Archive for April, 2006

Ads That Subsidize Mobile

I recently was sent an article from MediaPost entitled Closing The Ad-Support Deal that talked about a fully ad-supported wireless service called Xero Mobile. That means that revenues for the company are not generated from the traditional subscriber fees, but from ads that are placed on the service.

This is probably a scary deal for the mobile carriers because it shatters their current model and could start a trend toward ad-supported mobile. Currently the major mobile carriers depend solely on revenue from subscriptions, additional services and downloads. But, as the article points out, in the mobile market which becomes much more than a way to communicate via phone calls, there will be some basic services that will be expected by the consumer – relatively free. To gain the kind of audiences that the mobile carriers need, they won’t be able to sustain a model where they nickel & dime their customers for every minute, every application and every text message! So, they’re going to have to move toward at least a partial ad-supported model.

In my discussions with some of the carriers, they are not there yet and really feel they can continue charging for airtime, applications, events and maybe even the connect time for ads. I don’t see the consumer embracing this. Like the Internet, cable television and television before, they will understand the value ads bring to the mobile device and adopt a business model that takes this into account and creates winners on all sides. Consumers will accept ads to get more affordable pricing on mobile services, applications and equipment, advertisers will gain access to nearly 200 million potential buyers of their product and mobile carriers will create a strong and sustainable revenue flow that will allow them to stay profitable and continue to innovate.

As consumers and professionals in this or related areas, I’d like to hear your thoughts on this one.

-Andy

Small Audiences

The era of mass media is giving way to one of personal and participatory media, says Andreas Kluth. That will profoundly change both the media industry and society as a whole. This is from an interesting article I read called Among the Audience from Economist.com

The revolution becomes less about mass media and more about participative media. Case in point is what I do on this blog. I contribute thoughts and ideas that are within my areas of expertise for those who are curious and have an intellectual or professional interest in advertising, targeting and the future of media. I am not a member of the mass media, just a guy sitting in his office, coffee shop, airport or kitchen table pounding out thoughts relevant to my business and profession.

Given this movement from mass media to small audiences, what is the impact and direction of advertising? It’s still clear to me that the bread and butter in advertising is the mass media, yet there are so many opportunities now with the movement in participative media and addressable advertising that the ad game will become one of direct contact, accountability, and sales rather than just reach. Advertisers need to embrace this new era of smaller and more specific audiences.

-Andy

How Personal Can It Get?

Personalization has been a big thing for a number of years in many different venues. The Internet brought this to the forefront where people could have their own personalized home page with their choices of news, content, pictures and so forth. Earthlink and AOL really brought this to the forefront. As mobile phones became more prevalent, we saw personalized ringers, pictures and messages.

My question is: “How personal can or should advertising get and still be effective and palatable?”. There’s really a number of things involved in this question.

1. Do advertisers really know who is on the other end of the device and do they know enough about them to send a specific and personalized message? Answer: depends on the device, but in mobile, there is a pretty clear one-to-one relationship with the phone. Most people don’t share phones. This breaks down a little with the family plans that carriers offer. You might have five phones that roll up under one account. There are other ways to get to tie the mobile phone to person. With television and the Internet knowing your audience is a little less accurate. Assumptions could be made on time-of-day and types of programming or behavioral targeting, but it’s not as clean as with mobile.
2. Does it make sense for advertisers to really personalize their messages? Does this personalization really make that much of a difference? Do the economics support the efforts of personalization? Do we really mean personalization or is it really clustering?Answer: There are a lot of studies, full degree programs and legions of researchers trying to figure out these questions. In the meantime, there is a belief, as is evidenced in the advertising community, that better personalization and better targeting does produce better results. I suspect there is a point of diminishing return, but that point is unclear.
3. Do people really want personalized ads? Answer: I think consumers get weary of all of the marketing noise. They do, however engage better with ads that are relevant and entertaining. Understanding their personal styles and behaviors can help to form this higher level of relevancy. The flip side of this has to do with privacy or their perception of privacy. See my last post What About Privacy? Another reference is an article entitled Consumers Want Personalization — and Privacy By Sean Michael Kerner | August 16, 2005.

How do you feel about this, either from a consumer or an advertiser standpoint?

-Andy

What About Our Privacy?


I just finished reading an interesting article on IPTV and privacy Risks By Jeffrey Krauss, President of Telecommunications and Technology Policy. It talks about idea that the carrier can keep a record of what I watch and maybe even use it for more personalized marketing in the future. It also talks about aggregating most-watched programs into a What’s Hot category and could they eventually do a What’s Hot in my household list!

Really, this is a great discussion and has implications on trends in Washington regarding technology and our rights to privacy. On the other hand, marketers have been aggregating behavioral data about consumers for a long time. Back to one of my earlier premises, Consumers have gained significant control over their media with more choices and control over what they see and when they see it.. The winners will understand and embrace the consumers ability to control their media and ads coming their way. The consumers inherently understand the economics of ad supported programming and are willing to see ads for a fair price on the programming. The better and more relevant the ads are to the consumer, the less concern about invasion of their privacy. If it turns into a free-for-all with abuse of this information and lack of consumer control, then there will be a big back-lash and ultimately legislation that severely limits what can be used.

This brings us to personally identifiable information. What exactly does that mean? I took a look at the definition in my Sprint PCS Privacy Statement. It calls it Customer Proprietary Network Information or CPNI and states The FCC does not deem a customer’s name, service address or telephone number to be CPNI, consistent with the publication of this information in telephone directories. HMMMM. There’s non-public personal info like credit card numbers and bank account numbers that are protected, but it seems there are loop holes on the other stuff. I think it is somewhat debatable that the emergence of new technologies and services like IPTV encroach on our privacy more than what is already known out there. Data providers already collect a tremendous amount of data on each of us. The key is who ultimately controls the spigot!

A Diversion

A couple of random thoughts to share:

First, on Guy Kawasaki’’s blog, take a look at the posting on The Art of The Executive Summary. Really some good thoughts and the comments are interesting as well. I’’ve written many executive summaries for businesses and find this overview refreshing, convicting and validating. Guy has a nice way of writing the stuff.

Second, the CTIA conference in Las Vegas starts this week and should play host to some 40,000 people. Keep your eyes on the mobile trends especially mobile advertising. You’ll hear a lot about that and its promise. I’’m seeing the buzz as I talk with agencies and advertisers. My mantra is: “don’’t settle for the basic and nearly valueless use of broadcast advertising over mobile when the platform is perfect for specific targeting and accountability! Broadcast will be there, but if too pervasive will drive away the interest and the opportunity to get the right ad to the right person. This is where the real value proposition is.

-Andy

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