Like Al Pacino in “Scent of a Woman,” the mobile advertising space is just gettin’ warmed up. And so is the sniping.
Nokia Corp. cranked up the already-deafening buzz last week, agreeing to acquire Boston-based mobile marketing firm Enpocket for an undisclosed sum. One of the first players on the playground Enpocket has carried out campaigns via text, multimedia messaging and the wireless Web for noted brands including Pepsi, Ford, Toyota and Snapple. And the company scored a major win a year ago when it was tapped to power on-deck ads for Sprint Nextel Corp., marking the first effort by a major U.S. carrier to monetize its own inventory with marketing messages.
The tie-up extends a year-long spending spree that has seen the industry’s No. 1 handset manufacturer pocket a digital music company (the $60 million acquisition of Loudeye), a developer of mapping applications (gate5 GmbH, for an undisclosed amount) and a social networking community (Twango, which reportedly cost Nokia $100 million).
Nokia last month introduced Ovi, an ambitious direct-to-consumer play that will serve as an umbrella brand for Nokia’s music, mapping and social networking offerings. The Enpocket deal may be the final major piece in the wide-ranging effort, allowing Nokia to sell ad space on its own mobile applications and wireless Web pages as it extends its brand through Enpocket’s existing network of publishers.
The acquisition, which is expected to close later this year, follows AOL’s May buyout of Third Screen Media-which was rumored to be in the $100 million range-as well as a number of smaller M&A deals on the mobile-ad front.
Google goes mobile
While Nokia CTO Tero Ojanpera trumpeted his company’s “game-changing move,” Google Inc. followed with a slightly more circumspect effort. The Internet behemoth took its two flagship advertising programs mobile: It told its hundreds of thousands of AdWords customers that every paid link would be included in Google searches performed on mobile phones, as long as the link led to a Web site that could be transcoded for such devices. And it extended its AdSense offering to allow publishers with mobile-friendly sites to accept paid ads on their Web pages; site owners get paid every time a user clicks on a link.
The Enpocket acquisition may be a natural fit for Ovi, but Nokia’s entry to the mobile advertising world is a gamble. Not only is the strategy certain to draw the wrath of some network operators-a position not unfamiliar to Nokia, of course-integrating the businesses that Ovi will comprise will be a substantial feat, according to Current Analysis.
“Picking up Enpocket will help Nokia execute on its longer-term strategy of moving beyond handsets into mobile content services, but more importantly, this acquisition risks a further cooling of relations between Nokia and its core carrier customer base in the short term,” according to a research note from the market research firm. “Enpocket may be leveraged to make Nokia’s new Ovi content portal more attractive and price-competitive in the mid-term, but this will need ultra-careful treatment to offset damage to service provider relationships. Internet service provision is far outside Nokia’s core competency, and it will take time, money and resources for Nokia to realize a larger software-and-services ambition, within which Enpocket will play an important role.”
The backlash
And while Google’s move came without press announcements or other fanfare, the effort didn’t take long to draw attention-and criticism. Entrepreneurs in the pureplay mobile advertising world hammered the software giant, claiming Google is failing to address the unique nature of the wireless Web and the devices used to access it.
Detractors specifically blasted the AdWords effort, which delivers users to Internet pages that Google’s technology formats for wireless phones. The service forces publishers to surrender control of their content, critics said, and doesn’t deliver ads targeted specifically at mobile users. Worse, they claim, Google’s transcoding technology doesn’t change the fact that many existing Web sites are simply impossible to use or navigate with a mobile phone.
“I don’t think enough people appreciate the magnitude of their latest move in mobile, nor the unfortunate effects it is likely to have,” AdMob founder and CEO Omar Hamoui protested on his company’s blog. “Mobile is and will be a different medium. Most of Google’s advertisers are focused on conversion and ROI. I challenge you to purchase something or fill out a 5-page form on one of their transcoded pages.
Hamoui, like some other critics, competes directly against Google in the mobile space. But the entrepreneur said he’s pulling for Google to move the needle in the wireless Web with an effective program that leverages its vast network of publishers and operators. Unfortunately, according to Hamoui, AdWords falls short.
“The worst part is that now, rather than getting excited about mobile, there will be hundreds of thousands of advertisers and millions of users whose first experience with mobile advertising is a bad one,” he claimed.
The controversies underscore some long-standing concerns in the mobile world: Should the wireless Web merely be an extension of the established Internet, or should it be treated as a standalone entity? And what’s the most effective way to deliver marketing messages to mobile phones?
