Mobile Spam Will Kill Mobile Advertising
Mobile advertising is widely regarded as the last great unexploited frontier in digital advertising. Growth projections for mobile advertising in the coming years vary widely, but it's clear that marketers and carriers are chafing at the bit to expose the world's 2.2 billion cell phone subscribers to a torrent of advertising messages, and in December of 2006, cell phone giant Verizon began to test such ads on the decks of its subscribers phones.
There are tens of billions of dollars in play here, lots of deep-pocketed players, including the search engines, and a gaggle of competing business models that include ad-subsidized content, ad-supported subscription discounts and others. And yet it's clear that this nascent medium has more hurdles ahead of it than face an Olympic track team.
Some of these hurdles will be easier to jump than others. The first and most significant hurdle is for marketers to understand that cell phone users have a very different relationship to their devices than PC users do. Unlike PC's, which perform an almost limitless range of functions, from gaming to Web surfing to personal productivity applications, cell phones, even the forthcoming Apple iPhone, are primarily personal communications devices. While a few enterprising early adopters might enjoy surfing the Web or watching movies on their tiny screens, the vast majority don't. And while it's true that cell phones are "always on," meaning that they're always available to receive commercial messages via a variety of means, it's also true that most cell phone users not only do not expect commercial messages to flow into their devices, but do not want to receive any advertising, under any circumstances, at any time.
Of course, just because people don't want to experience advertising on their cell phones won't stop marketers and carriers from trying to foist ads upon them anyway, and it seems that the best bet for getting consumers to opt in is to offer incentives, in the form of discounts on their bill, free phones and other subsidies. Google's Eric Schmidt has gone so far as to say that mobile phones should be free, with all charges paid for with advertising dollars.
But while the availability of free, ad-subsidized cell phone service might induce many to sign up for such a network, opting into any mobile ad network will expose cell phone users not just to annoyances they don't need, but to risks which they've never had to deal with before, including exposure to spammers, spoofers, phishers and other miscreants disguising themselves as bona fide marketers. As the FBI's Internet Crime Complain Center notes, "spammers and hackers have recently realized that there are new opportunities with cell phones... presenting a whole new area of concern and potential vulnerability for cell phone users." Once commercial messages becomes a normal part of the mobile message traffic, it will be much easier for the bad guys to add their trash to the flow, using their time-honored tricks of deception and disguise to ensnare the unwary.
Cell phone spam is illegal in the United States, and Verizon has, in the past few years, aggressively pursued several unsavory marketers that have blitzed users of its network with hundreds of thousands of messages. Of course, traditional e-mail spam is also illegal (I'll bet that upwards of 90 percent of the unsolicited e-mails now clogging your inbox likely don't comply with the CAN-SPAM Act), but that didn't impede the creeps who send spam. In parts of the world such as Asia, where text-messaging is used more frequently in the United States, SMS-based spam has become a plague, and is only starting to hit this country and Europe now. Historically, it has been too expensive for such criminals to exploit cell phone users because of tariffs on data. But these tariffs, both in Europe and Asia, are increasingly moving to the flat-rate model, removing the disincentive that has kept the miscreants at bay.
The big problem for legitimate advertisers pondering an entry into mobile phone advertising is that most users will quite understandably tend to lump them into the same lot as the spammers. This creates high potential for negative brand equity: I can guarantee you that anyone clicking on a spoofed ad from Coca-Cola that winds up connecting them to a Nigerian 419 scammer will be drinking Pepsi before very long. And while the mobile carriers will certainly make efforts to police their ad-based networks, it's unlikely (I'd say impossible) for them to stay on top of the hundreds of thousands of SMS messages passing through their gateways every few minutes.
It's possible that Eric Schmidt's dream of free, ad-supported cell phone service may come true, but I'd lay odds that the real money to be made in cell phones isn't in advertising, but in security systems that can remove all forms of advertising from cell phones, and assure me that my portable phone, which is my single most indispensable personal computing device, stays secure, uncluttered, and private. There might be plenty of people out there willing to endure an endless stream of marketing messaging, some safe, some unsafe, in exchange for a few bucks knocked off their bill, but I'm not one of them, and I know I'm not alone.