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Four reasons why mobile marketing and commerce will change

By Marc Theermann

The last few months have been the most exciting in the history of mobile marketing and commerce. Ignited by a string of acquisitions and fueled by sizable fourth-quarter campaigns, the industry is in a state of euphoria. It seems like the pieces are finally coming together for us to reach more than 200 million mobile phones in a big way.

“Not so fast!” say the skeptics. “Despite all these addressable eyes and ears, mobile advertising spends are still small – probably less than $1 billion in 2010 – and most of it is from ringtones.” 

Maybe, but here are four reasons why it is all about to change.

Barriers to mobile commerce disintegrating
For years, it was beyond difficult to pay for something from your phone.

Typing a credit card number on a T9 keyboard is clumsy, and the only other credible payment system was premium SMS, which was quickly ruined and abused by the “sign up for my ringtones” clubs.

Today, we have full keyboards, PayPal for mobile, and one-click purchases through iTunes and other mobile content stores that already have our payment information. 

Once purchased, it is also getting much easier for us to enjoy the content across multiple devices – a pain point that has likely impeded hundreds of millions in digital content sales over the years.

When it comes to real-world goods, bar code scanner applications are the first in a wave of innovative tools making it truly easy to find, compare and buy products wherever we are.

The big retailers are definitely taking notice of all this. They are making a clear and rapid push into mobile, and companies such as Amazon and eBay are leading the way with seamless integration between their mobile and Web properties.

In the coming months, bricks-and-mortar players will begin to truly ramp up their investments in mobile commerce, sparking a feedback loop of unprecedented sales and mobile ad spends.

Credible audience data becoming reality
The lack of mobile cookies long meant the absence of valid targeting data.

Mobile media buyers tried to overcome this by using content as a proxy for audience. But when it comes to planning and tracking campaigns, there is no easy substitute for cookie-based metrics such as frequency capping and unique visitors. As such, mobile media buys have remained small.

Today, most smartphones that see almost all of the nation’s mobile Web traffic are cookie-enabled.

In addition, companies such as Ringleader and Umber Systems are working to bring cookie-type solutions to standard mobile devices.

Within 12 months, media buyers will be able to identify their target audience, and place relevant mobile buys against them.

The data for these buys will come from standalone data providers such as Colider and Flurry, wireless carriers, publishers, browsers and online providers which are extending their offerings into mobile.

Finally buy mobile ad inventory at scale
A decade ago, the industry started with a few clever publishers and their sales teams attracting early advertisers.
Round 2 saw the emergence of mobile ad networks that aggregated publishers and made it easier for media buyers to place buys on specific sites and properties.

However, as Forrester Research pointed out in a recent study, “No media-buying process is helpful if it connects buyers to only a few properties. Media-buying optimization hinges on comparing the audience, performance and ask price of millions of impressions in order to inform algorithms that determine optimal future buys.”

This type of reach can only be achieved through neutral players such as exchanges, supply-side platforms and yield optimizers that aggregate audience across hundreds or thousands of sites.

By making large buys more efficient, these players will help bring millions of incremental dollars into the mobile space.

Mobile ads getting more engaging
Eyeballs alone do not count.

In both advertising and content, consumers crave engaging experiences, and in the last 18 months, the industry has seen nothing short of a GUI revolution.

The explosive growth in mobile browsing proves just how much pent-up eagerness consumers have had to participate.

Traditional mobile banners will continue to have their place in the industry, but the truly exciting stuff is in rich media.

Companies such as Greystripe, AdMarvel and Medialets are paving the way for fun and appealing interactions. These new ad formats include sounds, video, voice, and mobile commerce. Not only will they lead to better click-through rates for performance advertisers, but they will truly excite brand advertisers.

Mobile advertising is about to embark on a tectonic shift that will affect everyone: consumers, publishers, technology providers and all the players in between.

With the major barriers to growth crumbling, many new advertisers are about to join the party.

In addition to the existing spenders, we will also see budgets from digital entertainment companies, and in fourth quarter we will see sizable retail budgets aimed at driving consumers to stores and retail experiences.

Brand advertisers will continue experiment with rich media, and by next year we should see a penetration of smartphones high enough that almost all brand budgets will also contain a mobile component. Any way you cut it, we are all in for a great ride.

Marc Theerman is vice president of mobile at AdMeld, New York. Reach him at [email protected].