Rule the wireless world? Build on SMS

Advertising will not be a cash cow for the wireless device world, at least not in the next five years, according to market research and consulting firm Ovum.

SINGAPORE--Advertising will not be a cash cow for the wireless device world, at least not in the next five years.

"Advertising is never going to be the cornerstone of the wireless business model in the same way as it was for the Internet," said Rosalie Nelson, research director for market research and consulting firm Ovum.

According to the company, global advertising revenues on wireless devices will stay below US$1 billion until early 2004, and will only take off from 2006.

On the other hand, in Asia Pacific (excluding Japan) alone, the Internet advertising market is expected to grow by 76 percent each year to hit US$1.15 billion by 2004, market researcher IDC Asia Pacific predicted in May.

As Nelson explained: "Users consider their wireless devices as part of their personal space, and will show a low level of tolerance to (uncontrolled spam)."

"They will only accept advertising which they have opted for...(and ads which are) relevant, valuable and fun," she said, without elaborating.

Having claimed to have analyzed the early approaches to wireless advertising worldwide, Nelson noted that it will "build brand affinity and reduce customer churn when done the right way".

She added that wireless advertising will especially work on the 16-year-olds to 24-year-olds, who spend most of their disposable income on entertainment.

However, she suggested that mobile operators should not simply wait for third generation (3G) networks and devices to become available, but that they should actively use existing technologies such as Short Messaging Service (SMS) to capture the youth market.

"Don't rely on (new) technologies to build this (the mobile phone) market. Instead, take the time to understand what works and remember to make it interactive and fun," she noted in a statement today.

In Singapore, mobile operators have already introduced creative ways to use SMS. As of May, MobileOne customers could buy drinks from selected vending machines via SMS. SingTel Mobile also partnered Pizza Hut to allow the former's subscribers to participate in Pizza Hut's advertising campaign by sending personal information to the restaurant using SMS.