Facebook seeks breakthrough in mobile ad market

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02 Mar 2012 , 21:25

Barcelona: For Facebook it must look like a no-brainer – exploit its huge consumer loyalty and half a billion mobile phone users as a way of opening up the mobile market to blue chip advertisers.

Trouble is, there are reasons for the limited success so far of mobile advertising and none of them have completely gone away. Even if Facebook succeeds, others eyeing this potentially massive market may still struggle to cash in.

Earlier this week, Facebook announced new ways for businesses to advertise to its users, including on mobile for the first time, by having marketing messages appear in its members’ news feeds — partly an effort to establish regular revenue streams as it gears up for an initial public offering.

The move could help give advertisers access to the mobile phone market, long seen as underexploited, but is unlikely to open up the market more generally.

Despite pent-up demand from advertisers — and a vast discrepancy between the amount of time consumers spend on their mobile devices and the advertising dollars spent there — there are still big barriers to mobile phone ads.

Mobile has proved almost impenetrable to advertisers except through Google Inc searches for a host of reasons, including the small screen, a lack of good mobile websites and resistance to the invasion of a space seen as more private than a computer.

For Facebook it must look like a no-brainer - exploit its huge consumer loyalty and half a billion mobile phone users as a way of opening up the mobile market to blue chip advertisers.AFP

Much experimentation is underway at telecom operators, ad agencies and software firms to find ways to deliver tailored ads to people based on their location and capitalise on a boom in smartphone sales, without driving away customers.

In Britain, for example, the three biggest mobile operators including Vodafone Plc are creating a joint venture that they say will allow advertisers to create a one-stop shop for advertisers to book campaigns that reach a national audience,

as well create coupons and loyalty schemes for stores.

Together, they have 70 million subscribers — more than the entire UK population as many Britons have more than one device — but such numbers are dwarfed by Facebook’s 425 million who regularly access the site from a mobile phone.

Facebook could succeed where others have failed because the messages will appear as a news item where a user has “liked” a brand or bought a product via Facebook, meaning they should feel more like a personal recommendation than an ad.

“You cannot have a brand coming along and just flaunting itself,” says Marco Veremis, president of digital marketing firm Upstream, which has run mobile campaigns for brands including Coca-Cola Co , Nestle SA and Royal Dutch Shell Plc .

“I would say they are going about it very carefully.”

IRRITATING ADS

Of the time spent consuming media, more than a quarter is on a mobile device, surpassing television at 22 percent, according to a study released this week at the Mobile World Congress in Barcelona by InMobi, the world’s biggest independent mobile advertising network.

Yet mobile accounts for only around 2 percent of the near half a trillion dollars spent globally on advertising each year, while television attracts about 40 percent.

Even powerful companies like Apple Inc are struggling to make an impact.

Advertising agencies and mobile operators are hopeful that the rapid spread of smartphones and tablets, with their Internet capabilities, bigger screens and greater processing power, will create new opportunities for mobile advertising.

Ad agencies can be more inventive than ever before, for example creating layers of video or interactive screens that open up when a user clicks on a banner ad, offering a more interesting experience and new ways of measuring engagement.

Mobile ad technology firm Celtra recently created a campaign for Starbucks Corp in which users could click on an ad to be taken to a screen where they could design their own cup, with the best ones featured in an online gallery.

“Because it’s such a personal device, we’ll see higher levels of engagement, and that should encourage higher levels of responsiveness,” says David Gosen, European managing director of the telecoms unit of research firm Nielsen.

But the personal nature of the phone is a two-edged sword.

According to a survey released by Upstream last week, the vast majority of adults in the United States and Britain find banner adverts on mobile devices irritating, and fewer than one in six who surf the Web on a mobile have ever clicked on one.

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