Nokia jumps on mobile ad-wagon
But still 'experimenting'
Comment In its bid to bring the full internet experience to the mobile device, Nokia will need to formulate a clear strategy for mobile advertising, an important internet revenue driver, but also an area fraught with risks.
Nokia said last week it was devising a platform that would avoid the "unseemly" aspects of conventional internet advertising, but with details of this critical element of its internet services program still sketchy, the main concrete progress came with a partnership with Handmark.
Nokia is publicly cautious about mobile advertising, but clearly it will look to use its brand and handset market share to ensure its ad services become dominant before Google can formulate its own attack on the fledgling sector.
The Finnish company does now have an executive in charge of advertising – Mike Baker, who became head of Nokia Ad Business after the acquisition in September of his company Enpocket, a mobile marketing and messaging start-up that now forms the centrepiece of Nokia's activities in this field.
Baker claims it is too early to talk about competing for market share with Google, because the mobile ad space is so young, and "any company that can grow the market is a net positive for the industry".
But behind the nice phrases, Nokia will aim to control as much as possible of this activity and promises the same advantages it claims in other internet services, particularly an intimate knowledge of how to deliver content from its servers to a mobile device in a way that is attractive to users - something it claims other internet players from the PC world do not yet understand.
Nokia is planning to make advertising an integral part of its Ovi portal, the umbrella for all the web services it will offer, from Music Store to N-Gage gaming to VoIP. It will be able to tie ads to location, via its recent purchase of mapping firm Navteq, and, in future, to presence.
In this, it will face the same dilemmas as in other internet services over how to work with operators. In its self-proclaimed bid to morph into an internet company, Nokia has the opportunity to bypass cellcos and build its own brand by delivering services directly to consumers. This could relegate mobile carriers to the position of bitpipes, and their situation will be worsened by the rise of open access and Wi-Fi phones in some regions.
However, the cellcos will remain Nokia's largest customers for many years to come, and it will need to tread a careful balance between building up its own direct offerings and hosting services for cellcos.
This is even more delicate in advertising as some operators are very concerned about the risk of ads alienating customers and increasing churn. "We've all seen some unseemly approaches taken online," said Baker in an interview on taking his new role. "Nokia, above all, is interested in the sanctity of the user experience."
In many early wireless internet ad models, users accept ads in return for incentives - a lower broadband rate or free voice minutes, for instance, as with the Virgin Mobile USA and Blyk approaches.
While these may be useful techniques for certain MVNOs or even selected target customer bases of major cellcos, they will put further pressure on ARPU and are only appealing to operators when they control the customer and the ad, and so take the lion's share of the revenue from the ad.
In a more open world, where Nokia might be serving ads to customers directly alongside web services, the operator's share of the revenue is marginalised.
In its Handmark partnership, Nokia will offer ad serving and media sales, while its new friend will use the Nokia Ad Platform to serve ads in its Pocket Express mobile service, targeted at high income professionals, an attractive demographic for advertisers.
While Nokia has not, as yet, made as much noise about its advertising ambitions as its web content services, it is building up this business behind the scenes, a process that should accelerate now it has Enpocket.
Last month, the handset giant said that Land Rover, a subsidiary of Ford, would use its mobile ad platform to serve ads that permit links to the carmaker's websites, download video of the new LR3 model.
Also, users can enter a zip code to learn of nearby dealerships, an early step towards the location aware advertising on which Nokia and Google are pinning high hopes. Nokia claims an unquantified but "very high" conversion rate from the Land Rover ads, in terms of people who then choose to visit a showroom.
Baker said in an interview with RCRnews: "We're in a period of experimentation. The beauty of mobile, with Nokia's solution, is that you can take an ad campaign around the world on one platform" – far more easily than with the less ubiquitous PC.
Six-year-old Enpocket was one of the first players in the mobile marketing space, and has carried out ad campaigns for brands such as PepsiCo. It delivers mobile ads via text, WAP and MMS or audio messaging.
Sprint Nextel was the first carrier to use Enpocket to sell adverts on its mobile inventory and the smaller player has since signed similar deals with Vodafone and Bharti Airtel. Nokia will use Enpocket to sell and deliver ads on its own mobile applications and web pages.
"Nokia has already announced its intention to be a leading company in consumer internet services, and we believe that mobile advertising will be an important element in monetising those services for our customers and partners," said Nokia CTO Tero Ojanpera at the time of the purchase.
"This acquisition is a game-changing move to bring the reach and depth of Nokia to organise the market across the world, and make it easier for an ecosystem to develop."
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