Wireless Advertising: The Future May be in the Palm of Your Hand
 

The term "wireless" and the application it has to advertising may, in fact, offer one of the strongest new mediums the advertising industry has seen in the last ten years. This medium utilizes web-ready cellular phones, pagers, and personal digital assistants (PDA's) to transmit data from the World Wide Web (WWW) to the consumer via a wireless "signal" or "clip" that will appear on their mobile device. The challenge for the advertising industry is to efficiently deliver messages via these networks and target the proper consumers.

Similar to the internet, wireless technology has the potential for huge economic growth. "The reality is that we think that advertising will be one of the single most important revenue streams for information delivery to mobile devices," said Jason Devitt, co-founder and CEO of Vindigo (Parker). This growth potential is partly based on predictions that these devices will overtake personal computers (PC's) as the primary means for accessing the WWW for both personal and business applications. In 1999, 1.3 million (web-enabled) devices were sold in the U.S., the same number was sold in only the first six months of 2000 (Miles)!

Many noticable advantages for both advertiser and consumer are possible thru the use of wireless technology. The ability to target a consumer in an area outside of "sitting behind a computer" holds great promise for all concerned. Not only should wireless technology allow the advertiser to hit the consumer close to the point of purchase, but also to effect consumer decision making and lead them to the point of purchase.

For example, it's a busy afternnoon when you receive a message on your pager that the cafe around the corner is running a late lunch special. This type of message could very well prompt you to get a quick snack, and the likelihood of trying the local cafe may very well have been prompted by this very advertisement. Not only can advertsers track you location, but can utilitze stored information about your lifestyle to target a usable message to you. "The real power of this kind of advertising is that you can reach someone who is on your street, in your neighborhood, and looking for your service"
 

Although it is brief, the following overview will cover the history of the wireless industry and its' corresponding advertising, as well as its' older brother, the World Wide Web (WWW). You will see who the potential consumers are, who is in the game, what they are offering, and what is ahead for the fututre.

Discussing the future of wireless advertising utilizing handheld devices (cellular phones, pagers, hand-held organizers, personal digital assistants (PDA's), necessitates a brief look at the history of online advertising as it relates to the World Wide Web (WWW). Although the following overview just brushes the topic, it is my hope to use past experiences in online advertising to shape an idea of what the future holds for wireless technologies.

Advertising hit the web around the middle of 1994. Since that time, the standard formats seen in television, radio, and print have had a new partner/competitor. One of the evident differences of online advertising is the ability of the advertiser to target their customer as well as allowing the customer to find products that suit his or her needs quickly and easily This interactivity between the message sender and receiver revolutionized advertising. Although television and other media outlets claimed successful targetability, the World Wide Web offered new opportunities and raised the bar for consumer interaction.

Use of the all too familiar "banner ad" became the norm as advertisers began finding ways to get their message across to internet users. This technology has fallen upon tough times recently due to the low level of "click-thru" rates, and users who have become accustomed to ignoring the standard rectangle at the top of their screen.

Recently, we have seen changes in the types of advertising appearing within this format as well as the birth of new standards. The Internet Advertising Bureau (IAB) recently announced new standard sizing for online advertisements to enhance options for advertisers. The "skyscraper" a vertical rectangle showing on the left or right of the screen shows an example of the new potential for larger ads, but some smaller counterparts hope to add more versatility on the screen. These smaller ads may offer better opportunity for wireless applications due to the smaller screens on handheld devices.

The first "banner-style" ads served to handheld computers appeared at the latter part of 1998. Hilton Hotels corp. unrolled an ad campaign to utilize 3com's PalmPilot, and similar devices using Microsoft's CE platform. During this phase, software provider Wired Digital Inc. compressed data taken from standard web pages and converted it to display on the smaller handheld PDA's. Messages were inflexible compared to those of the traditional web because data had to be downloaded when the device was connected to an information network. Therefore, the experience was not truly "live", but a predetermined message that was stored in the device when the user "clicked". This proved difficult to measure when trying to determine how often users actually "clicked" on the ad (Haar).

Measurement, which has become both a valued friend and hated enemy in the online advertising arena, has proven to be frustrating. Due to the fact that accountability is much higher for online advertisers than traditional media (newspaper, radio, print) expectations for success are much higher. "It takes a lot of work to prove that you can do everything and prove all the metrics. Look how many different pages, places and sizes advertisers can buy. It's not like buying a page in Sports Illustrated," said John Messina (Director of Ad Aency Rlations at /Time Warner's America Online). Responding to these new issues is the Internet Advertising Bureau (IAB) which hopes to develop better models for interactive advertising, set new ad standards, and set easier methods for buying and selling ads online (Olsen, CNET, 02/27/01 #6).
 

Any new technology must expect to meet with some loopholes. Unfortunately, advertising on wireless devices is not void of some problems. Questions concerning cost and availability of devices and service, size of screen restrictions, and measurement are just a few of the obstacles wireless advertising has to conquer.

Some speculate that the online advertising industry may have a small audience due the cost of devices for this technology. Currently, business leaders and their emplyees use cellular phones and wireless PDA's more than the average citizen. Everyday consumers may not see affordable web-ready phones (or PDA's) anytime soon. Business to Business (B2B) applications offer promise, but the high cost of this new technology may make it unattainable for the masses in the near future Corporate e-mail, database and internet access, and streaming video on the current low bandwidth may only be affordable to the select few and businesses who want their employees on the cutting edge of technology (Batista).

Also, the tiny low-resolution screens utilized by cellular-phones and/or wireless handheld devices might hampen traditional advertising. Some online providers have already allowed their users to get online by removing the advertisements in order to allow easier viewing.

There are some strong advantages to utilizing handheld technology for both the user and the advertiser. First, lengthy messages can be stored or sent to a PC which gives the user the choice to view potential large files now or later. Second, tracking systems can allow advertisers to use GPS-like technology to target a specific message relative to a certain area. Audio ads have great potential over their video counterparts that would transfer better on larger screens. Like free PC's, a free or heavily discounted wireless phone or organizer may entice users to accept ads or allow marketers to learn more about them. Phone makers can build software into their hardwarethat may allow partnerships between hardware and software companies to bring the cost of wireless technolgy down. Ken Dulaney, VP-mobile computing for Gartner Group, states that an advertiser may market a private-label wireless service and conduct one-to-one marketing with loyal clients.

Some negative aspects need to be addressed in order to make wireless advertising beneficial for both the user and the sender. The Federal Communications Commission (FCC) mandates wireless phone services provide users' location for 911 emergency calls. This technology has begun to be exploited causing backlash against junk e-mails. Those users paying per-minute fees will likely reject long download times for advertising when it interferes with their task at hand. Lastly, complicated messages may be difficult to transfer to the limited screen area.

Some practioners have mad suggestions concerning some of these roadblocks. The idea of GPS tracking has been downplayed by some who feel that where a person is located isn't nearly as important as what that person is looking for (Parker). Also, focus on complex messages may be overkill. "You don't need to put an incredibly graphic, singing, dancing ad, when everything else on the medium is text. Your not competing in the same way as on the web" (Dello).

The market potential of wireless advertising may currently be somewhat restrictive, but as the cost of the technology decreases the available audience has the oppurtunity to grow at an exponential rate. There are those that speculate that the current market is strictly business oriented, and that business-to-business (B2B) applications will continue to dominate the wireless world. It is my belief that this trend will easily extend to the common consumer in much the same way that the internet, and cellular phones, have reached the masses.

It has been no secret that those currently using wireless technology may not be a true representation of the common consumer. One must realize that the "early-adoptors" and those who want to be on the "cutting edge" may offer a target market extremely desirable to advertisiers. Those currently utilizing this medium are likely to have a larger disposable income than most, and there is likely a tendency towards a higher level of education. Those most affected by wireless technology will hopefully be easy to target by advertisers, and the number of current wireless technology worldwide it growing.

Targeting the nearly 107.5 million cell phones operating in North America is a great place to start. That number represents nearly 20% of the worlds total (Gartner Group, AdAge, 03/00) with a huge potential for economic growth.

Web-enabled cell phones from Nokia (the world's largest wireless phone marketer), Motorola, Qualcom, Ericsson, and Palm VII are partnering with the likes of Microsoft, Amazon.com, Yahoo!, AOL, and others to offer strong incentives to consumers wanting to jump on the interactive wireless bandwagon.

The previous methods of targeting consumers at their PC will likely fall by the wayside as wireless advertising grows. "Rather than forcing them into an artificial environment where they have to sit down at a PC," (David Stern, former VP of Unilever's interactive Brand Center) says, "wireless will enable consumers to get that solution where they need it most." (Williamson). One way this will become reality is hitting the consumer with a message where and when they need it. Geotargeting offers one of the most efficient ways to make this realistic.

Geotargeting will allow wireless providers to offer advertisers the ability to target consumers via location. Imagine the possibility of receiving a discount on an oil change on your cellular phone as you drive by a local Jiffy-Lube! This is becoming a reality for consumers in San Francisco where Jiffy-Lube Inc. is offering a coupon for a mid-week oil changes via a wireless advertisement. Gary Lillian (Senior-VP of Marketing for Jiffy-Lube Inc.) states that, "Much of the decision making about car maintenance happens when people are driving their cars, not when they're at home, in front of the computer. Marketing via mobile phones fits with our strategy to be a lot more relevant in our messaging to our consumers," he says.

International Success

The wireless market in Japan may be one of the best examples for a success model that has yet to be seen. Ads distributed via web-enabled devices in Japan are expected to reach astronomical proportions at an estimated $92.6 million in the 2001 fiscal year which starts next month.
Text based ads that are the most common in these markets have shown a much higher "click-thru" rate than standard PC's. "The average click-through rate has stabilized at around 1.5%, three times higher than the average click rates on PC's" (Yamada, The Standard, 09/25/00).
 

There are a multitude of different service providers and device manufacturers interested in capitalizing on this new medium. Some of the major players have experience with wireless-specific technoligies, some have World Wide Web prowess, and some a bit of both. The largest player to date is Palm Inc. followed by Handspring, Casio, NEC and Hewlett Packard.

Palm Inc, maker of the Palm wireless electronic organizers, currently holds 65.4% of the handheld market in terms of unit sales for 2000 (Miles). Utilizing Palm.net, the digital organizers allow customers to access package tracking thru FedEx, find flight updates thru American Airlines, and access Starbuck's Coffee (one of the top 10 most popular downloads) (Williamson).

Recently, Palm debuted a public beta version for the PalmVII series, but continues to be, in essence, a "wired" device due to the fact that the PDA must connect to a information source to update itself. Unlike Microsoft's system, the PalmPilot is not truly "wireless" on the World Wide Web. Users are restricted to surfing only sites that are available thru "Web Clippings" -scaled down text-based versions of full websites (Dello). Similar to the Visor, PalmPilot users must update their clippings when atached to a "wired" system. Palm Inc. recently signed a deal with Yahoo! and presently is involved with New York Times and the Wall Street Journal which may make it a stonger candidate than some of its rivals.

The Handspring-Visor accounted for approximately 21.6 of the retail market last year utilizing the same operating system as that of the Palm devices. The variation between the two is that the Visor seems a bit more upgradable with a slot in the back allowing it to "morph into almost anything" (Milies). Also, the Visor is a bit more attractive and costs a bit less than it's predecessor. Both the Visor and the PalmPilot require connection to the Web via hard lines to be updated.

Surprisingly, the software giant which controls the World Wide Web is struggling in the arena of wireless compared to the competition. The Microsoft Pocket PC is not holding ground despite the fact that they claim to have "won the wireless war" due to the fact that their Pocket PC can access any site on the Web. The Pocket PC is a truly "wireless" system that allows access to any website, but doesn't offer the same number of applications as the competition.

PORTALS

The Wireless Web offers a new battleground for portal companies. The big players are already laying the groundwork for wireless capacity with Microsoft, AOL, and Yahoo! all competing to snag a favorable market share of this new medium. Partnerships are forming between portal providers and wireless communication providers such as AOL with BellSouth, Nokia, Motorola, and Sprint PCS to carry their Instant Messenger service, MovieFone, and Map-Quest. Also, a wireless portal is in the works between Netscape Communicator and Lucent Technologies (Riedman, AdAge, 03/00).
 

Yahoo! offers advertising in text-based "alerts" sending information such as stock quotes, sports scores, or auction bids to cell phones, pagers, or handheld device equipped with text capability.
Web-browsing capabilities have the potential to grow to over 40.4 million users by 2003 according to researcher International Data Corp. (IDC) (Riedman). If these predictions are correct there are those that speculate that wireless devices will overtake the PC in accessing the Web.
 

While it may take time to hone the interactive advertising message on a wireless device, this new medium offers a great oppurtunity for trial, as well as research. Perhaps we will see flash ads, banner-style, or more intricate text-based messages. The possibilites are virtually limitless.

Realistically, technology will likely need to improve for truly interactive advertising to sppear on the wireless format. With the growing potential of broadband just around the corner, the future of quick download times, and graphic ads isn't very far out of reach.

The current system(s) available will invariably require improvements to make this medium both efficient and affordable and truly interactive, but the market should support investments in this new technology. Shipments of smart handheld devices are on a steep upward climb. If the IDC forecasts are correct the worldwide market pottential will grow from 12.9 million units last year to over 63.4 million by 2004, creating an opportunity worth more than $26 billion (Burden).

The question reamains: "how will we advertise here"? The future may be close at hand, literally.
 

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