Mobile internet advertising is any form of advertising on a mobile device that requires the internet. This can include websites designed for mobile phones, search engine marketing, traditional banner adverts, video adverts and ringtone downloads. All of these advertising tools are already available for mobile phones.

Mobile marketing on the other hand encompasses all of the above, but also includes text messaging, mobile commerce and Bluetooth marketing. These methods of marketing use mobile, but don’t necessarily use the internet. On a mobile device, you can usually tell when an application is using the internet because it will either warn you in advance or a small connection symbol will appear at the edge of the screen (often a spinning globe).

Accessing the internet on mobile can be done in a number of different ways, but the current standard in the UK is using one of two different technologies:

• 3G – this stands for ‘third generation’ and allows for high speed data transfer using a mobile phone signal. It is now the standard for mobile internet connection in the UK and costs the user money depending on how much information they download. Although mobile operators now offer fixed cost monthly packages (discussed later in this report).

• WIFI – stands for ‘wireless fidelity’. In the same way that computers and laptops can connect to the internet using wireless routers, mobile phones are now adding the same technology. This means that a phone can bypass the need to connect via a mobile signal, and instead connect to the internet using existing broadband connections, be it in the home, office or public place.

However, as technology develops, the lines are continuing to merge as some companies are producing systems that combine text and mobile website technology. For instance, it is possible to send a text message with a link for instant access to a website. Then, by registering on the website, it is possible to receive text alerts to be reminded when to look at the website again for updates. For the purpose of this report, we will be concentrating on mobile internet advertising and its growth in the UK.

What are the similarities with internet advertising?

There are a number of similarities that can be drawn between traditional internet advertising and mobile internet advertising despite being delivered and consumed differently it uses much of the same technology. Plus many of the fundamental characteristics of online advertising (interactivity, permission based etc.) still apply.

In most instances, advertising is booked using exactly the same models that you already use for internet advertising, like Google’s AdWords for paid search for example.

The way in which adverts are delivered is also largely the same. For instance banner adverts still appear on mobile sites next to relevant content and video adverts appear before or after video programming.

What are the differences with internet advertising?

The differences are largely practical:

• Small screen size resulting in less space for content.
• Harder to use interfaces (although this is improving).
• Slower connection speeds resulting in a need for smaller file sizes.
• Internet accessed on the move, away from desks.
• Usually supplementary to primary internet access on computers or laptops.
• Mobile internet is used for different reasons e.g. for snippets of information useful for a journey such as restaurant locations to meet a friend, timetables for trains, short news bites or TV programmes to pass the time on a train journey.

Bear all of this in mind and understand what a user requires from a mobile internet experience and you will begin to realise that mobile advertising must be treated very differently. However, like internet ads, mobile ads work best when they are relevant and useful to the user and created for that particular device.

The state of the mobile advertising market

The UK mobile advertising market is in its infancy. Today, the majority of mobile advertising bought and sold is ‘on portal’, sold through third party sales-houses (e.g. Screen Tonic for Orange, Yahoo! for Vodafone and 4th Screen for O2). Inventory on ‘off-portal’ sites is also sold by third party specialist sales-houses (e.g. Admob, Adinfuse) as well as some web companies like Unanimis. This allows for interest group targeting, when adverts are placed on sites depending on the audience interested in the content of that site (e.g. sites like The Spectator, Financial Times and The Economist may attract a slightly older demographic). For on-portal advertising the ad sales model which sees mobile inventory sold according to the section of the portal where the ad appears will be replaced by a model targeting mobile users by socio-demographic profiling, behavioural analysis and location in order to provide better targeting.

Measurement

Buying advertising on the mobile internet is similar to buying display advertising on traditional internet. In most cases banner ad impressions can be purchased by cost-per-thousand (CPM). Prices vary according to the degree of targeting: the majority of on-portal ads sell for £10 – £20 per thousand, whilst highly targeted ads on special interest sites, or served only to certain aggregated sociodemographics or served on a search results page can sell for up to £100 per thousand. Othermobile internet site owners, predominantly publishers, sell their mobile inventory on both the CPM and cost-per-click (CPM) bases. Prices for display advertising are typically 5p – 25p per click.

Highly bespoke on and off portal banner campaigns comfortably generate double digit response rates at a fractional cost of other traditional channels. Click through rates range from 0.5% (on a typical off-portal site) up to 4% (on portal), considerably higher (sometimes 15 times) than the equivalent for traditional internet sites.

Inventory

Inventory is still relatively scarce because of a ‘shortage of eyeballs’. Both reach and frequency are a long way from their theoretical maximum due to the early stage of the market. Today less than a third of mobile subscribers regularly use the mobile internet and they average only one page per day (source: MMA UK).

The total UK inventory of page impressions is estimated at one billion page impressions per month (October 2007) but is growing at 9% month-on-month and is expected to reach over five billion by the end of 2008 (source: MMA UK).

Opportunities

Mobiles offer a vast number of opportunities for advertisers, but only through clever marketing that takes into consideration the needs of a consumer on the smaller device. Benefits include:

• Mobiles are extremely personal because they are only used by one person; a dream for targeting and measurement.
• Mobiles are always with the user , resulting in opportunities to target people in ways that no other device can.
• Mobiles are always on (unless the battery runs out!) allowing the user to access advertising at any time, no matter where they are.
• Mobiles are highly interactive – all mobile handsets now come with many different uses (call, text, camera, music player, web browser).
• Mobiles have unparalleled reach with over 90% of the UK population owning one, if not more, handsets.

Trends

Accessing the internet on mobile is becoming faster and easier. 3G allows for mobile optimised web pages to load within a few seconds, almost equivalent to broadband internet access (in terms of the speed of page load). WIFI technology allows for internet access at the same speed as internet on a computer at no extra cost. As WIFI becomes more commonplace in public spaces too like cafes and hotels, mobile internet is easier and far cheaper than it has ever been.

In terms of marketing, text and picture messaging (SMS / MMS) are still being used to introduce advertisers to mobile, almost as a taster for everything else mobile has to offer. However, this is gradually beginning to change as mobile advertising develops and people become more aware of what the medium can be used for.

Search is being used more on mobile with operators implementing search on their own portals and other sites as well. Search has been one of the driving forces behind internet growth and the growth of internet advertising, and this is being replicated on mobile.

Banner ads are already being used well across mobile internet, although it is still a very young area with a lot of improvement to be made. However, we are already seeing increased creativity with mobile banners and sponsorships.

Video pre-roll and post-roll, and ad-funded content are starting to emerge. Volume is limited both in terms of current audience and advertising, but this is increasing and will continue to do so rapidly over next few years.