Mobile advertising is still in its nascency, but operators convinced of its potential to bolster their and advertisers' bottom lines are working to persuade wary brands of its benefits.
Last October, 3 announced plans to transform itself from a 3G mobile network into a 'mobile media company'. At the heart of its plan was an audacious strategy to lure big brands to advertise on mobile phones. A year later and this strategy is only just starting to yield results.
While 3 is fast establishing itself as a pioneer of user-generated mobile content through its popular See Me TV and music-download services, its attempts to convince advertisers that mobile is a valid channel are still at a very early stage. This is despite the fact that it has become the mobile operator of choice for the notoriously hard-to-reach youth market because of its low tariffs and focus on irreverent content.
3 is adamant that there is revenue to be made from mobile advertising. Mark Joseph, its director of music and TV, who has run campaigns for Apple's iPod in the past, says that 'advertising is the next logical step for 3 as a mobile media company'.
'We are in the early days at the moment, but this is definitely something we see as growing to be an interesting source of revenue,' he adds.
At the heart of 3's ad strategy was the intention to sign up a third-party sales house to sell inventory across its portal. However, while the company was heavily linked with mobile marketing agency FlyTxt earlier this year, it has yet to sign up a sales partner. Sources are now suggesting that it has opted to work with a number of suppliers, rather than a single retained agency.
Though 3 is still building the foundations of an advertising business, it has already had some successes, including signing up Budweiser, Electronic Arts and Canon to sponsor its World Cup mobile-highlights package and magazine show.
Joseph insists that this is just the start and that 3 has identified clear advertising opportunities for brands across its service. 'So far we have run full-length, TV-style video ads for Apple, an interactive competition microsite for Budweiser, video bumpers around proprietary TV content for Canon, banner ads and click-to-call mechanics for 118 118 and straightforward portal placement deals with content providers such as EA,' he says.
One factor in 3's favour is that analysts are increasingly bullish about the potential of mobile as an advertising channel, not least because of the personal nature of handsets.
Last month, media research specialists Informa Media predicted that within five years, global mobile advertising revenue will be worth dollars 11.35bn (pounds 6bn). Some of this growth will come from the introduction of search and location-based services, which allow brands to target consumers based on their geographical position. Analysts also believe that TV-style advertising has a big future in mobile, particularly as a mechanism to fund exclusive content.
Catalysts to growth
Two factors are behind the forecast growth, according to Nicky Walton, senior research analyst for Informa. First is the proliferation of more advanced handsets, which offer colour screens as standard, 3G capability and access to operator portals. Second, consumer interest in mobile media and content, fuelled by early versions of mobile TV, is also growing.
'As operators push for new revenue streams, advertisers search for more immediate, intimate access to consumers, and the technology becomes more effective for ad delivery, we will see dramatic growth in this space,' she predicts.
3 is not alone in trying to attract big brands to part with their adspend. All the operators are working on developing mobile marketing, although some are at a more advanced stage than others.
Orange, for example, recently started selling advertising on its portal, Orange World. …