Are clicks, inventory and CPMs the new minutes, messages and ARPU?

Editor’s Note: Welcome to Reality Check, a feature for RCR Wireless News’ weekly e-mail service, Mobile Content and Culture. We’ve gathered a group of visionaries and veterans in the mobile content industry to give their insights into the marketplace. In the coming weeks look for columns from Mark Desautels of CTIA, Laura Marriott of the Mobile Marketing Association and more.
I am not a real member of the Seattle Operator Originals. Occasionally I am invited to join the gang and even act as a kind of venture-capitalist consigliere to various members who have failed to launch their latest venture with pure vendor financing. In general, I have been a mere student of the origins of the cellular industry and only a sideline participant in its evolution. However, I have helped start a dozen companies that sell stuff to, or through, wireless carriers and I get to look at more mobile business plans than anyone I know. And now, somewhat suddenly, most of these business plans are trumpeting the virtues of advertising-based revenue models.
In theory, and maybe even in practice, mobile advertising should be really, really big.
First the theory:
–There are a lot more cellphones than there are computers, and look how well advertising models work on Internet-connected computers.
–Advertising on computers can only happen when the user happens to be on the computer. (Only 20 hours a day if you are my 15-year-old son.) But mobile phones are always with you and almost always on.
–And here’s the big one: You can’t walk around with your computer but you do walk around with your phone. Mobile advertising has the potential to reach out and touch someone exactly where they want to be touched.
–As if all of this isn’t enough, computers are frequently shared but mobile phones aren’t. Mobile-phone media is the ultimate one-to-one marketer’s nirvana.
These are all reasonable reasons to believe that mobile advertising will be big (and also, if we are not careful, really annoying). Now for the “However, in practice” part.
We have a few barriers to overcome:
–Despite Verizon’s open-sesame vows and Google’s “don’t worry, everyone can just use Android initiative,” the mobile content delivery landscape looks like the moon viewed through a kaleidoscope. Finding what you want is a little like using a high-powered microscope to find a needle in a haystack. And if content is fragmented, balkanized and hard to find, then advertising inventory isn’t far behind.
–As a result, the only reasonable volume of mobile advertising dollars rides on the least common denominator technology of SMS (not bad but not razzle-dazzle good either). In general, mobile advertising inventory is so small that very few of the mega brands are willing to take the time and effort to run relevant, but tiny, campaigns.
–Most, but not all, non-SMS mobile advertising is done as crammed-down versions of Web-based campaigns and borders on hard-to-see spam.
–Carriers and content platforms are still struggling with the technological and privacy issues that, if addressed, might allow the promise of relevancy to flourish.
These are daunting barriers to overcome but there are some powerful reasons why we in the mobile community have to figure out how to make mobile advertising work.
Why it works
–If we don’t get help from advertisers, our customers won’t be able to afford the very cool services our very expensive networks will provide.
–Most of the massively successful business models on the wired Internet did not happen by making users buy a subscription. They were advertising/commerce supported and free to the user.
–If we can homogenize content delivery and reach critical mass of advertising inventory, we will most likely have broken down the barriers to cross-carrier viral uptake of the now free-to-the-consumer applications
–And last but not least, giving our customers highly relevant offers to buy things at exactly the right time and place could just possibly delight them, and in the process generate billions of dollars of incremental mobile revenue.
We are investing in advertising-based revenue models or in the requisite enabling technologies. Zumobi provides a cross-carrier platform for content creation, discovery, use and sharing. Singlepoint is generating billions of interactive SMS inventory opportunities. Ontela’s automatic photo upload service and Modiv Media’s mobile shopper products are cool PWCs (physical world connections). I know that in the near term, there is considerable risk that advertising-based revenue will become “more equity please” revenue, but the payoff is just too big and too inevitable to ignore.
You may contact Tom directly at [email protected]. You may contact RCR Wireless News at [email protected].