Wireless advertising emerges to uncertain future

Will American users willingly accept wireless advertisements sent to them over cell phones and other mobile devices?

Advertising agencies, makers of handheld devices and companies that are looking to advertise their products are betting that people won’t balk at the ads, as long as they’re matched with inducements such as free voice or data air time or free information services. But some analysts and wireless users said they’re not so sure.

Whoever is right, wireless advertising is starting to become a reality in the United States. On Monday, for example, New York-based DoubleClick Inc. said it plans to begin trial runs of mobile ads in New York, San Francisco, Chicago and Boston early next year in order to test whether users will accept the idea.

At least one other U.S. company, WindWire Inc. in Research Triangle Park, N.C., is already delivering wireless advertising to mobile users on behalf of clients such as the National Hockey League’s Carolina Hurricanes franchise.

Ken Lehner, vice president of marketing for the Hurricanes, said it’s too early to tell how much business value and return on investment the team will get from the wireless ads it’s running. But the promise is there, he added.

Lehner said he expects increased ticket sales through the ability to promote games to users carrying cell phones and other devices. The ads give the users the ability to click on an icon and be connected via wireless voice technology to the Hurricanes’ ticket sales department, he noted.

International Data Corp. (IDC) recently conducted focus-group evaluations of mobile users and found that the people who participated “are very open to Internet and wireless advertising as long as there is a free service” or other inducement attached to the ads, said Callie Nelsen, an analyst at Framingham, Mass.-based IDC.

The service might be free air-time for the users or the ability to get useful information such as the location of a restaurant without being charged a fee, Nielsen added.

Wireless device manufacturer L.M. Ericsson Telephone Co. yesterday released the results of a six-week wireless advertising study conducted last summer with 5,000 users in its home country of Sweden. The users received a total of more than 100,000 messages that included ads and were given free text-messaging capabilities in return.

The study showed that a majority of the users were receptive to the advertising messages, according to the Stockholm-based company. Ericsson said more than 60 per cent of the participants said they liked receiving ads targeted to a personal profile they each completed, while 20 per cent sought more information about the products being advertised after seeing the messages.

The receptivity of users to wireless ads is a subject of intense interest to the companies that would be potential advertisers, said Alan Reiter, an analyst at Wireless Internet & Mobile Computing in Chevy Chase, Md. “Advertising for wireless is a hot topic this year,” he said. “Corporations will drool over advertising to wireless devices.”

But there also are many wireless advertising critics who said they aren’t convinced that the concept will work. “I think wireless advertising will be very unpopular with [users],” said Jack Gold, an analyst at Meta Group Inc. in Stamford, Conn. “Consumers will want something for free but won’t want to be annoyed.”

The billions of dollars in potential revenue that advertisers expect to get by advertising their wares on wireless devices won’t be realized unless companies can find ways to precisely target the information to individual users, Gold warned.

One user, Dr. David Donnell, said he uses a wireless service to send prescription refill orders to pharmacies for patients of his Dallas-based medical practice. He also handles some consultations with technology-savvy patients via wireless e-mail messages.

Donnell said he’s willing to pay $50 a month for the wireless service from ePhysician Inc. in Mountain View, Calif., after trying, but rejecting, two free wireless prescription filing services from other vendors. The reason for the rejection: He said he didn’t like the advertising he received from pharmaceutical companies as part of the two free services.

“It’s a trade-off that I’ve made,” Donnell said. “In 10 years, I’ve never learned anything from a pharmaceutical ad.”