Mobile Phones: A Pocketful of Marketing

The future is calling. Pick up!

There are 3.2 billion cellular connections worldwide, and with the iPhone's launch last year, the concept of browsing the Web from a mobile phone has gone mainstream. Marketers are abuzz about the trend. Consider this: Mobile phone carriers are sitting atop a trove of data--not just your name, address, and, of course, phone number but also credit card information, who your friends are, and where you're located at this very moment. Even with privacy regulations, more of this information will become available to marketers as phones are used more like little PCs, creating opportunities for highly targeted ads and other marketing breakthroughs. Imagine a retailer texting customers with a discount offer whenever they are within a few blocks of a particular store. The mind reels!

How exactly do I advertise on a mobile phone?

The most common type of mobile ad is a display banner served on a Web page called up on a cell phone's screen. When you go to The New York Times' website from your phone, for example, you will see ads like the one for AT&T (NYSE:T) shown here. The ads are created for the site's mobile format and may not be the same as the ads you would see if you were browsing the site on a PC. Ads are priced on a Cost Per Mille, or CPM, basis--the price you pay for the ad to be seen 1,000 times.

To get a sense of what your website looks like on a cell phone, go to Skweezer.net. JetBlue has used the free messaging tool Twitter to provide fare updates to customers.

How do I buy mobile ads?

Most advertisers work with mobile-ad networks, which bring together advertisers and websites that are frequently viewed by phone. Some of the larger players, which are owned by the likes of Nokia, AOL, and Yahoo (NASDAQ:YHOO), will act as full-service marketing shops. They handle the entire process, including technology, the creative content of mobile ads, and the ads' placement.

What do mobile ads cost?

Because the industry is so young, rates range widely. Third Screen Media and AdMob, the two main mobile-ad networks, charge CPMs of $15 to $25 for banner ads. "The market is trying to find its price points," says Mike Baker, head of Nokia Ad Business, which charges CPMs as high as $75.

What about text messaging?

One option is to buy or rent a short code, a five- or six-digit phone number from which you can send and receive text messages. One common way to use a short code is to publish it on a billboard or in a print ad ("Text 51234 for more information") that encourages customers to enter a contest or participate in a poll.

What does a short code cost?

Cellit Mobile Marketing, in Chicago, and Movo, in Florida, sell short codes for $500 to $1,000 per month, plus a one-time setup fee of a few thousand dollars and a charge of 4 cents to 7 cents for each text message. You can also rent a code for as little as $225 per month. Keep in mind that technological standards vary. Nearly every phone on the market is equipped to send and receive texts, but some systems won't let you embed complex graphics or photographs.

How do I go after my best customers on a mobile phone?

Google (NASDAQ:GOOG) is expanding into the mobile world, allowing companies to buy contextual ads--ads related to content, like those Google ads you know and love--on the mobile Web. This is being hyped as the next big thing. AdMob claims click-through rates on this type of ad of up to 3 percent, which is quite high. The company doesn't charge by CPM for contextual ads; instead, it charges a cost-per-click fee of 25 cents to 30 cents. Marketers are also experimenting with targeted click-to-call ads on mobile phones.

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