Original URL: http://www.theregister.co.uk/2010/11/24/mobile_advertising/

Location-based advertising grows up

Shooting the mobile messenger

By Bill Ray

Posted in Mobile, 24th November 2010 11:36 GMT

Analysis Mobile advertising is huge, and only getting bigger; but can advertisers gather information without appearing creepy ... and should they bother when customers are so willing to share?

Last month O2 started delivering adverts to opted-in customers based on their location - supplementing information volunteered by customers with that harvested by the network infrastructure. But O2 is far from alone in deciding that asking nicely won't get them all the data they need, even if some of the competition just think O2 isn't asking nicely enough.

These days a plethora of location services are tracking, recording and compiling people's location information – along with their sex, age and address – all in the interest of providing targeted advertising. The companies behind the services are adamant that this is what end users desperately want, while quaking at the danger of being labelled the next Phorm.

Back in 2004, Morgan Kaufmann published Location Based Services, a book which remarkably (by today’s standards) makes no reference to advertising at all. But back in 2004 it was thought that users would pay for services rather than expecting everything for free... Turns out that the company was wrong: users would much prefer to be battered with a continuous stream of advertising than pay for stuff.

However, on the phone screen every pixel counts, so placement companies are vying to provide the most accurately-targeted advertising platform.

Most high profile of the companies involved has been Blyk, who at one point tried to fund an entire Mobile Virtual Network through targeted advertising; customers got free calls, data and texts in exchange for viewing advertisements delivered over MMS and SMS. Blyk didn't make it as an MNVO, in the UK at least, but the company now provides the engine behind Orange Bright Stuff: the opt-in consumer offering that is sold to advertisers as Orange Shots.

Blyk reckons it can make a dollar a month out of those who opt in, and with 300,000 Orange customers opted in before the Bright Stuff brand has really been promoted, that adds up to a lot of money. But unlike the Blyk's MVNO, it is not free calls or cheap offers that bribe users to sign up, but (according to Blyk) exclusive content provided by advertisers who appreciate the 25 per cent response rate that Blyk is able to promise.

That rate, which includes those who click on a link or call a number, is so high thanks to the targeting information Blyk gathers from users as part of the sign-up process. According to Blyk, the user's home address is by far the most valuable thing collected, much more valuable than the next best thing, sex, which ranks just above age, with the rest far below.

Not that the rest is worthless. Bright Stuff includes an interface allowing users to tag things in which they're interested. In return they get even-better targeted advertisements. That might sound strange - customers taking the time to share their interests with advertisers, but this is a generation used to sharing their innermost thoughts with the world, and to whom advertising is a fact of life, so if you're going to be "advertised at" anyway, you might as well take the time to make sure those adverts are pertinent.

This is good news for Blyk as it has no other source of customer data, unlike its competitors. O2 More, for example, recently started adding the users’ current location to the mix. O2 More is O2's equivalent to Orange Bright Stuff, but can now use automatically-gathered information (the customers' location) to help target ads.

Operators already know where every customer is, but have until now refrained from using that data for advertising: even Blyk told us its users thought the idea was creepy. But those who opt in to O2 More can expect to have adverts delivered to their phone based on where there are, as well as who they are.

Both Blyk and O2 More collect responses to better profile their customers - click on a link advertising a car and you'll get more car adverts, ignore all shoe-related ads and they'll stop arriving, but other than that they're dependent on the information voluntarily provided by the user.

That's a shame when the network operator has such a wealth of information available to it. Network operators don't just know where you are... they know everywhere you've been (and are required by EU law to remember that for 12 months). The operator also knows everyone you've called and every website you've visited over the air, not to mention the model and make of handset and the browser version you're using.

Those last bits of information are also available to the websites you visit, and to any content-optimisation service such Opera Turbo (which is part of Opera Mini, and optional in other Opera version). Optimisation services compress graphics, strip out redundant code and squeeze the most out of mobile browsing, but they can also be used to inject ads into the stream too.

Vodafone does that, using servers from Novarra (owned by Nokia these days) to append navigation bars to mobile web sites. Most operators still shy away from activating the capability, but all of them are considering it in some form or another.

Opera Turbo only injects adverts with the websites' approval - the site puts code into the page and if that page is viewed though Opera Turbo then AdMarvel (the company bought up by Opera last year) drops in an advert based on the user's location (at least country, sometimes more accurate depending in the handset and connection path), the device they're using and the current time and date. Websites can also pass additional information to AdMarvel, such as the age and sex of the user, but only if such sharing is allowed by the site's privacy policy.

One piece of information AdMarvel, and thus Opera Turbo, won't use is browsing history. AdMarvel's CEO told us: "We would only use such information if the user consented to that" – before admitting that he expected a more public debate to open up on the subject of what information companies should be allowed to use.

That debate, if it happens, could leave us happily using Phorm-like services in exchange for cheaper connectivity. The only difference between what Phorm does and what AdMarvel is doing is the use of that browsing history (skipping over Phorm's complicity in BT's quite-possibly-illegal trials of the technology, which isn't related to this debate). Customers who are happily sharing the details of their sex lives on Facebook have already made it clear they don't care if that information is used to sell them dinner for one, so why should they care if some of that data is added automatically?

Facebook knows more about its customers than most companies, but in the mobile sphere it has yet to capitalise on all that data. Facebook's various mobile incarnations don't yet carry any advertising at all, but that will no doubt change soon. And if customers are so willing to voluntarily share their geographic information, and actively take the time to do so, then it would seem to make all those clever mechanisms for automatically gathering data redundant.

We've suggested before that one might end up obliged to sign up to something like Bright Stuff or O2 More, in order to get a cheaper tariff. But now it seems you will voluntarily hand over your personal information, just so the deluge of advertising with which you'll be bombarded will at least be relevant to you.

Users, perhaps sensibly, fear automatically-gathered information much more than data they throw into the mix themselves, but before jumping to the same conclusion, it is worth taking a moment to consider who you would trust more with your personal data – a major corporation like Telefonica or Google, or yourself, 20 years ago. ®