• by Steve Smith , Staff Writer @popeyesm, September 28, 2007

Here in the U.S., most of the discussion of behavioral targeting into mobile sites is both theoretical and premature. Scale is hard enough to achieve with behavioral targeting online, let alone on the relatively puny mobile Web inventory. Only 10% of us even access the Web on a handheld device each month. Revenue Science is getting a head start on the eventual market here by launching Japan's first mobile BT ad service. Partnered with KDDI, the second largest carrier, and media firm Digital Advertising Consortium (DAC), Revenue Science could reach up to a third of mobile customers in Japan. For CEO Bill Gossman, this is a bit of a homecoming, since he once worked for OpenWave, which has supplied mobile Web browsers to U.S. carriers. One of the great advantages of mobile BT is that it touches more spots on the purchasing funnel.

Behavioral Insider: Given that Japanese mobile Web use is so much more evolved than ours, how much reach and inventory will you access?

Gossman: You have the number two player in KDDI and great coverage there. So let's say its 30% of the 99 million mobile phone users and 30 million uniques. We expect to do about a billion page views of traffic a month from launch in November. And we have a large carrier and two large agencies involved in this financially, so it is a pretty interesting partnership.

Behavioral Insider: Is the technology much different for a mobile deployment from an online one?

Gossman: It takes some special tricks. I have been in mobile for a long time and Japan has some good things and some bad things from a standardization perspective. They chose their own standards early on, so you have incredible penetration. You have a very uniform user experience on a handset that is very well known. It's just a much more friendly environment than we have in the U.S. But you still have to interface the network infrastructure we have into the cell phone infrastructure to address behaviors, warehouse them, categorize and use them to create audiences. So the back end system is substantially identical to what we do for people like AOL and NY Times Digital. The secret sauce is how we interface through the cell network down to the device.

Behavioral Insider: What kinds of segmentation will you be doing?

Gossman: The way we do segmentation is, we don't do anything a priori. We index behaviors and then create segments out of those behaviors. Those behaviors can be media downloads, videos, articles purchased using cell phones, and purchases made on the phone. The three verticals we will focus on out of the gate are music, games, and entertainment. Mobile phone usage there is a little like the iPod or iPhone is here, an integration of entertainment, video, audio, Web surfing. But I don't see any limitation to the number and types of segments we can work on, because people do a lot of e-commerce over cell phones there, and a lot of point of sale as well.

Behavioral Insider: What is the state of behavioral targeting off the phone on the Web there? Are you talking to an audience of digital advertisers who are already familiar with this targeting approach?

Gossman: Yes. There are two parties that do BT in Japan: us and Yahoo Japan. Yahoo Japan is the gorilla over there, and we, in our partnership with DAC, work with people like iMediaDrive, which is a very large online ad network. We work with NIKKEI Digital Media.

Behavioral Insider: Is there an added layer or necessity to address privacy issues once you are on the phone?

Gossman: Not really. The essential elements of privacy are, no personally identifiable information (PII); do a good job of protecting your data warehouses; and for access to the data. you have to offer a benefit to the consumer, which is more relevant ads and subsidization of media consumptions. Cell phone networks are all registration-based so there is PII; we just aren't intermingling that with the behaviors. I will never see the billing record equivalent that the cell phone carrier has.

Behavioral Insider: Does the more advanced m-commerce in Japan skew the potential inventory toward more direct marketing advertisers?

Gossman: I think the biggest thing is that we will get to access more of the complete funnel because you do have so much point-of-sale and purchase activity that takes place on the phone. You'll see things down to branding from a particular source of games or entertainment, down to offers to buy. There are a lot of pieces of behavior that can be mixed within a wireless network, like the fact that you are interested in a certain genre of music or that you're in a certain area and near a merchant, because you can get location out of a cell phone. There are a lot of interesting things you can put together.

Behavioral Insider: When will the U.S. mobile market be ready for BT?

Gossman: Late next year. The Japanese market started off very heavily concentrated. KDDI and Docomo were the two gorillas for a long time. In the U.S. over the last ten years we went from six providers to about twelve and now we are back to about three. So over that period of time we had lots of different handsets and network infrastructures and broadband was not a reality.

Now we are down to three or four carriers and broadband is more of a reality. And the user interfaces are becoming more standard and the experience is just becoming good enough to start doing meaningful Web browsing. Advertising online took off in the U.S. when we hit the curve of broadband adoption.

That is why [mobile] is so interesting in Japan and why it will be interesting in the U.S., when that 3G meets the curve and people can get high-speed access to their cell phones in a meaningful, consistent way. I think the eco-system in Japan is going to lead the market in mobile online advertising and mobile BT simply because of the quality of the eco-system there, and how well established and adopted it is.