Mobile mad men

Tech-savvy duo have turned their Md.-based company into an online advertising powerhouse

March 07, 2010|By Gus G. Sentementes | gus.sentementes@baltsun.com

Advertising campaigns are always looking for a new canvas, and that could soon be your cell phone screen.

With the rise of the iPhone and other smart phones, more people are using their mobile phones to search the Web, watch video and get news. According to a recently released survey from the Pew Research Center, one-fourth of Americans say they get some form of news on their cell phones.

And where there are consumers of media, ads typically aren't too far behind. The advertising industry has talked for years about the moneymaking possibilities in mobile advertising - from text-message campaigns to tagging popular applications with marketing messages - and now analysts see it beginning to fulfill expectations.

The Interactive Advertising Bureau has projected that the mobile ad industry will grow from $416 million in 2009 to $1.6 billion within three years.

"In the past, you had people talking about it in a hypothetical way, but now you have real adoption; the campaigns are out there," said Greg Sterling, mobile analyst with Sterling Market Intelligence in San Francisco. "You've got real consumer behavior out there now, creating opportunities for advertisers. The challenge for advertisers is to match that and take advantage of that."

One of the biggest players in mobile advertising, Millennial Media, is based in Baltimore. The company - founded by Paul Palmieri and Chris Brandenburg in 2006 - got in on the ground floor of the emerging industry.

Within the past six months, heavyweights Google and Apple have acquired two of Millennial's top competitors for hundreds of millions of dollars each, leading many analysts to believe that the mobile ad industry is on the verge of a breakout year in 2010.

For Palmieri, a veteran wireless executive, launching Millennial was the culmination of a long fixation with how to leverage on-the-go technology for marketing.

"I had thought this would be a huge opportunity for many years," said Palmieri, 39, Millennial's chief executive and president.

The growth of the mobile Web and availability of fancier phones mean that consumers can expect an intensifying stream of advertising targeted straight at their portable devices. Advertisers are starting to appreciate that consumers interact with their phones differently than they do with their laptop and desktop computers.

But overall spending on mobile advertising last year was just a fraction of total online ad spending, which totaled $24 billion. Believers in the mobile ad industry still have to convince companies and marketers that seeking to reach consumers through portable devices is at least as worthwhile as reaching them through television, print, radio and traditional online means.

"It's still a very fragmented marketplace," Sterling noted. "Advertisers aren't going to pay attention until there's enough value being delivered."

Generally, advertisers who want to market to mobile phone users can choose among three formats: display, search and text message.

Display ads are shown as part of mobile Web sites and within applications, similar to the kind of advertising shown on regular Web sites but adapted for smaller screens. A consumer clicks on the ad and usually is directed to a mobile Web page with more details about an offer. Search-based marketing involves ads shown alongside Web searches for specific terms - an arena where Google already has a strong presence.

In the future, consumers can expect to see display and search ad campaigns dominate on their mobile phones, while a smaller percentage of marketers continue to embark on text message campaigns, according to industry statistics.

Mobile ad networks, such as the one run by Millennial, strike deals with Web site publishers to build an audience of mobile phone users. Using its own computer technology that can disseminate ads to mobile phones, Millennial can target different demographics within a broad audience of the Web sites in its network. The company has thousands of sites, services and mobile applications in its network that it can make available to advertisers.

"We can target moms in the Northeast on a rainy weekend," Palmieri said.

Mobile advertisers also can embark on interactive campaigns that would be harder to pull off on the desktop Web, mainly because the advertising is tied so closely to the phone and text-messaging experience.

For instance, Millennial teamed up with Paramount Pictures to promote the movie "Eagle Eye" a month before its release in 2008 with a "mobile challenge" sweepstakes. Participants viewed mobile pages and received text messages plus two interactive phone calls from a woman who sounded like a main character in the film, the mystery caller. The campaign generated millions of ad views, and got half of the viewers to opt into taking the sweepstakes challenges - a high rate, according to Millennial.

Another trend that cell phone users will likely experience in the near future is location-based advertising.

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