• by Steve Smith , Staff Writer @popeyesm, January 24, 2006

Let's inaugurate this column on mobile marketing with a real flyer, shall we?

Sometime within the next year or so, I predict, we will see a fully ad-supported cell phone service. The phone, the voice minutes, and assorted data services will be free to the consumer in exchange for giving marketers access to the customer. Yeah, yeah yeah, I know what you're thinking. NetZero and Juno failed famously with the ad-supported free ISP model back in the day, and anyone trying this model will need to learn from his mistakes. Regardless, I think a fully sponsored wireless service is the inevitable end point of several mobile trends that are accelerating faster than many expected.

On the face of it, ad-supported phone service seems a marketer's dark hash dream. After all, in study after study, consumers claim they loathe the notion of marketers reaching them via their cell. The twin debacles of telemarketing excess and online e-mail spam seem to be in everyone's mind when they contemplate the potential consumer apocalypse here. Walking in a public space in America today is strange enough with scores of us having disembodied conversations into thin air (we used to call it schizophrenia), but imagine if half of those holding phones were screaming "Take me off your ****-ing list!" as well. No one wants this.

In fact, consumer rejection of mobile marketing is a bit of misnomer. Millions of people engage in mobile marketing every month when they use short codes to interact with TV shows, magazine polls, or even trivia contests initiated by sports arena jumbotrons. I am still trying to get my head around the idea of grease-painted fans text messaging in sub-zero temps, but I guess we will do a lot of weird stuff after ten $5 beers.

ESPN already plants millions of ad impressions a month via its mobile Web pages, and Third Screen Media claims its mobile banner ad network for major media companies like USA Today and Hollywood.com is sending 50 million impressions a month to WAP pages. Because both short code marketing and WAP banner placements have been relatively non-invasive, and there has not been any wholesale reselling of mobile phone lists, U.S. consumers are not pushing back against these disciplined first steps into mobile marketing.

The carriers themselves have become much more amenable to WAP ads in the last year. Previously, content providers with deck placement were forbidden from running ads on pages that linked directly from the deck. Now, major media are flexing their muscles in renegotiated deals that include rights to run WAP ads and split the revenue with the carriers. I think cellcos are starting to wake up to the idea that consumer subscription fees for mobile content will not be enough to make up for the steady decline in ARPU from voice services. This stool will need another leg.

But the final push for ad-supported mobile content will come from consumers, who like the idea of cellular data services but don't like the added cost. For instance, when mobile consultancy TMNG tested consumer price tolerance for buying mobile video clips, 40 percent said they were "extremely" or "very likely" to download free video with commercials, while high interest plummeted to a mere 19 percent at the $4/month price point and 16 percent even at 30 cents a clip. Any mobile customer who subscribes to one or two standalone data services like a game and a stock ticker is adding $5 to $8 to his monthly bill. Add a $10 or $15 a month mobile multimedia service like MobiTV or Verizon VCast to that mix, and people's cell tabs start exceeding their cable bills--and that won't work. In order to move beyond the early data plan adopters, carriers will need to enlarge the size and scope of content bundles and reduce prices. This means that everyone in that value chain (consumers, publishers, aggregators, and carriers) will be looking for additional support for the mobile content ecosystem.

The technology and the models for this ad-supported service are coming. I know of at least one technology and business model in the works that allows content providers to collect market intelligence via on-deck surveys and compensate the user for her cooperation with credits against her phone bill. In the past, publishers loved the idea of mobile because it was a platform with a built-in micro-payment billing system where people expected to pay for content. But mobile is also the perfect platform for bartering with consumers, making a fair exchange of free content for marketing information or a small slice of their attention span. In his smart new book The Search, John Battelle weaves a scenario in which cable TV viewers get free service in exchange for downloading and watching highly targeted ads on their DVRs. I think this model is more likely to occur first on phones.

The pieces for an ad-supported phone service are falling into place. Some marketers already offer free branded wallpapers and ringtones to mobile customers who crave personalization tools. As carriers open up their decks this year to off-portal distribution, the possibilities for fully sponsored content become limitless. One company, MobilePlay, just launched a beta version of ad-sponsored mobile content packages that will include iVillage, USAToday, AP Digital, and About, among others. This is a model that will proliferate and ultimately escalate into a service where we buy into sponsored packages of mobile content, and the voice minutes and phone get tossed in free.

 As in radio, broadcast TV, cable and the Internet, marketers once again will be called upon to make the numbers work for a new media industry and for all the usual reasons: American are not willing or able to pay the full cost of the media experiences they really want.