Sprint Nextel Corp. is expected to become the first Tier 1 carrier to officially step onto the mobile marketing playground this week, tapping Enpocket in an effort to generate revenues by delivering advertising messages through its wireless Web service.
Industry sources say New York-based Enpocket will power an ad-delivery system for Sprint Nextel’s mobile Web portal, selling advertising space on navigation pages and other locations. The move is scheduled to be announced at CTIA Wireless I.T. & Entertainment 2006, which opens Tuesday in Los Angeles.
Both Enpocket and Sprint Nextel declined to comment on the planned announcement, but mobile marketing executives hailed the partnership as a turning point of sorts for wireless advertising.
“I think it’s great that carriers recognize they need to (embrace mobile marketing) more broadly than the small points they’ve tried up until now,” said Dale Gonzalez, chief technology officer of Atlanta-based mobile marketing firm Air2Web Inc. “What we really are talking about is a carrier beginning to couple ad placement (opportunities with) the context of a mobile storefront.”
Marketing messages are nothing new to the world of WAP, of course: A quick trip around the wireless Web will reveal banners, links and—occasionally—interstitial ads from the Ford Motor Co., Progressive Insurance and Aruba Tourism, among countless others.
Until now, though, those ads have been placed by content providers such as ESPN and The Weather Channel Interactive, and viewed only by surfers who access those mobile sites. While carriers generally share revenues from such publisher-sold advertisements, Sprint Nextel looks to be the first operator partner with a marketing firm to sell advertisements on its deck, selling the space itself and pocketing the revenues.
While limited in scope—the agreement is said to support only WAP ads, leaving applications such as mobile video or music unaddressed—the move signals a dramatic shift in how operators view wireless advertising. Carriers are still concerned about sharing consumer face time with other brands, of course, and remain terrified of consumer backlash against ads that may be seen as intrusive.
It appears they can no longer afford to keep mobile marketing at arm’s length, however. Wireless advertising is expected to explode into an $11 billion worldwide industry by 2011, according to figures released last week from Informa Telecoms & Media. Perhaps more importantly, ad revenues increasingly are expected to support next-generation services that have gained only moderate traction thus far.
“I would say it’s good for the industry,” said Tom Burgess, chief executive officer of Third Screen Media. “It’s a positive and significant step in the direction of the wireless operator.”
Third Screen was one of a handful of marketing firms Sprint considered as a partner for its wireless Web marketing initiative; online marketing company Accipitor Solutions Inc. was also in the running. But while Boston-based Third Screen was rumored to have been passed over in favor of Enpocket, Burgess said his company took itself out of consideration after Sprint Nextel said it was looking for an agency to develop mobile marketing software to the carrier’s specifications.
“They wanted someone to develop custom software applications, and Third Screen Media is not a custom software development house,” Burgess explained. “We have a product, an industry-standard solution based on technology used in other digital media. Sprint is choosing to do something very customized, and it didn’t fit with what we do.”
At least one more operator is set to follow Sprint Nextel’s lead and announce plans to sell space on their decks in coming weeks. Although it doesn’t appear as if any other Tier 1 is planning to roll out a similar initiative at this week’s show, other players are planning on making news with partnerships and product launches. Indeed, mobile marketing may be the hottest topic in Los Angeles this week, supplanting even sexy applications like mobile TV and full-track music downloads.
And WAP decks are likely to be a very small part of the long-term ad-revenue pie. While most mobile content providers share ad revenues with operators, wireless advertising clearinghouses that match publishers with advertisers are already gaining traction—and leaving operators out of the value chain.
AdMob Inc., a Palo Alto, Calif.-based startup, claims to be “the world’s largest mobile advertising marketplace,” delivering 250 million ad impressions a month. The eight-person firm serves as a kind of mobile marketing clearinghouse, allowing marketers to find publishers with space to rent. Advertisers can target ads based on geographic market, platform and device manufacturer and capability. And while it hopes to eventually partner with carriers, it has no formal relationships with a network operator—meaning no revenue-share commitments.
Carriers eventually could bring mobile marketing teams onboard in an effort to sell inventory on behalf of content providers and expand their revenue-share opportunities. Operators are already hoping to move beyond voice service providers and evolve into mobile TV broadcasters and digital music companies. Sprint Nextel and its competitors now must also determine whether they want to become wireless advertising agencies.
“I think (all the carriers) see mobile marketing as a big opportunity, but they still don’t know quite where to take it,” said AdMob CEO Omar Hamoui, who laid the groundwork for the company as a student at the University of Pennsylvania’s Wharton School. “I think carriers could be a big opportunity for us, but really our focus right now is on the industry players. To be honest with you, that’s larger than the U.S. carriers. That’s just all untapped.”
