Telecom advertising will continue to increase

Mobile ad campaigns in nascent stage, but growing

The sun will continue to rise, death will surely come to us all and telecom companies will persist in spending heaps of cash to advertise their services. In fact, when it comes to advertising spending, there are few sure things except maybe for telecom, which has been a cash cow for Madison Avenue for this decade. The coming year looks to be more of the same.

Why? Intense competition. That's the reason most carriers have now adopted $99 per month "all you can eat" plans that forgo the previous per-minute rate models. Charles Golvin, a wireless analyst at Forrester Research, Cambridge, Mass., said there are too few opportunities to find new customers. "We've got family plans that have been driving subscriptions to kids and spouses," he said. "We've got more and more prepaid phone emphasis. Also, the market is crowded with all-you-can-eat carriers like Leap and Metro PCS, which offer affordable plans that are limited to a city. With all this happening, the larger carriers are trying to steal customers from others, improve loyalty and keep current customers. Churn has always been important and now it's especially important."

Herding to Data ���

While competition ensures that telecoms will keep lobbing millions of ad dollars at each other, will price pressure eventually undermine that? Perhaps. Average Revenue Per User (ARPU) has been relatively flat over the past three years (in the $49-50 range), said Golvin. But what the revenue carriers are getting from data is increasing and so is the need for educational ad campaigns. "These data services require a different kind of marketing. It has an educational component because you have to explain the value of what you're offering," Golvin said. "When you introduce new services, you really have to tell customers why they should get [the services] and why you're charging for them."

What About Mobile Advertising? ���

That ad spending by telecoms will continue is a no-brainer, but ad revenues earned by telecoms is another story. And honestly, a mobile ad is last thing you want to see while a Web page is loading on the tiny screen of your BlackBerry. In a recent Forrester survey, 65% of consumers said they were irritated by mobile ads that appeared while they waited for a page to load.

Even if marketers are able to get past the annoyance hurdle, they're faced with others, like creating mobile widgets to distribute their content on mobile phones. (Standards are still a mess so marketers must tailor mobile widgets to specific phones and operating systems.)

Despite some pitfalls of mobile marketing, which is still in a nascent stage, advertisers are experimenting. Earlier this year, 58% of mobile subscribers said they have been exposed to mobile advertising, per Nielsen Mobile, a unit of Nielsen (owner of Brandweek). Pepsi and Burger King, among other large brands, have started testing different forms of mobile marketing. Chains like Pizza Hut and Papa John's now offer consumers the option to order using the mobile Web and text messaging. Starbucks offers a mobile store-locator tool.

Forrester estimates that current mobile marketing spending in the U.S. is $270 million. Spending is forecasted to grow to $405 million in 2009 and $2.8 billion by 2012.