Commnexus SIG Panel on Advertising Hits Mobile…

Hot on the heels of the NAB show, I attended a panel discussion yesterday morning on “Advertising Hits Mobile – How Will It Reshape the Current Business Models” presented by the Wireless Content & Applications SIG of Commnexus. The moderator was Atul Suri of Kyocera Wireless and panelists were Jim Souders, Senior VP of Worldwide Field Operations, Action Engine; John de Tars, Partner in Launch Ideas and, a late add, Jeff Pokonosky, President, WiggleWireless.

Suri guided the conversation around a couple of key questions that attempted get underneath where mobile marketing and advertising is evolving and where it might be going. What is the growth rate of marketing and advertising? Will click thru rates be higher on mobile than Internet click thru rates?

There seemed to be agreement around the current state of mobile media in the US. It is being handicapped by the limited bandwidth available. If you want to get to the largest audience in 2007, your best option is programs that utilize SMS.

There was some focus on the “Three-Legged Stool” in this area of Content Owners, Aggregators, and the Carriers and who stands to win and control this space. Here there was some disagreement. There was one vote for Portal Owners, one for Content Owners and one for Aggregators and no votes for the Carriers.

While at NAB, I had a conversation with a Venture Capitalist who was there looking for possible companies to invest in and, in his opinion; the aggregators are in the best position especially if they can own some of the content. I tend to agree although I think that the Carrier has to see some benefit and ways to increase ARPU (Average Revenue per User) with Mobile Media. After all, Carriers do own the customer and they will need some push to upgrade their capabilities to provide the bandwidth needed to effectively provide rich media content and television to the small screen.

Suri put a stake in the ground over marketing and advertising fees at $1B by 2009 (I assume this is US only). Pokonosky countered that he heard recently at CTIA that is was $45M in 2004 growing to $1.6B in 2007. In either case, what is not known is “how much of this is net new spending versus shifting from one medium to another?”

The panel agreed that the area is too new and there just aren’t any good metrics yet, but they will evolve over time. Until then, advertisers will probably spend limited amounts to get some “On the Program Learning”.

The bottom line consensus was that this is a totally new space that will eventually provide big revenue opportunities for some players. Just who they are and how much it will be worth is still up in the air. It is also not clear what wars will develop between the Content Owners, Aggregators and Carriers as each jockeys to get their share of the revenue pie.

What should be clear is that the US is really behind in this space and maybe we can learn by looking at how it evolves in Europe, Korea and Japan and incorporate the results into our thinking. I applaud the Commnexus SIG for getting some conversation started! Keep them going.

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