Mobile Marketing

Opportunities in Mobile Marketing &
Advertising 2008-2009
Simba Information
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Published by:
©2008 Simba Information
ISBN 13: 978-0-88709-346-3

ISBN 10: 0-88709-346-9
By Gary Arlen with Limor Schafman, and the editors of Simba Information
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Opportunities in Mobile Marketing & Advertising 2008-2009. Simba does not assume, and hereby disclaims any liability
for any loss or damage caused by errors or omissions in Opportunities in Mobile Marketing & Advertising 2008-2009,
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Table of Contents
Table of Contents ________________________________________ i
Methodology ____________________________________________v
Executive Summary _____________________________________ 1
Chapter 1: Overview of the Mobile Marketing Business __________ 5

Introduction ______________________________________________________5
Mobile Advertising _________________________________________________7
Where the Mobile Ads Go _______________________________________________ 8
Enabling a Critical Mass _____________________________________________8

Potential Market Size ______________________________________________10
Background of Mobile Marketing Services ______________________________11
Audience Demographics____________________________________________12
Where Ads Are Going Now__________________________________________12
Table 1.1: U.S. Mobile Phone Market Share _____________________________6

Table 1.2: Interest in Mobile Marketing Among U.S. Mobile Phone Users _______9
Table 1.3: U.S. Online Video Advertising Viewers ________________________10
Table 1.4: Global Mobile Advertising Spending by Format _________________10
©2008 Simba Information, Stamford, CT · 203-325-8193 · www.simbainformation.com. Copying Prohibited.
i
Opportunities in Mobile Marketing & Advertising 2008-2009
Table of Contents
Table 1.5: Interest Among U.S. Teen Mobile Phone Users in Receiving Mobile
Advertising in Exchange for Incentives________________________11
Table 1.6: Top Mobile Web Destinations by Ad Impressions Served __________12
Chapter 2: U.S. Industry Structure _________________________ 13

Introduction _____________________________________________________13
Wireless Carriers _________________________________________________14
Carriers Role vis-à-vis Advertising _______________________________________ 15
Competitive Environment ______________________________________________ 15
Carrier Outlook ______________________________________________________ 16
Content Creators and Aggregators ___________________________________17

Developers and Ad Agencies ____________________________________________ 17
On-Deck vs. Off-Deck Content ______________________________________18

Handset Equipment Suppliers _______________________________________18
Ad Networks_____________________________________________________19
The Role of Mobile Advertising_______________________________________21
Mobile Performance ___________________________________________________ 21
Outlook for Mobile Industry Structure _________________________________21
Table 2.1: Mobile Ad Networks and Their Benefits _______________________20

Table 2.2: Mobile Advertising’s Effect on Consumers’ View of Brands ________22
Chapter 3: Technology and Implementation _________________ 23

Introduction _____________________________________________________23
Marketing Formats____________________________________________________ 24
Transmission Technologies _________________________________________24

WAP: Wireless Application Protocol _______________________________________ 24
Third Generation (3G) _________________________________________________ 25
Operating Systems ___________________________________________________ 25
Text Messaging and SMS Codes _________________________________________ 25
SMS Outlook ________________________________________________________ 26
ii
Table of Contents
Click-Through Rates_______________________________________________27
Future Technologies_______________________________________________27
QR and Other Scanning Technologies _____________________________________ 28
Chapter 4: Growth of Products and Services _________________ 29

Mobile Marketing for Diverse Products: Growth _________________________29
Search and Location-Based Services __________________________________31
Search via Mobile Platforms ____________________________________________ 31
Location-Based Services _______________________________________________ 32
Pioneering Location-Based Services ______________________________________ 33
Geographic Positioning System (GPS) and Mobile Commerce _______________33
Table 4.1: SMS Advertising Audience and Response Rates, Select European
Nations ________________________________________________30
Table 4.2: Global Location-Based Service Users, 2008-2012P ______________32
Chapter 5: Usage Patterns, Measurement & Analytics __________ 35

Usage Patterns___________________________________________________35
Tween Usage ________________________________________________________ 37
Steady Choices ______________________________________________________ 38
Measurement and Analytics _________________________________________39

Young Users’ View of Mobile Marketing____________________________________ 40
Table 5.1: Mobile Content Usage_____________________________________35

Table 5.2: Reliance on Mobile Devices, 2002-2007 _______________________36
Table 5.3: Mobile Data and Communications Activities ____________________36
Table 5.4: Mobile Web Usage by Age _________________________________37
Table 5.5: Use of Mobile Data Services ________________________________38
Table 5.6: Mobile Analytics Vendors __________________________________40
Table 5.7: Mobile Ad Recall by Age Segment, Q2 2008 ___________________40
iii
Table of Contents
Chapter 6: Social Media and User-Generated Content __________ 41

Introduction _____________________________________________________41
Social Networks __________________________________________________41
Carrier Opportunity: Buying In (European Examples) ________________________ 42
Bringing Ads to Mobile UGC _________________________________________43
Table 6.1: Comparative Estimates, Mobile UGC Revenue __________________43
Chapter 7: Policy Considerations __________________________ 45

Introduction _____________________________________________________45
Impact of FTC and Other Regulatory Restrictions ________________________47
Spectrum Usage__________________________________________________47
Privacy and Security ______________________________________________48
Future Developments______________________________________________48
Industry Response and Best Practices _________________________________49
Chapter 8: Case Histories of Mobile Marketing ________________ 51

Introduction _____________________________________________________51
Obama for President 2008: “Celling of the President”_____________________51
Nokia: A Manufacturer Supports Services ______________________________54
Kinetic Mobile: A Focused Ad Agency _________________________________56
Hyundai Motor America: Integrating Mobile Into Launch Campaign __________58
Table 8.1: Estimated Cost of Obama Text Messaging Campaigns____________53
Chapter 9: More Examples of Mobile Marketing Projects and

Experiments __________________________________________ 61
Chapter 10: Conclusions _________________________________ 65
iv
Methodology
Enthusiasm about mobile marketing is generally very high; it includes the focused
objectives of companies that sell consumer products and services along with the
business goals of technology vendors who hope to participate in a vast new
opportunity. Inevitably, such visions are seasoned with “wishful thinking,” especially
as vendors hope to deploy new services (and generate new revenue) as soon as the
audience is enabled, which is more lethargic than the vendors would like.
This report is based on extensive analyses of companies and organizations in the

mobile marketing sector, including reviews of predictions from independent and
company-sponsored forecasts. The research team attended numerous industry
conferences and meetings to hear the views of technology vendors, wireless carriers
and service providers. Simba has examined their demonstrations and listened to
their views about the progress of mobile marketing deployment. In addition, Simba
conducted interviews with executives and managers in all categories of the mobile
marketing industry.
Simba has synthesized the forecasts of growth, where possible, to devise a

“consensus” outlook for the scale and speed of mobile marketing development.
This report focuses on the mobile marketing services delivered to handsets, including
conventional “cell phones” and the growing base of “smartphones” (such as the
Apple iPhone, BlackBerry, Treo and similar devices) which provide Web access.
Simba acknowledges that portable, wireless devices (such as laptop computers
logged onto wireless networks via venues such as coffee shops and urban WiFi-
enabled locations) provide even more opportunities for mobile marketing. However,
v
Methodology
the focus of this report will remain on services aimed at always-on, portable handset
devices.
Simba uses a broad definition of mobile marketing, including the one developed by
the Mobile Marketing Association: “The use of wireless media as an integrated
content and direct responsive vehicle within a cross media or stand-alone marketing
communications program.” The highly visible “mobile advertising” subset focuses on
the delivery of specific marketing messages—especially those with a sales offer and a
call to action; as with other advertising, there is also a process for measurement of
concrete results (message delivery and sale).
Methodology for Projecting/Estimating Results
When reported information was not available, estimates were developed by Simba
Information using the above sources. Simba also uses: historical trends, general
guidance provided by executives (weak, flat, etc.), size of competitors, relative sizing
based on customer observations, number of titles, library-spending studies and
searches of online news databases.
All Simba estimates in this report are marked (E) and all projections are marked (P).
vi
Executive Summary
Marketing via the growing array of wireless personal devices is the dream of
technology, telecommunications, and consumer product and services providers. With
the widespread adoption of mobile handsets (by more than 80% of the U.S.
population of teenagers and older), the opportunities for mobile marketing are vast.
Various forecasts, as analyzed for this report, put total U.S. mobile marketing
revenue at about $7 billion in 2012, more than double the level of 2008.
Significantly, future growth is fueled by new applications of “search” and display
advertising, beyond the initial focus on SMS (short message systems)/text
advertisements.
Thousands of mobile marketing projects are under way. Yet even the most
enthusiastic providers acknowledge that they are still seeking the best formulae for
successful, ongoing mobile marketing operations. Diverse technologies, financial
relationships with wireless telecommunications carriers plus potential regulatory
pitfalls add stumbling blocks along the route to mobile marketing success.
The global economic turmoil that accelerated in late 2008 has had significant impact
on the advertising/media industries and may affect the mobile marketing community
in the near-term. Optimistically, it is possible that as marketers seek to optimize
their spending, they will focus on targeted platforms that deliver measurable,
actionable messages and transactions. Mobile media perform that function.
Alternatively, marketers may take longer to review return-on-investment using this
new platform; traditional advertisers may show reluctance to experiment during this
economic lull, thus delaying major mobile marketing initiatives.
1
Executive Summary
On a global basis, mobile marketing is expected to generate $12 billion by 2011, $19
billion by 2012 and $24 billion by 2013, depending on which forecaster you believe.
(The 2011-2013 figures are estimates and projections from Gartner, eMarketer and
ABI Research, respectively.) The U.S. share of that worldwide boom will be about
20% to 30%.
Despite the uncomfortably wide range of expectations, all of the predictions point
emphatically upwards. The range of forecasts underscores the difficulty in building a
valid revenue model based on today’s limited experience. The consistent bullish
expectations encourage companies to find the “correct” way to build this potential
opportunity.
“Mobile marketing” encompasses many applications, technologies and services,

including:
• Advertising delivered to a mobile phone handset, such as graphic display ads

or Short Message Service (SMS) text messages.
• Mobile commerce (m-commerce), a sale or transaction conducted via the

handset, including downloading of ringtones, music or other digital content.
• Point-of-sale support, especially for advertising that is connected to a

physical transaction (e.g. at a store).
• Location-based services (LBS), which (using geographic positioning data) can

alert phone users to the proximity of a product or service (such as restaurant
or specialty store).
• Search-based marketing, which amplifies the value of Internet searching to

steer mobile users to a service or product provider, presumably ones that are
nearby.
• Content suppliers, such as music, information and video entertainment;

these providers work in collaboration with product/service vendors to
integrate marketing and advertising into the mobile content.
“Mobile advertising,” the most visible segment of the mobile marketing world today,
accounts for barely 2% of all advertising expenditures. According to Informa
Telecoms & Media, 2006 saw $871 million spent worldwide on mobile advertising,
compared with $24 billion for Internet advertising and $450 billion for all advertising.
2
Executive Summary
The mobile marketing community includes several intertwined but independent

categories of providers, each having their own objectives in this collaborative
business.
• Wireless telecommunications carriers: In the U.S., the largest carriers

are Verizon Wireless, AT&T Wireless, Sprint and T-Mobile. They operate the
networks and generate revenue through usage of “air time”; hence they seek
to encourage applications (such as advertising and marketing) that support
more usage (although they are concerned about overburdening their wireless
networks which would require them to invest in additional costly
infrastructure).
• Handset suppliers: Equipment manufacturers, such as Apple, LG,

Motorola, Nokia, Samsung, Research In Motion, Sony-Ericsson and many
other companies that supply personal receivers. Their devices fit the
requirements of the carriers on whose networks they are used. The growing
popularity of smartphones, which offer greater graphics and video
capabilities, open new opportunities for mobile marketing.
• Marketers and advertising agencies: Consumer products companies,

automakers, entertainment companies and a new breed of advertising
agencies are among the most actively involved in mobile marketing. Sales of
movie and concert tickets have been among the most widespread uses of
mobile advertising.
• Audiences: Young audiences—the so-called “Generation M” (Mobile

Generation)—are the primary target of many mobile marketing efforts.
These consumers, mostly under age 30, rely on mobile communications,
often as their only phone device (i.e. about 30% of this age cadre has no
wireline phone connection).
• Regulatory, legal and standards organizations: In the U.S., the Federal

Trade Commission and the Federal Communications Commission have looked
at practices and abuses in the mobile marketing environment. Rules that
govern other telecommunications plus privacy/security and pricing appear to
apply to mobile marketing.
Each of these industry participants plays a role in shaping the scale and development
of mobile marketing.
3
Executive Summary
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4
Chapter 1
Overview of the Mobile
Marketing Business
Introduction
The mobile marketing ecosystem includes the technical infrastructure, reception

devices and processes to deliver appropriate marketing messages to individual
users—either pushed to users through the systems or pulled (on demand) by the
user. Initially, the major application has been delivery of text messages from a
brand, although elaborate plans are under way to enable targeted video and
enhanced services via mobile handsets.
Marketing via mobile platforms has attracted a wide array of industry interest
because of several important attributes and capabilities:
• Always on;
• Active engagement with users (instant feedback);
• Location sensitivity;
• Personal and social media enabled; and
• Rich-media enabled.
Mobile marketing encompasses services that are contextually relevant. Applications

include:
5
Overview of the Mobile Marketing Business
• Short Message Service (SMS), i.e. text messages;

• Multimedia Messaging Service (MMS), a standard for sending images, audio,
video, photos and longer messages using the WAP (Wireless Application
Protocol) standard—the de-facto world standard for the presentation and
delivery of wireless information and voice services on wireless handsets and
other devices—used to deliver ringtones;
• Web browsing via enhanced handsets and smartphones;
• Call backs; and
• Search: the user seeks a specific product or service.
As devices become more robust and include more features, the potential for mobile
marketing will grow. Barriers include the restrictions (such as technology limitations)
imposed by the oligopoly of U.S. wireless carriers, dominated by Verizon Wireless
and AT&T Wireless, which collectively control more than half of the U.S. wireless
market (about 61 million customers for AT&T Wireless; 59 million for Verizon
Wireless. Verizon is acquiring Alltel, another wireless carrier; when that merger is
completed, Verizon will have about 70 million customers).
Table 1.1:
U.S. Mobile Phone Market Share
Other
Alltel* AT&T Wireless
9%
5% 27%
T-Mobile
11%
Sprint Nextel Verizon

22% Wireless*
26%
*Verizon is merging with Alltel

Source: Annual Report and Analysis of Competitive Market Conditions with Respect to Commercial
Mobile Services, Federal Communications Commission, February 2008.
6
The carriers' policies—such as a recent Verizon Wireless plan to charge for text
messages—ripple through the mobile marketing business.
Moreover, carrier decisions about the use of new technologies, such as 3G and 4G
(third and fourth generation wireless formats), LTE (Long Term Evolution, another
advanced wireless technology) and other platforms deter marketing initiatives.
Advertisers and marketers must weigh the value of reaching immediate markets with
today’s technology against the risk of investing in next-generation applications with
no guarantee of when such services will be available and widely embraced by
potential customers.
Mobile Advertising
Mobile advertising is one component—arguably the most visible one—in the mobile
marketing ecosystem. Some industry leaders view mobile advertising as transferring
the Internet vision of pay-per-click to a new platform. Others see mobile advertising
in a more holistic way: as a means for providing value to customers by giving them
information when, where and how they want it and via the device they choose. The
consumer drives the content and context of the message.
Two important behavior trends are emerging for mobile advertising:
• Consumers will accept mobile advertising if they receive value in exchange.

The incentives include free content, free airtime or other discounts in
exchange for seconds of attention.
• Consumers want value for their attention—they want the content whether it
be video, coupons or advertising, to be relevant to them.
These two trends are helping to define the line between content and advertising—a
line that is increasingly blurred. Similarly, the line between mobile advertising and
mobile marketing will blur. To illustrate: consumers will use the mobile Web to
search for a pizza restaurant in their vicinity. This is an application of mobile
marketing. The search will be sponsored by Pizza Hut. This is mobile advertising. A
click on a particular icon in the advertisement opens a browser window with Pizza
Hut nutritional statistics on healthy eating and its menu. This is content. It may be
promotionally related and it is using the Web browser as a mobile marketing
platform, but it is content.
7
Where the Mobile Ads Go
• Message: Text, SMS and MMS: This category includes ad messages that can
be delivered by the various messaging formats. These simple messages allow
brands and companies to deliver their content and connect with consumers
through surveys, sweepstakes, voting and purchase/transactions.
• Mobile Web: This category offers mobile Web browsing (search and banner
ads), familiar online services delivered via a small-screen wireless device.
• Downloadable Applications: These range from ordering ringtones or movie

tickets to delivery of games.
• Mobile video ads: This category is a blend of television, YouTube and mobile
Web, allowing TV-like commercials (either original creations or adapted from
a broadcast TV campaign) to be delivered to a handset.
Enabling a Critical Mass
About 80% of Americans over the age of 12 have a mobile phone or smartphone.
The best prospects for interactive mobile marketing stem from growing deployment
of mobile Web services, which rely on smartphones. As of May 2008, there were
about 40 million active mobile Internet users in the U.S., according to Nielsen
Mobile. That is just under 25% of all U.S. mobile device users.
One positive factor about the future of mobile marketing is the growth of the
installed base of Web-enabled mobile devices—either enhanced “standard” phones or
full “smartphones,” such as the Apple iPhone, the new “G Phone” devices using
Google’s Android software, BlackBerry and Treo, as well as products from LG,
Motorola, Nokia and Samsung.
About 19% of mobile consumers now use a smartphone. Nearly 50% of other mobile
phone users plan to buy an advanced mobile device, i.e. a smartphone, by 2010,
according to a November 2008 study by The Kelsey Group.
The number of U.S. subscribers who paid for mobile Internet access jumped by 28%
(74 million to 94 million) from the first quarter to the second quarter of 2008,
according to Nielsen research, which also found that:
8
• 60% of mobile data users are “more likely than average” to find mobile
advertising acceptable;
• 25% of mobile Internet users recall seeing some form of advertising while
using the mobile Web;
• 23% of mobile data users expect to see more mobile advertising; and
• 32% are open to mobile ads if they lower wireless bills.
Other surveys have generated widely divergent—often contradictory—results. For

example, Synovate, in a longitudinal study it has conducted for the Mobile Marketing
Association for several years, has identified very slight changes in Americans’
appetites for mobile marketing. Indeed, during three consecutive years, about three-
quarters of mobile phone users said they are “not interested” in mobile marketing.
Beyond the seeming contradictions of the Nielsen and Synovate forecasts are more
studies that demonstrate the complexity of choices facing the mobile marketing
industry. For example, an eMarketer study identified a great and growing appetite for
Table 1.2:
Interest in Mobile Marketing Among U.S. Mobile Phone Users
(on a 10-point scale)
Highly Interested
(8-10)
2005
Moderately
2006
Interested (5-7)
2007
Not Interested
(1-4)
0% 20% 40% 60% 80%
Source: Synovate “Mobile Attitude and Usage Study” for Mobile Marketing Association
9
online video advertising. If consumers are

Table 1.3: turning to mobile handsets for more of their
U.S. Online Video online experiences, the value (and appeal) of
Advertising Viewers mobile video advertising may be greater than
current expectations suggest (see Table 1.2).
# of Viewers
2008 130,000,000 Hence a conundrum is developing of whether

2009 144,000,000 viewers will extend their appetite for video ads
2010 155,000,000 from their desktops (or laptops) to the handheld
2011 165,000,000 mobile device. The barriers for mobile video
2012 175,000,000 advertising include cost and vitality of
2013 183,000,000
service/signals. While some skeptics deem that
the relatively small screens of handheld devices
Source: eMarketer, August 2008 (typically smaller than 5 inches, often less than 2
inches) are not conducive to videos—either
advertising or other content—in fact many mobile users, especially younger
audiences, are very comfortable with the miniature displays. Nonetheless, screen
size, and the restrictions it forces upon marketing content, may deter some
marketers from embracing mobile video presentations.
Potential Market Size
The various segments of the emerging mobile marketing category will grow at
significantly different rates. Thanks to a continuing influx of new technologies and
applications, the actual growth rate may shift during the coming spurt. The
eMarketer forecast (Table 1.4) for global mobile advertising typifies the expansion of
Table 1.4:
Global Mobile Advertising Spending by Format
($ in billions)
2009 2010 2011 2012
Mobile messaging $6.4 $9.3 $12.0 $14.2
Mobile display 0.4 0.6 0.9 1.2
Mobile search 0.6 1.3 2.3 3.8
Total $7.4 $11.2 $15.2 $19.2
Source: eMarketer, March 2008
10
each sector. Starting from a much bigger base, messaging (SMS, MMS and next-
generation formats) will more than double during the 2009-2012 time frame. Display
and search will grow, threefold and sixfold, respectively, although they will continue
to represent, collectively, about one-third of the global mobile advertising market by
2012 (compared to about one-sixth of mobile advertising today).
Background of Mobile Marketing Services
The first SMS phones were limited to 160-character text messages. SMS generated
$47.5 billion in worldwide revenue in 2006, and an estimated $52.5 billion in 2007.
By 2012, with 3.7 trillion SMS messages being sent—not all of them for advertising,
of course—revenue will top $67 billion, according to Portio Research.
Today, with the advances of cell phones, broadband capabilities, and transcoding
software, among others, MMS or Multimedia Message Service is starting to take hold
as a marketing tool. As technology related to the mobile space improves, so do the
range and capacity for mobile marketing growth.
Table 1.5:
Interest Among U.S. Teen Mobile Phone Users in
Receiving Mobile Advertising in Exchange for Incentives
6% 6% Extremely Interested
15% Very Interested
Interested
Somewhat Interested
52%
Not Interested
21%
Source: Harris Interactive for CTIA-The Wireless Association, September 2008
11
Mobile marketing and advertising—plus the evolving opportunities of mobile search—

are developing a framework of practices that are drawn from traditional and online
media. Moreover, many marketers believe that a fundamental value of mobile media
stems from its flexibility to be integrated into conventional marketing campaigns. For
example, branding campaigns in print, broadcast or online media can be extended
via SMS or MMS to reach the consumer at or near the point of sale.
Audience Demographics
The U.S. mobile Internet audience (age 13 and higher) is about evenly split between
those under the age of 35 (52%) and over age 35 (48%). It is slightly more male
than female. There are about as many teens using the mobile Internet as there are
people over age 55 (5.1 million ages 13-17 and 4.4 million age 55 and older),
according to a May 2008 Nielsen Mobile Report.
“Generation M”—especially the youngest segment

(i.e. teenagers)—are amenable to online ads.
Nearly half of U.S. teen mobile phone users
Table 1.6:
indicated they are at least “somewhat interested”
Top Mobile Web
in accepting mobile ads so long as they received
Destinations by Ad
something in return, such as free air time, music Impressions Served
or other incentives.
Rank Web Destination
One reason for the surprisingly large number of
1 Yahoo! Games
teenagers (more than half) who claimed to be
2 Yahoo! Finance
“not interested” may be the fact that their
3 Yahoo! News
parents pay for the mobile phone service.
4 ABC News
5 MTV
Where Ads Are Going Now 6 Comedy Central
7 MSN Hotmail
Marketers go where the audiences are. By mid-
8 NBA
2008, the focus was on entertainment, news and
9 Yahoo! Music
mobile mail. As the Nielsen Mobile study (see
10 ESPN
Table 1.6) shows, Yahoo!’s significant
commitment to mobile services attracted Source: Nielsen Mobile
considerable attention: four Yahoo! mobile sites AdRelevance, July 2008
ranked in the top 10 most visited destinations.
12
Chapter 2
U.S. Industry Structure
Introduction
Mobile marketing involves the inter-relationship and collaboration of several

categories of service and technology providers, each working at its own pace and
with different, albeit overlapping, objectives.
At the core of all mobile services are the carriers—a shrinking handful of licensed
wireless providers that operate the technical infrastructure over which all mobile
services are transmitted. In the U.S., the major carriers are Verizon Wireless, AT&T
Wireless, Sprint/Nextel, T-Mobile plus many independent and virtual mobile
providers. These companies ultimately control the relationship with their customers
by supplying service, often subsidized handsets and billing. Moreover, the biggest
carriers are developing or investing in content, hence their role in marketing services
is likely to increase (see On-Deck/Off-Deck section later in this chapter).
Separately, content creators and aggregators—including advertising networks—are

building systems and relationships to use these mobile transmission networks.
Leveraging their experiences in online services, companies such as Yahoo!, Google
plus dozens of ad network packagers have introduced services that are customized
for the mobile platforms. In addition, new competitors are springing up in this
category, such as the Nokia Media Network, which is an offshoot unit of the world’s
largest handset manufacturer.
13
The companies that manufacture mobile phone equipment, such as Nokia, Samsung,
Apple and Motorola, play a role in applications including mobile marketing. The
devices they make must be capable of supporting current and next-generation
services. All handsets today can handle WAP (Wireless Application Protocol) text
messages, the current primary implementation of mobile marketing.
Next generation mobile Web services are expected to be compatible on any mobile
device, although such consistency is not guaranteed. The boom in smartphone usage
will require considerable standardization to assure that marketing messages are
viewable on any brand of handset. Marketers want to be assured that their messages
can reach every prospective customer, no matter which equipment is being used.
This flies in the face of some carriers and handset makers who prefer to offer an
exclusive capability to attract customers to their platforms.
This quest for exclusivity is behind the “walled gardens” (also called “on-deck”
content) favored by some carriers and equipment makers who are protective of their
systems. However, marketplace circumstances, especially marketers’ demands to
reach a near-universal market, seem to assure that the industry will migrate toward
technical compatibility, although possibly not universal compatible access.
The relationships between these sectors of the mobile industry are constantly
shifting. In particular, the consolidation of carriers (such as Verizon Wireless’
acquisition of Alltel) and the market strength of handset makers affect the nature of
the industry. Mobile marketers have little input in such realignments, but some of
the services they seek to provide may be affected by these industry developments.
Wireless Carriers
Verizon and AT&T collectively control more than half of the U.S. mobile market.
Sprint/Nextel, the next largest U.S. mobile carrier, has been losing customers for
more than a year and faces an uncertain future. T-Mobile concentrates largely on
corporate users, although its recent alliance to offer service via the G1 “Google”
phone changes the landscape of the industry.
“Wild cards” are still being introduced into this equation. The arrival of the “G1”
phone (“G” as in “Google”) in late 2008 is a possible game-shifting event. Actually,
T-Mobile initially was the exclusive carrier for the device. The “gPhone,” as it is
dubbed, runs on Google’s “Android” software, with the promise that it can be
upgraded as new features are developed.
14
Cable TV companies, which seek to become full-service communications suppliers,

especially to compete against Verizon and AT&T, have tried several times to enter
the mobile arena. A collaboration with Sprint for a service called “Pivot” was
abandoned in 2007, but the major cable companies are exploring alternative
operations. In November 2008, Cox Communications, the nation’s third largest cable
operator, unveiled plans to launch its own wireless service in 2009, which will be
delivered via Sprint/Nextel’s network while Cox builds facilities using spectrum it has
acquired. Cox plans to test Long Term Evolution Technology, a higher-capacity 4G
standard being adopted by AT&T, Verizon Wireless and operators outside the U.S.
Other large cable TV companies, notably Comcast and Time Warner Cable, are also
exploring other wireless options.
The marketing significance of such alternative mobile providers is that cable

companies could be well positioned to offer integrated marketing and advertising
packages to content partners. For example, marketers may advertise on cable’s
video channels or online portal sites—and supplement their messages via mobile and
location-based advertisements on the wireless platforms run by the same parent
companies. Such an approach, which could also be used by legacy phone companies
(Verizon, AT&T, etc.), may play a big part in the bundled services (the so-called
“triple play”) that carriers are offering to customers.
Carriers Role vis-à-vis Advertising
Mobile carriers originally expected that consumer subscriptions and premium services
would generate all revenue—much as it did in conventional wireline telephony. The
growing interest of mobile publishers (content packagers), many of which have deep
backgrounds in advertising-supported services, gradually encouraged carriers to
open their systems, albeit sometimes reluctantly. Carriers remain protective of their
networks. At the same time, they are looking for ways to share in the revenue of
services carried via their networks. Current licensing arrangements do not permit
direct benefits, but new ventures are being explored.
For example, companies such as Mobile Posse and Digital Sidebar are proposing
ways to place advertisements on idle screens.
Competitive Environment
Amidst this fluid environment, the rival wireless carrier providers (current and
pending) are accelerating their assault on market share—and value-added services
to recruit and retain customers.
15
At this point in the wireless communications evolution, with overall penetration

leveling at about 86% of U.S. residents age 13 and older in 2007, according to
M:Metrics, the only way that carriers can grow is by luring users away from each
other. Almost all adults who care to have a mobile phone now actually have such a
device. The carriers are seeking to tempt customers away from each other through a
variety of technology, pricing and service packages. Most notably, AT&T’s exclusive
relationship with Apple gave the carrier the sole right to sell the Apple iPhone in the
U.S. starting in summer 2007.
In addition to facility-based carriers, “virtual wireless companies” (resellers of other

companies’ bandwidth) have sought to carve a piece of the industry, often based on
content and affinity marketing opportunities. These “mobile virtual network operator”
(MVNO) services have included ones from Disney Mobile, Mobile ESPN and Helio,
which was owned jointly by EarthLink and SK Telecom of South Korea. The ESPN and
Disney services focused on bundling content and highly directed services (such as
team scores on Mobile ESPN), which were believed to be ad-friendly formats.
However most such services quickly failed. Virgin Mobile and TracFone, which offer
prepaid services for customers who don’t want a service contract or who have bad
credit, have survived, but with relatively small customer bases (in the hundreds of
thousands) and limited services.
Carrier Outlook
Competition will remain intense, especially if the aggressive cable companies finally
devise a solution to bring mobile into their bundle of communications services.
Although further consolidation is possible among the carriers (following the Verizon-
Alltel merger), the opportunities for such action are becoming scarce. Hence, the
dominance of a handful of carriers will govern the direction of the mobile industry—
affecting all aspects of it, including the relationships with mobile marketers.
One unsettled element of this competitive situation involves the footprint of existing
wireline carriers (the legacy landline businesses of AT&T, Verizon and the cable TV
companies). Wireless services are not restricted by legacy relationships, hence
mobile customers in cities such as New York, Boston or Washington, D.C., may
choose to use AT&T Wireless phones (such as the Apple iPhone now) and still remain
tied to their landline offered exclusively in those markets by Verizon. Similarly, in
Miami, Atlanta, Chicago or Houston, where AT&T is the dominant legacy wireline
phone company, mobile users may opt for a Verizon wireless phone—or any other
carrier.
16
In either case, the landline telcos have an incentive to lure customers to become
“total” users of one provider. The wild cards in this equation are (1) the reduced
reliance on wireline phones, especially among younger customers—an estimated
15% of all U.S. homes have eliminated their wireline phone connections; among
customers under age 30, that share rises to nearly 30%—and (2) the possibility that
Verizon or AT&T may abandon their decades-old gentlemanly agreement to stay out
of each other’s legacy landline territory.
Content Creators and Aggregators
As is the case elsewhere in the digital media sector, the lines are blurring between
content creators, advertisers and media distributors, including content aggregators.
For example, games, including mobile games, with embedded advertisements—
sometimes called “advergaming”—are a staple of the new digital environment.
Marketers produce or underwrite such hybrid entertainment, which may include a
call for action (purchase) or brand awareness message.
Online portals and search engines, such as Yahoo!, Google and Microsoft, are playing
a major role in content aggregation, which also allows them to bring their advertisers
to specific mobile sites. In addition, for SMS advertising, packagers match the
message to a specific marketing message.
Developers and Ad Agencies
Hundreds of organizations have popped up to create content and marketing

campaigns for the mobile marketplace. Many of these organizations are off-shoots of
existing advertising agencies and Web design/development companies. Others are
focused on specific functions that mobility enables or encourages, such as games and
contests tied in to events on other media (like sports broadcasts or game shows).
Some agencies specialize in certain applications, others provide full service mobile
engagement. For example, ipsh! (based in San Francisco, New York and London) has
created 1,000 mobile campaigns since it was formed in 2001. It has developed one-
way, two-way, SMS, alerts, promotions, ringtones, wallpaper, Java games, chats and
location-based services for clients in the entertainment (Warner Bros., HBO, Fox,
etc.), consumer packaged goods (Kraft, Kellogg’s, etc.), retail (Kmart), restaurant
(McDonald’s, Dunkin Donuts) and other categories. ipsh! is a subsidiary of Omnicom
Group Inc.
17
Kinetic Mobile, recently spun off from Kinetic Worldwide, a global ad/marketing
agency that specializes in “out of home” media, is jointly owned by WPP Group and
its own management team. It also has focused on similar categories.
On-Deck vs. Off-Deck Content
The digital content world has been debating the value of “walled gardens” for more
than 20 years. In the mobile marketing environment, this is often called “on-deck”
versus “off-deck” content: “on-deck” is material (including advertisements)
controlled by the carrier, while “off-deck” content is outside the walled garden and
available to any user.
Carriers prefer on-deck service, while consumers and many content providers favor
the openness of unrestricted access to off-deck content. Carriers fret that they will
be merely wireless “pipe providers” rather than “value-added content providers” of
choice who share in the revenue from content and services transmitted through their
circuits. The content services they select for their on-deck packages typically have
mass appeal and are generally sourced from the largest media and entertainment
brands. On-deck services help drive overall data-service adoption.
Off-deck content—also known as “direct-to-consumer” mobile sites—consists

primarily of brand-owned sites offering material from third-party providers. Through
the handset, there is a direct interactive relationship with a consumer. The off-deck
provider uses the carrier’s infrastructure for signal delivery, support and billing.
With much of the content increasingly linked to advertising or marketing campaigns,

all parties in this equation (content companies, aggregators and carriers) have
decided that the two distribution channels should co-exist; they are seeking ways to
profit from both approaches.
Handset Equipment Suppliers
Manufacturers of mobile handsets work with carriers to develop features that can
distinguish products and enable carriers to offer services. Most notably, Apple’s
iPhone, which has been available exclusively for AT&T customers in the U.S. since its
debut in mid-2007, has attracted customers to the AT&T service. By November
2008, the iPhone 3G had become the most popular smartphone, outpacing the
Motorola RAZR in sales as the best-selling handset purchased by U.S. adult
18
consumers. RAZR had been ranked as the top-selling consumer handset for the
previous 12 quarters, according to NPD Group’s November 2008 report on third-
quarter sales.
The popularity of the iPhone represents a focus on functionality, especially Internet

access features. Although the icon-driven interface of the iPhone differs from the
keyboard approach of most other smartphone devices, the overarching implication is
clear: next-generation devices will have to include a more sophisticated input system
than the standard 12-key numeric keypad.
This offers great benefits to mobile marketers. Recent studies showed that the
category of mobile phones with a QWERTY keyboard had the greatest year-over-year
sales growth: 30% of handsets had keyboards in the third quarter of 2008, nearly
triple the level of a year earlier. Consumers also like camera phones, which have
marketing applications as well as entertainment and personal enjoyment elements,
according to NPD Group.
Another study from Strategy Analytics cited Samsung as the major supplier of U.S.
mobile phones in the third quarter of 2008, with a 22.4% market share. The dueling
data—i.e. conflicting studies—underscores the lack of clarity—or disinformation—that
is rampant within the equipment and transmission infrastructure of the mobile
industry.
The major handset manufacturers, especially Nokia, Motorola and Apple, have
supported and allied themselves with content and marketing providers. Nokia has
established several production and ad network operations (which is discussed further
in Chapter 8). Motorola has invested in content suppliers, notably for digital content
such as ringtones and music distribution.
Overall, the interlinked sectors of the mobile phone infrastructure are collectively
supporting the development of applications and distribution that further enable
mobile marketing and advertising. Their efforts coincide with greater competition for
audiences in a mature market.
Ad Networks
At the core of mobile advertising—as it is with online advertising—is the “ad

network,” typically a company that connects publishers (Web sites) with advertisers
who want to place ads on those sites to reach specific customers. In other words,
19
they are matchmakers who take an inventory of space on various mobile Web sites
and sell them to marketers who seek to put a relevant message in front of
demographically correct users of that site or via other content delivered to users,
such as e-mail, blogs, RSS (syndicated) content or other messaging content. The ad
network serves advertisements from its ad server, which responds to a site when
content is requested.
In the mobile sector, ad network companies range from giants to tiny specialized
firms. Here is a brief—but far from exhaustive—roster of ad networks: Google
Mobile, Yahoo! Mobile, AdMob, Greystripe, Third Screen Media (AOL), Screentonic
(Microsoft), Nokia Media Network, Millennial Media, Medio Systems, Quattro
Wireless, Amobee and Mo’Jiva.
Table 2.1:
Mobile Ad Networks and Their Benefits
Network Benefits
AdMob Large ad network; online set-up; global; caters for a range of budgets
Medium ad network; online set-up; global; strong presence in social
BuzzCity
networking sites; caters for a range of budgets
GetMobile Medium ad network; apply online; global; strong U.S. presence
Large search ad network; easily set up by contacting MCN; global; caters
MCN
for a range of budgets
Small ad network; online set-up; presence in Asia Pacific & South Africa;
mKhoj
strong presence in India
Medium ad network; apply online; global (predominantly Europe & U.S.
ItsMy.Biz
focused); strong presence in social networking
Third Screen Media Medium ad network; apply online; global
Medium ad network; online set-up; global; provides adult advertising

AdModa
inventory
DeckTrade Large ad network; online set-up; global; caters for a range of budgets
Large search ad network; online set-up; global; caters for a range of

Google
budgets
Medium search ad network; apply online; global; caters for a range of
Medio
budgets
Mo’Jiva Medium ad network; online set-up; global; caters for a range of budgets
Medium search and display ad network; online set-up; global; strong U.S.
JumpTap
carrier presence
Large search ad network; apply online; global; display and search
Yahoo!
advertising
Source: Adapted from Bango White Paper, Vol. 1 by Peggy Anne Salz, 2008
20
Other sectors of the digital advertising community have formed alliances with mobile
ad networks. For example, DoubleClick, which provides marketing technology and
services, has integrated the capabilities of its DoubleClick Mobile advertising delivery
system with mobile ad networks including AdMob, Google’s AdSense for mobile
content, and Millennial Media’s MBrand and Decktrade networks. These relationships
underscore the evolving ways in which ad networks and other entities in their value
chains are establishing additional ways to reach mobile prospects.
Each system has an automated way in which marketers can match their advertising
objectives to the appropriate audience. There are automated checklists, such as
country, product category, and relevancies, including mobile sites dealing with
entertainment, news, sports, business, health and many other specific topics.
The Role of Mobile Advertising
Mobile advertising has primarily been a direct response medium, rather than
branding medium. About 87% of mobile ads seek a direct response order or call for
action, compared to about 13% that strictly intend to distribute a brand message.
Mobile Performance
The value of any medium or campaign comes down to the results generated. Despite
trepidations about the mobile platform and its overall reach, early studies have
indicated that it can effectively reach target markets. One study that compared
people exposed to mobile campaigns and those not exposed found that mobile ads
can be effective in raising brand metrics. This research from Dynamic Logic found
that mobile ad campaigns generated an average increase of nearly 24 percentage
points in awareness plus elevated favorability and purchase intent (see Table 2.2).
One reason for the significant upticks may be the relative novelty of mobile
advertising. Users may be intrigued and pay more attention since it is perceived as
personal and appears in a less cluttered environment.
Outlook for Mobile Industry Structure
Mobile marketing relies on the providers of technology, service and ancillary support,
such as billing. The oligopoly of carriers may consolidate even further than it has in
recent years, and the weaker carriers (notably Sprint/Nextel, which has
hemorrhaged customers throughout 2008) may fold.
21
Table 2.2:
Mobile Advertising’s Effect on Consumers’ View of Brands
30.0%
23.9%
25.0%
20.0%
15.0%
12.2%
10.0%
6.9%
5.4% 4.7%
5.0%
0.0%
Aided Brand Brand Message Mobile Ad Purchase
Awareness Favorability Association Awareness Intent
Survey included the following industries: alcohol, automotive, consumer electronics, consumer
packaged goods, entertainment, financial services, retail, telecom and travel.
Source: AdIndex of Mobile, Dynamic Logic, July 2008
The barriers to entry—spectrum space and capital expenses—restrict new

participants in the market, although future mobile services using WiMax and other
emerging technologies could modify the provider line-up.
Similarly, only a limited number of handset manufacturers will remain in the

market—offering a wider array of smartphones. The instant ascendance of Apple,
thanks to the iPhone, and the quick expansion of HTC, with its Google phone device,
suggest that new providers can find a spot—but often at the expense of older
suppliers. Motorola’s tumble in 2007 and 2008 on the heels of Sony-Ericsson’s
retrenchment from the U.S. market demonstrates the challenge of building
commodity products in a large, but limited, marketplace.
On the other side, the relatively low barriers to entry for content providers suggests
that more such companies will compete—and seek to develop relationships with
carriers and equipment makers.
22
Chapter 3
Technology and Implementation
Introduction
In less than 20 years, mobile phone technology has jumped ahead in spurts of three
to six months, enabling services—such as mobile marketing—but also generating
confusion and frustration. This frenzy is slowing but is likely to continue with the
migration from third-generation (3G) to fourth-generation (4G) transmission
technology. At the same time, new platforms, such as WiMax and LTE (Long Term
Evolution) networks are in development and may begin appearing after 2010. These
platforms will add new opportunities for mobile marketing, especially ones that
benefit from broadband, high-speed delivery of visual material. Nonetheless, the
specific nature of these future services is not yet defined. The ability to develop
marketing tactics for such platforms will itself evolve from today’s ventures.
Mobile phone technology is advancing rapidly—which is generally both a joy to

equipment suppliers, carriers and applications providers (including marketers) and a
burden to them all. The downside of rapid improvement is the need to upgrade
facilities, which includes the expense of developing additional (often expensive)
products.
On the positive side, new components provide greater power, capabilities and
reliability to handsets. For example, the new Sandbridge Technologies SB3500
baseband processor for cell phones is said to be able to cut the cost of phones by
23
about 15%. The Sandbridge processor is software programmable, which means that
it can be upgraded as new applications and technologies, such as fourth-generation
(4G) wireless service, become available.
Other mobile chip makers, such as Broadcom and Qualcomm, have comparable
single processors, although not with the software programmability.
Marketing Formats
Four primary methods exist for mobile marketing:
• Message: Text, SMS and MMS: This category includes ad messages that
can be delivered by the various messaging formats. These simple messages
allow brands and companies to deliver their content and connect with
consumers through surveys, sweepstakes, voting and purchase/transactions.
• Mobile Web: This category offers mobile Web browsing (search and banner
ads), familiar online services delivered via a small-screen wireless device.
• Downloadable Applications: These range from ordering ringtones or movie

tickets to delivery of games.
• Mobile Video Ads: This category is a blend of television, YouTube and

mobile Web, allowing TV-like commercials (either original creations or
adapted from a broadcast TV campaign) to be delivered to a handset.
Transmission Technologies
The quality and reliability of mobile marketing is in part dependent on and affected
by the types of transmission services available from mobile carriers.
WAP: Wireless Application Protocol
Most U.S. mobile phones use WAP, the Wireless Application Protocol which enables
access to the Internet. WAP is an open international communications standard. A
WAP browser provides basic services of a computer-based Web browser but
simplified to operate within the restrictions of a mobile phone, such as its smaller
view screen. WAP sites are Web sites written in, or dynamically converted to
Wireless Markup Language and accessed via the WAP browser.
24
Third Generation (3G)
The third generation (3G) of mobile phone standards enables network operators to
offer a wider range of advanced services along with improved efficiency and
reliability. 3G has enabled mobile video and broadband data services via wide area
networks.
Operating Systems
Marketers—like other mobile applications developers—have to work within the

Operating System (OS) framework that runs the handset devices. The dominant OS
provider is the Symbian Foundation, an organization that Nokia owns (after buying
out the stakes of other handset makers). Symbian OS holds a 47% share of the
mobile OS market compared to Apple (iPhone OS) at 17%, Microsoft (Windows CE
and Windows Mobile) at 14% and RIM at 15%; other OS competitors include Palm
OS, Qualcomm's BREW, Google Android, SavaJe and MontaVista Software, according
to Information Week.
Text Messaging and SMS Codes
Common short code messaging has become the first model for mobile marketing. It
is relatively easy to use for access to a large, addressable audience at a relatively
low cost. Short Message Service (SMS) is a communications protocol that enables an
interchange of short text messages between mobile devices; capability for SMS is
built into more than 95% of mobile phones in use today.
Advertising campaigns via SMS require a user opt-in action, signaling that the
handset (i.e. its users) is receptive to short code messages. Young users of mobile
service have shown themselves to be willing to accept such marketing messages.
For advertisers, this is an encouraging signal—especially because the very nature of
SMS triggers engagement and dialogue with prospective customers through a highly
personal medium.
Beyond its wildly popular use for real-time messages between individuals, SMS is
widely used for targeted advertising. Common Short Codes (CSCs) are a string of
numbers, typically fewer digits than standard phone numbers, to which a mobile user
can send a message, usually expecting a message in return. The term “common”
refers to the ability of a single short code to reach handsets served by all major
wireless carriers. The ubiquity of CSCs as a marketing platform means that it is a
scalable vehicle for brands to connect to almost any mobile user.
25
Marketers have adopted SMS for a variety of applications and a recent analysis by
M:Metrics of the percentages of SMS marketing messages received by type showed:
information about a product/service/brand (42%), contests (17%), coupons or
discounts (15%) and donations to charity (3%).
Consumers have a high recall of SMS messages. An August 2007 M:Metrics

evaluation of 40 million U.S. consumers found that 43% of people who actively text
and 19% of total mobile phone users recall receiving SMS ads. Of this group, about
12% responded to an SMS ad—a far higher response rate than conventional direct
mail (less than 3%) or online messages.
So far, marketers have used SMS for a combination of branding and direct response
campaigns. Just under half of SMS offers are focused on brand-building, primarily
through the transmission of general information about a product, service or brand.
Promotional ads, usually built around contests or coupons, represent about one-third
of the total SMS messages.
SMS Outlook
As SMS persists as an ad medium, its integration with traditional (print, broadcast,

online and other out-of-home) media will grow. Texting can become an order-entry
system for messages delivered via other media, in the same way that cross-platform
interactive connections via Web pages proliferated from TV and print advertising
during the late 1990s and early 2000s. Short codes are widely accepted and
deployed worldwide and thrive in low- and high-tech environments.
Because they’re so scalable, SMS messages can be dispatched economically for small
and large campaigns, which is discussed further in Chapter 8 in connection with the
Obama presidential campaign.
Several indicators point to a robust future for short codes:
• Global reach: They are widely accepted and deployed in North America and
Europe.
• Technology: Short codes work on low-tech devices; for customers with

smartphones, texting is especially simple and familiar.
• Scalability: Because short codes work on any device, marketers have

universal reach.
26
• Engagement: Use of the familiar format through which mobile users

communicate with each other means that short codes fulfill users’
expectations with a familiar and personal interface.
• Return on investment: Mobile marketing campaigns using short codes are

relatively inexpensive and can generate almost immediate payback.
Click-Through Rates
When a mobile user receives a marketing message (SMS or other format), he or she
can respond with a click response. According to a Nokia Interactive report conducted
by Bango, mobile ad click-through rates fluctuate from 2% to 20%, and are
consistently higher than online rates, in part because of the lack of clutter on the
mobile platform, i.e. fewer distractions from multiple banner or other ads on a single
screen.
Future Technologies
Wireless carriers are currently engaged in a vigorous debate about next-generation

transmission standards, especially ones for broadband formats that will greatly
enable mobile Web services. The feud over WiMax (Worldwide Interoperability for
Microwave Access) and LTE (Long Term Evolution)—all part of fourth-generation
(4G) ecosystems—is beyond the scope of this report. But developments bear
monitoring as business and regulatory decisions will affect the ways in which
applications (such as marketing) can be implemented.
Other technology factors are also works in progress. For example, High Speed Packet
Access (HSPA) is a collection of mobile telephony protocols that extend and improve
the performance of mobile services. An offshoot called “Evolved HSPA” (also known
as HSPA Evolution, HSPA+ or Internet HSPA) extends the capabilities to offer faster
data rates and provides significant battery life improvements.
As part of the global rivalry among handset and infrastructure developers, more such
technology developments are likely to surface during the coming years. The adoption
of such technology may depend on the economic conditions that allow for their
deployment and for customer adoption.
27
QR and Other Scanning Technologies
Beyond the transmission and handset technologies are a variety of converged

features that can be used in mobile marketing, including location-based marketing.
For example, QR (Quick Response) codes can be printed on posters, billboards or

other products (magazines, newspapers, product labels, etc.). The two-dimensional
QR code resembles a familiar bar code, except it is square and composed of blocks
rather than lines. By capturing the image of the code from the printed ad, using a
camera within a mobile handset, a customer can obtain information or directions
regarding the product. QR codes originated in Japan and have been widely deployed
in Asia and parts of Europe. They have not yet made much of an appearance in the
U.S, although fashion merchant Ralph Lauren offered a QR showcase in connection
with a style guide issued for the 2008 U.S. Open.
Cell phones with cameras and specific reader software embedded within them can
read the code, then a WAP (Wireless Application Protocol) browser (effectively a
browser on a mobile phone) opens to reveal particular data that store, brand,
content owner or advertiser wants to show. With today’s Web-enabled smartphones,
a print advertisement in Vogue can connect a reader to a video of a fashion show; a
Broadway billboard can become a direct mail piece for a show ticket purchase; a bus
stop advertisement can drive traffic to a nearby restaurant with information of
location and a discount coupon. Customers decide to actively seek further
information. This instant opt-in style of 2D codes is a key ingredient to successful
mobile advertising. Once the mobile browser opens, the consumer and brand begin
to have a direct, immediate, interactive “conversation.” Such enhanced advertising
revenue is expected to appeal to mobile operators.
Other technologies that integrate mobile reception and interactivity with traditional
media are being developed. Marketers should be vigilant to make sure that their
technology developers are aware of major technology breakthroughs and distribution
schemes and to be sure that their content is compatible with any new devices or
services that appear and are viable.
28
Chapter 4
Growth of Products and Services
Mobile Marketing for Diverse Products: Growth
As the SMS marketing category matures, there are more messages for consumer
goods and relatively fewer for mobile services (such as ringtones). Although the
European experience is not always a definitive signal of trends in the U.S., a recent
analysis of the categories of SMS ad messages offers a significant snapshot of what
U.S. mobile phone marketers may expect. A comScore study of SMS advertising in
five European nations (U.K., France, Germany, Italy and Spain) identified 15.2%
annual growth in the number of messages for consumer products and services,
especially clothing/fashion, restaurants and food; at the same time, there was a
9.6% decline in the number of SMS ads for mobile-only services (see Table 4.1).
The shift toward ads for products and services not tied directly to use on the mobile
handset reflects the growing appeal of mobile marketing. In particular, the popularity
of fashion and food (both restaurants and grocery purchases) bodes well for these
categories as advertising moves to smartphone platforms, with their multimedia
capabilities. The decline in car advertising reflects the fall-off of interest in
automotive purchases during the economic crisis of 2008.
While SMS ads for mobile and media products/services are still threefold the number
of ads for mobile-related products, the ratio is shifting. (It was about fourfold in
29
2007.) This migration reflects marketers’ recognition that the sole targeting criterion
is no longer products/services for use on the mobile handset.
Table 4.1, although based on usage in five large European countries, augurs the
usage pattern that can be expected in North America. Specifically the growing
popularity of clothing/fashion and food suggests the mainstreaming of SMS services,
especially to young, targeted audiences. The drop-off of automotive messages is
surely linked to the precipitous decline in car advertising and sales during 2008.
Table 4.1:
SMS Advertising Audience and Response Rates,
Select European Nations
(3-month average ending Aug. 2007 and Aug. 2008)
Received SMS Advertisements

% Responded to SMS ads
(in 000)
Aug. 2007 Aug. 2008 % Chg. Aug. 2007 Aug. 2008 Chg.
Downloads for 40,792 35,915 -12.0% 4.4% 3.9% -0.5

mobile phone
News or 25,929 22,122 -14.7% 2.8% 3.2% 0.4

information
Mobile phone or 32,222 31,574 -2.0% 4.6% 4.7% 0.1

plan
Entertainment 12,644 11,230 -11.2% 4.3% 5.1% 0.8
Total Mobile + 111,587 100,841 -9.6% 4.1% 4.1% 0.0

Media Sectors
Clothing/fashion 3,982 5,503 38.2% 5.8% 6.4% 0.6
Restaurants 1,037 1,424 37.3% 11.6% 15.5% 3.9
Cars 4,407 3,731 -15.4% 11.2% 7.9% -3.3
Food 1,413 2,162 53.0% 9.2% 12.6% 3.4
Financial 8,963 9,956 11.1% 3.7% 4.7% 1.0

services
Consumer 3,957 4,647 17.4% 6.3% 6.7% 0.4

electronics
Travel 5,779 6,602 14.2% 4.9% 5.8% 0.9
Total Non-
Mobile + Media 29,539 34,024 15.2% 6.2% 6.8% 0.6
Sectors
Results for mobile subscribers in the U.K., France, Germany, Italy and Spain
Source: comScore M:Metrics, October 2008
30
Search and Location-Based Services
While mobile marketing often focuses on the “push” of interactive advertising, there
is a tantalizing opportunity in the “pull” of search marketing. The revenue model is
significantly different—and still uncertain—but the transaction capability of search
marketing is appealing.
Most importantly, the development of mobile search reflects the growing popularity
of smartphones. About half of U.S. handsets will include smartphone (Web access)
capability by 2013. Among early adopters now using smart phones, there is currently
increasing search for products and services both in the local region and in distant
locations. The large emphasis on local searches represents a need to find sources for
immediate access and use. Hence one of the most popular search categories is local
entertainment and movie listings and start times.
Search via Mobile Platforms
Mobile search is the ultimate direct marketing tool; an always-on “yellow pages” that
enables a mobile user to look for a product or service from any location. It allows
marketers to reach a customer while en route to making a purchase.
As with an online search process, a customer can enter a word or topic into a mobile
search engine. Marketers expect the term may be one connected with shopping,
entertainment, refreshments or similar location-based service—such as the nearest
pizza or coffee shop, directions to a theater or gas station or other activity connected
with an on-site transaction.
The scale of mobile search is potentially enormous, although today’s level is barely
half a billion dollars worldwide. Tied to the expanding use of smartphones, the
revenue from mobile search may climb about eightfold by 2012 to nearly $4 billion.
While much of that growth will be in Europe and Asia, the U.S. will account for at
least 25% to 30% of that total, or about $1 billion to $1.2 billion.
Underlying these expectations for mobile search is the finding that nearly 18% of
mobile users sought maps or directions via their handsets in late 2008, up from less
than 11% a year earlier. About 16% of them looked for products or services in their
local area, compared to 10% in a 2007 study. Nearly 14% of smartphone users
sought information about movies or other entertainment, compared to just over 8%
in 2007, according to The Kelsey Group’s October 2008 report Mobile Market View.
31
All of the major online search providers have been seeking deals with carriers and
handset makers. Google negotiated for months in late 2008 with Verizon to make
Google Search into the default browser and interface on Verizon smartphones.
Eventually, Microsoft won out with a package that provided Verizon with a more
generous revenue sharing feature plus a guarantee of substantially higher payments.
Technology plays a role in the mobile search roadmap. For example, Yahoo! added
an old-fashioned voice capability to its oneSearch mobile portfolio in October 2008.
Users of BlackBerry and Nokia handsets can either speak or type a search for content
ranging from cinema times and restaurant recommendations to sports or financial
data. Yahoo!’s service bypasses the mobile browser and includes Search Assist,
which features spelling suggestions and real-time related concepts for better search
results.
This combination of technology deployment and user expectations indicates that

mobile users will increasingly rely on smartphones for local commercial and social
search experiences. The growth of mobile search applications, including on-deck, off-
deck and SMS services, will continue to represent a larger share of mobile
marketing. In all categories, search will quintuple in use during the next five years—
with more than 70 billion mobile searches conducted by 2013.
Google, Yahoo! and other online search providers will be the greatest beneficiaries of
the migration to mobile search. The broader usage of smartphones will accelerate
the popularity of mobile search.
Location-Based Services
The “last three feet” of a transaction is the Holy Grail, advertisers believe. For that
reason, mobile advertising and marketing—which can reach a customer at or near
the point-of-sale—is a major objective of many marketers. It is tied, in part,
Table 4.2:
Global Location-Based Service Users, 2008-2012P
2008P 2009P 2010P 2011P 2012P
# of users 61,000,000 134,000,000 215,000,000 329,000,000 486,000,000
% chg. -- 119% 61% 53% 48%
Source: eMarketer, September 2008
32
to mobile search, since customers seeking a product or service are most likely to
respond to messages that recognize their position.
In the U.S., the audience for mobile location-based services will reach about 100
million users by 2012. This aggressive expansion reflects the increasing use of
smartphones and Americans’ representation of about 20% of the global market for
LBS.
Pioneering Location-Based Services
CBS launched Loopt, a social mapping service that offers location-based, service-
based advertising. The project, which began in February 2008, included localized
banners on the CBS Mobile News and Mobile Sports sites, pointing Loopt users to
local businesses based on their physical location.
Quattro Wireless introduced a similar location-based advertising inventory in

September 2008, limited exclusively to iPhone users.
Geographic Positioning System (GPS) and Mobile Commerce
GPS—built into every mobile device—will encourage more location-based and mobile
search opportunities. They represent the real value of a portable service, able to
direct users from wherever they are to an appropriate (local) merchant. They enable
contextual, space-, time- and place-relevant connections.
Mobile commerce is potentially a major component of the mobile marketing

equation. On a micro-purchase scale, m-commerce has proven itself via the sales of
ringtones and other handset-oriented content. The bigger dilemma is whether—and
how—customers will buy larger, costlier products via their handsets.
As smartphones become more widely used, that question is likely to diminish. The
smartphone is a supplement or replacement for the desktop or laptop computer, able
to deliver all of the same services. Moreover, the mobile handset, equipped with a
point-of-presence chip (such as an RFID: Radio Frequency Identification
microprocessor) can be used for proximity-based services. For example, Nokia and
others have tested chips in handsets which can be swiped past readers and fuel
pumps or other retail locations to automatically make debit or credit payments for
purchases.
33
Married to handset marketing, the options are extensive. Since most mobile
advertisements involve calls to action, they may be adapted to encourage one-touch
ordering. This prospect is being developed, although adoption may be very slow—
especially if the economic downtown discourages customers from making impulse
purchases.
34
Chapter 5
Usage Patterns,
Measurement & Analytics
Usage Patterns
Predictably, older and younger mobile users rely on different features of their mobile
devices. Basically, younger
customers (“Generation Y,” now
Table 5.1: aged about 18- to 24-years-old) use
Mobile Content Usage more of the interactive features,
most notably browsing the Web.
Gen Y
Baby Although only a small share actually
Boomers &
(18-24) do browse (about 9%), the rate is
Older (45+)
Only phone calls 27% 69% triple that of their parents’
Taking photos 21% 13% generation (see Table 5.1).
Checking e-mail 10% 8%
Browsing the Web 9% 3% Americans’ love affair with mobile
Video calling 4% 3% devices encourages marketers to
GPS services 2% 3% pursue this platform as a marketing
Listening to music 12% 1% medium. As evidence of the
Playing games 5% 1% indispensability of mobile phones
(including smartphones), The Pew
Source: Accenture, December 2007 survey
Internet and American Life Project
35
Usage Patterns, Measurement & Analytics
Table 5.2:
Reliance on Mobile Devices, 2002-2007
(% of respondents who said it would be “very hard to give up” device)
2002 2006 2007
Cell phone 38% 43% 51%
Internet 38% 38% 45%
Television 47% 44% 43%
Landline telephone 63% 48% 40%
E-mail 35% 34% 37%
Blackberry or wireless e-mail device 6% 22% 36%
Source: Pew Internet and American Life surveys, 2002-2007
has asked consumers “how hard would it be to give up” a device or service they use
for communications and media access. Reliance on mobile devices has increased
annually, while other services have waned (see Table 5.2).
The Pew Internet and American Life study of what Americans do with their mobile
devices (both standard handsets and smartphones) looks at similar data in a slightly
different way. Pew identified a number of activities that suggest a proclivity to use
mobile marketing/advertising features (see Table 5.3).
To understand how mobile phone users may embrace mobile marketing messages, it
is useful to know how they use existing mobile services. Most notably the
“generation gap” between young customers and their parents (i.e. “Generation Y”
Table 5.3:
Mobile Data and Communications Activities
(Among mobile device users)
% who have EVER done this % who do this on a typical day
Send/receive text message 58% 31%
Get a map or directions 14% 3%
Watch video 10% 3%
Source: Pew Internet and American Life Project Survey, December 2007
36
and “Baby Boomers”) demonstrates the significantly different expectations they have
for their mobile devices. According to Accenture’s survey, more than three-quarters
of older users merely make voice calls on their mobile phones, compared to just over
one-quarter of younger customers. Conversely, only 1% of older customers listen to
music via their handset, while 12% of young mobile users take advantage of that
function.
As smartphones make inroads into all age groups, use of mobile content is likely to
become more widespread. Hence, the expansion of technology set the stage for
more marketing opportunities—although it is not yet clear that older customers will
expand their usage patterns. Marketers are counting on their interest—and previous
examples from the online world suggest that as customers become more familiar
with a medium, they are more willing to tolerate—or even enjoy—marketing and
advertising options that seem customized to their interest. Targeted mobile
advertising can fulfill that requirement.
Tween Usage
It is not just “Gen Y” that has embraced mobile phones among America’s youth.
Nearly half of U.S. “tweens” (ages 8 to 12) use a mobile phone, paving the way for
Table 5.4:
Mobile Web Usage by Age
10% 10%
7% 13-17
18-24
12% 23%
25-34
35-44
45-54
55+
11% Other
27%
Source: comScore M:Metrics, May 2008
37
the next generation of mobile devotees. According to a September 2008 Nielsen

survey, the primary reason parents cite for giving their kids a mobile phone is
“safety” or an emergency. Many of the kid-friendly phones have limited usage (e.g. a
“Firefly” model which can only send and receive calls to pre-programmed numbers,
such as home or parent’s office phone. The Nielsen survey found that 68% of
parents prohibit downloads of ringtones, games or other extra-fee services to these
phones.
Steady Choices
Even as the mobile marketplace segments use by age and demographics, there are
ways to keep track of overall usage—largely to gauge the viability of each emerging
category of content and applications. This measurement helps marketers and content
developers identify categories toward which they must pay attention and consider
services. Notably, a comparison of late 2007 data and mid-2008 data showed that in
four categories—SMS, MMS, games and mobile Web access—the number of users
continues to climb (see Table 5.5). Most dramatically, the burst in mobile Web usage
(about 25% in less than one year, but coming off a relatively small base)
underscores the great potential for mobile Web advertising.
Table 5.5:
Use of Mobile Data Services
(Users in millions)
180
160
160
140
140
120
102
100 Q4 2007
85
80 78 Q3 2008
80
70
62
60
40
20
0
SMS MMS Games Mobile Web
Source: Limbo and GfK/NOP Mobile Advertising Report, October 2008
38
Measurement and Analytics
Measurement of mobile usage, including analysis of how customers respond to

mobile advertising and marketing messages, is still in its infancy. Mobile analytics
allows mobile site owners to obtain insight into traffic and sight usage, enabling
them to make data-driven decisions. Despite the growth in mobile Internet access
via smartphones, there is still a paucity of measurement of mobile usage. An
Omniture Inc. study in 2008 found that 71% of businesses do not measure mobile
traffic to their sites and half of firms do not know how many unique users landing on
their sites originate from a mobile device. Omniture, a Utah-based provider of online
business optimization software, contends that intelligence from mobile traffic can be
used to improve Web site content for mobile users and for marketing, which will
retain customers on the Web site for longer periods and increase conversion rates.
Measuring mobile Internet traffic, also called “Mobile Analytics,” is not easy and
provides many challenges, ranging from data gathering technology to user
measurement. Following are some hurdles facing mobile marketing analysts:
• JavaScript is the most common way of collecting data for Web analytics, but
not all the mobile browsers execute JavaScript.
• Lack of cookie support on mobile devices and changing IP addresses mean

that it is hard to track the identify of unique users.
• Detecting the source of traffic is not a stable process; users may come to a
mobile site via search, e-mail, direct entry, RSS feeds or other directions.
• Geographic identification is murky. Not all devices enable geographic

detection because the gateway’s IP address is used, not a GPS signal.
As mobile Web becomes widespread, Webmasters are adopting mobile analytics to

complement their online analytics tools. The companies cited in Table 5.6 provide
mobile analytics services, which include mobile-specific metrics. Most of them offer a
dashboard for desktop analysis of how a marketing campaign (or general usage of a
mobile site) is succeeding. Some of the services, such as Bango’s, offer real-time
monitoring and analysis.
Just as Web analytics have become a vital tool within the online marketing world,
mobile analytics have evolved at different paces (owing largely to mobile’s later
arrival and for now, smaller scale. Hence marketers who want to see a more
39
complete picture of what's happening with their

Table 5.6: mobile users must retain an analytics supplier.
Mobile Analytics Vendors
Young Users’ View of Mobile Marketing
Admob
Amethon
Another view of mobile marketing recall
Bango
Coremetrics appears in a spring 2008 Nielsen mobile study,
DeckStats which found that young users are most likely to
mobileStats recall mobile advertisements. The relatively
Mobilytics
high recall rates of younger users demonstrates
Motally
Nedstat how engaged they are with the devices.
Omniture Penetration of smartphones in this age category
Tigtags is large but not as pervasive as it is in the older
XiTi
professional age brackets, where users may use
Source: Simba Information their smartphones for business and non-
commercial/non-entertainment applications.
Nonetheless, the high ad recall levels among teenagers are another reminder of the
long-term opportunity in mobile marketing as this age cohort grows up.
Table 5.7:
Mobile Ad Recall by Age Segment, Q2 2008
(% of U.S. data users who recall seeing ads on mobile phones)
70%
58%
60%
50%
40%
34%
30% 31%
30% 25%
20% 17%
10%
0%
All Data 13-17 18-24 25-34 35-54 54+
Users
Source: Nielsen Mobile’s Q2 2008 Mobile Advertising Report
40
Chapter 6
Social Media and
User-Generated Content
Introduction
In the Web 2.0 environment, two of the liveliest elements are user-generated
content (UGC)—the kinds of homemade productions that appear on YouTube—and
social media, which includes all kinds of collaborative relationships (Facebook,
MySpace and many other personal and business-oriented services). Mobile access
and input to these ventures is rampant.
Social Networks
Facebook had close to 43 million unique U.S. visitors in August 2008; MySpace had
71 million; Hi5 tracked 55 million monthly visitors worldwide; Friendster had more
than 80 million members worldwide with 97% of them outside the U.S. With this
audience available—all of whom want to connect with others, share information and
pictures [one of the top uses of social networks and of mobile phones]—social
networks have become communications systems. The participants are largely within
the target demographic age group and behavior group of smartphone users. What
the services need are means to connect their users via mobile. Increasingly, they are
exploring how to take advantage of their platform. A natural progression for them is
41
Social Media and User-Generated Content
to become communications platforms. They can become virtual private networks,

licensing mobile network access and creating their own mobile platforms.
Legacy wireless carriers are waking up to the fact that they have the quintessential
social network at their fingertips. They “own” millions of consumers, have
information about these users including telephone numbers, identity profiles (e.g.
home location) and opportunity for mobile commerce.
As such, carriers around the world are looking at how to create their own social
networks that take advantage of their infrastructure, the data they have, the
lifestyles their consumers have and what the consumers want to have access to.
Carrier Opportunity: Buying In (European Examples)
Figuring out how—and who—will exploit this social networking/mobile opportunity

now confronts the industry. One way to plunge into this sector is for telecom carriers
to acquire pioneer mobile social networking ventures. That is the case with Zyb
(www.zyb.com), a Danish firm that provides backup services for data and contacts
on mobile phones. In August 2007, it converted this ability into a social network on
which people can manage their contacts and communicate with them through
photos, comments, profiles and texting status updates.
Vodaphone, the European carrier, purchased Zyb in May 2008 for €31.5 million.
Vodafone sees it as fitting within its “Total Communications” strategy of integrating
the mobile and PC customer experience by adding to the communications services it
offers to customers.
Another company that has moved into that space is Dublin, Ireland-based Newbay.
Newbay has license agreements with Orange/FranceTelecom, Deutsch Telecom
Group [T-Mobile], Vodafone and Telefonica UK-02. In the U.S., Newbay has
partnered with US Cellular, T-Mobile and Alltel (now part of Verizon), bringing its
potential customer base to 250 million users worldwide; currently about 20% of that
audience uses Newbay’s product, a social networking gateway called LifeCache which
is a mobile social network aggregator. A client application is either downloaded onto
a cell phone or pre-embedded in a device. This client enables people to connect to
their various social networks through their phones. If users take a picture, they can
then upload it to any of the social networks they belong to, instantly. The system
also works on the Web and mobile Web. It has up to 60% repeat usage. It stores
petabytes of user data on its systems. The company has focused on enabling photos
42
first because calling, texting, contacts and photos are the four top things that people
use cell phones for at this time.
Advertising becomes part of their mix on the data download side with banners and
sponsorships. The major issue with advertising at this time is that it is without
context or personalization.
Bringing Ads to Mobile UGC (User-Generated Content)
Throughout the Internet community, there has been extensive focus on social media
and “user-generated content” (UGC). Distribution systems such as YouTube and the
capabilities of mobile phones to capture and transmit still pictures and motion video
have fueled this UGC burst.
Matching mobile advertising to UGC is already underway. One global revenue

forecast for mobile UGC (by ARCchart) projects it will generate up to $6.6 billion
worldwide in 2012, nearly 10 times the current level. An earlier study by Juniper
Research identified similar, but albeit slightly lower growth. In both studies, ad
revenue was a major part of the business model, which also included subscription
and transactional fees.
Table 6.1:
Comparative Estimates, Mobile UGC Revenue
($ in billions)
$0.60
Juniper Research $5.70
Aug 07
2007
$0.70
2012
$6.60
ARC chart Jan 08
$0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00
Sources: eMarketer.com; ARCchart; Juniper Research
43
In the case of UGC, the major challenge to advertisers is matching marketing

messages with the highly personalized, and often unpredictable, UGC content and
settings. In this situation, banners, pre-rolls or other conventional Internet ad
formats may not be effective. Hence, UGC-related mobile marketing may take on
new forms—possibly putting a reliance on product placements or similar embedded
marketing methods.
44
Chapter 7
Policy Considerations
Introduction
Mobile marketing is governed by many federal policies that cover wireless

communications, advertising regulations and consumer protection. As the wireless
and mobile phone industries grow and modify their operations, federal oversight may
affect mobile marketers. Moreover, as Congress reviews communications industry
operations on topics such as “net neutrality” and wireless security, additional issues
may emerge that will affect the deployment of mobile marketing.
Net neutrality assumes open, equal access by any service to communications

networks, such as the ones operated by telephone or cable TV companies or wireless
phone service providers. These network operators would not be able to put any
content restrictions upon certain users of their networks. In other words, all
content—including content that is supplied or financially supported by that carrier—
faces the same operating conditions, tariffs, access and other rules.
The primary agencies whose decisions affect mobile marketing are:
• The Federal Trade Commission (FTC), which has responsibilities for consumer
protection (including the Do-Not-Call regulations), some anti-trust oversight
and is deeply involved in telemarketing, direct marketing and deceptive
advertising reviews.
45
• The Federal Communications Commission (FCC), which primarily oversees use

of the airwaves (spectrum) and has also been involved in First Amendment
(freedom of speech) and the Do-Not-Call oversight.
• Congress has adopted and continues to consider legislation that may affect
how mobile media is used for advertising and marketing. Proposed legislation
also affects privacy and security—especially personal information—which
continue to be hot buttons in the mobile world. Legislation, such as the “CAN-
SPAM Act of 2003” (Controlling the Assault of Non-Solicited Pornography and
Marketing Act), establishes requirements for those who send commercial e-
mail, spells out penalties for spammers and companies whose products are
advertised in spam if they violate the law, and gives consumers the right to
ask e-mailers to stop spamming them. The FTC enforces this legislation, and
the Department of Justice can further enforce its criminal sanctions.
For the most part, rules that apply to wireline telemarketing also apply to mobile
marketing, notably consumer applications to be placed on the “Do Not Call” registry.
Rules that restrict hours for calling and prohibit harassing phone calls apply to
wireless as they do to wired communications. FCC rules also prohibit sending
unsolicited e-mail to wireless devices. Thus, customers—including the growing
number of phone customers whose ONLY connection is via a wireless phone, must
use opt-in procedures at the domain level to authorize marketers to reach their
mobile devices.
As technology expands for use by mobile marketers, there is an effort to use auto-
dialing (“robo-calls”) to reach such totally unwired customers. The FCC is trying to
enforce these rules. At the same time, private companies are developing directories
of wireless phone numbers and selling such databases to marketers. Most such
directories are now used for voice messaging, but comparable directories for text
messaging will soon be available.
In addition to the federal jurisdiction, some state attorneys general have brought
cases against marketers for sending text messages to mobile phones. For example,
the Illinois Attorney General’s office prosecuted a marketer for sending real estate
text messages, and the Florida Attorney General has filed charges against companies
that offered ringtones via mobile messaging. Case law in these categories is still in
its early stages.
46
Impact of FTC and Other Regulatory Restrictions
FTC commissioner Jon Leibowitz cited four specific topics of FTC concern regarding
mobile marketing in a May 2008 presentation:
• “Disclosure” to assure that mobile customers understand what advertisers are

selling and how much it costs. He singled out the difficulty of disclosure on a
tiny screen, including explanation of extra fees for SMS messages, and
recurring charges.
• “Invasive marketing messages,” including text spam, offensive content and

location-based services that enable the identification of where a mobile phone
user is at any time.
• “Location-based services” that permits physical location to be tracked in real

time. The “Big Brother” potential and the real threats of stalkers “raise
troubling issues about government access, physical safety and personal
privacy.”
• “Safety of children and teenagers,” acknowledging that youngsters usually

feel more facile and fearless when using technology, but are often unaware of
dangers such as mobile tracking and targeting.
“Most responsible marketers are treading cautiously in this new space,” Leibowitz
concluded, but emphasized the need for government oversight to restrict and punish
abusive mobile marketing companies.
Spectrum Usage
The FCC continues to oversee the rearrangement of the electromagnetic spectrum—

the airwaves over which mobile phones (along with broadcast TV, satellite and many
other wireless signals) are transmitted. Most notably, the “spectrum auctions” of the
past decade plus recent decisions, such as the use of broadcast TV “white spaces,”
are changing the way that companies can provide mobile services through a variety
of devices. The white spaces decision, for example, enables use of unlicensed
spectrum to be used for transmission of signals ranging from wireless microphones in
theaters or stadiums to new mobile phone devices. Companies such as Google, Intel
and Microsoft have indicated an interest in developing services—which would
inevitably include marketing components—via such unlicensed spectrum.
47
The FCC decisions—which often face long-term appeals and court reviews—will affect
the development and deployment of mobile marketing services, along with other
wireless services. Issues such as net neutrality are part of this spectrum review and
could specifically affect marketers as advertising and marketing content blends into
the applications that may be subject to net neutrality obligations—or the absence
thereof.
Another evolving mobile technology—use of the Digital TV (DTV) spectrum, regulated

by the FCC as part of the DTV transition in February 2000—raises another prospect
for mobile marketing and advertising. The FCC is monitoring a broadcasting industry
collaboration to develop a system to deliver DTV signals from local broadcast TV
stations to mobile, personal, handheld devices, which may be specially enhanced
mobile phones or other portable receivers. The Open Mobile Video Coalition (OMVC)
is an alliance of commercial and public broadcasters focused on mobile digital
television, which will include mobile marketing capabilities. The role of the FCC in
authorizing such services may be minimal.
Privacy and Security
Policy makers—especially Capitol Hill advocates—continue to raise concerns about

personal information, identify theft and similar threats posed from use of
communications technology. Although most companies and government agencies are
diligent about protecting their customers’ personal information, the frequent and
continuing examples of abuses and lapses—plus the hacking of protected systems—
will continue to keep these twin issues of privacy and security in the spotlight.
Self-regulation and industry cooperation seem to be the best antidotes for

government interference. The FTC, Justice Department, Department of Homeland
Security and other agencies at the federal and state levels will continue to use their
enforcement tools.
Future Developments
The political transition triggered by the November 2008 elections will inevitably affect
policy making. The FCC and FTC, which have been headed by a Republican-
appointed chairman and had three Republican members, will now shift into
Democratic hands. The Justice Department, Commerce Justice and other executive
agencies will be led by Democratic appointees.
48
Although broad policy changes are unlikely, many specific initiatives—including net
neutrality (which the Obama campaign endorsed) and restrictions on marketing may
be adopted during coming years. The impact on the nascent mobile marketing
industry is, as yet, not clear.
Industry Response and Best Practices
The Mobile Marketing Association has adopted Consumer Best Practices Guidelines
that are intended to cover marketers’ use of SMS, interactive voice response, off-
deck QWAP and other applications. The document is a compilation of accepted
industry practices, wireless carrier policies and regulatory guidance. The MMA
guidelines are an effort to establish self-regulatory practices and focus on several
“hot button” topics including:
• Limits on unsolicited messages and consumer privacy;

• Establishing of pricing categories such as free to-end-user, standard rates and
subscription rates;
• Guidelines for sweepstakes and contests;
• Chat guidelines;
• Opt-in and Opt-out policies;
• Marketing to children;
• Customer care; and
• Spending cap limits.
The MMA updates its Consumer Best Practices Guidelines periodically. The July 2008
version is posted on its site (www.mmaglobal.com/policies/consumer-best-
practices).
49
50
Chapter 8
Case Histories of Mobile Marketing
Introduction
Every sector of the evolving mobile marketing industry has contributed to the
practices and processes that are shaping the industry. Following are four examples
from various segments.
Obama for President 2008: “Celling of the President”
After three election cycles in which the Internet was expected to play a significant
role in the campaign process but ultimately was a marginal factor, 2008 was the
breakthrough year. In particular, the role of mobile communications in the Barack
Obama campaign has prompted some to describe it as the “Celling of the President.”
The Pew Internet Project found that a record-breaking 46% of Americans used the
Internet, cell phone text messaging or e-mail to obtain information about the
campaign. In some categories Internet usage was triple the levels of the 2004
campaigns. For example, about 6% of Americans made political contributions online,
compared to 2% who did so in 2004.
Mobile communications played a major role in the efforts, particularly in the tech-
heavy activities of the Obama campaign. Text messaging was a fundamental
51
component of the plan, used on an opt-in basis. This established relationships with
supporters, especially young voters. For example, the Obama campaign blasted text
messages at key moments of their campaign, notably the announcement of Joe
Biden as the vice presidential running mate. An estimated 2.9 million people received
that text message early on the Saturday morning (August 23, 2008) just before the
Democratic National Convention began. The Obama campaign has not officially
released the number of supporters who signed up to receive mobile text messages
and other online communications.
For the mobile campaign, the Obama team set up a dedicated mobile Web site:
http://obamamobile.mobi. Supporters who logged in to the campaign’s primary Web
site, with an M (for mobile) prefix—http://m.barackobama.com—were automatically
redirected to the .mobi site. The mobile site invited visitors to “Get involved: Sign up
for mobile alerts”—basically to register to the short code 62262 (the keypad
numbers corresponding to the letters O, B, A, M, A). This opt-in procedure enabled
the campaign to identify its contacts.
From the Obama mobile server, supporters could download ringtones, wallpapers
and campaign videos. Users could also get candidate information—such as campaign
stops and schedules, as well as news reports and social networking opportunities
(e.g. the link to “ask a friend to join”). Most significantly, the mobile site—like other
Obama online components—permitted individuals to make financial contributions.
The mobile site also enabled supporters to request white papers and other
documents, which were automatically sent via e-mail to their desktop or portable
devices.
In addition to the text alert for the Biden selection, the Obama campaign dispatched
messages before local appearances, prior to the debates, as well as on the eve of
primary and general Election Days. There was also a “thank you” message after the
November 4 victory.
Supporters who signed up for the service paid an average of 10 cents per message,
although that figure varies widely. It is assumed that many in the young, tech-savvy
Obama cadre subscribe to their wireless carriers’ “bulk text messaging” packages.
Casual and occasional users pay about 20 cents per message.
Each text message blast generated a cost for both sides (the Obama transmission
and the individual reception), whether it was a per-use fee or a click on the bulk
bundled subscription fee). One analysis of the Biden message blast concluded that
52
Table 8.1:
Estimated Cost of Obama Text Messaging Campaigns
Total Spent Total Spent Total Spent

Number of people signed up
(at 3¢/message) (at 5¢/message) (at 10¢/message)
100,000 $39,000 $45,000 $60,000
500,000 $195,000 $225,000 $300,000
1,000,000 $390,000 $450,000 $600,000
3,000,000 $1,170,000 $1,350,000 $1,800,000
5,000,000 $1,950,000 $2,250,000 $3,000,000
Source: Silican Alley Insider
the total expense for that event could have ranged from about $1.2 million to $1.8
million, depending on the fees for each individual message (in the range of 3 cents to
10 cents per message). If there were 5 million participants, the range rises to $1.95
million to $3 million (see Table 8.1).
One objective of a political campaign is to build a contact list of supporters,

contributors, volunteer workers and other citizens. The Obama campaign gathered
e-mail addresses, phone numbers and other data about supporters, securing
relationships that can be used in future political efforts by Obama and other political
allies.
Strategically, the use of SMS—and online messages as well—represented an

integrated marketing plan. Among its attributes: it bypassed traditional media as a
way to communicate with and energize a large and widely dispersed audience. The
interactive features enabled financial contributions and viral social media
connections, which the Obama campaign exploited.
The Obama campaign’s activities have been widely hailed as a prototype for the
digital era. Advertising Age declared Obama as the “Marketer of the Year,” citing the
digital campaign and especially its mobile marketing component. In the polling of
marketing industry executives, the Obama campaign (36.1%) scored ahead of
familiar brands such as Apple (27.3%), Nike (9.4%), online shoe seller Zappos
(14.1%) and Coors Brewery (8.7%). The John McCain campaign (4.5%) was far
behind.
53
The McCain campaign also used mobile marketing, but far less aggressively. It was
difficult to find the SMS sign-up information on the primary McCain campaign Web
site, www.JohnMcCain.com. There appeared to be few efforts to dispatch text
messages consistently during the campaign. One significant promotion for the
McCain SMS capability came during the Republican Party’s convention: an SMS
appeal to donate funds to the American Red Cross for victims of the hurricanes that
were hitting the southern U.S. during that period. (The Obama campaign also urged
$5 text donations to the Red Cross during that period.)
Nokia: A Manufacturer Supports Services
Nokia, the global electronics maker and the largest mobile handset manufacturer,
has developed many tools and services to encourage mobile marketing and support
mobile advertising. The company’s underlying rationale is to make Nokia’s hardware
more useful and desirable, thus adding value to the mobile experience. Beyond that,
Nokia seeks to establish a mobile digital environment, putting itself at the epicenter.
Nokia Media Network's wide reach of the most desirable mobile audience is yielding
click-through rates averaging 10% in certain channels, the highest reported response
rates in the industry. Overall Nokia properties reach more than 100 million mobile
consumers around the globe, for now far more than any other provider.
“The industry as a whole is in the middle of a transformation,” Nokia’s CEO Olli-

Pekka Kallasvuo said in an October Information Week interview. “It’s moving from a
device industry to an experience industry, and we're making a conscious long-term
effort to capitalize on that.”
The Nokia Media Network is a global aggregation of digital Web sites on which
advertisers can place their mobile messages; as a mobile advertising network—
comparable to many existing online ad networks—it brings together brand-name
Web publishers and enables marketers to place ads onto their mobile components.
The Nokia Media Network originally served parts of Europe, Scandinavia and Asia,
but in February 2008, it was opened to include Canada, Brazil, Mexico, China,
Russia, and areas of Europe not previously reached. It competes with ad networks
including Quattro Wireless, Millennial Media and AOL's Third Screen Media.
BMW, Paramount and MobiTV are among the brands that have advertised on the
network. Nokia seeks to establish a “uniform ad unit and the ability to purchase and
track campaigns” worldwide through this network.
54
Nokia brings the advertisers to the appropriate sites, which include (in the U.S.)
AccuWeather, A&E Network, Bio Channel, History Channel, CNET, Discovery, Fox
News, The Hollywood Reporter, Hearst, Reuters and Agence-France Press. The
network also includes wireless operators, such as Sprint and Airtel.
The networks also include Nokia properties, such as Nokia MOSH (a social
networking site, see below) and Nokia.mobi. Additional properties, which Nokia has
either built or acquired, include Navteq and Gate5 GPS navigation services; Twango
and Ovi photo sharing sites; game platform N-gage; and other providers which offer
services and opportunities for advertisers.
Another operation to support mobile advertisers and content owners is Nokia

Interactive Solutions (formerly known as enPocket, which Nokia acquired in October
2007), based in Boston and London. The group builds mobile-centric Web sites and
services. One of its units, Nokia Interactive Advertising, has created mobile
campaigns for big brands such as BMW, Hyundai, Kraft, Unilever, Ford and MTV
Networks. Its campaigns include banner ads, mobile Internet sites, location finders,
mobile coupons, click-to-call and other advanced mobile mechanics.
Another client, Dolce & Gabbana used mobile to promote the brand’s new teen-
focused fashion catalog; the campaign was tied to a Fashion Week event in Milan.
As part of the campaign, D&G created the game “Dee&Gee.” Nokia designed banner
ads that were served via the Nokia Media Network. The banners led consumers to a
D&G mobile Internet site where they could download the game to their handsets, as
well as view the catalog and download branded wallpaper. The campaign received an
average click-through rate of almost 10%.
Exemplifying the ever-closer relationship between advertising and content, Nokia has
accelerated its development of “MOSH,” which stands for “Mobilize and Share.”
MOSH offers a user-driven distribution channel for applications and other content for
mobile devices. In the process, it establishes new social network platforms on which
advertising can be inserted.
Nokia’s November 2007 acquisition of Navteq Corp., the Chicago-based maker of

mobile mapping software (mainly used in automotive navigation systems), has
quickly focused on location-based services. The $8.1 billion deal gives Nokia a tool
that can be offered for LBS advertising. Nokia sees maps and the information
associated with them as a vital component of mobile advertising and transactional
services. Navteq has been visually enhancing its maps, adding dynamic information
such as local fuel prices.
55
Navteq is also adding “deeper details” about local facilities, such as parks and
community information in up to 90 U.S. cities by the end of 2008. Although LBS
advertising is a goal in this effort, the challenge for Nokia/Navteq will be developing
these features without introducing unnecessary costs into the process.
Nokia has tested an “image recognition” system that has been used in several
European advertising campaigns. In one project for a football (soccer) championship,
Nokia’s partners posted photos of a goalkeeper in front of the goal net. Participants
were told to use their camera phones to indicate where the ball should go. The
process then took users to a site that showed where the shot actually hit and
whether the goalkeeper stopped it or allowed the ball to reach the goal. If the shot
got through, the player was eligible to win tickets to a football championship.
For another image recognition campaign, conducted with Vodafone (the European
mobile carrier), Nokia created a Formula 1 racing contest. Participants were asked to
match the childhood photo of a star racing driver with his current celebrity picture.
Through a two-way SMS process, participants found out the correct photo matches
and also were able to enter a drawing to win tickets for a Grand Prix race.
Another Nokia marketing project involved the use of mobile commerce. Nokia is also
exploring how to integrate mobile payments—primarily micropayments—with the
Near-Field Communications (NFC) capabilities being installed into phones. This
includes RFID (Radio Frequency Identification) chips that can recognize and handle a
secure payment opportunity and transmit data to the customer’s financial account.
Such micro transactions via mobile phone, already being tested in Europe and Asia,
include purchases from vending machines and public transportation fares.
Nokia’s support of mobile-based marketing development mirrors similar industry

support efforts from other handset makers. In doing so, the company validates the
capabilities of mobile platforms. It also secures relationships on multiple levels with
media, marketing and advertising companies. The risk may be in isolating its own
services from those delivered to customers using other handset technology.
Kinetic Mobile: A Focused Ad Agency
Advertising agencies have been at the center of interactive media development,

often positioned as “Web development partners” or providers of creative and media
planning services. In the past decade, some have specialized in mobile marketing
services or spun off a subsidiary to focus exclusively on the mobile market.
56
Kinetic Mobile is just such an agency. It was hatched within Kinetic Worldwide, a
global ad/marketing agency that specializes in “out of home” media (including
billboards and transit signage); Kinetic itself is jointly owned by the massive WPP
Group and its own management team. In early 2008, Kinetic Mobile was spun off as
a separate entity, based in New York and London, to focus on mobile marketing. It
brought with it clients from its out-of-home parent, such as British Airways, Visa and
U.K. retailer Tesco.
In setting up the mobile-focused agency, management concentrated on the

categories to serve, which helped organize its structure:
• Entertainment, because mobile lends itself to new forms of entertainment,

• Financial services,
• Retail and consumer packaged goods,
• Automotive, and
• Travel.
Michael Collins, CEO of Kinetic Mobile, expects that entertainment advertising—

ranging from cinema trailers and showtime listings to music and games—will remain
the mainstay of the mobile marketing sector for several more years. He
characterizes mobile entertainment as “entertainment snacking,” with customers
typically spending two to seven minutes per day on various entertainment-related
messages. “Mobile is what you do while you’re waiting to do something else,” he
said.
The agency is also focused on the “user experience” for mobile—which is a much
more important factor than the user cost, Collins added. That experience is one
reason that Collins sees great opportunity in retailing and consumer packaged goods,
a category with a modest and sporadic presence online.
“Dollars will open up as soon as we bridge the POS (point-of-sale) issue,” Collins
said, referencing the development of location-based systems and m-commerce
capabilities. When new scanners are deployed, paper coupons will become a thing of
the past, he added. Acknowledging that these steps will require additional
intelligence in handsets plus more precise targeting systems, Collins expects that it
will take at least two to three years (i.e. until about 2011 or 2012) to develop the
mobile market for consumer packaged goods.
Driving Kinetic Mobile’s interest in mobile advertising is its economics. “Mobile can
deliver a cheaper cost per lead” than other media, Collins explained, citing the value
57
of that capability during a period when “ad dollars have to work harder.” He
acknowledges that mobile media does not allow advertisers to be as visually
creative, yet the mobile phone is very engaging in other ways.
“You can take in life patterns, get to people [where] they are living their lives,”
Collins said. This, in turn, creates a better dialog, more persuasive than a desktop
experience, despite the graphic limitations.
Although Collins is upbeat about travel opportunities, largely because of the direct
response capability, he hesitates to predict how large a category it will become on
the mobile platform. In part, its success depends on GPS capabilities—which would
suggest that the widespread deployment of location-based services, which Collins
expects, would ripple out to travel services—again, depending on the definition of
such ad campaigns.
For an advertising agency in a volatile climate, Kinetic Mobile recognizes that its
clients (and its own operations management) must make decisions based on many
evolving factors. He cites Verizon Wireless’ recent decision to impose an additional
3-cent tariff on every text message, which affects the industry’s “fundamental
underpinnings.” Such volatility raises the bar to making long-term business decisions
and deploying capital when companies cannot assure the opportunities and prices
that will be in place a year or two into the future.
The cost of developing advertising for the mobile platform is also a challenge, Collins
said. Design can be labor intensive, and thus expensive while the scale of potential
users is relatively small. For some projects, it is hard to do a cross-carrier media
buy, which further restricts some deployment.
Nonetheless, as an agency executive focused on mobile marketing and advertising,

Collins believes that users are excited about the new ways to reach clients through
mobile devices. Apple’s iPhone has recharged such clients during the past year.
Collins looks forward to a “richer, high-fidelity experience” for ads on the iPhone,
Google’s Android platform and other smartphones. The introduction of faster 3G
networks and compelling content will spur that experience, he said.
Hyundai Motor America: Integrating Mobile Into Launch Campaign
The automotive industry has aggressively used “new media” for sales and marketing
efforts for more than 20 years, ranging from “online test drives” to promotions via
58
Internet and wireless platforms. It is estimated the industry spends more than $500
to attract a prospective customer into a dealer’s showroom via brand advertising and
promotions, so automakers and car dealers constantly seek to make those costs
more productive.
In particular, the auto industry has been challenged to match new media to the type
of vehicle (including price range) aimed at its target audience. Hence Hyundai Motor
America, the U.S. subsidiary of the Korean automaker, made a sizeable commitment
when it pursued an integrated cross-platform campaign—including mobile
advertising—to launch its upscale Genesis line of cars, which it sought to position
against BMW and Mercedes. One element of the campaign was a mobile initiative
coordinated with Hyundai’s two video commercials during Super Bowl XLII in
February 2008. It demonstrated how to integrate mobile advertising into a complete
ad campaign.
The Hyundai mobile campaign featured downloadable wallpaper (images of the new
vehicle) and ringtones, including the sound of the engine’s “rev.” The integrated
marketing campaign also featured banner ads that clicked through to the Genesis
mobile Web site, where users could find the downloadable content. Hyundai ran
cross-promotional ads on the Web to encourage viewers to text in an SMS shortcode
that led them to the Genesis mobile Web site.
The entire campaign—including mobile and other media—was intended to raise brand
awareness. Hyundai and its mobile advertising provider, Nokia Interactive
Advertising, said that the click-through rate for the mobile site averaged 3.4% and
called the results of the test campaign “very encouraging.” Additionally, 11% of
people who clicked through to the Hyundai banner ad submitted their e-mail address
to get the free “RevTone” downloads, giving the carmaker a live lead to follow-up for
subsequent sales efforts. Hyundai was able to capitalize not only on the days leading
up to the Super Bowl itself, but leveraged the after-effect as the brand-sponsored
wallpaper and ringtones continued to offer brand identification after game day.
Post-game research by the Nielsen Online MegaPanel Survey found that 43% of
respondents had improved their opinion of the Hyundai brand, the highest of any
automotive advertiser. In addition, in comScore's 2008 Super Bowl post-game
survey, Hyundai garnered a 45% increase in net brand improvement, the highest
figure of any Super Bowl advertiser. While those factors were not solely due to the
mobile component, Hyundai executive Eric d’Ablaing contended that the Nokia
Network’s “prime ad placements and quick delivery of a high quality campaign”
contributed to “outstanding results.”
59
60
Chapter 9
More Examples of Mobile Marketing
Projects and Experiments
In the early stages of any technological opportunity, pioneers try out all sorts of
ways to use the new platform to reach their target audiences. As marketers test the
airwaves, so to speak, for mobile marketing and advertising, an intriguing array of
ideas are emerging. Here is a random and very limited roster of the kinds of services
that are being implemented:
• Visa Inc. is expanding its mobile payment services in late 2008 by using the
Android operating platform developed by Google. The partnership opens the
door for Visa itself to use mobile marketing. The first services developed for
Android allow Chase Visa cardholders to opt in and receive notifications to
their mobile devices about activity on their accounts, including notification
about special deals from marketers and use of a “locator feature” (powered
by Google Maps) to find the location of the nearest retailer offering for that
deal. Deals show up on the phone as logos, and when the customer clicks on
that logo, a coupon appears that can be redeemed by showing the screen at
the store’s checkout counter. Visa plans to develop similar services for other
card-issuing financial institutions.
• Meijer Inc., a Michigan-based supermarket chain, developed an interactive

“widget” called “MealBox,” which was designed and managed by Qponix, a
61
More Examples of Mobile Marketing Projects and Experiments
Seattle Web developer. MealBox offers coupons, specials and other deals,
within appropriate Web sites and can generate a shopping list based on real-
planning and recipe selections made by the customer. Although initially
developed for online sites, Meijer adapted the application for the iPhone.
Customers can save a list of coupons on the handset and have the device
scanned at the checkout register in the store.
• Sears2go, a mobile commerce site from the Sears department store chain
enables shoppers to find and buy selected Sears.com merchandise from their
handsets. Powered by Usablenet, Sears2go allows customers to shop from
categories such as apparel, jewelry, tools, toys and games, electronics/
computers and fitness/sports. When a customer makes a purchase, Sears
sends a text message alert when the merchandise is ready for in-store pick-
up. Sears2go offers additional features from the Sears.com Web site,
including product reviews, store locators and promotional offers.
• 3rd Dimension Inc., a mobile services network, is collaborating with the NBC
television network to launch “Mobileyes,” a mobile advertising network that
includes live video transmission of road and traffic conditions in several cities.
While the video is loading from the requested real-time highway traffic
cameras, 3rd Dimension serves an advertisement from the new Mobileyes
Advertising Network. The system includes a geotargeting capability so that an
advertiser can push an ad related to the direction in which the customer is
heading. Initial advertisers include McDonald’s, local auto dealers and (for the
Philadelphia-area service) the local tourism authority. Mobileyes is initially
available in New York, Los Angeles, Washington, D.C, Detroit, Houston,
Kansas City, Hartford, Knoxville and Indianapolis.
• Land Rover ran a mobile campaign aimed at affluent males. Twenty-three

percent of those who clicked through to the landing page responded to at
least one call to action; 88% watched a video, 3% used “click-to-call,” and
9% entered their zip codes, using the dealer-locator module. Of the qualified
leads, 50% of the click-to-call connections generated voice conversations of
longer than 30 seconds, which Land Rover considered significant.
• The Chicago Tribune Media Group recently expanded its mobile classified
advertisements by launching Automart Quickfind, a service that sends out
detailed information to mobile phone users about specific vehicles listed in the
newspaper’s Saturday auto section. The set-up enables users to send an SMS
containing a code for a car featured in the Tribune’s Automart section, which
62
triggers the system to send photos of the vehicle, the seller’s contact
information and driving directions to the seller’s location (usually an auto
dealership).
• When Penguin Books published Slam, the latest novel by Nick Hornby (and his
first novel aimed at teenagers), it created a mobile campaign that involved
downloadable audio of celebrity voices via the Blyk mobile network. Blyk
created a two-part messaging dialogue whereby positive respondents
received a 90-second audio preview of the book’s first chapter, read by a
national TV star; this marked the first time audio clips were sent via mobile to
promote a book. The campaign generated a 67% response rate.
• Diageo ran a special mobile service to promote Smirnoff, its premium vodka
brand. The campaign, developed by the digital agency AKQA, offered a
“pocket guide to vodka” plus entertainment and lifestyle tips, which were
integrated with mobile portals and lifestyle sites. The content on the mobile
site combined useful information and branding; a section called “Pocket
Bartender” provided a collection of Smirnoff Signature cocktails and a
“Vodkapedia” explained facts and information about the subject of Vodka.
• The U.S. Navy launched an innovative “click to video” mobile campaign

intended to raise awareness of opportunities in service. The ads ran on mobile
sites in categories such as entertainment, sports, news and weather. The
campaign, designed by Third Screen Media, was sent out with an “auto-play”
feature to the phone-enabled, and included a click-to-call banner. The Navy
received a click-through rate of more than 3%.
• MINI USA (for the Cooper Mini automobile) expanded its “Hammer & Coop
campaign to include a mobile component—a series of short episodes that can
be seen on a branded mobile content channel on Sprint and WAP sites in the
Ad Infuse network. The network can insert 15-second and 5-second video ads
on associated podcasts. The campaign features segments about two crime
fighting characters, Hammer and Coop, with Coop being a MINI Cooper S.
• For location-based services, a vital issue is where users are when they access
their mobile service. A study done in collaboration with the Vancouver (British
Columbia) Transit Authority analyzed SMS requests for bus schedule
information. The greatest number of requests originated from major
intersections in downtown Vancouver where the buses stop very often; many
of the hot spots tracked corresponded with bus shelters that had full-size “call
63
to action” posters suggesting that passengers could obtain schedules via text
message. There were far more requests for schedule information in the
entertainment and business districts than in suburban/commuter locations
where regular passengers seem to know the schedules.
• Blyk is a mobile network for 16- to 24-year-olds, aligning young people with
brands they like and awarding them free text messages and usage minutes
every month. The ad-supported service is available only in the U.K. (2008),
with plans to expand pan-European during 2009 with the potential to reach
over 40 million young consumers. Among its advertisers are Brylcreem (for its
“b:” hair care products aimed at young males), Penguin Books and music
companies.
• Gawker Media, a youth-oriented Web publisher whose sites include Gawker,

Defamer, Jezebel and Gizmodo, partnered with mobile ad network Quattro
Wireless to run mobile sites across its properties, five of which are exclusive
for the iPhone. Ketel One, the vodka maker, negotiated with Gawker about
running an exclusive mobile campaign on its site.
Additionally, advertising agencies are extending their capabilities to serve the mobile
marketing business.
• Omnicom Group established “Mobile Behavior,” an agency focused on

matching advertisers to the right audience by understanding consumers’
mobile experiences and expectations. The practice will work with Omnicom’s
agencies on projects for various clients.
• Rhythm NewMedia focuses on serving mobile in-video ads in partnership with

more than 60 media companies, several top tier mobile operators and dozens
of brand advertisers. Rhythm's services include ad sales, ad serving, custom
iPhone and smartphone application development, mobile site design and
overall video management. Rhythm, based in Mountain View, Calif., and New
York City, recently launched vSNAX Videos, a free entertainment application
for Apple's iPhone and iPod touch, to showcase Rhythm's ability to develop
user experience, groundbreaking ad units and high quality streaming. Clients
include Mazda, BMW, Puma, Toshiba and Paramount Pictures.
64
Chapter 10
Conclusions
Mobile marketing—including advertising—remains on track to grow revenue by 20%

to 25% annually between 2009 and 2013, reaching at least $6 billion in the U.S. by
2013. The velocity of that growth will be determined by several factors:
• Customers using smartphones which permit greater graphic and interactive

(transaction) capabilities.
• Marketers shifting their budgets into mobile-specific services.
• Technology improvements that assure security and accurate measurement of

mobile marketing activities.
• Economic conditions (the biggest uncertainty of this period) which enable

expansion of services and experiments with new technologies.
Identifying the scale and velocity of mobile marketing growth remains the most
challenging task for every sector involved in the business, including the carriers and
equipment makers that control the infrastructure of the wireless communications
business.
Mobile marketing is currently at the point where online Web advertising was about a
decade ago. This is significant because mobile marketing is in many ways an off-
65
Conclusions
shoot of Web marketing, migrating to a mobile platform. At the same time, mobile
marketing has attributes—notably the always on/always present mobility factor—that
distinguishes it from desktop-anchored services—in much the same way that Web
interactivity differentiated it from conventional direct response or brand advertising.
Overall, the wireless mobile industry will be affected by developments in several key
areas:
• Consolidation at all levels, notably equipment makers and some carriers.
• Adoption of smartphones or development of other innovative transceiver

devices that can be used for marketing delivery at affordable prices.
• Convergence, especially the integration of marketing/advertising into

entertainment content.
• Competition, including the feature-creep prospects of a full-out battle

between Apple (iPhone) and Google’s Android platform. Marketers may be
swept into such a battle if they are forced to take sides under pressure for
exclusive deals. While most marketers would want to avoid cutting out
potential markets (i.e. users of “the other” device), such decisions may have
to be made.
Competition will also include technology turf wars, such as the platform war
between WiMax and LTE (Long Term Evolution) wireless broadband
technologies, which may affect marketers’ decisions on when to move into
this sector.
• Regulation may play a bigger role in industry development. The new Obama
administration is tech-savvy, and has indicated a commitment to re-asserting
control over many of the telecom and media sectors that have been
unleashed in recent years. Actions at the FCC, FTC and in Congress could
affect segments of the mobile marketing industry.
The rapid acceptance of mobile marketing, advertising and commerce assures a

significant place for these services in the digital business arena. The consensus
outlook of organizations involved in the business—such as advertisers, agencies and
media planners—is for growth during 2009 and 2010, despite the turbulent U.S.
economy. An October 2008 Internet Advertising Bureau survey of 115 organizations
found that 62% expect an increase in mobile marketing spending during this period.
66
Conclusions
At the same time, the diverse segments of the industry—although claiming to seek
collaboration and cooperation—have diverse objectives. Such disagreements may
discourage marketers from plunging deeper into mobile marketing until these
differences are resolved.
Nonetheless, the outlook for mobile marketing appears strong—based on the

acceptance of young mobile phone users and the adoption of smartphones, which
will deliver stronger marketing services. About one-fifth of mobile consumers now
use a smartphone, and nearly half plan to purchase such a device within the next
two years.
For mobile marketing to prosper as quickly as proponents hope, several component

industries will have to rethink the ways they operate.
• Advertisers will have to determine if they prefer to reach a smaller, but more
engaged and relevant audience, via mobile platforms than they could reach
on TV or other media.
• Marketers will have to expand their view of mobile advertising’s effect on

consumers, particularly on the post-mobile interaction, not simply consumers’
click-through response.
• Carriers will have to decide if “on-deck” services provide a sufficient

experience that will encourage marketers to embrace mobile marketing.
There is plenty of room for more experimentation and implementation as marketers

and consumers become more aware of and comfortable with the opportunities of
mobile marketing.
67
Conclusions
68

Mobile Marketing

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Mobile Marketing

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Opportunities in Mobile Marketing &

©2008 Simba Information

ISBN 13: 978-0-88709-346-3

Table of Contents ________________________________________ i

Executive Summary _____________________________________ 1

Chapter 1: Overview of the Mobile Marketing Business __________ 5

Enabling a Critical Mass _____________________________________________8

Table 1.1: U.S. Mobile Phone Market Share _____________________________6

©2008 Simba Information, Stamford, CT · 203-325-8193 · www.simbainformation.com. Copying Prohibited.

Chapter 2: U.S. Industry Structure _________________________ 13

Competitive Environment ______________________________________________ 15

Carrier Outlook ______________________________________________________ 16

Content Creators and Aggregators ___________________________________17

On-Deck vs. Off-Deck Content ______________________________________18

Outlook for Mobile Industry Structure _________________________________21

Table 2.1: Mobile Ad Networks and Their Benefits _______________________20

Chapter 3: Technology and Implementation _________________ 23

Transmission Technologies _________________________________________24

Third Generation (3G) _________________________________________________ 25

Operating Systems ___________________________________________________ 25

Text Messaging and SMS Codes _________________________________________ 25

SMS Outlook ________________________________________________________ 26

©2008 Simba Information, Stamford, CT · 203-325-8193 · www.simbainformation.com. Copying Prohibited.

Chapter 4: Growth of Products and Services _________________ 29

Location-Based Services _______________________________________________ 32

Pioneering Location-Based Services ______________________________________ 33

Geographic Positioning System (GPS) and Mobile Commerce _______________33

Chapter 5: Usage Patterns, Measurement & Analytics __________ 35

Steady Choices ______________________________________________________ 38

Measurement and Analytics _________________________________________39

Table 5.1: Mobile Content Usage_____________________________________35

©2008 Simba Information, Stamford, CT · 203-325-8193 · www.simbainformation.com. Copying Prohibited.

Chapter 6: Social Media and User-Generated Content __________ 41

Bringing Ads to Mobile UGC _________________________________________43

Table 6.1: Comparative Estimates, Mobile UGC Revenue __________________43

Chapter 7: Policy Considerations __________________________ 45

Chapter 8: Case Histories of Mobile Marketing ________________ 51

Table 8.1: Estimated Cost of Obama Text Messaging Campaigns____________53

Chapter 9: More Examples of Mobile Marketing Projects and

Chapter 10: Conclusions _________________________________ 65

©2008 Simba Information, Stamford, CT · 203-325-8193 · www.simbainformation.com. Copying Prohibited.

This report is based on extensive analyses of companies and organizations in the

Simba has synthesized the forecasts of growth, where possible, to devise a

©2008 Simba Information, Stamford, CT · 203-325-8193 · www.simbainformation.com. Copying Prohibited.

Methodology for Projecting/Estimating Results

©2008 Simba Information, Stamford, CT · 203-325-8193 · www.simbainformation.com. Copying Prohibited.

©2008 Simba Information, Stamford, CT · 203-325-8193 · www.simbainformation.com. Copying Prohibited.

“Mobile marketing” encompasses many applications, technologies and services,

• Advertising delivered to a mobile phone handset, such as graphic display ads

• Mobile commerce (m-commerce), a sale or transaction conducted via the

• Point-of-sale support, especially for advertising that is connected to a

• Location-based services (LBS), which (using geographic positioning data) can

• Search-based marketing, which amplifies the value of Internet searching to

• Content suppliers, such as music, information and video entertainment;

©2008 Simba Information, Stamford, CT · 203-325-8193 · www.simbainformation.com. Copying Prohibited.

The mobile marketing community includes several intertwined but independent

• Wireless telecommunications carriers: In the U.S., the largest carriers

• Handset suppliers: Equipment manufacturers, such as Apple, LG,

• Marketers and advertising agencies: Consumer products companies,

• Audiences: Young audiences—the so-called “Generation M” (Mobile

• Regulatory, legal and standards organizations: In the U.S., the Federal

©2008 Simba Information, Stamford, CT · 203-325-8193 · www.simbainformation.com. Copying Prohibited.

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