though, the advertising opportunities may prove too tempting to wait for invitations. “Korean teenagers send on average 66 text messages a day,” Spurrell says. “They have a higher emotional attachment to their mobile than to their mother.” Now he has to convince consumers to love the ads as much as they love their phones.