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Will Mobile Ads Work?

Advertising might be the salvation of content creators on the web, but will it translate to the small screen? That was the big question on everyone’s mind at CTIA last week. The optimists (read start ups) hoped that ads could catalyze the mobile content market, by offering consumers free stuff. And we all love free.

At the show Sprint Nextel said that it would start offering a banner ad service on its deck powered by mobile startup Enpocket. And MVNO Amp’d Mobile said that it will offer ad breaks in its video channels sponsored by Procter & Gamble. While mobile ads might have been a well-worn topic at CTIA, the market for mobile content and mobile ads is pretty nascent, giving startups like Enpocket hope that they can create decent businesses off of cell phone ads.

One of those hopefuls is San Francisco-based Mobileplay, and we met with the company at CTIA. The 20-person company’s service aggregates mobile media content, like news sites and weather reports, into an ad-supported free service that can be downloaded and accessed from a variety of smart phones.

Mobileplay CEO James Ryan is a former journalist and mobile media exec at AvantGo, an early mobile ad company, and said that the company is now working on raising a Series B that it’s looking to close over the next few months. The company previously raised a $2 million Series A funding last year from Rustic Canyon Partners.

Mobileplay’s service is pretty limited for now, with only around 35 content partners and a downloadable application offered via mostly Blackberrys’ and Treos’. But the idea is a good one. Help content companies mobilize and get a revenue share from advertising while the carriers are mostly sitting on their hands.

Other mobile ad companies like Third Screen Media, and Enpocket are building businesses off of helping content companies serve up banner ads mostly within their own mobile WAP sites. Think Double Click for mobile. AdMob, is a Sequoia Capital-backed startup that is creating an adwords type model for mobile, replicating Google’s web advertising model. mFoundry is another startup that has a mobile ad platform for content companies looking to offer ad-based mobile content without a subscription. mFoundry CEO Drew Sievers says that mobile ads even have the potential to significantly boost wireless data usage.

Of course he admits he’s drinking his own kool aid, but the conversation about mobile ads has come a long way over the past few years. Several years ago companies were clamoring about SMS-based advertising, which always seemed like a really bad idea. (That’s a pure ad in a text message form, not necessarily SMS-marketing, which has some interesting applications, especially when combined with print and TV ad campaigns). But with the mobile web experience getting a little closer to PC-based Internet browsing, the mobile ad market can now take a cue from Internet ad models—less intrusive ads for free service.

No doubt there are still major differences to consider between ads on the deskstop versus the cell phone. During a panel discussion at CTIA, Verizon Wireless COO Lowell McAdam said, “More than the PC the cell phone is a personal space. If customers get an ad they don’t like, we are going to hear about it. We are moving slowly on this.”

Verizon Wireless’ claims that it’s slow on ads out of customer concern, which, strikes us as a little ridiculous. It’s likely more about having control of the revenue from the ads, than any thing else.

Slow moving carriers might be the best thing right now for the mobile ad startups, though eventually some will end up making deals with major carriers. There was a lot of rumors at the show that Verizon would start an ad service similar to Sprint’s in the coming weeks. As for the startups, there will likely be considerable consolidation, and could even end up being interesting acquisition targets by Internet ad companies looking to offer a mobile component.

The question remains though, will an ad-based subscription-free content model become popular on cell phones to the extent that it has on the Internet? Or will subscription-based mobile content always rule on cell phones?

20 Responses to “Will Mobile Ads Work?”

  1. Yes I guess you can offer a free game in exchange for ads.. But the revenue model just ain’t there.

    In Japan the a person recieving ads is worth $5 a year in 2006.

    So what can you give the subscriber that is worth $5. Umm a few calls for them reading ads for 1 year..

  2. Well, we at obviously believe in them :)

    Up until very recently, the models of content and advertising on mobile were seperate: people either had to pay for content, and the ads were done for no reason at all “SMS us and we’ll send you an ad for our movie!”. The industry is figuring out that people won’t mind ads that are targetted at them in order to get free content. So that’s what we’re doing. We can tightly target an ad to a java game or a mobile website to get users free content, and ads that they care about.

  3. Mobile ads are working now. has been able to offer its games completefly free of charge largely due to advertiser support. Of course one needs to be concious of the format — but who would have thought you could have a dozen ads come back on a search request — and have the best and most used search engine.

    The same situation applies to the phone — offer your users a fair deal, and interesting content — and the ads will be welcome.

  4. if i could browse the mobile web for free (ie, no extra cost over my voice plan), in return for seeing a few non-obtrusive ads (such as small mma banners), i’d be perfectly happy with that. similarly, if i could download free games and only had to see an ad or two, i think that’s well worth it (certainly over the current game prices). i guess i wouldn’t have ads in my ringtones or wallpapers for any price (well, maybe not any). but in general, i think mobile content will go the way of the internet– free (or very affordable) but ad-supported.

  5. Mobile ad’s are either going to have to be inline so as not to get in the way of the user experience or displayed briefly while other pages are loading. We built a system in 1999 for displaying banner images on WAP phones while they were loading the site you wanted, you could then click the ad if wanted or it disappeared when the site you requested had finished loading.

    I prefer the idea of inline adverts, possibly with a pay-per-click model. Content rich sites could allow advertisers to buy keywords within their content, these become links to the advertiser. Problem is, how does the user know it’s an advert?

    Mobile advertising needs to be done elegantly or it will just turn the users off.

  6. Jesse Kopelman

    If I were a mobile carrier I’d be looking at voice as the first interface for ads. The first thing to try is to subsidize your free night and weekend calling periods by having a 30 second add at the beginning of outgoing calls.

  7. It depends on the type of advertising dollar you are chasing. For instance, a free mobile directory service with featured listings is one way to generate advertising revenue via mobile devices (using the Craigslist approach for moving content onto mobile devices affordably). Eventually, making free video available with embedded ads will find its place in this space as well. But, I agree with the previous posters. Bombarding viewers with ads outright will make for a unpleasant user experience. Also, the number of users in the U.S. accessing the Internet via their mobile devices needs to increase significantly.

  8. No company wants to be the first. However, with Sprint dipping into the ad space, I am sure that their competitors will follow. As other markets have proven, people will be willing to deal with ads if they can save money. In addition, mobile content is how more and more people will get and share information. It only makes sense that the advertisers will soon follow.

  9. In a word: no, they will not work. The models that are being used to distribute mobile ads don’t cater to mobile device usage and in many cases hinder the mobile experience. Mobile ads work when they are not an ad in appearance and can dissolve some of the aspects of mobile computing that people take for granted. Clicking on an add, receiiving a text message, or downloading a reader that is ad supported won’t cut it.

    If advertisers want to take advantage of the mobile space, they must give space to people to be people and then live within the personal rules of mobile computing. Its too fluid of an arena for it to be anyting near successful otherwise.