We Are Social - Advertising 2.0

Robin Grant

The state of play with precisely targeted mobile advertising:

Mobile operators hold huge amounts of valuable data on consumers and their mobile behaviour. This year sees them starting to unlock this data goldmine to help drive their mobile advertising strategies.

O2, Orange, 3 and Vodafone are among the operators bidding to harness the potential of the data they hold. They're keen to open up fresh revenue streams by charging advertisers a premium for access to the highly specific customer information they hold.

Orange recently announced the results of a six-month trial of banner advertising across its portal. It reported that subscribers welcomed ad messages if they're relevant, and now intends to extend the service across its base of handsets.

"It's more than acceptance. People will be engaged with advertising if it's done right," says Steve Ricketts, head of third-party services for Orange. "The key reason is the way it gets implemented. Don't interrupt the user's experience and keep it relevant, engaging and interesting."

Such aims are currently achieved by relatively simplistic personalisation methods. Mobile ad network Screentonic, which manages the sales process for Orange, sells banner space on the Orange World portal based on individual content channels. So for example, Paramount Pictures' ads will feature in the movies area of the portal while Adidas requests the sports pages. It's a model widely used online.

"We deliver the relevant message to the relevant audience," says Theo Theodorou, sales director for Screentonic. "It's not about annoying people with irrelevant content that gets in the way of the user experience."

Orange has also laid out a roadmap designed to fine-tune the degree of information it offers to advertisers. It sits on a valuable arsenal of basic customer information data, including age, gender and address. Initially this will be used to help the operator reduce churn by offering its customers suitable subscription packages. For example, it plans to advise subscribers which of their friends should be added to their cheaper 'magic numbers' voice offer.

But in future the overhaul of its customer information system will result in the data being leveraged for use by third parties. An advertiser will be able to request a targeted base of people who are under 25, live in the South East of England and are active cricket fans, for example. Orange will match the core personal data it holds with the ways in which its customers have interacted with the portal to create the solution.

"There are different areas of the roadmap," says Ricketts. "With the data we have about customers we can do careful targeting by their age, gender and location. In future we'll do more using a customer's behaviour and target advertising to make it interesting and relevant. So an advertiser will be able to spend on a campaign to just target the audience it wants to address."

O2 is engaged in a similar process. It's rolling out an application that provides it with real-time information about subscribers. This too combines its basic demographic data with how subscribers use mobile content. Conceived to address issues like churn by offering customers suitable subscription tariffs and appropriate handsets, it will also be used as a tool for advertising. The operator is currently engaged in banner ad trials on its O2 Active portal, which will form an ideal opportunity to trial the results.

"We understand at a customer level who people are calling and what they're browsing, buying and playing," says Andrew Day, head of CRM for O2. "The application is based on a customer's history and dictates how a call centre agent interacts with a subscriber."

He adds that if O2 can analyse the customer data held in its systems and couple it with real-time information about their usage habits, then a powerful tool for achieving advertising relevance is created. "The same technology can be applied to the web and WAP in terms of leveraging it for cross-sell and up-sell purposes," says Day. "We'll look at that in next six to eight months."

The idea is that O2 could offer advertisers a much clearer idea of who they'll be reaching and charge a premium for the privilege. "That's the dream," says Mark Slade, MD of mobile media sales agency 4th Screen Advertising, which handles O2's banner ads. "Using CRM for advertising is every operator's end-game. One of the USPs of mobile is the actual information operators hold on their customers and their behaviour. Mobile operators are only just launching advertising, however, so it all needs to be built into their roadmaps. Each one plans to integrate demographic info into its ads proposition."

Legacy problems
The reason why O2 and the other operators are unable to offer such solutions already is because they're limited by their legacy systems. The networks were designed to carry voice calls, they were never intended to be easily farmed for customer profiles and usage patterns. And they have to handle a great deal of information that's constantly changing.

As a relative newcomer to the UK mobile market, 3 doesn't have the number of subscribers or the same legacy systems that hobble the more established operators' attempts to harvest their data. Graeme Oxby, marketing director for 3, acknowledges that it's lucky because its database was designed from the ground up with customer profiling in mind. "We know which consumers are using certain services and the information gets presented and used by advertisers," he says.

The 3G operator has recently announced plans to extend its ad offering from banners to video bumper ads. Its free videos will shortly be preceded by video ads that the user has to watch before viewing the content. These ads will be targeted to the individual.

However, despite the accurate customer information that 3 claims to hold, it still relies on third parties to manage its data effectively. It has outsourced the job to technology company Rhythm New Media, which offered the world's first individually targeted ad serving solution, claims CEO Ujjal Kohli. "It's the world's first ad-supported video service on mobile where the ads are individually targeted," he says. "There are enormous benefits for the advertiser and a guaranteed frequency cap on how many ads are seen."

Oxby admits that 3 already knows the information but says it's important to involve Rhythm's additional filtering as a final guarantee that the user is happy to accept advertising. The first time a customer wants to view free content they're warned that by accepting the conditions they agree to receive ads around the content.

"We also ask for their age and gender as a way of securing the data and ensuring that the person is comfortable with receiving ads," says Oxby. "The questions act as a trigger for the ads service."

Owen Hanks, UK media sales director for Rhythm New Media, admits that its service can be used to reach broad audience segments, but says that in the short term it won't be cross- referenced with 3's customer data to deliver an ad message to each individual.

"Advertisers decide the audience they want to target and we deliver that exact audience," he says. "We reach the right person with the right ad. In some scenarios, CRM information might be more pertinent but advertisers don't make one ad for one person. If you walk into a creative agency they want groups of people."

New MVNO entrant Blyk is confident, however, that a demand from advertisers for highly specific customer information does exist. It plans to offer advertisers information that will fund free voice and SMS to opted-in 16-24-year-olds.

"The segmentation goes further than age and gender," says Blyk co-founder Antii Öhrling. "We create a rich user profile. When customers join, it's part of the deal that they tell us their likes and dislikes. It provides good information so we can be very relevant. Relevance is a factor we've seen so much impact from after our trials. A lot of people said there wasn't even any advertising on the network because they thought it was a part of the wider service."

Öhrling believes that sufficient numbers of customers do exist for advertisers to justify individual targeting. He accepts that not all of these will be content users, and anticipates advertisers reaching many via SMS. Along with voice and a mobile's alarm clock, he says these comprise the applications that young people use most.

"Mobile is inherently a push medium," he says. "A lot of mobile ad trials have been pull based, but the strength of mobile is that it can push messages. Advertisers say that if they can see exactly where their money goes and can target consumers, there's no reason not to engage."

Blyk also plans to squarely target the 16-24-year-old demographic. It claims that this is an audience about whom operators typically hold very low CRM information because of the high numbers of pre-paid subscribers.

Charging worries
Media planners, however, are wary of costs spiralling as operators offer increased targeting. The more specific the data, the higher the going rate they could see fit to charge advertisers.

"Every layer of targeting adds to the CPM and aggressive pricing won't endear advertisers to test the medium," says Matt Champion, associate director of media agency MediaCom. "Planners will look at the CPM across media channels, factoring in the role of the individual medium and the consumer experience. So while accurate targeting is a goal for any media offering, it must still be competitive against other channels. If it isn't, it won't encourage spend."

The worry from some is that over-charging could stunt investment in mobile as a marketing medium before it has fully matured. 4th Screen's Slade says that while this won't cripple the market, there's a risk it will take off more slowly than if operators expected reasonable rates.

"A problem in the marketplace is that the price point is too high," he says. "I've heard CPM figures of £100 being bandied about based on targeted advertising. That's cinema pricing. People will realise you can't sell at that price point, but it slows growth."

Screentonic's Theodorou sees the logic in higher prices for greater levels of information. "There's a certain value to individual targeting by CRM and a premium price attached to that," he says. But he adds that achieving broad market segmentation is as important as individual targeting at this early stage of mobile advertising. The numbers aren't yet enormous so as the targeting gets finer, fewer people are reached.

Others agree that leveraging highly detailed customer information is less important than building the market. Daniel Rosen, head of AKQA Mobile, says, "Right now it's more about creating effective ad formats and measurement that will allow brands to express themselves creatively and engage consumers. Operators providing information about their subscribers isn't something that should be rushed. As far as we're concerned, it's more important that it's executed well rather than quickly by the operators."

He adds that once a platform has been developed then value-added services like geo-demographic targeting can be implemented and ultimately make mobile a valuable tool for advertisers. "No other form of media can provide the level of targeting that mobile will eventually be able to provide," says Rosen. "As the mobile advertising industry grows, this additional level of targeting will help it become even more competitive with other forms of interactive media."

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