Nefarious marketers keep carriers awake

LOS ANGELES-Fixed-line Internet companies and industry associations have long grappled with potential pitfalls and consumer-unfriendly tactics such as spam, click fraud and unwelcome pop-up ads from in-your-face marketers.
In the world of wireless, though, carriers are hoping to boost mobile data services by keeping dubious advertisers at bay.
“There are people who want to hurt the carriers,” said Chris Black, director of mobile marketing and interactive media at Cingular Wireless L.L.C., during a roundtable discussion at last week’s Mobile Marketing Forum 2006 in Los Angeles. “The work we do around auditing and monitoring (marketing practices) might just be the most important work we do from here on in. Those of you who are in this for the short term, I hope we find you all and kick you all out.”
Indeed, there’s little doubt that the wireless industry has enjoyed substantial data revenues at the risk of long-term customer relationships. Companies such as messaging provider SMS.ac and content aggregator Buongiorno Vitaminic have gained substantial traction even as they have drawn ire from consumers for questionable marketing practices.
Jamster, perhaps the best-known mobile content aggregator in the world, has run into trouble on both sides of the Atlantic for what consumers charge is false advertising. The company, which Rupert Murdoch’s News Corp. recently acquired a majority interest in from VeriSign Inc., was sued last year by a San Diego man who said his teenage daughter was hit with premium SMS charges after accepting an offer for a free ringtone.
Of course, network operators are as much to blame as anyone for any consumer uproar in the mobile content space. Carriers have partnered with any number of questionable characters, allowing companies to bill through monthly consumer statements in exchange for a share of the revenues. As data services move beyond early adopters into the mainstream, though, operators say everyone in the value chain must do a better job of protecting subscribers.
“I think the industry has done a poor job in terms of how to drive responsible growth,” according to Chuck Mildes, senior manager of content services at T-Mobile USA Inc.
And carriers have the most to lose from advertising campaigns that alienate consumers. Not only do they jeopardize the future revenues they’re banking on to offset falling profit margins for voice, they often result in costly calls to customer-service departments.
“We’re tired of it; I’m tired of it,” Alltel Corp. executive Craig Kirkland said of underhanded marketing campaigns. “I have one person working full-time on fixing stuff, which is frustrating.”
Operators are hoping that more mainstream, high-profile brands will help raise the bar as they begin to embrace the mobile phone as an advertising platform. And the Mobile Marketing Association and other industry associations continue to churn out advertising guidelines and “best practices” documents, outlining rules for its members regarding such issues as marketing to children, customer care and clickable banner ads on the wireless Web.
Some insiders say such efforts have been effective, particularly given the relatively minimal cash generated by content and data services as opposed to voice.
“I personally think we’ve done a hell of a job” controlling mobile marketing, said John Styers, general manager of mobile advertising for Sprint Nextel Corp. “When you’ve only got 1 percent, 2 percent, 3 percent of overall revenues, guess how much attention you get from management? It’s 1 percent, 2 percent, 3 percent.”
The headaches will only increase for the carriers, though, as uptake of the wireless Web increases. Nefarious advertisers are sure to find new ways to reach-and annoy-users on their phones, and subscribers will surely encounter all sorts of uncontrollable marketing messages as they grow accustomed to strolling away from carrier decks for content and information.
“There’s a host of nasties that are going to come along” on the wireless Internet, predicted Greg Stuart, chief operating officer of the Interactive Advertising Bureau.
Which is why operators are hoping to join forces with their content partners and media companies in continuing to establish advertising standards for wireless content and mobile marketing campaigns. While there will always be rogue players in the wireless advertising space, carriers can help boost usage, generate revenues and, perhaps most importantly, reduce churn by bringing more players from different industries into wireless and forcing them to play by the rules.
“We need everyone to get on board-content producers, advertisers, brands, carriers,” said Mitch Feinman, senior vice president of Fox Mobile Entertainment. “If it’s done well, we’re going to have an unprecedented advertising opportunity.”