Study: Consumers Accept Wireless Ads in Test
SkyGo's pilot project found that 64 percent of the Boulder, CO, consumers who received permission-based alerts (messages or ads) on their mobile phones opened them. Fifteen percent took action or planned action as a result of the ads, and 2.9 percent bought the product online or offline.
"The purchase rate is great compared to online banners, where you're pretty happy to get a 0.5 percent purchase rate," said Daren Tsui, co-founder and CEO of SkyGo.
SkyGo delivered about 500,000 alerts from advertisers such as Best Buy, JCPenney, ValuPage, Procter & Gamble and Subway to 1,000 consumers. Participating consumers received various one-click calls to action within ads, including to click through to buy, interact (via polls and trivia), e-mail, register, visit a wireless application protocol site or call the company.
"We set out to determine whether consumers would accept profile-based alerts on their mobile phones," Tsui said. "Our findings prove that this model of wireless advertising is an effective direct response and branding vehicle."
SkyGo said the test also showed that wireless ads are an effective branding medium. Ad recall was 58 percent, and 35 percent of the people who recalled them said the ads had a positive effect on how they viewed the company or product. However, ad recall rates dropped over the course of the study.
"Initially, ad recall numbers were sky high," Tsui said. "We had a feeling that these numbers would not sustain as the novelty of the medium wore off."
Ads featuring interactive trivia boasted the highest click-through rates at 52 percent, followed by polls with a 40.8 percent click-through. Tsui said SkyGo was surprised by the rates for trivia-type messages, but thought the popularity was linked to the use of trivia and polls on news and portal sites as well as the success of the television show "Who Wants to Be a Millionaire."
One advertiser, Kinko's, sponsored a trivia contest in which it asked how Kinko's got its name. Four choices were listed. Consumers who got the right answer received a coupon.
"It's sort of entertaining and generates multiple page views with constant reinforcement of Kinko's brand," Tsui said.
The lowest click-through rate, 0.7 percent, was attributed to a click-to-call option, "possibly demonstrating that simply embedding a phone number within a wireless ad is not enough incentive to drive consumer action," according to SkyGo.
In other results, 7.4 percent clicked through to register for newsletters and services and 3.6 percent clicked through to e-mail information on their online accounts.
The test also proved the viability of mobile commerce, according to SkyGo. Thirty-seven percent of participants opted to give their credit card information and sign up for an electronic wallet that enabled them to buy online.
"We are particularly excited by the number of participants who opted to sign up for the electronic wallet [provided through Visa]," said Annette Merriman, director of technology at e-Visa, a division of Visa USA.
Despite the success of some of the ads, the project shows challenges facing wireless advertisers.
Many consumers were annoyed by ads that simply touted a product with no interactive option or corresponding offer, according to SkyGo.
Study participants also were irritated by alerts that were not targeted to the interests they specified in their profile. SkyGo tested targeted and non-targeted ads.
"This is a very big challenge going forward for all wireless marketers," Tsui said. "If you give them ads that are not relevant, you're going to create negative branding."
Tsui also noted that for the medium to be attractive to national advertisers, more consumers must use WAP phones.
"At least in the U.S., we only have a couple million WAP users," he said.
Tsui noted that advertisers are willing to pay more for targeted wireless ads based on consumer profiles. Instead of the average $50 to $75 per 1,000 click-throughs on typical wireless banner ads, the going rate for targeted ads ranges from $100 to $150 per 1,000 click-throughs, Tsui said.