Proving that Wireless Advertising Works
By Jeffrey Graham, Mon Apr 30 00:00:00 GMT 2001

Only through continous industry trials advertisers will be able to comprehand how to use the mobile advertising channel effectively.

In the first few years of its history, when every campaign was an experiment, Internet advertising was not expected to provide an immediate return on investment. Advertisers wanted to learn about the medium and to demonstrate that they were on marketing’s cutting edge.

But in the last two years, accountability has crept in. Advertisers have become increasingly frugal with their online advertising. Consequently, the industry is scrambling to prove that online advertising works, especially as a branding vehicle. Unfortunately, mainly because of the reliance on the misleading metric of click-through, the perception that online advertising has failed advertisers is pervasive.

This perception is compounded by another feeling—that online advertising has failed consumers. The transition from a primarily public, non-commercial channel for academics and enthusiasts to a commercial, ad-supported medium has been rocky. Buffeted by spam and intrusive ad units, consumers have become increasingly intolerant of Internet advertising.

It is in this challenging environment that wireless advertising is trying to emerge. Advertisers’ blind faith in anything interactive is gone. Obvious limits in bandwidth, screen size, and adoption mitigate its potential. And it’s not certain that consumers, increasingly wary of advertising and emboldened to resist it, will accept ads on their cell phones, pagers and PDA’s.

The nascent wireless advertising industry is trying hard to prove itself. To that end, like pharmaceutical companies who use trials to prove the safety and efficacy of their drugs, a number of companies have recently conducted studies showing that users will accept wireless advertising, and that it works.

Consumer acceptance

The advent of television, radio and print advertising wasn’t preceded by extensive surveys gauging consumer acceptance. But the issue is a serious preoccupation for wireless advertisers. Why? Because advertising on devices like cell phones is inherently intrusive, and can disrupt user experience. Companies with a stake in wireless adoption realize that bad user experience will slow growth.

If you believe the results of the recent industry trials, however, it seems that consumers will accept advertising on wireless devices—for the right price. Recent studies indicate that consumers will accept advertising on their wireless devices if it saves them money.

As part of an extensive trial involving twenty-two campaigns, Windwire, a U.S.-based wireless infrastructure and media company, asked 260 users about their attitudes towards wireless advertising. They found that 86% of respondents said they preferred free or ad-subsidized wireless content to fee-based content.

A much larger trial of 5000 users in Sweden, conducted last summer by wireless device manufacturer LM Ericsson Telephone, consisted of a total of more than 100,000 messages that included ads. In exchange for receiving ads, users were provided with free text-messaging service in return. Surprisingly, the company found that 60 percent of the trial users said they liked receiving SMS advertising messages when they were targeted to their profile and interests.

Users like ads? A study by U.S.-based SkyGo published a study early this year goes a step further. Twenty-seven percent of trial users said they like ads so much they would switch access providers in order to receive them. But the fact that users were given phones and access to participate casts some doubt on the study’s validity.

Obviously, industry-sponsored research needs to be digested with a grain of salt. Not all research has been proven to be so overwhelmingly positive. Jupiter/Media Metrix, a research company, found that 46% of consumers with wireless phones and PDA’s said that they want no advertising at all, even if it pays for all or a portion of their service or device.

It’s clear that some consumers will tolerate ads and some won’t—the proportions vary, depending on who’s asking. But providing value, and making sure that advertisements are targeted, seems to boost consumer acceptance.

Does wireless advertising work?

Beyond proving consumer acceptance, the wireless advertising industry has sought to prove it works. Recent trials have been successful in showing that wireless devices can be effective vehicles for both branding and direct response.

Quios, a company focused primarily on the European market, set out to prove the effectiveness of wireless advertising last year. During the Euro 2000 soccer tournament, fans signed up to receive real-time SMS notification each time a goal was scored during the tournament’s 31 soccer matches.

Each of these messages was accompanied by a "Brought to you by" sponsor message from one of the campaign’s advertisers, who included Sega Dreamcast, Grolsch Beer and More than 35,000 people in more than 100 countries received a total of 2.5 million alerts in the trial.

The study found that the wireless advertisements had a significant branding effect. About sixty percent of the 500 respondents recalled having seen messages from each one of the advertisers, and twenty-five percent of respondents said they had a higher opinion of the sponsors as a result of the campaign.

Another trial conducted on three models of Nokia cell phones by fusionOne, for their client Net2Phone, highlighted how wireless advertising can be effective as both a branding and direct response vehicle. Among users exposed to two SMS promotional messages, interest in Internet calling increased by 25%, and consideration of Net2Phone increased 57%.

The campaign was also effective in driving direct response. The campaign also had a response rate of 6% to the promotion, and an overall conversion rate of 4%, better than most direct response campaigns on and offline. The success is particularly noteworthy considering that 69% of users said they were unclear as to how to respond to the offers.

Branding or direct response?

If Internet advertising is any indication, there will be tension and debate between viewing wireless advertising as a direct response medium, or one geared primarily towards branding. The advantage of direct response is that it is easier to measure and compare results and calculate ROI. Branding campaigns, however, constitute 60% of advertising spending.

Problems arise, however, when branding objectives are measured by direct response metrics. Based on a survey of advertising agencies, publishers, ad servers and advertisers who ran advertising trials by the Wireless Advertising Association, the problem is already apparent. While 56% surveyed said that the top campaign objective for their tests is branding, the most common metrics used to evaluate them were leads, impressions served, and clicks.

The future

The promise of Internet advertising is that consumers can be targeted with advertisements that they find valuable and relevant. This promise has yet to be consistently fulfilled, and the online experience is cluttered and degraded by untargeted, intrusive advertising that offers little value to users.

Over the past decade, consumers have become more intolerant of advertising and more emboldened to try to block them out. Wireless advertising is the first medium to dawn in the age of the empowered consumer.

The results of these recent, carefully constructed trials suggest wireless advertising can prosper with the right combination of targeting and incentives. But for advertising to work on wireless devices, it is going to have to get smarter. The personal nature of the wireless media raises the bar for advertisers.

Now is the time for experimentation and learning. But before advertisers make significant investments in the medium, companies with a stake in wireless advertising are going to have to have to prove its worth. Striking the right balance between giving consumers what they want, and serving the needs of advertisers, will continue to be a difficult challenge.

Jeffrey Graham is Director at Dynamic Logic, whose flagship product, AdIndex, measures the branding effectiveness of online advertising. Formerly he was Research Director at NOVO, where he helped plan, test, and evaluate e-marketing programs for companies such as General Motors, Procter & Gamble, and Hewlett Packard.

Jeffrey taught Internet Research at New York University and speaks frequently on articles related to eMarketing.