Overheard: Word of the Day

May 5 2009   6:53PM GMT

Location-based service – SMS text ads coming to a cell phone near you

Margaret Rouse Margaret Rouse Profile: Margaret Rouse

Google has been teaming up with hardware makers to build cellphones with the Mountain View, Calif., company’s Android software, part of its strategy to accelerate mobile Internet access and generate more revenue by selling mobile ads.

Scott Morrison, Mobile Ads Seen Picking Up As New Google Phones Hit Market

Today’s WhatIs.com Word of the Day is location-based service (LBS).  Imagine going shopping at your local big-box grocery chain and as the electronic doors whoosh open, your cell phone dings. Who is it? It’s an SMS text message from the grocery store letting you know what’s on sale (forget those old-timey flyers). Or maybe it’s a text coupon, letting you know that your favorite snack food has a two-for-one offer today.

Even as I speak, one of our local New York chains is working to make this happen.  What’s it going to take?  They’re not sure yet, but one thing’s for sure — it’ll take my co-operation.  You see, location-based services are permission based. I’ll either have to download their new iPhone app or register my GPS-enabled cell phone with their loyalty card program.

Interpublic is one of the world’s largest advertising companies — so like E.F. Hutton of years gone by –  when Interpublic speaks, the publishing industry listens.  And according to a new report released by Magna, (the unit of Interpublic that – among other things – provides research and market intelligence to all of Interpublic’s buying operations) mobile ad spends are expected to grow to $229 million in 2009.  That’s down from their original forecast before the economy tanked, but it’s a number that’s still impressive.

Most interesting to me is what kind of ad Magna says will pay off best:

Text messaging platforms represents the best near-term potential for advertisers who want to use mobile devices to support broad-reaching marketing campaigns.   This contrasts with slower growth rates for other more narrow-reaching types of mobile media (such as mobile search, in-call media, mobile video, mobile coupons and mobile gaming).

Tie that in with what Nick Brien’s been recommending about traditional vs. emerging media and one thing’s pretty clear — if you haven’t already been asked to opt-in for SMS ads on your mobile device, you will be soon.  The grocery store is just the tip of the ice berg — and location-based services have definitely reached their tipping point. Nick Brien, a senior executive at Interpublic, says:

In other words, if companies are cutting advertising budgets, they would be well-advised to take money out of traditional TV commercials, while maintaining funding for web search ads; or they should abandon a newspaper campaign, but keep spending to zip-targeted  text ads to cellphones.

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