Andrea Bauer

First, Microsoft wins a mobile search and advertising deal that enables them to be the exclusive provider on Verizon Wireless’s entire mobile network, and now it is bulking up on inventory and ad-serving technologies. Quattro Wireless, a Waltham, Mass-based mobile ad network, has entered a strategic relationship with Microsoft Advertising to help advertisers and agencies plan, buy and execute mobile ads as part of their overall campaign.

Going forward, Quattro’s platform will be able to accept traffic from Microsoft Advertising’s Atlas Media Console buy-side ad serving technology. Quattro manages ad inventory for mobile sites, such as Hachette Filipacchi Media, Gawker Media, Cox Newspapers, Def Jam Music, and also gained recognition after working on Barack Obama’s presidential campaign. Now ads from Microsoft’s network will be able to be served across any publisher in Quattro’s network.

Steven Rosenblatt, Quattro’s VP of Advertising Sales: “We view our relationship with Microsoft as a watershed moment for the mobile advertising industry…We are seeing unprecedented demand for buying mobile advertising inventory and this critical solution will simplify the process for the advertisers and agencies and revolutionize how they buy, manage and measure their media campaigns.” From Microsoft’s view, Ryan Mackle, director of Display Sales Product Management for Microsoft Advertising, said: “Advertisers are eager to track and measure their digital advertising campaigns holistically, across the PC, mobile devices and other emerging technologies.”

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Microsoft has finalized a mutli-million deal with Verizon Wireless for the right to provide the country’s largest carrier with portal, local, Internet search and mobile advertising services. The announcement is expected to take place during Microsoft’s Steve Ballmer’s opening keynote at CES tonight, starting at 6:30 p.m., although Verizon spilled the beans earlier at an investor conference. The search deal was hard fought and lasted nearly two years, in which all three Internet giants Yahoo, Google and Microsoft were first involved, and then more recently, only Google and Microsoft were left. During the negotiations, the WSJ reported that the deal size ranged between $550 and $650 million, making it a significant coup for the emerging mobile search and advertising industry that is just getting off its feet.

The decision by Verizon Wireless is important for a number of reasons. First off, it gives Microsoft a foot in the door, which had been rapidly closing—the other U.S. carriers were already locked up. If the deal went to Google, it would have owned half the market between Verizon and Sprint. If it had gone to Yahoo, it would have been a landslide victory for the Sunnydale company, which already works with AT&T and T-Mobile USA. With Microsoft also in the game, the mobile search industry—especially in the U.S.—is still completely up in the air.

The second thing to point out is the vote of confidence on Microsoft’s behalf that they believe the mobile search and advertising market could be of significant value over a five year period, which is the length of their contract with Verizon. Perhaps it is just buying marketshare, but Medio Systems’ CEO Brian Lent, who provides white-label search services, and to Verizon Wireless specifically, believes differently. “I would suspect that it would be recoupable. Why would anyone would bid that amount?...I think these are not completely unreasonable numbers, given the size of the space. My industry expertise says that over a period of five-ish year period, one should be able to make those types of revenues.”

—Some more details: The deal will last for five years and the first devices are supposed to launch in the first half. Searches will integrate voice commands and location-based services, and results will include maps, directions, traffic information, local business information; movie show times, gas prices and weather. In addition, users will be able to search for full-track songs, videos and games. Microsoft’s Live Search will be available on a device’s home screen, by downloading an app. The company did not say what the financial terms of the agreement were, or whether it also included a side deal in which Verizon committed to selling more Windows Mobile devices.

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Advertisers are going to spend a lot of money mobile media this year, but it pales to the amount of cash they’ll be spending in just a few years. According to a new Strategy Analytics report, “Global Mobile Advertising Update: Outlook Bright as Inventory Expands,” advertisers may spend $1.4 billion on mobile media this year, and the firm predicts that mobile media advertising could account for a fifth of global spending on Internet advertising by 2011, to the tune of $14.4 billion.

“The outlook for mobile advertising spend has significantly advanced in the past 12 months,” says Phil Taylor, director of Global Wireless Practice. “The supply of advertising inventory is rapidly increasing as mobile publishers look to develop advertising as a revenue stream. Major mobile network operators like SprintNextel, Verizon Wireless and Vodafone have all accelerated plans to sell advertising within their mobile media channels and advertisers appear to be responding positively.”

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Yahoo Europe has launched a pitch to build up a network of mobile agencies that will help it offer a one-stop shop to advertisers, in an effort to boost ad sales throughout its European operations, reports NMA.co.uk. In the past, Yahoo worked with agencies on an informal basis, but wants a more formal roster that it can turn to to help advertisers develop mobile ads. Yahoo Europe’s director of monetisation of Connected Life Charles Sword said it was “vital” to simplify the process of buying ads. In the UK, Yahoo has search or ad sales deals with the UK’s top operators. It currently handles the mobile ad sales for T-Mobile, Vodafone and Three, with Virgin Media signing Yahoo earlier this month to provide search for the MVNO’s mobile portal.

Meanwhile, in an interview with Mobileeurope.co.uk, Sword gave an optimistic picture of mobile advertising in 2009. He noted that customer behavior has changed, in large part to social networking going mobile, which has led to a “huge upsurge” in the use of Yahoo Mail and Messenger on mobile, which doubled in the first three quarters of 2008. Sword told Mobileeurope.co.uk that the numbers were beginning to sway a lot of agencies who had been “a little sceptical” of mobile advertising, and that Yahoo was getting a greater participation by brands, and more repeat business.

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Mobile advertising is hitting its stride. A year ago, ads on cellphones were pricey and considered experimental, and while they still may not be mainstream, there’s some rationalization going on. Prices are dropping, inventory is increasing, and the value of placing an ad on the cellphone is better understood. The maturing and stabilizing of the market isn’t escaping opportunists, like venture capitalists. Start-ups that count on wireless ad sales are still getting their fair share of venture funding, reports Investor’s Business Daily (via Cellular-News).

For instance, the article says Blyk, which offers mobile-phone subscribers free calls and text messages if they agree to receive ads on their phones, has recently raised more than $50 million from private investors, while AdMob, which operates a mobile ad network, has raised $15.7 million. But there are others, too. Other mobile advertising companies that have recently announced rounds include: Transpera, the Santa Monica, Calif.-based mobile video platform company that allows for an ad-supported model, raised $8.25 million; MoVoxx, also based in Santa Monica, raised an undisclosed round to help brands integrate ads into SMS campaigns; and Chicago-based Vibes Media, a mobile marketing company, raised $15 million.

Still, there’s a lot to be proven, and now more than ever it may be difficult with advertisers and agencies cutting budgets. Investor’s Business Daily reported hat research firm eMarketer likely will soon lower its mobile ad forecast. eMarketer’s spokesman Samson Adepoju said: “(Our) projections will almost certainly be trimmed,” he said. “How much remains to be seen.” The firm’s most recent forecast dates back to March, when it said U.S. revenue from mobile display ads would rise to $541 million in 2012 from $85 million in 2008, and search ads would rise to $1.48 billion from just $107 million.

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AdMonitor, a Google Maps mashup from mobile ad serving company AdMob, provides real time data on who is viewing mobile ads worldwide, including the network they are on and the phone they are using.

San Mateo based AdMob has seemingly slipped under the radar in terms of attention whilst competitors have been acquired; Third Screen Media was acquired bought by AOL and Screentonic was acquired by Microsoft. And yet this is a company with some great stats and backing. AdMob is now serving 1 billion mobile ads a month and has amongst its investors Sequoia and Accel Partners. Director Maynard Web was COO for eBay between 2002 and 2006 and staff include Tony Nethercutt, the former VP of Sales for YouTube and Kevin Scott, a former senior engineering manager for Google.

The AdMonitor mashup provides an accessible way of seeing just how many ads AdMob is serving. Notably, Nokia would still appear to remain the world most popular provider of mobile phones.

AdMob clients include ESPN and CBS.

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In China new methods of advertising have been turning up everywhere, and Bluetooth media company Pioco has made mobile devices the newest outlet. The Shanghai based company has set up “hotspots” in hotels, shopping malls, and other commercial areas around the city where people can receive advertisements through their mobile device’s Bluetooth connection. About a week ago news broke that Pioco would be partnering with Coca Cola to serve mobile ads for the Olympics, so we spoke with CEO Steve Chao about the details and potential of the service.

Whenever someone with a Bluetooth enabled device enters a hotspot they receive a message asking if they would like to download Pioco content. If they accept, they are shown a video from Coca Cola, or some other partner company, and then given access to things like free movie trailers, music, wallpaper, e-coupons, and premium content from companies like Disney or MTV. The incentive program is only run in these hotspots, so the conversion rates have been much higher than in regular Bluetooth ad campaigns.

Chao explained that Bluetooth is the best execution angle in China because 3G functionality has yet to penetrate the market. He stated that Pioco is prepared for market change, and will adjust their strategies to accommodate other wireless technologies when the timing is right. In the near future he sees Pioco offering location-based browsing, and creating a centralized network to manage content and track usage.

Pioco sees its primary competition from E-Xing and many other, but differentiates itself by bundling advertisements with desirable content. The company was founded in 2006, has about 50 employes, and has received very little funding. Advertising partners include Coca Cola, Best Buy, Sony, and Chevrolet.

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Airline travel is set to get even more unpleasant, as hapless airline passengers face being hounded through airports by online advertisers as well as security, customs and perfume touting duty free sales staff.

The airline industry could save $600m a year by tracking passengers through airports and punting ads to their mobiles, along with their tickets and boarding passes, according to a report from airline industry tech supplier SITA.

The prediction comes in a report from SITA, distributed at its Air Transport IT Summit in Brussels last. It gains a little credibility by including research from Cambridge University, though SITA are the one's who would like to provide the technology.

The tracking idea could be done in conjunction with the network operators, in much the same way commercial tracking happens now. At present customers receive an SMS asking them if they're OK with the idea, and if they don’t say no then the third party (in this case the airport) gains access to instant information about the location of the phone, and hence that of the user. That generally gives rough information, though the density of cells within an airport should give locations within a hundred meters or so.

If working with the operators is too much effort, or more accuracy is desired, then airlines could use the technique Path Technologies is already deploying in shopping centres - airports being a cross between a shopping centre and an open prison these days anyway. Path Technologies track handsets, not their owners, but a link could be established during the check-in procedure.

Knowing where all the passengers are could save valuable time chasing them down when they should be boarding. Your correspondent's boss at Swiss Telecom had a policy of never going to the gate until his name had been called twice; the stares of the other passengers on boarding are cause to give up a lot of privacy.

Checking in could also be delegated to the mobile phone, in much the same way that many airlines operate online check-in. Using a phone would also allow an electronic boarding pass to be issued direct to the phone. This is already happening in Japan using FeliCa handsets and could be an application for NFC, though a lower-tech solution could just display a bar-code on an existing handset (as offered by Mobiqa).

But SITA reckons mobile phones won't just cut costs and reduce paper work, they could also increase revenue. In a trial punters hanging around Manchester Airport spent 45 per cent more if money-off vouchers were sent to their mobiles. Combined with the tracking technology the opportunities are endless.

Of course, SITA is hardly an uninterested party in this, investing more than $100m during 2008 into finding new reasons for the air industry to spend more money on technology.

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Reading this article made me think of the business model for AM/FM radio and TV before cable. All you needed was an antennae and you could watch or listen to your shows. We all got used to listening or watching those commercials and learned they were part of why you did not pay for the programs. If you wanted to pay for entertainment, then you went to a movie.

This all changed when cable TV was introduced. People got used to paying for TV service and now we even have paid radio.

So, will Google return us to free services (or at least subsidized) for our cell phone and will consumers be willing to have commercials as part of their cell phone. Imagine having to listen to a commercial before your call is made? Will we as consumers dial the phone and ignore the commercial like we do with most TV advertising?

In many ways this makes sense. The usage and capabilities of Cell phones continues to grow dramatically and it would only make sense for offerings like Google's to expand the market. I do, however, see this as more of a consumer option. I can not see companies opting for their employees to have to watch an ad before they could read their email on their PDA's or allowing google to search your mail to give you targeted ads.

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San Mateo based mobile advertising solutions provider AdMob has announced AdMob for Facebook Mobile, a mobile advertising solution for developers of third-party Facebook applications.

AdMob has enabled optimized mobile ads for Facebook Mobile, which developers can use to monetize their mobile applications. Developers can start showing ads and earning money immediately.

AdMob for Facebook Mobile is said to be the first monetization solution for Facebook Mobile developers. AdMob is now serving 1.5 billion ads a month, up from the 1 billion they were serving when we first wrote about them in August.

AdMob Investors include Sequoia and Accel Partners and management includes staff previously with eBay, YouTube and Google.

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Local.com, the Irvine, CA-based local search firm, has got a patent approval for a “method of responding to enhanced directory assistance inquiries using various protocols including voice-enabled and SMS systems. The patent also covers an associated referral advertising model, which is designed to monetize those local searches.” This follows another related patent the company announced last week, for location-based search.

The new patent seems to be in direct conflict with an existing patent, one from Jingle Networks, says ClickZ. This means litigation and consolidation in the industry.
Greg Sterling: There’s the looming Geomas local patent that has both online and mobile implications. There’s also a lesser-known local search patent that Microsoft owns through its acquisition of Vicinity Corp. in 2002.

More details in release.

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Fast Search & Transfer, the Norway-based B2B search firm, has acquired US-based AgentArts for an undisclosed amount. AgentArts, based in San Francisco, has a personalization and recommendation engine which has been used on the mobile side, and has clients including Infospace Mobile and Telstra Big Pond. The company was started in Australia in 1999, but moved to U.S.

AgentArts' technology provides the ability to understand online and mobile user habits and to recommend content and promotions based on user patterns, as well as enabling social recommendation. The capabilities will be added to Fast’s search services.

More details in release here.

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While Microsoft isn't exactly the first name we'd guess to be associated with a new DVR tidbit, the firm has nonetheless filed a patent for "DVR-based targeted advertising." Apparently, Microsoft's idea is to eliminate the "dilemma" that DVR users purportedly face when watching shows a week or so after its original air date.

Since many commercials (like weekend sales) are time sensitive, viewing last week's ads today isn't likely to do you any favors if the information is already outdated. Microsoft is hoping to come to the rescue by establishing an "advertisement data store," from which an "advertisement manager" detects when an ad is supposed to be shown and fills that spot with a current, up-to-date spot so you witness fresh plugs during old shows. Although the concept is at least somewhat sound, the folks at Redmond presumably don't spend much time surveying actual DVR owners, as they'd probably find that a good percentage of them utilize that fast forward button as much as possible, regardless of how "fresh" the ad they're cruising through actually is.

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Advertising is making its way into the mobile industry, following in the footsteps of mobile marketing, according to a recent IDC study. Mobile operators will have to embrace mobile advertising, which is key in their strategies for the coming years. Mobile advertising does potentially offer a new way to add value to the mobile chain. Operators predominantly rely on customers to generate revenue, and as voice revenues are declining, they are trying to offset this with data, but with adoption taking place at a slower pace, advertising could play an integral part of the revenue mix.

In any case there is an opportunity to monetize content in a way that carriers haven't previously explored, but what is proving to be the biggest headache is how best to introduce adverts over mobile. This is due to the variety of business models, and discovering which one to implement will be a case of trial and error, certainly in the early stages. Whichever one works best will depend on market dynamics and characteristics.

It may also represent an important part of their off-portal strategy and revenue. Off portal is an area that mobile operators are actively seeking to bolster and opening up their portals will facilitate greater opportunities for advertising. They have increasingly opened up their portals and advertising may prove to be another source of revenue. This will naturally complement their on-portal strategy, especially given the introduction of free browsing or flat rate pricing plans. In addition, the operators will be able to offer content sponsored by brands. Content can vary from type of service as well as how it is delivered or the creation of communities such as chat groups.

End users may well accept mobile advertising, provided there is a code that is respected and followed. Users do not want to receive spam but are willing to opt-in provided that ads are targeted, useful, and meaningful to them.

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