Now that we have learnt to ignore adverts on television and websites, the next big test will be avoiding them on our mobile phones. New research published last week by advertising agency Leo Burnett predicts advertising on mobile phones will "boom" by 2005. It reckons consumers will embrace new services once they upgrade their existing mobile. And, the findings show, users will be willing to receive advertising - especially in exchange for extra services.
Such ideas seem strange at a time when the likes of mobile phone giant Nokia are warning of declining sales. Just last week, the Finnish company stunned financial markets with a profits warning which resulted in a 23 per cent drop in its share price.
Analysts point to consumer disillusionment with current "enhanced" mobile phone offerings - such as limited Web access - which manufacturers had hoped would stoke interest in the run-up to the launch of their all-singing-all-dancing third generation mobile phones. But Leo Burnett identifies all this as a temporary rather than permanent setback.
"The current slowdown in the mobile phone sector is a flattening off after phenomenal growth," says senior planner Chris White. "Once penetration reached 70-80 per cent, it was inevitable the emphasis would shift to replacements and upgrades. The conundrum for telecom companies who have bid billions for next generation mobile phone licences is how to make money out of new services from consumers familiar with using the Internet for free. That's where advertising and commerce come in." The report, "Advertising on the Move: the 'Brand-in-Hand' Opportunity", surveyed 1,000 mobile phone and Internet enthusiasts. One in three of those interviewed said they were likely to get an Internet-enabled phone when they next updated their mobile. More than 60 per cent of those who said they would use Internet-enabled mobile phones said they would welcome advertising in exchange for extra services, such as local information or entertainment, shoppers' guides (such as information on comparative high-street pricing) or traffic information.
Interest was highest among 14 to 29-year-olds who preferred the idea of receiving advertising instead of paying a subscription fee to receive such services. This represents a significant opportunity for advertisers, White says: "The potential is enormous, especially for targeting younger consumers using mobile phones". The study concludes that, by 2010, more than 9 million people will be actively requesting advertising in this way. Text messaging has been identified by a number of youth marketers as a key weapon in their battle to reach 15 to 24-year-olds.
Last year, Worldpop, ex-radio DJ Peter Powell's digital marketing company, launched a text messaging campaign targeting clubbers on Ibiza. Mobile phone users were offered insider information on the club scene and Euro 2000 scores in exchange for receiving a number of commercial messages. This year, the initiative will be extended with offers of free club tickets.
Orange, meanwhile, has announced plans to sponsor Ibiza night-club Manumission this summer. It will offer clubbers discounted entrance to the club if they sign up to receive promotional text messages.
The first advertiser to use WAP in the UK was Internet sports service provider football365.com. The March 2000 campaign, consisted of a three-line text message over the main sports menu on the Orange Nokia WAP phone. Users could click on the ad to be re-directed to the football365.com site by 24/7's WAP adserver to get more information.
At the time, 24/7 sales director Mark Nall claimed to be in no doubt about Wap's marketing potential: "It's absolutely huge." Unlike Internet advertising on PCs, advertising via third-generation mobile phones will enable companies to reach consumers when they are in a particular shop or using a particular service - in other words, at a time and location where they can immediately respond to an advertisement, Nall explains. Advertisers could also deliver electronic coupons to potential customers when they are in the vicinity of their business.
As well as being a mobile communications device, however, mobile phones also have the potential to work as a "digital wallet". Already, Scandinavian trials have involved drinks vending machines carrying code numbers which consumers dial into their phones to activate the machine's release of the drink, with the price added to the user's next mobile phone bill.
The challenge will be to understand how best to use the technology's promise of targeting consumers any place, any time. "It will be easy for younger consumers to accept advertising in exchange for 'free' services then screen out the commercial message," he says. "To overcome this, advertisers will have to use technology carefully as part of more sophisticated campaigns."