Advertisers face uncertainty over mobile privacy, effectiveness

Marketers remain wary of dedicating ad spend to mobile platform due to lack of insight on consumers' tolerance and medium's effectiveness, notes industry player.

COMMUNICASIA, SINGAPORE--Advertisers looking to leverage mobile devices as an alternative delivery platform will face concerns over privacy, effectiveness and sustainability.

During his presentation at the CommunicAsia 2010 tradeshow here Wednesday, Venkat Eswara, director of applications services marketing for Motorola Asia-Pacific's home and networks mobility group, said the three key challenges pertain to the lack of insight into consumers' tolerance to intrusion of their privacy, effectiveness of mobile as a medium and whether it is a sustainable advertising model.

Eswara noted that while consumers are willing to share information over the Internet, mobile operators and potential advertisers are unsure over user reaction and tolerance if, and when, users realize their data is being monitored. This fear remains despite the fact that users will have to opt-in to receive the advertisements, he said.

Furthermore, there are no standardized metrics to measure key performance indicators such as the effectiveness of the campaign and its sales conversion rate, he said. This does not help in selling the mobile medium as an effective, sustainable advertising model, he added.

However, Eswara did profess high hopes that the mobile advertising industry will eventually "explode". He noted that mobile advertising currently constitutes merely 1 percent of the overall global ad spend but this number is expected to grow.

"We believe the [mobile advertising] industry will grow from US$525 million in 2008 to US$13 billion in 2013," he said.

To address privacy concerns, he suggested that mobile advertisers and telco operators look to educate consumers "from day one" and use their consumer base to continually refine their mobile ads and services.

He likened current consumer reticence to the early days of e-commerce.

"Just like how people were initially reluctant to conduct financial transactions over the Internet when the service was deployed, taking three to six years before they were won over, the same [familiarization period] will apply to mobile advertising," noted Eswara.

Kei Shimada, CEO of mobile marketing research and consultancy company Infinita, also cited user privacy as an initial concern for the deployment of mobile advertising in the Japanese market.

However, local users' fears were eased by their ability to opt-in for such services, as well as efforts by telcos and third-party organizations to seek customer permission before utilizing user-generated content, noted Shimada, who was also a speaker at the summit.

Eamonn Kearns, Asia-Pacific vice president for Dialogic, told ZDNet Asia in an interview that user acceptance of mobile advertising, when deployed alongside mobile value added services (VAS), is also country- and culture-dependent.

Kearns explained that for certain regions and cultures, consumers enjoy advertisements and promotions to be "pushed" to them via their handsets when they are in the proximity of the advertising retail outlets. This might not be the case for Asia-Pacific consumers who value their privacy more, he added.

Industry standardization important groundwork
Citing Infinita's successful introduction of mobile advertising in Japan, Shimada noted that the Japanese market generates US$5 billion a year in mobile content revenue and US$1 billion in mobile commerce. For him, these numbers indicate that users have embraced mobile ads.

He underscored the importance of device and platform standardization, where efforts initiated by Japan's local mobile carriers--or in his words "benevolent dictators"--proved an important foundation that helped drive the deployment of mobile ad services.

One example is that offered by Japanese advertising firm Dentsu through its "iButterfly" mobile coupons, said Shimada. Users have to physically swipe their phones through the air to "catch" the butterfly coupons, where each butterfly contains a unique advertisement, and can be subsequently redeemed at the relevant outlet, he elaborated.

He added that this iButterfly service will soon be available in Singapore within "the next couple of months".

Shimada also urged companies to monitor customer feedback to ensure their mobile ad products and services will be successful.

They should also refrain from introducing products that will "shock users", but instead keep an open dialogue and educate consumers about the advantages of mobile advertising, he added.