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Summary:

Last week Forrester issued the results of a survey which showed people are annoyed by mobile advertising. Yahoo (NSDQ: YHOO), not surprising…

Last week Forrester issued the results of a survey which showed people are annoyed by mobile advertising. Yahoo (NSDQ: YHOO), not surprisingly, disagrees, as Michael Bayle, GM of Global Monetization, Connected Life, at Yahoo explained when we spoke. One issue is comparison: if you ask someone if they find mobile advertising annoying, the majority will say yes…but that applies to every medium. “Our point in mobile is that, yeah, it’s one of the last frontiers that haven’t been uncovered yet but there’s so much we as an industry are doing to ensure it adds value…and is not annoying,” said Bayle.

Yahoo has been in the mobile advertising industry for a while, launching in Japan in 2004 and in the US and UK the following year — and Bayle was quick to point out that Yahoo has been doing visual mobile ads for two years. The main point Bayle wanted to make is that, from Yahoo’s point of view, the main focus for mobile advertising is to make the ads relevant and thus minimize annoyance. Yahoo has partnered with 29 operators globally, and “operators have the number one thing to lose if it’s not a good experience for consumers.”

The important word in “mobile internet” is “internet: Yahoo believes that the successful models in mobile will be the same as the successful models in the internet, and is therefore focusing on display advertising and search advertising, charging on a CPM or cost-per-click basis. “One big differentiator in mobile against PC is the use of applications (in advertising),” said Bayle, giving the example of Yahoo putting rich media ad formats prior to a game or video.

“We’re not yet as bullish on SMS… as a consumer sees a proliferation of offers that comes to them solely via text messaging, they’re going to have the challenge they have on the PC with their inbox,” said Bayle, implicitly disagreeing with Forrester that SMS is the best ad format. The other business model Bayle spoke about for text messaging is putting ads in the P2P messages people send to each other. “There’s a tendency because there’s such a large volume to go and exploit that,” said Bayle, adding that Yahoo is watching the experiments going on around this because it doesn’t think consumers will accept it — especially if it removes some of their 160 characters. “Text messaging has the most vulnerability to be exploited in a bad way.”

SMS is best when not strictly advertising: To be fair, the examples Forrester gave of text messaging advertising involved the user interacting with an outdoor ad or send-to-a-friend messages, but talking to Bayle I get the impression Yahoo doesn’t see that as advertising, but a way to keep interacting with people after advertising has done its job by attracting their attention.

For example, Jaguar signed up Yahoo to run a mobile campaign for Jaguar XF with the intent of taking a leaf from Apple’s (NSDQ: AAPL) book and generating excitement for the product months before it hit the market. People following the ad were able to get visuals of the car (graphics galleries, and a video watched by 50,000) and many people filled in the form to sign up to drive the car when it was available. That message was sent via SMS, but Yahoo doesn’t consider it advertising so much as following through. Incidentally, Jaguar reinvested in mobile advertising in 2008, and incrementally increased their budget.

On-deck vs off-deck is a myth: Yahoo thinks that with carriers offering all-you-can-eat plan for off-deck browsing mobile advertising will become more useful — even ads on the carriers deck can link to web pages on the internet. That’s good for Yahoo, since everything it does is available to anyone typing m.yahoo.com on their web-enabled handsets…but the company also makes deals with operators. “Whether its on-deck or off-deck is a myth of the industry, it’s a definition we invented ourselves,” said Bayle. “The advertiser doesn’t really care.” And for Yahoo it either shares the revenue with the operator or with the content publisher, so it’s all the same as well.

  1. James – feel free to contact me at any time. I wrote the Forrester report and would've been happy to provide more information to give you additional perspective here. First initial, Last Name at Forrester dot com.

    Regards
    Pete

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