Study: Unlike Users, Ads Slow to Move from PC to Devices
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"Two roads diverge in a yellow wood..." Well, not exactly, but as marketers search for ways to improve banners, are they missing the point? Internet content and services are beginning to move off the PC and onto a plethora of devices. Perhaps they should follow.
In the next five years, 40 percent of the global market for Internet services will be attributable to multiaccess services, the delivery of content and services to multiple devices over multiple networks, according to research by Ovum. And while this phenomenon will change the face of the IT, telecom and new media industries, and create lucrative markets for new products and services, companies wanting to capitalize on opportunities must radically alter their business practices.
"This evolution of the Internet will stimulate the convergence of applications and services, and allow them to reach well beyond their usual domains," said Neil Ward-Dutton, research director at Ovum. "The introduction of interactive digital TV services, media streaming and the announcements of wireless strategies from IBM, Microsoft, Sun, Hewlett-Packard, and Oracle are just some examples of the early moves that are being made towards making Internet services available any time, anywhere. PDAs, mobile phones, TVs and even cars will be able to access digital content and services by 2005."
But what of the marketing opportunities that are sure to follow the content and services to the devices? According to Jupiter Media Metrix, they shouldn't follow too closely. Small and fragmented wireless and interactive television (iTV) audiences in the United States will limit advertising opportunities on post-PC platforms, according to Jupiter, making them secondary digital marketing vehicles. The post-PC audience (wireless devices, iTV and Internet kiosks) will reach critical mass by 2005 -- however, the PC will continue to dominate with a 74 percent Internet household penetration and 68 percent Internet individual penetration, a Jupiter report found.
Jupiter's analysts expect advertisers will be slow to allocate dollars for campaigns on post-PC platforms as they struggle to gain and control the key benefits of advertising on these devices. Jupiter recommends marketers view the post-PC audience as "modal targets" -- or distinct groups of individuals with similar behaviors and attitudes that stem closely from their use of any Internet-enabled device (see table below)-- as opposed to the more traditional audience segmentation characteristics, such as demographics, geography and gender.
According to a Jupiter Executive Survey, 77 percent of advertisers spent no money on wireless advertising in 2000 and 82 percent spent nothing on iTV. Thirty-six percent plan do to the same in 2001 for wireless devices, and 57 percent for iTV. Therefore, Jupiter expects to see only modest revenue increases for post-PC platforms in the near future.
Jupiter projects online ad revenues to reach $16 billion by 2005, but post-PC advertising revenues will climb slowly and trail behind. iTV will reach only $4 billion, and wireless $700 million, by 2005. While wireless ads have the advantage of immediacy (reaching consumers closer to when and where they may actually purchase), Jupiter analysts think the lack of standards, audience fragmentation and unclear ROI will inhibit the growth of marketing on these platforms. Consumers may also demand a high price from advertisers looking to reach them on their mobile phones. A Jupiter Consumer Survey found that consumers willing to accept advertising on their mobile phone or PDA said they preferred subsidized content and access (36 percent), followed closely by subsidized devices (35 percent). Nearly half (46 percent) of all users, however, said that no form of compensation would persuade them to receive advertising on their mobile phones or PDAs.
"Marketers that believe they can overcome the limitations of interactive and wireless devices as b