Mobile Marketing Poised for Takeoff in U.S.?

A host of players including advertisers, carriers, investors and wireless startups, are moving to capitalize on the ubiquity of mobile phones, saying the new channel offers a direct, personal and interactive link to potential customers.

“As a channel, mobile marketing’s time has come,” venture capitalist Joel Cutler told boston.internet.com.

Cutler’s firm, General Catalyst Partners recently backed m-Qube, a Boston startup whose software helps companies make marketing mobile.

The market is attractive because so many people already have mobile phones (135 million U.S. subscribers in 2002, according to IDC) and more are buying them as prices drop.

What’s more, nearly all new phones are equipped for short message service (SMS). Others are adding Web browsing, digital photo display and other features that could support rich, attention-grabbing graphics and sound.

Cutler also noted that big brands are using the technology elsewhere — particularly in the United Kingdom — as reason to believe it will spread across the Atlantic.

In recent months, major companies have begun testing the U.S. market, according to Jupiterresearch. For example, Yahoo is sending bulk SMS to AT&T subscribers to drive traffic to its wireless Internet sites. This follows AT&T’s use of SMS for in-house ads promoting its own wireless Internet and voice portal services.

European advertisers will spend $53 million for mobile campaigns in 2002, Jupiterresearch said. North American numbers are still neglible, but the firm projects the market will catch up to other markets by 2006 on the stregth of use by fast food and consumer product companies.

There are, however, potential pitfalls. Chief, among them, misuse of the medium. Users who receive Spam or feel like their private information is being improperly revealed will be angry with advertisers as well as carriers (something phone companies can’t afford given the 30 percent customer churn rate).

“Users will not be receptive to being solicited for products and services on their wireless devices if they have not explicitly requested it,” cautions ad firm Carat Interactive in a recent report on the technology.

Jupiterresearch analysts forsee companies requesting cell phone information through online registrations “in anticipation of costs savings and revenue generation from future wireless advertising campaigns.”

Carat counsels clients that there are other key factors in a successful mobile marketing. For example, because of its limitations (size of message, graphics etc.), it should be only a part of an overall campaign. In addition, phones could be used to gather useful information through surveys.

“Mobile marketing is in its infancy,” Cutler said. “But it’s going to be in its adolescence very soon, and it’s going to be successful.”

Editor’s note: Jupiterresearch and boston.internet.com are owned by Jupitermedia Corp.