Tuesday, May 20, 2008
Mobile Marketing Won't (Primarily) Be Ads (For Long)
Cell phones provide multiple ways for marketers to engage consumers, but many brands are thus far approaching mobile marketing in somewhat traditional ways: with banner and text ads. This approach--testing in a new medium something that worked in older media--has been repeated several times in the digital era. For example, in the early days of the Internet, the first marketing tactics borrowed from the paradigm of print advertising, and soon banner ads were appearing beside content. Another example is the way many marketers are testing Digital Signage by repurposing static print ads or existing video television spots.
When traditional advertising methods are brought to new technologies, the ROI experience can be predicted with some confidence: The first brands to try a tactic will enjoy initial success, encouraging other brands to follow suit. But as that tactic becomes more common, consumer attention and results decrease, forcing marketers to find more creative uses of the technology. For example, early Internet banner ads, because they were unexpected and new, saw significant click rates; the exuberance over this early success helped create the dot-com bubble, which burst in part because click rates plummeted as banner ads went from new to ubiquitous to annoying to ignorable.
Since mobile ads are still new, it isn't surprising to see early reports that indicate this tactic is working. According to a commissioned study by IAG, small banner ads on mobile devices result in the same level of brand recall as a :30 spot on TV. Also, the study found that "mobile banner ads produce clickthrough rates exponentially higher - at 2 percent - than online banner ads, where clickthrough rates have fallen to about 0.3 percent."
But even if tiny banner and text ads are working today, will they tomorrow? There is no reason to think that banners will succeed on the third screen any more than they have on the second screen. In fact, evidence that banner ads on phones will go the way of banner ads on the Web can be seen in the huge increase that is projected for U.S. mobile ad spending: from $878 million in 2007 to $1.7 billion in 2008 to $6.5 billion in 2012. It seems highly unlikely that a 2 percent clickthrough rate will be sustained when $6.5 billion of advertising is crammed into consumers' mobile phones.
More evidence that ROI and CPMs (cost per thousand rates) for mobile text and banner advertising will decrease can be found in the Q3 2007 Forrester Technographics report, which revealed that consumers perceive text ads and banner ads on cell phones as very untrustworthy; while more than 30% of consumers with mobile phones found brand Web sites and subscribed emails as trustworthy, less than 7% found text and banner ads on cell phones trustworthy. In addition, 48% of cell phone users found sponsored links appearing beside mobile search results annoying, and 56% said the same of banner ads at the top of mobile sites.
Some people expect that ads on phones may get a boost in the next year or two when carriers test mobile service that is free and supported by advertising. While it's not wise to bet against Google, I am dubious this approach will work in the long term. Totally free, ad-sponsored services have generally not proven economically feasible. Even television isn't free any longer--how many of you reading this actually receive free television over the airwaves versus paying for basic cable channel access? Attempts to sustain no-cost, ad-supported ISPs failed, so while CNN.com is free, your Internet access to reach the site is not.
In addition, the math doesn't really work for free ad-supported cell phones. The cost for mobile ads is around $20 CPM at the current time. This means each single view of an ad is worth around two pennies to marketers. In order to replace an $80-per-month cell phone bill, a consumer would need to see 4,000 ads each month. That's 133 ad views a day, and if each view lasts just five seconds, this would require 11 minutes of observing ads every 24 hours. My guess is most consumers won't mind the $80 bill in comparison.
If the past repeats and mobile banner and text ad results begin to disappoint, then another form of traditional advertising may flourish on cell phones: video ads. As wireless broadband access becomes common and more consumers begin to use their phones to watch video, it seems likely some sort of pre-roll or inserted video advertising may generate results. While this sort of advertising has yet to prove its worth on consumer-generated video sites like YouTube, it is working well on sites with proprietary and in-demand video content such as Hulu.com.
Of course, marketing is already flourishing on cell phones and will continue to to do so, but the most successful marketing won't involve placing or displaying ads on a phone. Instead, the best mobile marketing programs will create a welcome experience consumers enjoy via their cell phones.
One recent, terrific example of an engaging program comes from Volkswagen. Taking a multimedia approach, VW's "What the people want" campaign offers a national polling effort that utilizes voters' responses gathered online and via mobile devices and distributes the results across the Web via a site, vw.com/whatthepeoplewant, online banners and outdoor executions.
The most interesting aspect of the campaign is the 3,685-square-foot interactive billboard in Times Square. Echoing VW's new TV ads, the billboard pictures the bug parked behind his microphone, alongside the headline "The people want their voice to be heard." Using their cell phones, pedestrians text their yes or no responses to the poll questions appearing on the sign, and their texted votes are recorded live on a news ticker.
This campaign from Crispin Porter + Bogusky doesn't advertise to consumers but engages them in a dialog. It doesn't merely display something and expect the consumer to be interested; it involves consumers in something they'll enjoy, while still communicating important brand attributes and product information. This is an exciting mobile campaign that demonstrates how to tap the real potential of cell phones.