Big ads hit the small screen

24 Oct 2006

The juggernaut that is the US telecoms industry rolled into Los Angeles on 12 September for the CTIA (Cellular Telecommunciations and Internet Association) Wireless IT and Entertainment Trade Show. The show, which was traditionally about such things as billing and switching, now has a big focus on mobile content and entertainment.

In fact, entertainment has become such a part of the mobile phone industry that everyone expects to see Sony Pictures and MTV Networks execs sitting chatting to the content teams from Verizon Wireless, Sprint and the reps from the myriad of new mobile content start-ups and the seasoned aggregators.

We have gone beyond the ‘gee-whiz’ phase of mobile entertainment to practical phase. The thinking now is: “Yes, you can have entertainment on your phone, yes it works — now let’s make money.”

Money making is now the mantra of everyone in the ecosystem. Everyone I met at the show seemed to have an opinion on the potential of the market and how money was to be made but one theme reoccurred consistently: ad-supported free mobile content.

Everyone I met, from content producers to carriers, had just launched or was about to launch ad-based content trials. A good example is Fox’s production of spin-off mobisodes of the hit series Prison Break, which ran exclusively on Sprint, was sponsored by Toyota and featured ad spots for the Toyota Yaris, with the shows available free to the end user. Other examples include Amp’d Mobile’s deal with Procter & Gamble to offer ad breaks in its video channels sponsored by Procter & Gamble brands and Sprint’s announcement that it would start offering a banner ad service on its deck powered by mobile start-up Enpocket.
These deals are only the tip of the iceberg; I expect at least 10 more major announcements in the coming months.

So, what’s driving this new found love of mobile ads from an industry that only a couple of years ago was very resistant to it? Well, two major trends seem to be colliding here.

The first one is that mobile carriers and content providers have observed their stats over the pass couple of years and have observed that, while there is a major hunger for mobile content, this hunger does not always translate to sales.

There is a new found understanding that users, especially in youth demographic, can only spend so much on mobile entertainment (ringtones, music videos, films, TV, etc) so that if content can be given away for free then the resulting spike in attention can be exploited.

The second trend dovetails perfectly with the first one: that is the overall trends in internet advertising. It’s no secret that every brand manager is worried that their consumers are spending less time watching TV and reading newspapers and more on the internet (YouTube, MySpace, Bebo, Google, etc) and on their mobile phones.

Thus we have seen major content companies and brands clamour onto these new advertising opportunities. Google’s results and share price demonstrate the power and potential of internet advertising and the recent deals between Warner Music and YouTube and Universal and SpiralFrog to give music videos away for free in exchange for share of ad revenue show that even the biggest media companies are taking it very seriously. In this context it is easy to see how mobile is seen as the next frontier for the ad and content businesses.

The major media companies haven’t been slow on mobile either. Peter Chernin, COO of Rupert Murdoch’s News Corp, announced during a keynote address at CTIA that News Corp would acquire a majority stake in Jamba, the mobile content company best known for its annoying but huge-selling Crazy Frog ringtone.

Chernin was very upbeat about the deal and the market potential. He said that this medium, with over two billion customers worldwide (TV has one billion, internet has less) had the potential to become the biggest medium ever invented.

He mentioned that the penetration of content is still quite low and thus provides huge potential for growth: only 4pc of US cell phone users watch TV on their phones; if this even grew to just 20pc, then US$5bn in revenue could be created in the US alone.
Even Rupert Murdoch, who was slow off the mark in the dotcom era, is now a fully fledged convert to the potential of web and mobile, enough to make him embrace Crazy Frog.

By Stephen McCormack, chief executive of mobile content firm Wildwave