NEW YORK — As mobile phones become more like PCs, Internet companies are betting that they’ll find a new medium in which to thrive.
But that’s still some time away, experts said here today at the ThinkMobile conference and expo. After all, mobile advertisers and content providers have barely begun to bring the techniques that work on the Internet to mobile phones. And today, it’s the wireless carriers who dominate the cash flow in the mobile content industry, from advertising to subscription services. (ThinkMobile is produced by Mediabistro, which is part of WebMediaBrands, the parent company of this Web site.)
Still, the expectation is that as smartphones proliferate and grow in power, they’ll enable their owners to escape carriers’ locked-in environments — paving the way for a true PC-like Net experience, along with benefits for online media companies, advertisers and other Internet firms.
“These are complex ecosystems,” said Tom Henriksson, head of Nokia Interactive Advertising, during a panel discussion here today. “Industries are colliding, and there will be many winners, not just one.”
For content providers, the initial opportunity is to raise awareness of and drive traffic to brands that are outside the mobile space. Real advertising profits, meanwhile, will have to wait for the industry to mature.
During his opening keynote here, Salil Dalvi, NBC‘s senior vice president of mobile platform development, said it’s about focusing on the obvious. That means delivering entire episodes of NBC shows to mobile devices and delivering stock quotes from CNBC. The value for NBC is in brand awareness, not revenue.
Dalvi said that the sole mobile content revenue stream for NBC comes from apps sold in the iPhone store, such as the Cylon Detector App, related to the popular Battlestar Galactica show on NBC’s Sci-Fi channel, which retails for $1.99.
Looking for mobile ad profits
Others — like Yahoo, Google (with its recently acquired ad network DoubleClick), Microsoft, Nokia and AOL — are still angling for mobile ad revenues. Yet there’s not that much to go around at the moment.
While Greg Stuart, former CEO of the Internet Advertising Bureau (IAB) trade association said that mobile ad spending may have topped $600 million in 2008, he added that about $500 million of that went to premium SMS.
That leaves Internet companies scrambling for the remaining $100 million or less. And of that total, 70 percent or more of that spend already goes to Yahoo, Google, Microsoft, Nokia and AOL, representatives from the companies claimed during a panel today.
The low returns so far haven’t stopped major established companies and venture capitalists from investing a multiple of that $100 million into the mobile ad business, said Phil Miano, national director of mobile advertising sales for AOL’s Platform A, who spoke during a panel today.
They’re wagering that mobile ads are on the cusp of growth, but industry insiders questioned how soon that might come about.
“Every year since 1998, the mobile industry has said that ‘Now is the time for mobile,'” Stuart said. “What makes 2009 different?”
Ad spending on mobile devices will grow when that spend is an “above line” item in ad agency budgets, said Michael Bayle, senior director of mobile advertising at Yahoo. For now, even in the most innovative cross-platform campaigns, it represents 10 to 15 percent of the media buy at most.
For content providers, the carrier networks — rather than Internet firms — today represent the dominant sources of revenue. Dalvi said that NBC is being nice to the carriers, but “it’s easy to be nice to someone when you have a positive financial relationship with them.”
For now, that’s often cutting out the folks who stand to make the most from the Net’s growing role in mobile, since DoubleClick display ad trafficking and Google search have yet to make serious inroads with the carriers.
Behind the scenes, however, the big Internet players are working on technology to make it simpler for advertisers to buy mobile media — and hopefully, more enticing.
Robert Victor, product manager for emerging technologies at Google’s DoubleClick subsidiary, said that if an agency today wants to spend $2 million on mobile the same way it would spend that money online, it can’t, due to the space’s fragmented market.
“You could go to a single major player like Nokia,” he said, “but it’s tough to execute a complex plan like you would on the Internet. We see an exchange business in the future that will enable more fluid transactions.”
There are other hurdles to surmount, as well. As the Internet advertising business moves to complex metrics, the mobile media business is still selling ads based on the number of people who view them — using the Cost Per Thousand metric, or CPM
Moving away from CPM metrics also could lay the groundwork for advertising to make use of some of the unique benefits of mobile — like wireless downloads, redeemable mobile coupons and location-based services.
But today, the content on those phones is similar to what’s available on the PC, Dalvi said, who added that NBC focuses on reaching people on their mobile phones only when they lack PC access or want a specific piece of information immediately. He added that NBC would like to deliver applications like banking and shopping, and advertisers would like to deliver more targeted ads.
Part of the problem is that content providers are only able to sell ads based on older metrics because there’s not yet enough mobile content available.
Still, he added, the wireless space does have its benefits for content companies.
“At least for now, there’s no glut of content,” Dalvi said.