Nokia Enters Mobile Phone Marketing With Enpocket Buy

Nokia made an aggressive push into mobile phone advertising and marketing services Monday by announcing its intent to buy privately held Enpocket for an undisclosed amount.

Enpocket, which serves up ads for Hyundai, MTV's The N, Pepsi, MasterCard, McDonald's, Sprint and Vodafone, offers targeted video and text advertising on mobile phones. The technology allows companies to plan, create, execute and statistically measure mobile ad campaigns by analyzing consumer data.

The technology digests a high volume of consumer data to process and predict consumer behavior. This lets the service target consumers with relevant mobile ads. The processed data comes from publishers and mobile operators who gain permission to use the information from subscribers.

About 80% of Enpocket's business goes through agencies, says Mike Baker, Enpocket president and CEO. "We took on 45 new ad campaigns as of July 1, of which 20 of the brands are new to mobile advertising," he says. "That's significant because you can see the number of companies coming into mobile advertising has dramatically increased."

Nokia's push into mobile advertising and marketing began earlier this year when it introduced Nokia Ad Service--a platform that connects advertisers and media publishers with consumers through mobile phones--and Nokia Connector, which enables advertisers to target consumers with specific ads.

Enpocket, Nokia Ad Services and Nokia Advertising Connector will combine to form the Nokia Ad Business which Baker will head as vice president. He will expand services from the United States through China, Russia, Latin America and Europe. Effective in January, the trio will fall under a group called Services and Software.

The move isn't without hurdles. Baker says the convergence of mobile advertising and telecommunications "make odd bedfellows" because the two come from different worlds, but as companies become more educated, Nokia will "build the mobile ad market one confident brand at a time."

Nokia's plan to push into interactive mobile advertising supports analysts' predicted growth. EMarketer estimates U.S. interactive mobile advertising sales will reach $4.8 billion by 2011 in the U.S., up from $421 million last year.

Analysts say Nokia's move into the services business makes sense. Those that hesitate could find they'll need to compete solely on supply chain efficiencies as cell phones continue to penetrate emerging markets.

Not good for profits, says John du Pre Gauntt, senior analyst for wireless at eMarketer. "They will still make money, but not 40% margins on the mobile handsets like they did in the 1990s," he says. "One main reason Nokia acquired Enpocket is because other companies are doing it, and prime, attractive startups that have demonstrated traction but aren't too big are being snapped up."

Acquiring Enpocket puts Nokia squarely in competition with AOL and Microsoft. AOL owns Third Screen Media; and Microsoft, European mobile phone advertising company ScreenTonic.

Enpocket co-founders Jeremy Wright, Jonathon Linner and Rob Lawson, launched the Boston-based company in 2001 to provide mobile advertising services across multiple formats, including SMS, MMS, mobile Web banners and video. Enpocket plans to retain the 120 employees who now support the company.

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