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Video Ads Hit Some Mobile Phones

11/08/2008 9:41 AM Eastern

Ready for interactive, on-demand TV ads in the palm of your hand? Even if you are, your phone — or your wireless operator — may not be.

Mobile VOD ads have a long way to go before they're a mainstay of the business, but operators and mobile publishers have been encouraged by early tests.

A recent mobile TV commercial for Nikon's Coolpix digital cameras, produced by mobile-media delivery provider MobiTV, pops up an interactive alert (“click here to learn more about Coolpix”).

When a viewer selects the prompt, a dedicated Wireless Application Protocol site provides a downloadable data sheet for the camera and other information — even a 30-second Nikon TV spot featuring actor Ashton Kutcher mugging for the camera.

The Nikon spot ran across 10 of MobiTV's entertainment and sports channels, carried by AT&T, Sprint Nextel and other wireless providers.

The click-through rates for such video ads can be as high as 9%, compared with 5% for regular text-based mobile banner ads, according to Jack Hallahan, vice president for advertising and brand partnerships for MobiTV.

“There's a little bit of a novelty factor,” he acknowledged. “But people want to interact with their mobile phone. They're expecting to interact and react with it.”

Just as cable operators are looking to exploit the advertising potential of their video-on-demand platforms, mobile video providers are looking to tap into the potential to serve up targeted messages, on the fly, to wireless users accessing VOD content.

To be sure, mobile VOD ads are still in an experimental stage. Content publishers are looking to find the optimal length and format for commercial messages in the context of mobile devices.

“We're really being sensitive to make sure we're not overwhelming viewers with advertising,” Hallahan said. “We don't want overkill on the ad messaging. Mobile is very sensitive to that.”

The bigger problem today, however, is that just a fraction of mobile devices are capable of viewing video. Only 6% of all U.S. mobile subscribers, about 14 million people, pay for a mobile-video plan, according to Nielsen estimates.

“The numbers for mobile are really not at the rate that people can rely on as a sole advertising strategy,” said Chris Drake, senior director of business development for thePlatform, Comcast's Internet and mobile video management services subsidiary. “They're waiting for the audience to show up, to drive those CPMs [cost per thousand impressions] to make it a sustainable business.”

One obstacle is that mobile devices have only recently become widely used as entertainment devices in addition to communications tools.

Another problem: the massive complexity of serving content to literally thousands of different phones. That could require a publisher to create hundreds of different versions of the same video asset, said Drake.

“Imagine if you had to create a different Web page for every model of laptop and desktop out there — that's what you have to do in mobile today,” he said.

Still, none of that has stopped media companies from kicking the tires on mobile on-demand advertising.

Sony Pictures Television recently launched the Minisode Network (http://mini.4sony.mobi), a collection of 3- to 5-minute segments of TV shows from Sony's archives, including Charlie's Angels, Fantasy Island, Diff'rent Strokes and Married with Children.

The Sony site serves preroll ads of between 5 and 10 seconds dynamically, when a visitor requests a “minisode,” using a server developed by Mobixell Networks. The Mobixell software identifies the specific device being used and then formats the content for it, an architecture that eliminates the need to embed the ad with the video content.

MTV Networks also is scoping out this frontier. In September, the Viacom division announced its first-ever mobile ad spots on carrier-operated premium video-on-demand services, signing the U.S. Air Force as its charter advertiser.

MTVN was planning to experiment with preroll ads of varying lengths and formats across its mobile VOD channels to try to get a read on which formats are most effective. (The company said it was still in the midst of the trial and declined to comment.)

Marketers and agencies are helping to drive the concept forward, as they're eager to adopt dynamic mobile video ad formats, said John Tremblay, vice president marketing for Azuki Systems, a startup that provides interactive mobile media services.

“Most mobile advertising today is flat and static today,” he said. “Showing a little banner on the phone doesn't really convey the advertising message the client wants.”

In Italy, Vodafone Italia launched an ad-supported free mobile video service in a trial that ran in the winter and spring of 2008.

The wireless carrier “wanted to do ads on the fly — more like the Web — instead of having them hard-wired into the asset,” QuickPlay Media vice president of marketing Mark Hyland said.

QuickPlay, a Toronto-based provider of media management services for mobile video, and ad-serving provider Amobee Media Systems worked with Vodafone Italia on the mobile VOD ad trial.

Here's how it worked: Users would browse the catalog of news, sports and entertainment clips on their phone browsers. Once a clip was a selected, QuickPlay's system contacted the Amobee ad server to determine in real time which ad would play; for example, a spot promoting the new Antara auto from General Motors' Opel subsidiary.

“Only a very small percentage of people clicked off the content during the ad,” Hyland said. “That told me, if you do it right it's going to be effective.”

September