Advertisers' Direct Cellphone Connection
By Eric Sylvers

Wednesday, January 16, 2008

MILAN: Mobile phone operators have been searching for years for the best way to put advertising onto handsets. With no clear consensus, the market has been slow to develop and most people have yet to see an ad pop up on their phone.

Tired of waiting on the operators to come up with a viable advertising model, Celltick, a British company that develops software to deliver content to mobile phones, planned to announce Thursday the release of a new product that allows advertisers and media companies to bypass the operators and send content directly to cellphones.

"The West European operators are taking a long time to formulate their mobile marketing strategy, and we can't wait for them," said Stephen Dunford, the chief executive of Celltick. "We have this new approach because we saw demand from various brands to actively engage subscribers directly while being more in control of the process."

For their part, Vodafone, Orange, T-Mobile and other cellphone operators have spent the better part of the past decade making sure they controlled access to their subscribers. Almost anything that appears on a mobile phone display in major markets first passes through the network of the operator, which takes a cut of the revenue.

While most industry watchers are still predicting a rosy future for mobile advertising - Informa Telecoms & Media, for one, forecasts the industry will be worth $11.3 billion in 2011 - success will depend on the willingness of consumers to see their mobile screen invaded with ads.

Celltick believes it has solved the problem of intrusiveness with a silent ticker that floats across the screen of a handset while it is not in use, a tactic that a few other companies are trying to exploit as well.

Celltick baits users with little bits of content, such as a news headline, stock quotes or games, on the screen of an idle phone. Two clicks, in some cases one, and the content arrives downloaded from the Internet.

Celltick's software works on phones that run the Symbian operating system - which includes handsets from Nokia, Sony Ericsson and most other manufacturers - and soon will be expanded to others.

A version of the Celltick software, called LiveScreen Media, is already on 200 million handsets worldwide and about 35 million of people click on advertisements every month, the company said. The software can be embedded on the SIM card or an individual can download it directly to the phone or to a computer and then transfer it to the handset.

Though Celltick's new product could chip away at carriers' monopoly, the company is also working in tandem with operators in developing countries, including Vietnam, Cambodia, Indonesia, India and most of Latin America, because they are more receptive to the idea. Operators in developed countries may eventually come around, Dunford said, because such services could increase data traffic and thus the operators' revenue.

"If you look at computers and Internet services providers, the ISPs don't derive any revenue out of advertising," said Bengt Nordstrom, the vice president for Europe, the Middle East and Africa for inCode, a consultancy based in California. "Their only revenue is what is paid for access.

"The reason we have so much content and so much variety on the Internet is because it's an advertising business model," Nordstrom said, "and that is what the mobile phone industry should move toward."

Others agree. "There are forms of advertising that are more or less acceptable to consumers, and it's a question of getting that right," said Paul Goode, an analyst with M:Metrics, a cellphone market research group in Seattle. "We consistently see that for consumers, price is the primary reason for not purchasing services for different types of content, and mobile advertising could be the solution to the problem."

Bypassing the operators to market directly to consumers is mostly uncharted territory. But if it succeeds, the operator is not necessarily out of the advertising loop.

Analysts point out that the carriers will continue to have demographic information about their users that could be invaluable to advertisers.

Still, Celltick and its rivals have at least one advantage. "Even if operators don't like it, I'm not sure they can stop somebody else from advertising," Nordstrom said.

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