Andrew Walmsley on digital: Take five to realise mobile's potential

In the digital world, every year is heralded as the year of the mobile. The networks haven't forgotten the £22bn spent on 3G licences, and they would love to see the mobile ad market take off in a similar way to the web, which has grown by almost 14,000% since 1998.

Estimates of mobile's current market value range anywhere between £10m and £20m, but what most observers do agree on is that there is not a lot to go around.

However, with flat-rate data tariffs and highly usable devices such as the iPhone now established, it looks as though some of the key obstacles are starting to disappear. Yet while many observers believe mobile is set to take off at last, their optimism may still be premature.

While the industry's focus remains on the high-level reasons for the mobile market's sluggishness, such as consumer understanding, and technology uptake, there are five simple factors that are blocking progress right now, just as they blocked progress in web advertising 10 years ago. Fix them, and the market could ignite. Fail to address them, and the industry will be pushing water uphill for the foreseeable future.

First, there is a need to standardise banner ads. Before the IAB did this for the web, production costs often outstripped media prices, making online campaigns uneconomic. Resolving this helped online advertising become a manageable proposition, rather than a production black hole, and mobile needs to follow suit. Uptake of the Mobile Marketing Association standards, published in April, has been slow, and the area is still confusing and expensive.

Audience size is another consideration. The lack of critical mass in the mobile market continues to be an obstacle, with mobile campaigns remaining too small for many agencies to work on. On the web, this was cured by the formation of networks that aggregated media sales into buyably large chunks. In mobile, we have seen some progress in this area recently, as Nokia formed its own sales network, but the market is still too fragmented and will benefit from further consolidation of sales channels.

The third issue is pricing. Right now, cost per thousands in mobile are absurdly high, and are supported more by 'experimentation' budgets than by real commercial demand. Add this to its high production costs, and it is easy to see why mobile advertising struggles to be cost-effective, especially compared with the web.

There is every reason to believe that mobile could command high rates in the future, with its quality of audience, interaction and location, but right now there is no research to justify its cost.

The lack of third-party adserving is another problem for mobile. It is hard to overemphasise the importance of this. In web advertising, it enables agencies to distribute copy without needing to check it manually, to aim it at individuals, and to measure success.

Without this, web advertising would never have proved its cost-effectiveness to advertisers, and agencies simply could not manage the administration needed to run billions of banners a month.

Despite this, adserving still does not exist in any meaningful sense in mobile. Until it does, mobile advertising will remain a manual process, restricted both in scale and transparency.

The final hurdle is surely the easiest to overcome. Delivery in mobile is terrible just as it was in web advertising 10 years ago. Campaigns start late, finish late and fail to deliver. If this does not change, the marketing community is never going to take up mobile, no matter how attractive the audience.

There is not one of these factors that cannot be fixed, and if the mobile industry is going to enjoy the boom it has been anticipating for so long, it will need to get the basics right.

- Andrew Walmsley is co-founder of i-Level

30 SECONDS ON ... NOKIA MEDIA NETWORK

- Nokia announced the launch of the first global ad network of top-tier publishers, the Nokia Media Network, in Barcelona on 11 February.

- Other partners in the project include AccuWeather, Discovery, Hearst, Reuters, and Sprint.

- The network uses analytics technology developed by Enpocket, which was acquired by Nokia in October 2007, to measure campaign performance.

- Clients can place ads on the web pages of more than 70 publishers and operators, as well as Nokia properties. The network has a global audience of about 100m.

- Nokia's mobile marketing team also creates mobile campaigns, and has produced work for brands including BMW, Paramount, and MobiTV.

- The network has relatively high response rates, with click-through rates averaging 10% in certain channels.

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