What role will the I.T. executives who are currently managing their enterprises' mobility solutions be asked to play as their corporations move into delivering advertising, marketing and content directly to consumers via mobile phones?
Like so many of the strategy questions we raise here at Mobile Enterprise, this one has an "it depends" answer.
It depends on whether your enterprise is a media company that is delivering content to consumers - in which case you are probably already playing a major role. Or whether you're working for a consumer goods enterprise that is just beginning to explore mobile advertising - in which case you may be left blissfully untroubled as your organization's marketing team works with outside agencies.
Many large media/entertainment conglomerates are already retooling their internal I.T. teams and partnering with mobile networks and specialty platform companies to optimize mobile delivery. For example, at Viacom's MTV Networks - an entertainment company that ranks among the top 10 worldwide in terms of Internet visits - I.T. now includes literally dozens of mobile video engineers, programmers, project managers, content editors, and production assistants devoted exclusively to mobile deployments, says Greg Clayman, MTV Networks' EVP of digital distribution.
On the other hand, for some major brands - such as InterContinental Hotels Group (IHG) - it's still early days in exploring what role mobile media may play in the company's marketing efforts, and which employees will become involved. "We're [asking] 'Where does the competency lie across our company?' Right now, because it's still considered to be in the early stages, we try to the best of our ability to reach across the company to find people who have the expertise [across various departments]," says Del Ross, VP Distribution Marketing (Americas) for IHG and a member of the Mobile Enterprise Editorial Advisory Board.
"The question for us right now is 'Where will it end up?' Will there be a separate competency for internal and external [mobile] marketing, or will we pool that expertise?," says Ross. "The key question is, 'Do we need to have a mobile applications group of people who are interested in this to get together and share their internal knowledge?' That's what we're thinking about right now."
Tiny Business, Or Marketing Juggernaut?
Although The Economist deemed mobile advertising/marketing a "tiny business" as recently as October 2007, industry analysts predict an explosion of growth for all types of mobile media in the next several years. The expansion of 3G networks and video- and TV-capable handsets - along with major improvements in screen resolution, size, projection systems, and battery life - will propel mobile delivery of advertising and entertainment.
Mobile video continues to be a major, long-term opportunity in the U.S. market, according Mark Donovan, senior analyst at M:Metrics, who spoke at NATPE++, a mobile entertainment conference presented as part of the annual convention of National Association of Television Production Executives in January. The number of Americans who watched mobile video grew 60% between January 2007 and November 2007, Donovan says. Meanwhile, spending on mobile advertising alone could grow from an estimated $1.4 billion in 2007 to $14.4 billion by 2011, according to Strategy Analytics.
Consumer demand for mobile entertainment is, in turn, driving interest in mobile advertising and marketing. A recent Deloitte & Touche survey of more than 2,000 consumers indicates that 62% of young people (dubbed "millennials," ages 13-24) now use mobile phones to access entertainment, including streaming video, audio, MP3 music downloads, and exchange of photos and user-generated content. Nearly half of all Gen-Xers (ages 25-41) do the same, and the numbers are rising rapidly. Moreover, consumer receptiveness to online and mobile advertising is evident across all age groups.
In fact, proponents say mobile media may someday upset the Internet as a potent audience draw, a factor underscored in January 2008 when ESPN announced that it had more hits that month for the NFL content of its mobile Web site (4.9 million) than it did on the NFL section of its PC Web site (4.5 million), according to a report cited in RCR Wireless News.
"The business is growing exponentially," says MTV's Clayman. "We screened 4.5 million videoclips over [mobile] carrier networks this past year, and that was double the year before, and double the year before that."
Corporate advertisers and media companies are thirsting for mobile deployments because of their potential to reach a highly targeted audience. For example, when mobile customers sign up for premium services and/or particular content "channels" (i.e., movies, automobiles, news, sports, shopping, etc.), they provide profiles and preferences that corporate advertisers can leverage to target their ads or programming in a highly focused way.
As with the Internet, mobile results are measured with "click-through rates," when users click on a banner ad or video and watch it. With the advent of location-based mobile services, which are generally contingent on the user's voluntary submission of zip codes, whole new avenues for local marketing, advertising, and infotainment are expected to open up.
"Consumers are starting to understand that advertising pays the bills," says Mike Baker, VP / head of mobile advertising at Nokia. The handset maker operates the Nokia Ad Network, a mobile constellation of online publishers, corporate advertisers (i.e., Ford, Bank of America, Pepsi, Disney and Sony Pictures) and mobile operators such as Sprint. "The Internet has fundamentally changed users' perceptions about advertising," he says. "People realize that you don't get something for nothing, so advertising may be able to generate more interesting entertainment services for consumers."
Nokia joins Internet giants Yahoo, Google, and AOL in looking to create cross-carrier mobile advertising networks that make it easier for enterprises to extend brand messaging to mobile users.
Baker claims that mobile advertiser spending on the Nokia ad network is growing by more than 100% a year and that the network now reaches 100 million subscribers globally.
Nobody Said It Would Be Easy
As with any industry in its infancy, the delivery of media content via mobile phone is fraught with challenges. For MTV, the greatest challenge is integrating a customized MTV content management system (CMS) with the mobile content requirements of the various wireless networks that are carrying premium MTV content, Clayman says.
"It's one of those things on a high level that sounds straightforward," says Clayman. "But every carrier accepts content a different way, and more and more operators are working a different way."
For example, Sprint uses MobiTV, a video platform company that optimizes content for mobile handsets. AT&T uses RealNetworks. "From a media company's perspective, we need a team dedicated to mobile content delivery, to make sure our XML feeds match with the XML systems of various carriers, which also have variations in the ways they accept [video and coding standards]," Clayman says.
The technical compatibility challenges, especially in the video codec world, can be daunting for large companies, says Bill Joll, president of On2 Technologies, a video codec and compression producer.
The industry has already produced codec "flavors" as varied as H.264, VP6, and VP7 (these are newer standards of roughly the same quality); H.263 (the older codec standard) and VC1 (Microsoft's offering).
"Technologically these are not compatible," Joll says. Wireless networks are now operating with two different data standards: 3GPP and the emerging 3GPP2. "The question for mobile deployment becomes, 'Which content, which format?' " Joll explains. As a mobile I.T. manager, "you also have to understand the size of the particular [wireless] device to be sure that video assets are in that resolution and frame rate to hit that device properly," he says.
In addition, consumers are demanding "long form" mobile programming, rather than short "mobisodes," on handsets. As a result, such issues as large file storage, audience ratings and metrics, along with site licensing are becoming serious challenges.
Likewise, the building of effective mobile ad networks will take some time. From a structural and technical point of view, Nokia's Baker says, the majority of corporations and their ad agencies aren't up to the task of maximizing mobile advertising. "The internal mobile I.T. directors are not involved in this process," says Baker.
Many corporations are leaving it to their traditional advertising and media buying agencies to manage mobile advertising. But, says Baker, "These agencies have yet to build the expertise for mobile phones that can render across 500 mobile phones and over 20 different browsers."
Instead, media buyers, such as Group M/MindShare, are coming to third parties such as Nokia to deliver their clients' mobile ads. Nokia assists the brands and agencies in building mobile Internet sites.
The media business and the wireless industry lack standardized tools for building mobile Internet sites that can be tweaked to accommodate multiple devices, networks, operating systems, video codecs, and data speeds. Like other nascent mobile ad networks, Nokia is "training [media] agencies that buy [ad space] from us to use our tools," Baker says. For example, certain automobile makers have asked Nokia to host mobile ad campaigns and run corporate videos. In some cases, "more people watch the video on their mobile phones than on their computers," he says.
"It's a highly fragmented environment right now," says Nokia's Baker. "It makes the execution of a basic [mobile] Web site or ad campaign [difficult].