[The Msearchgroove mobile advertising podcast series and close collaboration with VisionMobile continues with a look at ad-funded content and the impact of interactive advertising. And what better senior executive to speak out on this than Patrick Parodi, Amobee Media Systems CMO and head of European operations. His company got in on the ground-floor and has consistently argued that only user-centric (translated: opt-in) services will cover all the bases and boost everyone's revenues in the end. Next week we pick up with ScreenTonic and keep up the momentum with a top-notch line-up including Hyperfactory, Enpocket, 4INFO, and MoPhat so check back regularly.]
Amobee Media Systems made its mark on this space through a user-centric, operator-focussed approach to ad-fund the entire spectrum of mobile content. In a nutshell, the system enables targeted, interactive ads to be dynamically inserted into the full range of mobile content and apps, including WAP browsing, video & music, games, SMS and MMS. For a short while it was a lone voice in the space, preaching that only a system that puts operators in control, and allows users to opt-in to receive ads in exchange for subsidized content would ever gain traction. Granted, the space has crowded since, but Amobee remains a first address when it comes to delivering a new twist to permission-based, interactive advertising schemes. (Amobee also supplies developers with HAPI (Handset Application Programming Interface), which can be integrated and activated to make mobile content Amobee ready and conditioned to take ads.)
Take the recent tie-up between Amobee and Anam Mobile, a provider of messaging infrastructure technologies, to deliver a joint solution for ad-funding subscriber originated SMS messages. The solution effectively pays off for both parties: operators can boost their revenues through opt-in advertising, and users have access to a lower cost SMS package (since ads help subsidize the messaging service). It reminds me of the ads and messages that appear at the bottom of email messages, and which we automatically pass around. In a word, that’s the value prop here: a peer-to-peer communication and advertising model that enables viral marketing. (It’s quite unobtrusive, but relevancy is another story.)
At the other end of the content spectrum, Amobee sealed a deal with PacketVideo to serve targeted and relevant opt-in advertising impressions within that company’s media platform. Amobee also sharpened its focus on mobile music, teaming up with SDC, a provider of mobile music solutions, to serve opt-in advertising impressions. (The partnership provides SDC s white label music players the ability to serve contextual and targeted opt-in advertising impressions without affecting the mobile music listening experience.)
But the real news is deployment and operator interest in ad-funding. Amobee tells me both are on the upswing, so we can expect some operators to reveal their trials and learnings soon. In the meantime, I caught up with Patrick Parodi, Amobee Media Systems CMO and head of European operations, to find out how operators are thinking about this model and hoping to protect their turf at a time when strength as a gatekeeper in this scenario is waning. Patrick, who is also Chairman of the Mobile Entertainment Forum, the leading global trade association representing both the mobile and entertainment industries, believes the “user-paid” model is THE key barrier to the growth of mobile data consumption and revenues. His warning: Adapt or die.
Listen to the podcast here. [21:02]
Don’t get fooled again: As the mobile phone is fast becoming a media channel, bringing advertisers on board in a way that creates value for all stakeholders will lead to a better and bigger market for all. Patrick says signs are good so far that mobile operators have learned the lessons of the fixed Internet and finally figured out that giving it all up to Google & Co. is a short-term solution that’s bad for business long-term. “We ve been excited about seeing some operators take charge – taking a more active role in the ad model as opposed to just saying: Well, you know, at this point we re getting commoditized so we should let some of the Web guys come in and figure out how to monetize the audience.’ We re very much on the operators’ side of the fence in this particular battle that is beginning in this space and we feel that they re in a much better position to provide relevancy and to provide an environment that is going to be positive for the user, positive for the media company, positive for the advertiser and of course positive for themselves as they grow their own brand and their relationship with users.”
Social media hype: Sure, there’s a lot of excitement about the Facebooks, Bebos, MySpaces and other social networking destinations that we can rattle off. But Patrick thinks there’s also a lot more mileage in SMS, which he regards as the mother of all social networks. “I think our implementation of SMS is probably different than some of the others in the sense that it s not application to person, it s really person-to-person.” This approach underlines the importance of the operator, which sits at the center and makes sure ads are inserted in a way that benefits everyone. By utilizing the unused part of the SMS payload, which is what Amobee enables, an SMS exchange between users can be a vehicle that delivers “an ad impression in a relevant manner.” The operator could sweeten the offer by providing users “some type of benefit to be part of a loyalty program, some type of ability to get an upgrade on their handsets or even a reduced cost for the SMS bundle.”
Mobile search matters?: Not until the industry gets it right. “To look at the web and say Well, you know, search is now garnering 50 percent of the online advertising revenue’ and then therefore to assume the same thing is going to happen on mobile is a bit simplistic.” Patrick is lukewarm on search and convinced that when it does finally arrive the user experience needs a rethink. “Clearly, what I ll be searching for on a mobile phone is going to be different. It s going to be much more tied to location and to immediacy.” Don’t get too excited about the tie-up between mobile search and mobile advertising just yet. “I don t see that as being the highest incidences of impressions being served on a mobile phone in the short-term. I think there s much more that s going to happen .The notion of using the unused part of the peer-to-peer SMS payload as a way to deliver an ad impression [is] going to lead to much higher volumes of inventory in the short-term.” [Well, Patrick may believe this play on P2P communications will drive more advertising. However, I would contend that ads in connection with search results conveniently placed when we are in buy-mode, not chat-mode will pay bigger dividends.]
Skin in the game:Ad-funded can be a particular boost in the case of mobile games, a market that hasn’t “been able to break beyond the 5 percent of mobile users downloading a game over the air for two years now.” If you figure it’s still managed to chalk up impressive growth, then you can imagine the hockey stick in usage when the price can come down as part of an ad-funded content pitch. “It’s exciting for us to be able to be part of a new business model that is going to boost the number of users by reducing, potentially, the price of a game by 25 – 30 percent.” He adds: “It means that the developer and the aggregator and the publisher are getting paid more based on game plays as opposed to downloads. It s going to have an inherent [knock on] effect, producing better games for the industry. I think a lot of people have complained about the poor quality of mobile games. Well, if the model shifts from a pay-per-download to a pay-per-game play for the developer and the IP owners of these games, you could see how that would have a positive effect overall on the mobile games business.” Look for Amobee to “launch some key video trials” to gather the metrics that will tell us more about the right price point for these types of services and how much the brands and the agencies are prepared to pay for those impressions.
More to come: So far only Orange in France has come out of stealth mode, admitting it has launched a mobile ad-funded trial with Amobee. (Brands include Coke and Saab, and the ads are served interstitially during idle time in between levels or while a mobile game is loading.) In Asia, Amobee has tied up with Hungama Mobile, a provider of mobile marketing applications and the largest aggregator of Bollywood and South Asian content globally, to raise the profile of ad-funded content in the South Asian market. (Hungama has already implemented more than 600 mobile advertising campaigns for its portfolio of over 100 leading brands, such as McDonald s, Coca-Cola, Citibank, Apple etc.) What’s next? Patrick expects more of Amobee’s operator customers to go on the record with their trials and results to date.
BTW: Patrick can’t share stats, but I did report on this during the 16 months I covered the space (and specifically mobile search) for MoCoNews. Based on aggregated data from multiple trials with tier 1 operators in multiple markets, Amobee reported (last November) that for every user who paid to download mobile content, up to 50 users went for the ad-funded offer. The advertising revenues can be worth as much as four times the equivalent download value. Patrick later told me that, when given the choice, over 90 percent of users opted for the ad-funded version rather than pay full price for ad-free content.
Special thanks to the Amobee team and Cristina Whittington @ Nelson Bostock for arranging this interview and my invitation to other companies to keep the pitches coming. If you’re not keen to participate in a podcast, contact me directly to be included in my strategic white paper, a research project I have undertaken for a client to show off the best& brightest in the mobile ad space and weigh their relative strengths and weaknesses.