Mobile is the Ultimate Personal Space: US MNOs Enter Advertising
Verizon has recently annouced its foray into the mobile adverstising space as covered by the New York Times. This is after Sprint decided to get into the space too as annouced last October. The Verizon Wireless COO Lowell McAdam said it best, “More than the PC the cell phone is a personal space. If customers get an ad they don’t like, we are going to hear about it. We are moving slowly on this.” In Google’s model, adverstising works best when it is well targeted.
Personally, I feel that both Verizon and Sprint are just reacting to the moves by off operator adverstising systems such as AdMob and potentially Google. It is pretty clear that Google will be making BIG moves in this space. Of course, this is just the calm before the storm. So operators need to do something to get a piece of this pie.
GigaOM poses this interesting dilemma.
We all know mobile ads will be a big business some day, though we can debate how fast the market will grow. An interesting question that the report doesn’t address is: will mobile ads lead to any kind of discounted service or lowered costs for the customer? If the company is helping monetize its services with mobile ads, shouldn’t the customer see some savings — or do we have to pay Verizon twice, once on our hefty bills, and a second time for our eyeballs on the mobile web?
Google is an extreme as they propose, operator services will eventually be subsidized by mobile advertising. This works nicely with their current model of giving their services for free (search, Gmail, Gtalk, …) and make money off advertising (sounds like Boom 2.0 mobile to me). Adverstising system brokers, in the current Verizon, Sprint and Admob Ad-on-WAP model, will make money off advertising separately from the operator network revenue. GigaOM is right. This is definitely double charging and it will be the case for sometime to come. Operators will just call it “a supplementary revenue stream”. However, in time, I believe adverstising revenue should be able to cover a significant amount of the network costs. Maybe even Google’s vision of advertising-subsidized free services.
