IDC: Early Lessons of Mobile Advertising Trials Require Advertisers and Wireless Service Providers to Rethink Business Models

IDC has published a new report that finds "the promise of wireless to be an effective and powerful tool for reaching targeted market segments makes it the hottest new medium for advertising and marketing. During the past year, both the U.S. wireless and the consumer brand communities have begun exploring mobile advertising through in-depth focus groups, market trials, and experimentation with different formats."

IDC believed "the unique nature of wireless devices and wireless usage characteristics creates a number of advertising format opportunities that will prove beneficial to both advertisers and wireless service providers. Wireless service providers have access to vast amounts of customer data that could be leveraged to create more effective advertising messages that reach customers on an individual basis. In addition, mobile advertising presents a significant new revenue opportunity for wireless service providers who are facing continued erosion of voice service pricing."

Scott Ellison at IDC said, "Early market trials are showing just how different the mobile advertising environment will likely prove to be. The real impact of mobile advertising will be forcing both advertisers and wireless service providers to substantially alter their highly successful business models to adapt to this very new but very different medium. Without fundamental model adaptation, both communities risk alienating the very customers they serve and strive to reach."

According to Ellison, "the new business models will need to adapt to a range of issues, including different wireless user tolerances and receptivity to mobile ads, different mobile advertising formats, sharply compressed ad rotation cycles, and advertising that relates to individual user characteristics. Successfully addressing these issues in addition to creating ads that are effective and engaging, yet unobtrusive, will prove to be the ultimate challenge for the two industries. In addition, wireless service providers will be forced to view themselves as media companies instead of as telephone companies."