You may hate them, but mobile ads are coming

Advertisers are testing wireless devices for what works, and what doesn't

Mobile advertising is still in its infancy, and already it's despised by some users of wireless devices. Nonetheless, it seems destined to become a major factor in the growth of the mobile Internet.

The kickoff keynote address at the Mobile Internet World conference in the US this week featured a Yahoo executive who has been testing advertising on mobile devices for the past year and expects to continue similar trials in 2008 to see what works and what doesn't.

Bruce Stewart, a vice president and general manager in Yahoo's Connected Life division, said that although mobile advertising remains a nascent business, the Sunnyvale, Calif.-based online services provider is testing the market at the behest of advertisers that want to learn about the process and how to measure its effectiveness. Yahoo is aware of market research predicting that advertisers could spend US$16 billion worldwide on mobile ads in 2011, he added.

Asked if Yahoo believes that advertising on devices is absolutely necessary to the future of the mobile Internet, Stewart said, "'We feel an incredible responsibility to our advertisers,' is the easiest way to answer that."

Earlier this year, Yahoo joined fashion magazine Elle in a mobile advertising trial during "Fashion Week" in New York. As part of the trial, Elle content was sent to mobile phones; it featured photos and blog postings from the fashion runways, along with ad-related links to restaurants and hotels in New York.

"It was a successful test from our perspective and helped us think differently about mobile ads -- namely, that it isn't just about simple keyword and banner ads, but what click-through actions [users take]," Stewart said.

Some attendees at the conference wondered whether Yahoo and other advertising-focused companies should worry less about the ads themselves and more about mobile users.

"Advertising is going to find its way into the mobile Internet," said Berge Ayvazian, an analyst at Yankee Group Research. "But who cares about the user? Without the user, all this advertising is nonsense."

Joseph Ferra, chief wireless officer at Fidelity Investments in Boston, said that Fidelity has focused almost entirely on end users in developing wireless applications since 1998. Only recently has the mutual funds company even begun to consider ways that it could use mobile advertising, he added.

Fidelity has more than 1 million customers who use its wireless applications to process real-time investment transactions from a variety of devices supported by a number of carriers. "It's all about the customer," Ferra said.

The company now is focusing on finding more ways to enable mobile phone users to take advantage of the investment capabilities that are available on PCs, according to Ferra.

"Our challenge has become how to deliver the content [to a mobile device] before the light turns green," he said. He emphasized that while Fidelity isn't encouraging texting while driving, it knows that its developers have to make mobile interactions quick for users.

Several people who spoke as part of a mobile advertising panel at the conference said they're aware that mobile users likely don't appreciate seeing a large banner ad load on their screens on the first page of, say, some search results.

But surveys show that users will be willing to accept advertising if it comes with free content or services, said Brian Suthoff, senior director of business development at Third Screen Media, a Boston-based vendor of software that enables advertising on mobile devices.

"If you ask mobile users if they want ads on phones, 78% will say, 'Not really,'" Suthoff said. "But if the ad comes with something for free, the survey result flips the other way."

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