Brands and carriers are campaigning to get
mobile advertising into every customer outreach.

Newspapers around the United States have been laying off thousands of employees this year, many of them reporters and editors, as revenues decline by double digit percentages. Cutting salaries is one way the newspapers are coping, but they’re looking at other areas to gain more revenue.

One way to build their revenue was through the use of advertising on the newspaper online Websites. Now they’re starting to go one step further – using mobile advertising.

Leading the way is the Associated Press, the news cooperative owned by its 1,700 daily newspaper, radio and TV members in the United States. The 162-year-old AP started as a way for newspapers to share stories but now provides news to thousands of newspapers, radio and TV stations and Websites. What the AP is doing shows the emergence of mobile advertising as a nascent technology that promises new life for traditional media.

Unlike some news services and newspapers, AP stories are not available free-of-charge directly to the general public, but rather through the cooperative’s members. That changed earlier this year when the AP launched its Mobile News Network, which provides news, photos and video to mobile phone users. The site is optimized for smartphones sucxh as Apple’s iPhone but the content can be read on most phones. The WAP site (apnews.com) is in beta but carries AP stories in a number of categories.

Why would the AP take this step, giving its stories away to mobile users who can’t get them on their desktops? The answer is mobile advertising.

Jeff Litvack, global director of New Media Markets for the AP, said the news agency plans on running advertisements on the mobile site. In addition to staff-originated content, more than 700 of AP’s member newspapers are providing local coverage.

GOALS
The AP hasn’t started posting ads on the mobile site yet, but Litvack said the company is testing different kinds of techniques with advertisers and brands. Advertising revenue also will be generated by individual newspapers who contribute content.

“Our long-term goal is working with our members to develop best practices to sell local advertising,” Litvack said, which would give the newspapers another source of revenue.

While the site remains in development, the AP wants to personalize the content for users so they could receive the local news they want, as well as links to local businesses. Litvack said the newspapers are working with potential advertisers such as car dealers and restaurants. A restaurant review in the local newspaper might be linked so someone could click to call the restaurant to make a reservation.

The AP also is working with advertising agencies and mobile advertising enablers like Millennial Media and AdMob on ways to integrate mobile advertising in the site. Verve Wireless provides the technology to publish the content on phones, as well as integrate advertising.

The AP Mobile News Network is the first of several planned projects under the agency’s Digital Cooperative, which the AP created to find new digital outlets for the news provided by its members.

GETTING RESULTS
You’ll get differing opinions about the past, present and future of mobile advertising depending on who you ask. Laura Marriott, president of the Mobile Marketing Association, said there has been a lot of hype about mobile advertising in the last 18 months, while mobile marketing has been quietly realizing results. The AP’s Litvack said he thinks mobile advertising will become more common next year, and that’s why he’s laying the foundation now.

During a recent Mobile Marketing Forum event in New York City, several digital and mobile advertising agency executives said they expect good things from mobile advertising but that there are some hurdles. The primary cause for concern is the lack of metrics that tell advertisers and brands the age, household income and gender of people reached by the mobile ads. The key to that information is held tightly by the carriers, who don’t want to invade their subscribers’ privacy.

Gene Keenan, vice president of mobile services for the digital agency Isobar International, said the company has seen a lot more interest in mobile advertising in recent months but that mobile marketing is where brands are spending the most money. Mobile advertising has a lot of interest because it promises to deliver information to specific consumers at the time the consumers want it, but Keenan said that promise can only be realized when carriers make the information available.

“We’re all in this together,” he said. “We can’t do it without the carriers, and the carriers can’t do it without us.”

Because carriers have been careful about getting into mobile marketing and advertising, some companies involved in the field have decided to offer an off-deck solution initially. That’s the case with Mozes, a mobile advertising/marketing company. Dorrian Porter, CEO, said carriers want to be sure that whatever advertising is offered through their networks can be trusted and provide a consistent experience.

“You talk with any (advertising) provider and they say it is hard to work with the carriers,” Porter said. “That’s because the carriers are so protective of their subscribers’ privacy. As marketing becomes more prolific, it is going to be vital for carriers to partner with (advertising/marketing) companies that address that concern.”

REACH
Vlademir Edelman, CEO of the Ansible Mobile marketing services company, said he believes mobile advertising has to be part of a marketing campaign to be most successful. Mobile ads by themselves don’t work as well as when they are part of a broader campaign, he said. Ansible ran a marketing and advertising campaign for the U.K. chain store Argos that resulted in 60 million leads, he said.

The Nielsen Company has reported as many as 58 million U.S. mobile subscribers have seen an advertising on their phone, with half of them responding to the ad. Teenagers are the most likely to recall seeing a mobile ad, Nielsen said, and nearly one-third of the subscribers who had seen an ad said they were open to mobile advertising if it lowered their bills.

Mobile advertising has to be included in any brand’s broad campaigns, including traditional and online media, according to Michael Collins, CEO of the Kinetic digital agency. It is too complex now to make a mobile advertising buy, he said, because it is often shoehorned into a campaign in the latter stages.

Anheuser-Busch made mobile part of its broad Bud Bowl advertising during this year’s Super Bowl after testing it in 2007. The brewer launched a WAP site before the Super Bowl and people who went to the Budweiser.com site and opted in received an SMS promotion code. Using the code, people could see the Super Bowl TV ads on their phones. They also could download ringtones.

Tim Murphy, senior manager of Anheuser-Busch’s digital marketing, said there were 75,000 page views of the WAP site during the Super Bowl and 74,000 text messages passing the site along to friends.

GROWTH MARKET
The potential for brands to increase sales through targeted mobile advertising has been the draw for companies like Anheuser-Busch. But what do carriers have to gain? Plenty, according to some analyst studies that said carriers can share the advertising revenue if they open their networks.

One study by Heavy Reading said mobile advertising revenue already has become a $1.4 billion industry globally and will grow to more than $10 billion by 2012. In the United States, the study said mobile ads provided just $421 million in revenue in 2006 but will reach $5 billion by 2011.

Heavy Reading also said the carriers share of mobile advertising revenue will reach $3.4 billion globally in 2012.

Stephanie Bauer, head of mobile advertising for Verizon Wireless, said the carrier is well-aware that advertising will play a role in the explosive uptake in mobile data. Verizon Wireless has started integrating banner ads in some cases and looking at how its subscribers respond, she said.

Verizon Wireless has seen “incredible” click-through rates on banner ads through its network, Bauer said.

Jordan Berman, executive director of Media Innovation for AT&T Mobility, said the nation’s largest operator has started using mobile ads through its on-portal sites. He said AT&T has been working on the details of how to fit advertising into a subscription-based business model.

An early, trial foray into mobile advertising was a program AT&T Mobility offered with 1800flowers.com, which used the theme “Cupid Goes Wireless” last Valentine’s Day. The advertising led to virtual bouquets, SMS reminders, and a Valentine’s Day theme sweepstakes.

“We worked closely with them to certify their WAP store and placed it on our portal,” Berman said. “They saw a 160% increase in sales.” 1800flowers.com also saw a 20% click-through rate through its WAP store.

Verizon Wireless’s Bauer said she’s heard the complaints that carriers have been too restrictive in allowing the use of mobile advertising. But she said that’s changing.

“We’re breaking down walls within the carrier,” she said. “We’re breaking new ground, chipping away at the old models. We have to work through the processes.”