The question:
What do agencies, brands, technology providers and operators need to do to turn mobile advertising into a success story in 2009? Sounds like a job for Telecoms Hothouse, an independent initiative designed to create debate and discussion about the future of the telecoms industry. Read on to hear what you can do to make mobile advertising a success in 2009, and how you can benefit from it.

Asking the questions: Keith Dyer
Giving the answers:
Thomas Curwen – Publicis Dialog
Kent Ferguson – The Neilsen Company
Andrew Grill – Gigafone (sponsor)
James Macdonald – O2 Media
Kieron Matthews – Internet Advertising Bureau
Time allowed: As long as it takes

Where are we at?
Keith Dyer: Mobile advertising has been the "next big thing" for the last five years. How would you assess the market right now, and what are your priorities for 2009?

James Macdonald: I think in terms of where we’re going there are some challenges to all the major players in the value chain. The watchword for 2009 will be convergence, and what I mean by that is an understanding of making the value chain a little bit easier to navigate. Wherever and however you are engaged with mobile advertising and marketing, 2009 has some major challenges. But I think there are some interesting shoots of growth.

Thomas Curwen: Yes it is very hard to navigate, but yes there is certainly interest. Mobile is still an experimental tool and I’m not sure that clients yet understand exactly what it does in their marketing mix. Typically clients buy an ad and then wonder about what happens next, but once we encourage clients to start thinking strategically about mobile, then the advertising becomes a no brainer. And for me that’s the real challenge for 2009 – to get clients to start to think strategically about how their consumers will react with their brand wherever they are. And only then will the real revenues start to flow.

Andrew Grill: All the pieces of the puzzle are there, but it’s not easy at the moment. We’ve had major brands say, "Make it easy for us to buy mobile and we will." But the important thing is if we are going to advertise to something as personal as a mobile, we’ve got to get it right. We don’t want to upset and annoy people. I think this is where the three P’s of mobile advertising come in – Privacy, Preference and Permission. If you get those right, and the users feel they have some control over what they are receiving, they will warm to it. If we can cut through and ask what consumers will be willing to receive in return for a benefit, and we actually do deliver them relevant advertising on their mobile, things will happen. But it’s about execution in 2009.

Keith Dyer: Kent, are the audiences there for this permission-based model Andrew proposes?

Kent Ferguson: We track the audiences and the audiences are there, at varying degrees of course, depending on what you want to do. When it comes to data in general 80% of mobile users in the UK are using some kind of data, which opens up an opportunity for marketing. So the audiences are there are – it becomes about how we can tap into these audiences.

Kieron Matthews: Our consumers are the advertisers, the people that are going to pay for this stuff, and I don’t think this industry has done enough to get those people on board. So we are trying to share the knowledge that is round this table and make sure those guys start spending some money. Because when that money goes in, that’s when the standards will follow, the technology will follow, and consumers will start using it.

MAKE IT EASY TO BUY
Andrew Grill: Thomas, you’re a planner, and what I’m hearing is that when it comes to mobile, it’s a bit harder to understand than TV, than internet, so what can we do to help people understand where mobile fits in the mix?

Thomas Curwen: I think user acceptance is far ahead of where the marketing industry is.
For example, text as a response mechanism is phenomenally successful. In many cases you get over 50% response rates to promotional activity and that says to me that the consumer wants to use this. We as agencies are quite slow at adopting this, which is partly down to the complexity again. It’s not just about how difficult it is to buy, but also when you go into this space, in the iPhone for example, you have to make an application, and then submit it to see if it gets accepted. That means our clients have to invest 30-50k only to find that it’s rejected and we look like idiots. So getting clients to understand the production process is just as important as getting them to understand the ROI model.

Kieron Matthews: We speak to a lot of media buying agencies and we go to some agencies where it’s not even on their radar, where they want a quick win and need to make some money out of it – so why on earth are they going to be buying mobile when they are not going to be making commissions? But the other side of it, largely driven by consumer planners and their advertisers, is that they are demanding of the media agencies, "Come on, what about mobile?" So I do think the media planning and buying process is absolutely critical to this.

James Macdonald: Right now it’s difficult for media buyers to generate a cash positive revenue, which is obviously a barrier because you need a degree of motivation. The key thing is that the current space is very fractured in terms of buying points and opportunity. The truth is when we can actually provide scale, and the other key thing is relevance, then permission will come. Until you can see that scale uplifted you are going to see this market spluttering. Most brands ask, "OK, how many people can you reach," and there you have to look at the internet analogy, and whilst the responses are really very interesting the scale doesn’t make it that exciting as a medium.

Once you get to the situation where your media planner, brand or agency can have some trust in the relevance values, your CPMs will go up and the revenue will also be there. From our point of view as an operator that’s one area that we are concentrating on right now, how to bring that relevance to the table.

Kent Ferguson: I think in order to get this market to where we want it to be, there needs to be an effort across the value chain, sharing information on lessons learnt, such as the IAB proposing the integration of mobile into these campaigns. And we need to provide those common metrics across all the media types, so when you’re talking to a planner they understand truly what mobile is offering them.

RELEVANCE, REACH, OR
BOTH PLEASE?
Kieron Matthews: I think it would be dangerous for the mobile advertising industry to chase the reach model…

James Macdonald: But if you are talking about the mobile big umbrella then suddenly you are talking about 100% of the population, so you cannot say reach is not important.

Thomas Curwen: If we go to a client and say, "Consider using mobile," the first question they ask is, "How many people do we reach?" just simply because they’ve grown up with the language. Their alternative is to put it back on TV because of the reach there – they know they are delivering the millions and millions of viewers.

Andrew Grill: It’s a fundamental problem because every new technology borrows from the old. The problem we’ve got is the advertising industry is fixated on reach because they can be, and people keep their jobs by buying reach. Rather than going CPM, I’d like to go to CPRA, cost per relevant audience. But we have to have a way to ask permission, preference and show that the last campaign worked. But let’s start doing things that are highly measureable, highly targeted, prove that there is a value in doing it this way, that CPRA can co-exist with reach, and then I think the relevance with mobile will come through. We have to be ambitious enough to chase relevance and reach.

Kieron Matthews: I would rather have no wastage and reach fewer people and get a better ROI…

Thomas Curwen: And I think every advertiser would agree with that. Where mobile is ahead of the internet is on the understanding of who the customer is. There are two critical issues here, first of all the operator has a lot of detail on the customer, and that’s a relationship that has to be opened up within a controlled environment. The second issue is consumer acceptance of advertising on the mobile device. Those two sides mean we have permission: they want to have this stuff and will tell us what they are interested in, plus we understand who they are. For me this is the one time we can go into genuine targeting, genuine reach that is relevant, whereas on the internet all we really ever had was the url from which they came.

WHAT METHODS WILL WORK BEST?
Kent Ferguson: I think you aren’t going to have many successful banner ads, it’s going to be more interactive.

James Macdonald: The market is already reflecting that, although to be fair there’s beginning to be a blurring of the division between pure advertising and marketing. So now we are beginning to see integrated campaigns, targeted SMS tied into banners, tied into targeted banners, tied into behaviourally-targeted banners, utilising a lot of that data that Thomas was was mentioning.

Kieron Matthews: I think we must be careful not to get rid of the banners too quickly. I’m a great believer that we need to stop talking about waiting for it because I think it’s a delay mechanism. What you can do now is display advertising, text, widgets, all that stuff; so do something now because you can be sure somebody else is looking at it and doing it.

Kent Ferguson: There are some innovative models that exist. In the attitudinal research that we’ve done we’ve looked at mobile users’ willingness to accept marketing, whether they use it, and their response rates – and we found that any type of subsidy that we get to their bills was extremely successful. But why is there only one model [Blyk] out there that’s doing it? 30% of all users said they would be willing to accept brand messaging if they get a lower bill, and that increases the younger you get.

Thomas Curwen: I think money off is pretty unimaginative – and whilst I applaud the Blyk model, just sticking to money is pretty dull. I have never seen so many intelligent organisations standing round the mobile market working out how they can help – we have the music business, the film business, people with phenomenal depth of content, and unlike when the internet came up, they’re looking to support this industry. There are plenty of other things that you can exchange with a consumer other than just the money off.

Andrew Grill: We at Gigafone are taking up the challenge and what we’re going to do in Barcelona is take eight or nine companies that have best of breed solutions, from analytics through applications development through to mobile advertising solutions, and build a platform to make mobile easy. Because what everyone is saying is it’s not just a banner ad, or whatever, that people want to see, the last mile delivery can be on a range of different areas. But more importantly we’re going to analyse everything that happens, because everyone’s doing all these things but no ones’ learning from it.
So what we’re doing, we’re going to build a brain where everything that gets booked and delivered gets measured, so the next time a campaign comes out someone can say, "I have this type of campaign, I have this type of demographic, what’s the best place for my advertising? Is it just banner ads, an in-game app, is it TV, is it an electronic digital panel?"

What we want to do is take a challenge to understand customer preferences and understand what works. I think the challenge is everyone is trying everything, but we’re trying to bring it together with some very smart analytics to make it easy and measurable.

WHO GETS TO THE CUSTOMER?
Keith Dyer:There is a view that operators have been slow to react to mobile advertising because they don’t want to lose the trust of their customers.

James Macdonald: What’s important to realise is that most people in telcos do not actually come from a media perspective. Their core business is all about providing customers with a good quality service. So it’s vitally important if there is any doubt that a customer might react adversely to a message that is potentially commercial. From a development point of view one of the areas we’re most concerned with right now is the customer acceptance approach. So we have to bear in mind that although the operator is seen as the stick-in-the mud, we have different objectives in many respects.

Andrew Grill: What I hear is that the sort of information that operators keep is not the sort of thing that advertisers want. So the question is, "How do we, as an industry, help operators develop these sorts of relationships?" Mobile is so inherently personal, I think there is a step change in thinking required. If you get the relationship right, if you know the person very, very well, what their preferences and values are, I think you can properly target. But no one is prepared to ask for this information because they are not sure what response whey will get. How can we maintain that very personal relationship with someone via their mobile, through the operator?

Kent Ferguson: I truly believe that if we are to move the ball forward it’s going to be with the brands. You were talking about operators; the telecom business is bigger than the media business, so they’re not going to turn their model upside down to accommodate us. What they have to do is work with the brands, not necessarily wait for the operators, to develop compelling messages from the brands to engage with the consumer directly. Operators have their relationships with the consumer and they’re going to try to protect it. So as long as the brand actually has that relevant message with the consumer that’s how it’s going to build.

WHAT’S NEEDED IN 2009?
Keith Dyer: So what are your plans for 2009, and what do you require from others in the industry to make it work?

Kieron Matthews: From an industry point of view, what’s missing is an appreciation of how big the market is. None of us knows. One of the things we are doing is measuring the size of the market – because seeing that growth pattern, seeing that pot of money grow, will make it more attractive to operators, agencies and advertisers. When they start to see this is a proper medium, we can sell that back into the industry and the quicker it can grow.

Thomas Curwen: One thing that will help accelerate it is offering flat rate broadband for PAYG, that’s still a stumbling block. There are a vast group of people out there as yet untouchable. Make it easier for us, give us big statistics like the growth of adspend. Help brands understand what consumers are doing with their mobile. Somebody has to help our clients understand what people do with their mobiles and when they are going to be most receptive to a message. There are fantastic opportunities that we need to help the brands understand.

Kent Ferguson: When it comes down to it there are only two components that truly matter; the consumer and the companies that are paying the bills. Now the consumers are there, this isn’t just hype that we are talking about. The mobile internet audience has grown by 36% in the last year. That’s significant. The users are there and as long as you engage them properly this thing will grow.
James Macdonald: We will be making announcements that specifically address many of the concerns that have been raised here. There is obviously some huge value to O2, and without being specific we are looking to build on our very successful mobile advertising piece, O2 Active, and make that one of the major market leading sites for mobile advertising. And we will also be looking, in a judicious manner, to work with different channels and different opportunities throughout 2009 in a way that’s relevant to our customers.

Andrew Grill: The first thing is, are we talking advertising language or mobile language – because we need to talk the language of the people with the money. It’s not about mobile, it’s about reach, relevance, all those sorts of things. The ­second thing is, let’s get together.We want to give them the one place to help make mobile easy. Make it easy to buy and measure and they will spend more. So for 2009 it’s about action, doing things collaboratively, and speaking the language of the industry and also of the consumer. If we make them think they are looking at information and not at advertising then our job is done.