Paid Search on Mobile: Looking Beyond the Hype

The last couple of years have seen a lot of speculation on the opportunity that is the ‘mobile internet’.  Carriers, mobile content providers and handset companies have all been working like crazy recently to position themselves as the organisation that can offer the ultimate mobile internet solution. 

The latest much debated topic around the mobile internet is whether mobile advertising will ever take off.  Analyst company Juniper Research seem to think it will.  In a report out this month they estimated that total annual advertising spend on mobile services will exceed $1 billion (£500 million) for the first time during 2008 rising to $7.6 billion (£3.8million) by 2013.  Part of the reason for this growth, they believe, is the availability of higher speed networks and new generation handsets such as the Apple iPhone.

Ever since the introduction of 3G services in 2003, mobile operators have been looking for a way to recoup their network investments.  Could mobile advertising be the vehicle that will allow them to do this?

A recent survey by Ofcom stated that only 44% of mobile users were actually aware that they could access the internet on their mobile phone – which might suggest that the opportunity may not be as close as we think. Vodafone recently estimated that 27% of its customer-base regularly used their mobile for browsing, collecting emails, or instant messaging and they predicted this figure will reach at least 50% by 2010. There may be more than a little confusion in what the opportunity may or may not be, so before brands start lining up to promote their services via mobile, it’s important to be realistic about the potential of these new platforms. 

Broadly speaking, online advertising falls into two main categories

1.     Search-driven advertising, in which highly targeted ads are presented to a user in response to them entering a search query

2.     ‘Display’ advertising which appears alongside other content.  Targeting of ads may be indiscriminate, contextual (in which the ad is selected based on the content of the page in which it appears) or behavioural (whereby the ad is selected based on inferences made from that user’s historical behaviour), or a combination of these.

In the home or business environment, a key element in the success of search advertising is that it can be presented in a fairly unobtrusive way alongside the ‘natural’ search results.  However the current small screen size of most devices make it extremely difficult to do this effectively in the mobile environment. And it looks like it may be some time before personal internet devices really will be in the mainstream, offering the likes of larger screens, better broadband connectivity and GPS (global positioning systems) integration.

Display advertising is therefore likely to provide a bigger growth opportunity than Search. Inserting this ‘in line’ – so that most or all of the screen is occupied by the ad for a short period prior to (for example) a web page being displayed or a call being connected – is one possible route.  However we have become accustomed to having ad-free services and most users would consider this style of presentation to be highly intrusive.  We’d need to offer some significant incentives to people for this to be acceptable.  Rumours that Google has plans to introduce its own phone which will provide free calling in return for users accepting ads – suggests they may be thinking in this direction.

What’s the conclusion? 

Many lessons have been learned over the last 5 years from the ‘big screen’ home/office environment in how to incorporate ads into websites in a way that is acceptable for users.  But none of these principles can be applied to the ‘small screen’ world of mobile.  We are starting again from scratch and this time, the challenges are much greater.  Mobile ads are going to be a lot more intrusive, and if there is going to be significant growth in this area then some compelling incentives are going to need to be offered to the mobile user if they are to be tolerated or embraced.

By Simon Norris

Co-Founder, Periscopix

www.periscopix.co.uk