Mobile Makes The Scene, Magna Reports On 'Third Screen'

The so-called "third screen" could become a primary advertising outlet for marketers, according to a new report by Magna Global. And the media-buying firm recommends that advertisers begin conducting research on how best to utilize the emerging medium.

"With a potential audience in the billions, as infrastructure is deployed to meet advertisers' needs, we believe this vast untapped market will ultimately emerge as one of the most important of the early 21st century," the report said.

Furthermore, Magna Global said, it expects cell phones to provide the most fruitful opportunities. At the end of 2005, there were more than 2 billion mobile phone users globally, of which 236 million had 3G service enabling video playback--a segment growing exponentially. "With video-capable devices growing market share rapidly, we expect that in the long-run, the best opportunities to market to consumers in mobile environments will be through cellular phones," Magna Global wrote in the report.

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Magna Global expects the cell phone segment to provide greater marketing options than two other sectors: "stored mobility," which includes devices such as Sony's PSP and Apple's iPods, and "place-shifting," which allows consumers to remotely access their home cable/satellite services through devices such as SlingBox and coming products from EchoStar, DirecTV, and TiVo.

Still, mobile video as a dynamic ad marketplace may be some time off, since usage is relatively small, although millions of consumers have access to it. The reasons for this include a modest amount of content available, subscription fees, and the cost of handsets. (Text messaging and ring tones remain the "killer apps" on cell phones, according to Magna Global.)

Also, the cell phone industry's infrastructure has some upgrades to make in order to be able to support distribution of live content--as opposed to simply clip-based offerings--to a wide audience, the report said. In a sense, service quality is hampered by many of the problems that years ago plagued AOL on the Internet, including network congestion. But mobile operators are experimenting with ways to improve the systems.

Advertising revenues could bring the financial resources to allow mobile video distributors to overcome these obstacles. But, Magna Global said, several issues need to be resolved to make mobile video "an advertiser-friendly medium." Advertisers need uniform standards allowing them to prepare creative that can be used across multiple networks and devices; a user-friendly buying process that enables the business to support advertisers' needs to make last-minute changes; and a measurement process to ensure advertisers that an a commercial ran and how it performed, including whether it was subject to trick-play behavior.

"With many different places to allocate budgets, it is important that any new medium support the needs of agencies and marketers in executing their media buys," the report said.

Magna Global said that mobile video needs a critical mass of consumers who aren't as easily reached through another medium. The report says, for example, that if 15 percent of Americans used mobile content, and 80 percent of those were also avid viewers of traditional television, the medium might not hold much allure for marketers. But if 80 percent of mobile-content users were adults ages 18 to 24, and half of them did not regularly watch television, Magna Global said "we would have a medium with more than sufficient unduplicated reach for many advertisers."

Overall, mobile operators will need to avoid the same pitfalls that have plagued VOD, and work with advertisers to optimize the medium, the report said. Magna Global said: "we believe that if suppliers had worked more closely with advertisers at the outset of the development of VOD and made accommodations in their favor, VOD would be a much larger business today."

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