Opera Sees Feature Phone Opportunity in New Ad Network

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Opera today announced it’s entering into the mobile advertising market with the Open Mobile Ad Exchange, an advertising platform that takes advantage of the company’s large, global user-base. Opera lays claim to more than 66.5 million handset owners who use the Opera Mini browser, primarily on feature phones. The company has yet to detail financial terms between developers and publishers who wish to use the Open Mobile Ad Exchange, and is instead taking contact information from interested parties on the new advertising network website.

The Open Mobile Ad Exchange is a clear next step from Opera’s January purchase of AdMarvel: The URL for the network uses AdMarvel in the domain, for example. Opera reportedly paid $8 million in cash, and could add up to $15 million more to the purchase price, if certain targets are met by the AdMarvel team in San Mateo, Calif. On the client side, Opera says developers and publisher can use “easily-embedded JavaScript” for the ad service and will benefit from “near-real-time reporting and analytics.”

So why is Opera getting into mobile ads? The company provides a free web browser, so it needs to find new revenue opportunities. Leveraging its browser product for advertising makes sense now because the mobile ad market is still in its infancy. Recently, research firm IDC estimated that mobile advertising will generate $500 million in 2010. That isn’t much when you consider how many players are splitting those revenues, but as the world continues moving towards mobility, the future looks bright. Karsten Weide, research VP of media and entertainment for IDC, sums it up best:

Mobile advertising will not make or break a publisher or network over the next five years. It grows extremely fast but simply does not attract enough absolute dollars. But 10 years from now, will you be sad if you did not get into mobile advertising today? You sure will be.

It’s ironic that Opera chose today to launch the Open Mobile Ad Exchange. Just yesterday, I pondered about content providers and developers giving up on feature phones since comScore reported that more smartphone users in the U.S. were downloading apps and using the mobile web than feature phone users. It’s too early to simply abandon feature phones just yet, as they account for roughly 90 percent of all handsets sold in the world. Opera Mini is the most popular browser for this class of device, bringing a near-smartphone mobile web experience to low-end feature phones.

With the new advertising network, Opera is wisely panning for gold in a river that others have passed by. Competing networks such as iAds from Apple and Google’s AdMob effort can fight it out in the smartphone space while Opera leverages its vast user base on feature phones. But recent data from Smaato, a mobile ad measurement firm, shows that Opera’s feature phone strategy may not be far-fetched: Ad clicks on low end devices are growing and on pace to rule the roost. In light of the move toward tiered data plans, Opera’s new ad network could even gain some traction from smartphone users: Opera Mini compresses data throughput by up to 90 percent, making it appealing to smartphones tied to a small data package.

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