The mobile advertising value chain is riddled with questions and shortcomings at this early stage of the game. Uncertainty over who has what place at the table, how many mouths we need to feed and whether there’s enough food to go around in the first place have created confusion and cost the industry valuable time and resources.

This is one of the key findings to emerge in Mobile Advertising Research U.K., a research project (undertaken by MSG, coordinated by Aeneas Strategy Consulting & Management, and guided by Every Single One Of Us) that draws upon interviews with companies across the ecosystem and a survey of 1,000+ individuals (purposely refraining from using consumers to refer to people) to expertly document the state of the mobile advertising industry in the U.K.

Chief gripes

Admittedly, the challenges are rife: the inability of mobile operators to deliver customer segmentation that effectively delivers a familiar demographic (say, males between 19-24 living in London as opposed to millennials, business prosumers or other concepts brands and buyers can’t relate to) ; the overemphasis on clickthrough, when we should be developing metrics and measurement better suited to mobile, such as cost per acquisition or cost per engagement, that better reflect its personal nature and value; and the overall lack of creativity and flexibility to move beyond the links and banners we know from the Internet. But widespread confusion over the mobile advertising value chain was reported as the single biggest obstacle blocking the industry from unlocking the vast potential of mobile advertising.

In fact, the consensus is that congestion in the value chain has paved the way for inevitable market consolidation, a process that may begin as early as late 2009.

Amid this confusion, it is virtually impossible to gain a sound understanding of the mobile advertising business models. To help the industry build a market and encourage the creation of a healthy ecosystem, Mobile Advertising Research U.K. offers insights into the value chain and the functions individual players must perform to enable brands to connect to people on their mobile phone. We have also identified where companies can (and will) play multiple roles in the value chain to build core capabilities and deliver value-add.

Unsurprisingly, although the report advises companies to collaborate (not compete) until the mobile advertising market has matured and business models have emerged, many of the executives interviewed revealed strategies to assert their dominance in the value chain by trying to squeeze players to their left and right into more peripheral roles. It is not possible to predict the outcome at this point, nor can we ascertain the impact on the overall market ecosystem. However, it’s clear that the value chain will continue to be an issue and become more complex and fragmented.

Education and examples

So, while it seems that the value chain is both the problem and the solution, it’s encouraging to see examples of how mobile companies can (and should) come together in pursuit of a greater goal: Covering all the bases to execute exceptional mobile advertising campaigns.

My work on Mobile Advertising Research U.K. (which will be repeated in 2010) has allowed me to connect with an eclectic mix of creative agencies, mobile marketing firms and applications companies, relationships that allow me to showcase notable campaigns, case studies and key learnings on MSG for the benefit of companies across the mobile advertising business ecosystem. I’m particularly looking forward to connecting with Alex Meisl, Chairman of Sponge, a mobile digital agency, in a few weeks for the inside track on a “powerful” mobile advertising campaign he assures me will impress me even more the campaign his agency put together for the Bird’s Eye frozen foods company.

By way of background, this promotion pegs the needle in my book. It started out as a simple text-to-win scheme and evolved into a personal dialogue with the individual, encouraging them to try other Bird’s Eye products. In practice, because the consumer sent a text to the short code on the back of the package, Sponge knew what the individual consumer bought and could suggest a complementary product, such as frozen potato waffles to accompany fish sticks. As Alex put it: “We wanted to move mobile advertising away from just a single point of contact to building up a long-term relationship with the consumer.” It paid off. Bird’s Eye was able to create an opt-in database of well over 100,000 people open and interested in receiving more text messages and rich advertising delivered via email moving forward.

Hardee’s multi-channel play

Another example high on my radar is Hardee’s new mobile campaign encouraging people to name their new line of Biscuit Holes. The multi-platform, interactive campaign will deliver geo-targeted advertising across Jumptap’s premium ad network through a channel of premium sites and applications that are frequented by the target audience of adults between the ages of 18 and 49. To ensure effective targeting (again, a prerequisite to an optimal advertising experience for both brands and people, as my own research shows), a custom channel was created for this campaign that brings together the mobile destinations (social networking, entertainment, sports and lifestyle brands) and publishers (Boost Mobile, Joker Poker, MocoSpace, LimeLife and Weatherbug) to fit this specific target audience. Hardee’s will also run display ads on tapMatch, Jumptap’s self service PPC mobile performance marketplace where the same ads will be delivered based on similar targeting parameters. (Release)

But what really stands out here is how the Hardee’s campaign, developed by advertising agency Mendelsohn Zien Advertising, has orchestrated the capabilities of key players to make this work.

• iLoop Mobile, a provider of integrated mobile marketing solutions and services, created the mobile-optimized site that features rich media such as videos of the ads, viral branded mobile greeting cards that people can send to each other, and product information) The site also integrates with the campaign Internet website via form fields that collect the person’s suggested name for the Biscuit Holes, as well as other user profile data. From there the data (in this case the suggested name for the Biscuit Holes) can be inserted into the TV spots.

• InsightExpress, a digital marketing research firm, closes the circle, bringing to the table its abilities to measure success and failure. Specifically, the research firm will measure the mobile campaign’s success, highlighting changes in consumer awareness, message association and purchase intent after exposure to the display banners and landing page.  Using Mobile InsightNorms, a database of 50+ mobile campaigns, InsightExpress will also compare the effectiveness of the Biscuit Holes campaign to previous mobile studies.

And there is a feedback loop to all of the companies in the ecosystem. Hardee’s, Mendelsohn Zien,   iLoop and InsightExpress will join Jumptap to showcase the results during ad:tech New York (Nov. 4) and share lessons learned from the multi-channel, multi-platform, multi-player campaign.

(By way of background, the partner companies – each fulfilling an essential element of the campaign and ensuring optimal execution – was set down at Jumptap’s MobileMix conference, which awarded Mendelsohn Zien Advertising a free “mobile advertising immersion program” – a kind of turnkey solution that brings together the companies listed above. The goal of the program is to showcase the ease in launching a mobile marketing campaign and demonstrate the overall effectiveness of mobile advertising.)

Jumptap’s Paran Johar

Thanks to Julie Ginches (who heads up marcom and is my constant companion on Skype) I arranged a briefing with Paran to discuss the campaign and get his view on mounting mobile advertising value chain tensions.

From our discussion:

Q. We know the Hardee’s news from late June, but what does it tell us about mobile advertising obstacles now? Is this the way to jumpstart and industry that has stalled?

A: That’s a great question. When we developed this concept, we really wanted to remove any barriers for an advertiser to test mobile advertising. No matter if they didn’t have a WAP site, a creative, or a way to measure it all. This program removes those barriers completely.

It was wonderful that Hardee’s won this because I think the fast food area has been moderate in terms of its adoption of mobile advertising. So I think they were the perfect winner. But what’s really great about this, and very unique, is that they integrated this into the overall campaign immediately. This is just not another ad in terms of ‘let’s just slap up some banners and see what happens’ It’s inviting  people to name the product, which I think leverages the medium [mobile] for what it does best.

Q: That’s what I’m hearing in all my interviews for the Mobile Advertising Research UK project: Mobile should sit at the center of a cross-media play. Is this your thinking?

A: Cross-media’s really critical because each medium has its place. Mobile has branding effects, we all know that from the dynamic study from InsightExpress. Television has a different role because of its sight, sound, and motion, and because it has a larger reach.

Within this mobile has the unique ability to be incredibly relevant, geo-specific, and interactive, all which complement other media such as online and TV. Mobile engages a consumer, when it’s relevant to interact with an ad and provide a response.

Q: Let’s talk more about targeting, because that also came out in my research. It has to be targeted and relevant, and our research into people’s attitudes supported this…

A: Yes, that’s why a perfect example is this campaign. They actually integrated that whole idea in campaign, the ‘Name Our Holes’ concept, into the mobile component. So people are going to be getting targeted media on both our performance marketplace tapMatch, and a premium mobile ad network targeting 18- to 49-year-old males, and they’re going to engage with ads to actually name the biscuit holes and provide feedback.

And that feedback could be integrated back into the television TV spots and is actually going to be used on other things like a mass-focus group to get insights from consumers. And they can also engage with the brand on the WAP site by forwarding mobile greeting cards; by forwarding TV spots and viewing TV spots. So it really provides an opportunity for a consumer to engage with a brand and provide a level of interactivity on the ‘Naming Our Holes’ campaign.

Q: Other companies are involved here. Does that tell us something about who has a place at table, or do you just all get along really well?(laughter)

A: We did this to bring the ecosystem together to show results. iLoop, as our partner; so for a campaign ‘Name Our Holes’, they brought the WAP site to bear, and it wasn’t just a one-page WAP site – it was a WAP site that included engagement with consumers to actually name the biscuit holes for Hardee’s restaurants. It also provides a crucial component, allowing consumers to forward greeting cards if they’re a Hardee’s fan. And it also allows them to watch the commercials – if they so choose.

The InsideExpress component was critical because advertisers need analytics. They’re going to measure this from a click-through rate perspective – what was the click-through rate and what was the number of people that submitted a response and/or sent a greeting card? But, beyond that, what InsideExpress allows them to do is actually measure the brand lift; the awareness, the message association and purchase, and that’s critical because that is specific to the mobile channel.

Our component is the media component of this campaign, which allows the advertiser to target its audience, males 18 to 49, in specific geographies, both in the premium mobile ad network and in tapMatch.

It really shows the goal here is bringing all of us together in the ecosystem we can show how relevancy with a clean user experience of a WAP site can drive user engagement – can drive conversion – can drive brand awareness and brand metrics.

Q: You have three companies here, the average value chain has at least six steps between the brand and the individual. What so few mouths to feed?

A: When you think about the value chain, there’s typically a publisher, an operator, an ad network. There has to be a WAP provider that develops the WAP site and then there has to be measurement. We obviously work with many operators, many publishers, and many advertisers. We work with many constituents in the value chain. This program is a way just to bring together an ecosystem that shows how this can be done and how we can remove barriers to show how easy it is to launch a mobile advertising campaign and measure results.

Q: It’s an opt-in campaign, which again covers the bases from what my research reveals is best practice. What can you tell me about engagement?

A: For this campaign, we wanted to keep it simple. And keep in mind; we had to pull this all together in less than four weeks. Hardee’s is all about interacting and entertaining their customers, so this was a perfect platform to do that. That’s their main goal is involving the customers in an entertaining way. The main call to action of the entire promotion is naming the Hardee’s biscuit holes. That’s their goal, is that they’re coming out with this new product. It’s basically a new product launcher. At the same time, it’s about capturing people’s names, emails and phone numbers to build a CRM database for the future. So that’s a win as well.

A word about patents

Using the opportunity to connect again with Paran, I asked him about the significance of the recent decision by the United States Patent Office to award Jumptap a patent that “relates to a method for presenting an advertisement in association with a web page displayed on a mobile communication facility.”

By way of background, the patent covers a method that is based on:

• determining a first relevancy score based upon a statistical association between at least a first advertisement and one or more keywords;
• determining a second relevancy score based upon a statistical association between at least a second advertisement and the one or more keywords;
• receiving a web page request from the mobile communication facility;
• receiving contextual information from the web page, wherein the contextual information includes at least the one or more keywords; and
• presenting the first advertisement in association with the web page to be displayed on the mobile communication facility based upon a determination that the first relevancy score is greater than the second relevancy score.

Paran declined to comment, a decision I respect. A look around the blogosphere didn’t help put this into perspective either. Most sites simply regurgitated the news and my esteemed colleague Greg Sterling stands out as one of the few to think this through and tell us what it means.

His take: A strong IP portfolio makes the company [Jumptap] more attractive as an acquisition target or potentially gives it another (licensing) revenue stream down the line.

My take: Thinking this though – and knowing Jumptap CEO Dan Olschwang as well and as long as I do – I must come to a different conclusion. Dan has his eye on the prize. He is hardly focused on wielding IP to be a more attractive candidate for acquisition. If anything, he’s creating and communicating capabilities (including a store of impressive IP related to targeting and mobile advertising) to make it clear that Jumptap has its stake set firmly in the ground. Jumptap a candidate for takeover? More likely getting in gear to take over someone else.

This brings me to Mobile Advertising Research UK and an update on an exciting opportunity for agencies and brands to stand up and be recognized for mobile marketing campaigns that set the bar. The EverySingleOneOfUs Mobile Campaign of the Year Award 2008/9 rewards mobile campaigns that demonstrate flair, creativity and – above all – benefit us (through relevancy, ease of interaction, or the value to the individual). For more information about the prestigious award and how you can enter your campaign for consideration, please click here.

Judging will take place during Mobile Advertising UK, a one-day conference (June 15 in London) organized Camerjam Events that brings together a who’s who of the U.K. mobile advertising industry in an open and frank exchange to identify the opportunities and the obstacles. How can companies create value and increase ROI? Is market education the key to driving mobile advertising growth? What is the ideal ecosystem? What metrics must mobile deliver? These are just a few of questions this event will address.

In addition to conducting an interview (more of a fireside chat) with Rory Sutherland, Vice Chairman, Ogilvy Group UK, during the conference, I will also present key findings from Mobile Advertising UK. Regular readers will recall that MSG was commissioned to conduct the research project – endorsed by leading global mobile marketing organisations, the Interactive Advertising Bureau (IAB Europe), the Internet Advertising Bureau (IAB UK) and the Mobile Marketing Association (MMA) – to expertly document the state of the mobile advertising industry in the U.K., identify growth opportunities in the emerging mobile advertising marketplace, and benefit stakeholders, shareholders and consumers worldwide.

The organizers have also invited me to help judge the mobile campaign of the year, joining a panel of esteemed colleagues and industry experts including Jonathan MacDonald, founder, Every Single One Of Us; Andrew Grill, mobile advertising evangelist and blogger at London Calling; and Alfie Dennen, co-founder of Moblog, a provider of mobile blogging software.

However, Moblog is much more than a software company. Alfie and his team have harnessed their technology to create and cultivate meaningful dialogue between brands and organizations (ranging from Oxfam to Sony Ericsson) and people who want to hear what their message.

After a long and invigorating discussion with Alfie – over 10 hours straight (!) – I am completely up-to-date on a string of exciting projects (which I will profile soon on MSG). I am also utterly convinced that Moblog has the potential to change the mobile advertising landscape and provide the building blocks for new experiences and exchanges that we can’t even imagine.

Indeed, mobile advertising 2.0 is happening NOW, and you can get a glimpse of progress at Mobile Advertising UK.

MSG readers can get a GBP100 discount if they register using the promotional code msg09.

I hope to see you there, and if you want to catch-up or meet-up, then please reach out to me at peggy@msearchgroove.com – or schedule a slot with my PA Andrea Henninge (andrea@msearchgroove.com).

Disclaimer: MSG has partnered with Every Single One Of Us to conduct mobile advertising research in the U.K. and Germany.

In order to focus my efforts on these exciting new projects, I will not attend CTIA in Las Vegas this year. But nothing could keep me from speaking at ThinkMobile in New York (March 18-19). From the moment that Matthew Snyder – ThinkMobile Conference Chair and Founder & CEO of ADObjects, a strategic cross-media consultancy – contacted me to brainstorm on the program and speakers, I knew this event was going to set the bar. (I have known and highly respected Matthew for several years, dating back to the time that he was responsible for mobile search at Nokia. He has drawn on 20 years of experience and contacts to compile an impressive list of speakers, and the pieces are in place to be sure this inaugural event pushes the boundaries.)

We not only identified individuals with something important to say; we also invited people we felt were most likely to make a lasting and significant contribution to the mobile industry. If you want to see the direction the industry is going, and connect with the people who are going to get us there, then this is THE event to attend.

I am personally looking forward to catching-up with colleagues and cool companies such as Answers.com (Bob Rosenschein, CEO), MocoSpace (Justin Siegel, CEO and Co-Founder), and David Berkowitz, Director of Emerging Media & Client Strategy at 360i , a high-energy digital marketing expert and high-profile commentator on all things digital. (You can look for his blogs and other must-read/must-follow sites in MSG’s new Knowledge Sharing zone…coming soon!)

David and Bob are on the panel I lead on the topic of mobile search, mobile advertising, and SEO. I’m pleased and proud to report I will be joined by Michael Slinger, Manager, Google, and Rachel Pasqua, Director, Mobile Strategy, iCrossing. What are the issues in mobile? Who are the players? And how valuable is a dedicated mobile SEO strategy, really? This panel will address the important – and sometimes uncomfortable – questions we need to move the industry forward. I hope to see you there, and if you want to catch-up or meet-up, then please reach out to me at peggy@msearchgroove.com – or schedule a slot with my PA Andrea Henninge (andrea@msearchgroove.com).

Overall, the report is a good read. It covers all the bases, from mobile ad revenue predictions to estimates for mobile search revenues, and it recounts the results of a road test (Google vs. Yahoo) to determine (literally) which provider is getting more bang for the buck when it comes to paid search.

Indeed, mobile search performance is at the top of my radar as Peggy Albright (founder of Albright Research, and MSG associate) and I have just wrapped up a white paper comparing mobile voice services available on the iPhone. More importantly, we have moved into the final phase of our Mobile Search Performance Report (MSPR), an industry-first quarterly report documenting the mobile search experience across a range of geographies, operators, and search engine providers, providing insight into the key performance metrics, such as click-distance and mobile advertising relevancy.

While I may have my issues with some of the Bernstein report findings, there’s no arguing the fact that Google controls a sizeable share of the U.S. mobile search market,  despite the fact the search giant consistently delivers a poorer user experience (an observation based on MSPR findings as well as those reported by Mobile Commerce during a recent Mobile Search Master Class).

Based on brand reach research (number of visitors to a search property divided by the estimated total of visitors ever to access the search category  in a month) and comScore estimates (as reported in September 2008), Bernstein Research reckons Google had 62 percent of the U.S. market in January 2009. Yahoo came in second with 30 percent, and Microsoft’s Windows Live finished third with 11 percent.

Listen to the podcast here. [19:21]

Against this backdrop, Bernstein estimates that mobile search revenues in the U.S. will grow from $20 million in 2008 to $910 million by end-2012. (Much lower than the numbers I’ve seen, so the truth must lie somewhere in the middle.) In contrast, mobile advertising revenues are set to skyrocket. Bernstein figures revenues will grow from $160 million in 2008 to $2.3 billion by end-2012. It further projects that global revenues will grow from $700 million in 2008 to $7.2 billion by end-2012.

But the real news is Google’s algorithm for success. Google’s strategy of “pulling through” users from its PC platform to mobile appears to be paying off big-time. Google is not only benefiting from user habit (users tend to visit the same brands and destinations they know from the PC Internet, with Google leading the pack); it’s able to keep all the cash from paid search advertising. As the report points out: “Google has not made to our knowledge any agreement to split revenues with the carriers. Google is possibly also gambling upon intensifying carrier competition and a favorable political climate to drive through de facto ‘wireless net neutrality’ and avoid splitting its revenues with the carriers altogether.” (Think it through. It’s an outspoken observation – and possible outcome – that should have alarm bells ringing in carrier boardrooms…)

At the other end of the spectrum, Yahoo and Microsoft focus on paid default placement (a strategy of negotiating to have their search engine app pre-loaded on the mobile deck so it is available as the default). Unlike Google, the search engines split their paid search advertising revenues with their mobile operator partners. (Yahoo with AT&T and T-Mobile and Microsoft with Verizon.) It’s a strategy to which I give high marks because it potentially encourages a more robust and healthier business ecosystem. However, Bernstein doesn’t seem to share my long-term view. It focuses on the here and now, concluding that Google’s strategy of winner-takes-all “will result in significantly higher margins” than Yahoo and Microsoft.

But a closer look (and an excellent podcast with Jeffrey) reveals good reasons to watch Yahoo over the next months. Vast improvements to mobile search and an exciting set of mobile apps are a boost to Yahoo’s popularity and potential for growth. (More on my take after I hear back on my request for an in-depth briefing to connect the dots in the raft of recent announcements, so watch this space.) Bernstein thinks Yahoo has “already overtaken Google.” The challenge now is to “translate this gain into superior financial performance with advertisers.”

As Jeffrey put it in the podcast:  “To Yahoo’s credit; Yahoo has improved enormously in mobile search recently. And clearly, its applications are resonating more with users. Now that may ultimately translate down the line into a more favorable share, so possibly, going with Yahoo might end up being a good strategy provided Yahoo can keep its momentum going and keep improving. Probably at this minute, it seems that the worst choice for the carriers would be to go with Microsoft, which is where Verizon has gone.”

Among the highlights:

GOOGLE WINS?: Sure seems that way. As Jeffrey puts it: “Even though competitors have preferential placement through deals, and even though competitors may have apps that consumers say they prefer, Google’s still winning.” Why? Brand reach is a big part of it. “What we’re seeing with Google is: That without compelling people in any way – you don’t have to sign up a contract to use Google, you don’t have to pay Google anything, you just use it if you prefer it -  people, in 60 percent of the cases, will just elect to use Google.”

VODAFONE & YAHOO: “After analysis and results, and we’re doing some more user surveys at the minute which we think will probably confirm [our view]: Vodafone might actually be wasting their money.” Drilling down a bit more Jeffrey says “Vodafone might not be wasting money in the sense that they’re doing a deal with Yahoo, it just that they probably could have done better with Google had they selected Google under very similar terms.” (A tall order indeed if we consider Google doesn’t split paid search revenue. (I later asked Jeffrey to look at it from the operator perspective. Does it pay to give it all to Google? Listen in and let me know what you think.)

ANDROID: It’s a fail as far as Jeffrey is concerned. The bad news: The apparent collapse of the Android Alliance and the surprisingly low brand reach of Google among G-1 users have dealt a tough blow to Android. The good news: It doesn’t seem to matter. “Android strategy doesn’t seem to have been a success, but it hasn’t hampered Google’s outcome.” The pull-though strategy – picking up users who repeat their PC behavior on their mobile phones – has paid off.  We should keep in mind Jeffrey is talking about the trend in the U.S.  No doubt users in emerging markets that have leapfrogged the PC altogether are likely to be a little harder for Google to simply “pull through.” What’s more, MCN tells me user preference in Japan and much of Asia favors content and commerce over search results.

OPENNESS & OPERATORS: “I think it boils down to the control mindset with the operators. The operators need to feel control, and it depends whether you would accept a lesser degree of control and a lot more money, or you want a higher degree of control and get nothing.”

My take: It depends on where you are in the value chain. For investors, it’s enough to know Google’s paid search pays dividends. But the mobile search road test Bernstein uses to determine the effectiveness of paid search strategies employed by Google and Yahoo also highlights an important factor that could play in Yahoo’s favor as more people do more with their mobile phones.

By way of background, Bernstein road tests Google’s approach (giving prominent placement to ads) and – based on the Google Ad Traffic Estimator – estimates what the advertiser had to pay Google for the top-notch spot. Yahoo, on the other hand, has organized its apps into a carousel that gets high marks on user experience, but makes it tougher to show ads.

Read between the lines, and this criticism may actually hold the essence of Yahoo’s longer term competitive advantage. Its paid search strategy correctly tends to emphasize the quality of the user experience over the quantity of paid search ads that could be delivered. As the report points out: Yahoo favors delivering a good user experience over “overt monetization via display ads.”

But is that really a shortcoming? Doesn’t delivering a better user experience ultimately solve the monetization issue? A better user experience means more users, more searches and more opportunities for brands and mobile advertisers.

And let’s examine the premise that the end-game is about displaying ads at the top of the results list. Many companies – including those that support Every Single One Of Us – are beginning to question the fit between PC advertising methods and our intensely personal mobile devices (and the metrics we use to measure their success/failure).

User experience or prominent placement? Which makes for a more sustainable business model over time? The jury is out on this one – so please share your ideas and insights.

Disclaimer: MSG has been chosen to undertake the Mobile Advertising U.K. research project on behalf of Every Single One Of Us; MSG is an Every Single One Of Us Collaborator. MCN has been an MSG supporter.

U.K. MOBILE INTERNET: A new report from eMarketer – true to its name always an excellent source of mobile marketing stats and insights. U.K. Mobile Internet connects the dots in mobile user behavior. How many users are there? Between just 7.2 million and 17.4 million, depending on the report you read.

But the report conclusion is hardly subject to interpretation: The mobile Web is “gaining ground in the U.K., and soon the audience will be large and broad enough to interest mainstream advertisers.” Key drivers: iPhone and similar high-end devices, cool new apps, and improved usability. Still, more of the same are sorely needed to increase the number of people using the mobile Web.

LOCAL MOBILE SEARCH: The Kelsey Group gives us hard figures on the size of the local mobile search advertising opportunity in the U.S. It reckons mobile advertising revenues (search and display) will grow to $3.1 billion in 2013, from $160 million in 2008, representing a compound annual growth rate (CAGR) of 81.2 percent. During the same forecast period, the research firm predicts mobile local search advertising revenues will increase from $20 million to $1.3 billion. On paper, local marketing looks promising. “There is a strong correlation between local search and the mobile use case, which will cause a good portion of the ongoing mobile application boom to focus on local,” Michael Boland, program director, Mobile Local Media (MLM), The Kelsey Group, said in a press statement. What’s missing is a sure-fire strategy to get local shops and businesses on board. And, if the end-game is location-aware advertising, then there are even more issues to solve before we can get to the revenues Kelsey is forecasting. The press release gleans over these details, so I suspect it’s a numbers-focused report. Nonetheless, there is some value to having the hard facts.

Among the findings:

• The percentage of mobile searches that have local intent will increase from 28 percent in 2008 to 35 percent in 2013
• Currently there are 54.5 million mobile Internet users in the U.S., representing 25 percent of online users
• Approximately 15 percent of iPhone applications are local

RINGRING MEDIA RESULTS: The email just came in that Ben Tatton-Brown, RingRing Managing Director, and I are set to discuss these new numbers and much more in a briefing later this week. In the meantime, RingRing is bullish on mobile search following some successful campaigns. We don’t know the base numbers, but the company has increased its own mobile search spending four-fold. Why? Because keyword campaigns run by RingRing on behalf of its clients have achieved click-through rates of up to 16 percent. The company says conversion rates have “peaked at over 110 percent, generating tens of thousands of content downloads at an unprecedented cost per acquisition.” As a result, clients are now attributing much more of their mobile advertising budgets to search. (By way of background, RingRing specializes in planning and buying mobile advertising and search campaigns, and has already booked substantial volumes of search this year through Yahoo and Google. This includes buying search terms across Yahoo’s mobile advertising network and on-portal directory links on mobile operators Vodafone and 3 in the U.K., as well as on Google Mobile. More on what RingRing Media does and how in an exclusive Q&A next week.)

Will 2009 be the year of mobile advertising? In Germany the question isn’t associated with market hype; it’s linked to the realization that the climate and conditions are right in Germany for mobile marketing to finally and formally take-off. Gone are many of the legal and business hurdles that have stifled ideas and innovation, paving the way for home-grown mobile marketing companies – such as MindMatics AG, Netbiscuits GmbH, Smaato Inc., and YOC AG – to take their place among international giants. This overview names companies and some interesting stats – thanks again to Mark (“Mr. Mobile”) Waechter, independent media consultant and head of the Mobile Marketing Association (MMA) in Germany.

Mobile World Congress (MWC) introduced me to some exciting German companies sure to leave their mark on mobile. Some (such as the amazing aki-aki) I met during my day judging the Mobile Peer Awards (the winner in the Emerging Startups category was Popcatcher, a Swedish company set to do for radio what TiVo did for TV). Others I connected with at the reception held by Smaato to announce the winner of the Smaato Mobile Advertising Award 2008 (which was DialPlus, by the way) and finalist companies: aka-aki, buzzd, Fishlabs, fring, FunkySexyCool, Peperoni, Qeep, Skout, TourSpot and Vayyoo.

I also had a deliciously disruptive discussion with Harald Neidhardt, Smaato CMO & Co-Founder, during which I also learned more about m.LOVE, a path-breaking group of “mobile passionistas” Harald has brought together to discuss the future of mobile and ways how “mobile advertising, mobile social communities and the society find solutions to be more engaging in the mobile media of the future.”

This dovetails quite well with the aims of Every Single One Of Us, so it’s no wonder that its founder, Jonathan MacDonald, has  joined their ranks. Likewise, MSG is also a passionate m.LOVE supporter, and I will use this platform to showcase the individuals and ideas driving this forward. Watch for the upcoming m.LOVE tour, a series of workshops bringing together people from all parts of the ecosystem spanning London, New York, Singapore, Barcelona, San Francisco, Hamburg, Milan, and Tokyo.

I was also pleased to meet Carsten Szameitat, managing director of 11 Prozent Communication, a company that organizes a number of cutting-edge industry events in Germany (such as M-Days, one speaking engagement I regrettably had to cancel). Carsten’s team also produces a comprehensive German-language industry newsletter. We share a vision to bring his publication to a larger audience, highlighting the companies and executives that rate a top-notch spot on your radar. I’m eager to connect with German companies for this and other projects, so please keep the pitches coming!

In the meantime, I have been commissioned by New Media Age (NMA) to provide readers news on industry trends and my pick of cool German companies. You can download the debut issue on the New Media Age website. I kicked off my string of contributions with a look at the German mobile advertising market, and an interview Mark (“Mr. Mobile”) Waechter, independent media consultant and head of the Mobile Marketing Association (MMA) in Germany. NMA printed a version quite different from the one I submitted, so allow me to share the complete Q&A here:

Q: Until now Germany has been the sleeping giant when it comes to mobile marketing. What has happened to wake the country and shake the market up?

A: We have made important progress in areas such as standards, guidelines, and definitions to make sure we are all on the same page and that we can all move the market forward.  For example, because of strict legislation that requires companies to mark advertising in a way that consumers can recognize it as advertising, we have agreed to recommend that advertising on a small mobile screen is simply marked with a “w”, standing for Werbung [German for advertisement]. There is very little space on a mobile screen and this is a solution that works. The next step is to quantify mobile marketing spending in Germany, numbers that are important to educate media buyers and the marketplace. It’s an on-going project because you need to have details on pricing, the total universe of inventory, and other statistics, but we are hoping to release figures in September.

Q: Can you offer a ball-park figure to give us a better idea of the size and potential of the German market?

A: The rough estimate for the market revenue is 400 million euros. Classical mobile direct response marketing, marketing that asks consumers to send an SMS to a short code or take a picture with their cameraphone to get more information or offers, accounts for the vast majority – some 80 percent -  of revenues. Mobile permission advertising campaigns – which are like the ones I just described except the brand proactively contacts consumers using their own database of contacts which they have bought or created – account for 15 percent. Finally, 5 percent of the total is mobile advertising, which we define as typical display and paid search advertising. The user receives and consumes content and somewhere they see advertising. In five years from now,  I expect that these numbers will have turned on their head, with mobile advertising accounting for the majority of revenues. In five years, I expect mobile marketing revenues in Germany will exceed 1.5 billion euros.

Q: What role will mobile operators play in helping brands achieve reach?

A: The next biggest project on our list is establishing metrics in what we call a gateway measurement approach – quite similar to what the major operators in the U.K. have formed. In Germany, we need a trust center, a neutral entity that will take data from all the operators, anonomize the data, and provide a view to what is going on with regards to the mobile Internet and mobile advertising. The GSMA endorses the plans to set this up in Germany – bringing together the four operators: T-Mobile, Vodafone, E-Plus and O2 — and it’s planned for September.

Disclaimer:  Smaato is an MSG supporter. MSG has partnered with Every Single One Of Us to conduct mobile advertising research in the U.K. and Gemany.

Following an RFP (Request For Proposal), MSG was selected from among five research and consulting companies to take the lead role in Mobile Advertising U.K., conducting in-depth primary and secondary research — including one-on-one interviews with 25+ executives at a mix of agencies, enablers, and operators in the U.K. — as well as online and mobile surveys of U.K. consumers. This ambitious and far-reaching project will be coordinated by ÆNEAS Strategy Consulting and Management, an international consultancy firm founded by my esteemed colleague Tarik Fawzi that has driven the development of innovative mobile advertising strategies on behalf of players in the emerging business ecosystem since 2004.

Our research will be the first such project to include the views of both advertisers and consumers, thus providing the industry qualitative and quantitative insights into trends and attitudes. As we point out in the chart below, which shows the USPs of a range of mobile advertising research, our collaboration will quite literally set the bar.

To an extent, Mobile Advertising U.K. will follow the blueprint of Mobile Advertising Netherlands, a mobile advertising research project spearheaded by Tarik and his team that was sponsored by some 20+ companies including GroupM, a leading media investment management operation; telecom vendor Alcatel-Lucent; mobile operators and service providers Vodafone, T-Mobile, KPN, and Blyk; and full-service media agencies Starcom, Marvellous, MADS, Webads, DQ&A, Mindshare, Icemobile, and Mediaedge:CIA.

As Tarik put it in a press statement: “Following our success in the Netherlands, we are ready to rumble, and roll this out across Europe and the U.S., starting with the U.K., and later Germany. We are pleased to be working with Every Single One Of Us and MSearchGroove, and to have the endorsement of three of the leading global marketing organizations, strengthening us in our mission to make advertising mobile.”

Connect the dots, and it’s clear this is not about creating yet another mobile advertising research report. It’s about encouraging discussions about emerging business models, industry issues, and areas of growth to help companies engage with potential consumers and ultimately drive mobile advertising revenues and positive results.

Why?

Because the success of mobile advertising and subsidized models based on delivery of content, applications, and services, is dependent upon the willingness of participants to accept advertising on their mobile devices. Ultimately, users demand advertising that relates to their interests and is tailored to their specific needs. Anything else – as Every Single One Of Us founder Jonathan MacDonald is apt to point out - “will be perceived as ’spam’, which degrades the experience, increases the likelihood of churn, and breeds a distinct lack of trust.”

To build end-user trust, Every Single One Of Us calls on companies involved in the mobile advertising ecosystem to ensure content is delivered in accordance with the 3Ps: Permission (people will decide what brand messages they interact with); Privacy (people will decide where their data is collected and how it is used); and Preference (people will decide what content they find relevant).

The research project stage will conclude by the end of Q2 2009, and findings will be presented on June 25 in London, as part of a larger mobile advertising industry event organized by James Cameron, who has started his own events company to roll out a range of conferences, seminars and master-classes based on the findings and work of Every Single One of Us.

All of us at MSG wish James all the best in his new endeavor!

Disclaimer: MSG has partnered with Every Single One Of Us to conduct mobile advertising research in the U.K. and Gemany.

In the meantime, I encourage you to listen in to Tom, who offers entrepreneurs valuable advice and the inside track on the mobile companies and concepts highest on his radar. Some good news in these challenging economic times: There is plenty of money and opportunity, but it’s up to entrepreneurs to structure their good ideas so VCs get it. What pitches are getting the most traction? The Apple App Store and similar schemes from Google (Android), RIM at one end of the spectrum, and Qualcomm and Amdocs at the other (check next week for an MSG exclusive on Amdocs app store strategy), have – as Tom put it – “changed the entrepreneurial landscape.” Open systems, open storefronts and open operators. Now all we need is the apps.

Listen to the podcast. [10:34]

CREDIT CRUNCH: Not in this market. As Tom put it: “The credit crisis has not hit venture capitalists yet. We don’t have a window that people can pull up to and say give us our money back please. We have very low liquidity expectations in general. So, on the whole, venture capitalists have not run out of money. The bars are high and it’s difficult, but my gosh, my advice to entrepreneurs is keep working on your idea until it does appeal to the money, or don’t use the money to do it.”

MOBILE SOCIAL NETWORKS: Great opportunity but a big risk. The trick: Deciding what is going to be viral and picking services that have the necessary ‘cool’ factor. His advice: “I think that there are [openings] to take advantage of successful mobile social networking opportunities. I think there’s a chance to co-market once they’ve succeeded. There are some very cool things that large groups of interconnected people can do together, and there are some tremendous opportunities to help them do it.” (An example he offers is Ontela, a company he’s invested in that is getting serious traction with an offer that unlocks the photos users save on their phones by allowing them to automatically save them to their email, a “My Pictures” folder on their PC, and a range of online Web photo albums. The offer is a boost to mobile operators and Web-based image services because it gives them a center spot in the exchange, with an offer to deliver people’s picture where they want them.) As Tom sums it up: “One click, take the picture, and it’s gone. And that’s pretty cool. That opportunity wouldn’t exist if there weren’t large groups of mobile social networks [and members].”

DEAL MAKING: Between three finds Tom has “10 to 20 ideas that are moving along towards what I think could be very large opportunities.” In fact, one of them is an enablement tool for mobile social networking. It would also enable a brand to have a personal relationship with consumers – a hint that 2009 may indeed be the year of engagement.

If this is indeed the year of engagement and two-way conversations between brands and people on their mobile phones, then we’ll surely need some guidelines to make sure it’s a dialogue built on trust. Good timing as this is also the year Every Single One Of Us, a global effort aggregating knowledge, and authorizing best practice and methodologies that ensure optimal mobile advertising user experience, moves a huge step forward with a research project to identify growth opportunities in the emerging mobile advertising marketplace, and thus help ensure content is delivered in accordance with the 3Ps: Permission (people will decide what brand messages they interact with); Privacy (people will decide where there data is collected and how it is used); and Preference (people will decide what content they find relevant).

Another big opportunity is measurement. Everyone – particularly mobile advertising companies -  needs good analytics, and Tom tells me the demand for companies that can deliver has never been greater.

Disclaimer: MSG is closely alligned with Every Single One Of Us.

A browse through Tom’s bio, and it’s clear he’s not one to follow the crowd of lemming investors who rush to the next new thing, only to drop it when the cool factor has gone cold. To the contrary, Tom is convinced early-stage startups can pay-off big if investors stick with them for the long-term. To identify the do’s and don’ts for startups in a downturn, he started off talking through the business basics, such as the best exit strategies and the opportunities for “kitchen-table startups” – as he calls them – and app developers. Tom’s answers are insightful and entertaining – all the more reason to listen in.

But the main attraction is Tom’s take on what mobile advertising really needs: Engagement. In his view, it’s all about providing and managing a one-to-one conversation between brands and people, and he’s looking for companies that “get” it. As he puts it: “There are a few agencies that appear to get it, but they und up getting slotted as a mobile agency…What you want to be is a creative advertiser [agency] that uses mobile.” Since there are so few on the horizon, the time may be right to start one yourself.

Listen to the podcast here. [19:16]

I’m smiling to myself as I write this post, since Tom’s outspoken views on engagement echo the principles of Every Single One Of Us, a venture set up by colleague and co-collaborator Jonathan MacDonald to “unite a cross-section of mobile operators, mobile companies and big-name brands to educate the market and encourage discussions about emerging business models, industry issues, and areas of growth that will help companies, stakeholders and shareholders engage with potential consumers and ultimately drive mobile advertising revenues and positive results.” Every Single One Of Us is gaining serious traction, counting over 100 supporters (aptly called Collaborators), including the CEOs of large brands and advertising agencies, mobile influencers, and citizen activists. (Disclosure: I am also a Collaborator.) In the few weeks since the launch meeting, Every Single One Of Us has achieved some exciting milestones (and formalized its relationship with MSG), developments which I am documenting in a press release as we speak for distribution next week. All good, as Jonathan would say..

Among the interview highlights:

M&A: It’s THE exit strategy. “But along the way, you should build the company as if you are absolutely going to be ready to go public.” It’s important if you want to structure your company properly, “but you can’t have a specific company as your M&A target; as you acquire a target. If you ever do that, you’ve narrowed the universe of potential buyers so extremely that I don’t think your odds for success are very high.”

GROWTH: Tom recalls the milestones he’s seen in mobile, including the expectation that mobile would reach over one million (yes million) subscribers by 2000. The fact that we are well past this shows that mobile is and continues to be the highest-growth sector there is – even in a downturn. “Anyone who’s been participating in mobile for the last 15 years and hasn’t experienced unbelievable growth has had their head under a log.”

APP OPPORTUNITIES: Thanks to iPhone and a new interest in openness among mobile operators “there’s suddenly an opportunity for entrepreneurs that have been using mobile phones in a very widespread way.” Who is likely to benefit and make a lot of money in the process? “They’re kitchen table start-ups that can make individual developers quite a bit of money, as long as they don’t sell most of their company to venture capitalists with very high expectations.”

SPONSORED APPS: Thanks to the iPhone there is a new market for what Tom calls “sponsored apps” that allow people to interact with brands in a personal way. “There are a lot of opportunities to develop these sponsored apps…and I have been investing in companies that would provide the sponsored apps, the one-to-many communications capability.”

MOBILE ADVERTISING & ENGAGEMENT: Cross-media is the key here. As Tom puts it: “I’m very interested in a number of opportunities that involve the heterogeneous mix of talents and services that’ll aim at using mobile in quite comprehensive personalization campaigns, as opposed to looking at platform plays where mobile is all that the platform looks at. I think it has to be a combination.” To be clear mobile advertising is not about technology. It’s about “individual engagement between a consumer and the brands they will grow to love as opposed to this notion of targeting.” Is this a business model or a warm-and-fuzzy concept? Tom has no illusions. Big ideas can be “baloney” but this is an idea whose time has come. Engagement is the “ultimate goal” of most brand advertisers. “If you told any large brand that you were going to offer them the opportunity to have a cost-effective personal engagement with their consumers; they would all say ‘tell me more’.”

WHERE DO WE GO FROM HERE: Tom and I enjoy a meeting of the minds near the end of the podcast when we debate engagement, and question whether we might have to start a company that “gets” it. But it’s more than fun; it’s a blueprint for change – if you’re game to transforming how you do business.

Check back for Part 2 next week, when Tom is back with valuable advice for entrepreneurs, and his pick of top trends for 2009.

The groups claim deceptive practices throughout the mobile advertising industry and ask the commission to launch an investigation into the privacy implications of marketing practices targeted at mobile phone users.

While the 52-page document highlights some valid concerns, it also exaggerates the intent and ability of the some 50 vendors listed in the complaint to threaten privacy and consumer welfare.

This hyperbole is unfortunate as it seriously compromises the credibility of the complaint and clouds the core issues that the mobile industry must address, such as improved citizen education about the costs and benefits of providing personal data.

Searching for answers
Take the example of ChaCha, a people-powered search service I have tracked since it launched its mobile service and subsequent mobile advertising solution last year.

The complaint charges that this mobile search is guilty of a “covert approach” to mobile advertising. It bases this observation on ChaCha marketing material which states: “There’s no complicated opt-in process-users are part of ChaCha when they ask their first question, and your valuable message or offer is integrated naturally into the answers they receive.”

Read the rest of this guest column on Mobile Marketer

Disclaimer: I am a Collaborator with Every Single One Of Us. AdMob has been an MSG supporter; Bango is an MSG supporter.

This emphasis doesn’t only make for potentially more effective campaigns; it confirms my view that this is the one to watch. Earlier this week KF Lai, BuzzCity CEO, briefed me on company strategy and revealed a raft of upcoming announcements that likely will move BuzzCity into the major leagues. The end-game: To become the emerging market’s answer to Facebook, enabling a platform and ecosystem that benefits developers (I’m under NDA, but will have more closer to the date), and to operate the world’s leading long tail ad network.

My take: After a road test of BuzzCity’s offer today I’m convinced KF not only has his eye on the prize; he has developed the capabilities that will allow him to reach for it. More in my analysis early next week.

Mobile advertising tops my agenda here in London for the rest of the week. In addition to a series of briefings with company executives, I greatly look forward to an in-person meeting with Scott Seaborn, who heads up mobile advertising at Ogilvy. I did a phone interview with him for the Netsize Guide 2009, during which he outlined a number of super-cool projects, and this week he’s invited me for a tour of Ogilvy’s Innovation Labs (and the opportunity to ask a lot of questions).

But the real highlight is discussing next steps during the Every Single One Of Us Powwow tomorrow with Jonathan MacDonald, who launched the venture (and accompanying knowledge resource/thinking space), and the capacity crowd of supporters who have signed up to attend. The meet-up starts off with presentations and perspectives from a roster of esteemed colleagues and mobile advertising evangelists including Andrew Grill (a frequent MSG columnist), Dominic Travers, Vikki Chowney, James Whatley, and Alfie Dennen.

I’ll be there to outline MSG’s new role in Every Single One Of Us. I am proud to announce that my proposal – one of many submitted by firms to research and write an authoritative report on the mobile advertising markets in the U.K. and Germany – has been chosen. To correctly assess the landscape MSG’s new custom research division will undertake 25+ in-person interviews with companies, stakeholders, and shareholders across the emerging mobile advertising value chain. This research will also include the results of a comprehensive questionnaire and online survey aimed at industry experts, as well as relevant consumer segments.

(Indeed, understanding attitudes toward mobile advertising is critical if we consider the current controversy brewing around mobile marketing practices, personalization and targeting. Mobile Marketer will publish my personal take on this topic in a column early next week.)

I am excited about this project and confident the research we conduct will provide advertisers, operators, media agencies, and other interested companies insight into consumer attitudes/behavior, best practice, and offer recommendations on how to drive acceptance of advertising and grow the overall mobile advertising market. If you are interested in learning more about the research, or in joining the group of sponsor companies lining up to lend their voices to Every Single One Of Us of Us, then contact me directly – peggy@msearchgroove.com

As Stan Chesnais, Netsize CEO, points out in the chapter (aptly titled The Best Of Both Worlds): “It’s not just about linking the physical and virtual worlds; it’s about hyperlinking images and items to pave the way for a new breed of promotion services and shopping experiences, enabling consumers to make purchases or browse the Web by simply snapping a picture using their cameraphones.”

Indeed, the signs of this new convergence are everywhere. From visual search provided by companies including SnapNow, to 2D barcode schemes provided by companies including Scanbuy (the topic of the next in the MSG podcast series), to a new breed of extremely imaginative and interactive mobile advertising campaigns that harness augmented reality to encourage brand engagement, we can see how mobile is becoming the remote control for our daily lives, allowing us to connect, communicate, share knowledge and information, and interface with world(s) around us.

Take it a step further, and this new convergence will likely transform daily activities such as commerce (mobile, online, and the in-store experience), as well as marketing, promotion, advertising, and mobile CRM. Mizuko Ito, a cultural anthropologist at Keio University and the University of Southern California’s Annenberg Center for Communication, saw this coming some five years ago when she observed: “The connected state is the default, and the disconnected state is noted.” (Put another way, we alert others when we are not online – not when we are.)

Mobile changes all the rules, allowing us to live, work and play in a new collective state of hyper-connectedness. Add the ability of the mobile to blur the boundaries of the virtual and physical worlds – and we witness a shift that will affect every industry that relies on the Web for communications, business growth, and interactive marketing.

The connected state has become our collective default.

It’s a topic I explore in my interview with Tomi Ahonen, esteemed colleague, independent consultant and six-time author. We deep-dive into his new book, Mobile as 7th of the Mass Media: Cellphone, Cameraphone, iPhone, Smartphone (a must-read book that documents the pivotal importance of mobile as the 7th of the mass media, following print from the 1500s, recording from the 1900s, cinema from the 1910s, radio from the 1920s, TV from the 1950s, and Internet from the 1990s). We also discuss the many ways in which all forms of content are converging around the mobile phone. (On a personal note, Tomi and I are discussing columns, podcasts and other ways to showcase his ideas and projects on MSG, so please check back regularly.)

I should also note that the Netsize Guide will also be available for download via MSG after it launches. This year it will be accompanied by a new site, allowing readers to access and explore interviews around the book, including an in-depth interview with (authorized) mobile advertising activist Jonathan MacDonald. A lot has happened since our interview last October (referring here to the launch of Every Single One Of Us), so I’ll have him back (both on Netsize and here on MSG) for a deep-dive discussion into the roadmap following the big kick-off get together and Powwow in London on January 15^th. I’ll be there until the weekend, so please contact me directly if you want to meet up or catch up.

A lot is happening – and all of it’s good!