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Mobile Users are Paying to Watch Ads!

parodi.gifThe mobile advertising industry risks falling at the first hurdle by ignoring the basic principle that consumers should not be charged to receive advertising, argues Patrick Parodi, Chief Sales and Marketing Officer at Amobee Media Systems and Chair of the Mobile Entertainment Forum.

The UK’s Advertising Standards Authority has a code which forbids charging consumers for accessing advertising. Yet in the mobile world (and in the world known to many as the “mobile web”) consumers are increasingly paying traffic costs resulting from the delivery of banners, interstitials, paid search results and sponsored links. Off portal mobile advertising companies as well as many industry insiders point to the imminent arrival of flat rate tariffs as an argument for continuing this practice. However, even if the long awaited flat rate plans do make their way into the operator networks, this change in the data tariff fails to address the “prepaid” or “pay as you go” youth market who advertisers are most desperately trying to reach.

parodi_quote1.gifThis target market, for whom mobile is in fact a media, is composed of users who are very conscious of the value of their consciousness and will avoid advertisements on their phone unless they can see a direct personal benefit… particularly if they will have to pay to receive them.

And even if many users latch on to the idea of flat-rate data, does this mean that the mobile industry will have “carte blanche” to bombard users with “commercials”? According to Informa the mobile entertainment industry (video, music and games), represented by the Mobile Entertainment Forum, is already worth $19B worldwide. This industry, still in its infancy has been built on a “direct pay” “premium” model where with no support from advertising. Mobile users worldwide have shown a propensity to pay for mobile content, and we should as an industry continue to let them consume entertainment advertisement-free.

It is not surprising that mobile advertising has so far taken off the most successfully in markets like South Africa and the US where flat rate tariffs have been deployed by several operators. However, these ad impressions for the most part have not been delivered to help fund the cost of the service to the consumer. Are users in any way benefiting from the ads they are presented?

parodi_quote2.gifSome proponents of mobile advertising also point to the internet, where ad revenues have not been used as a way to subsidise content. ‘Why should mobile be any different?’ they argue. This is the only way publishers such as The Weather Channel can earn revenues from their mobile assets. Unfortunately, this is a short sighted view of the mobile advertising world since it fails to see the true value of this new media.

If there is one thing the mobile advertising industry needs to learn from the likes of Google is that a majority of ad-revenue is now coming from the industry’s ability to understand a user’s “intention” rather than to focus on grabbing “attention”. Nowhere will that be more the case than in mobile.

This doesn’t mean that mobile search is the answer either. I have yet to see a blinking cursor on my mobile. What it does mean is that mobile advertising impressions must take advantage of the unique benefits of this new media: they must be personalized, contextual, localized and relevant. They should also appear only with users’ consent, which in turn means giving users something in return for presenting them.

Live trials have shown that, if advertising follows these criteria, users will opt in for an “ad-funded” version of their service and the industry will grow: both because of new revenues from advertisers but also from increased usage. Making the advertising relevant, contextual, and localized – in essence “personal” – will become one of the key missions of the mobile operator and will help grow services like WAP browsing, messaging, video, music and games.

Instead of endorsing a practice which looks at using advertising as a way to grow share of mobile content (most current buyers of mobile advertising are mobile media companies themselves), why not adopt a practice which will allow the industry to grow by accessing advertising dollars from the large FMCG brands? Particularly if this in turn helps increase the use and consumption of mobile services.

This can only happen if operators and the rest of the value chain work together on standards and metrics, such that these brands and their agencies can feel comfortable about making large integrated media buys.

Operators “zero rating” the traffic associated to the delivery of the advertising is an essential first step in building the right ad model for mobile but it is far from the only one they will need to take. Asking users for permission will most likely be just as important.

In the last 12 months, mobile advertising has become the industry’s new hot topic with companies across the value chain desperately trying to plug into the billions of dollars spent on advertising impressions. Unfortunately, many of the early initiatives have failed to understand that in order to build the right audience on mobile one must put the user at the centre of the experience.

Mobile is not only the most interactive medium ever created, it is also the most user-centric. The industry will need to stop viewing mobile consumers as “end users” but rather “empowered users”. Let them lead the way in enabling advertising revenues for mobile – but don’t charge them to consume ads.

Take a look at other MobiAD posts about Amobee:

Player X and Amobee Team Up on Ad-Funded Games
Vodafone and Amobee Go Live in Czech Republic
Amobee & PacketVideo team up for ad-funding content

Patrick Parodi has over 15 years of experience in the wireless and interactive media industries in over 20 markets worldwide. He has held management roles at Alcatel, PacketVideo, Diveo Broadband Networks, Skytel, Teleworx and TVAnswer (Eon Corporation). Amobee, funded by Sequoia Capital and Accel Partners Europe, is delivering opt-in personalised, dynamic and targeted advertising impressions to mobile users worldwide, providing them with a unique way to reduce the cost of their mobile consumption.

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