Reports from Forrester predict a high rate of growth for all the online sectors, but growth rates will be especially high for mobile advertising and social network advertising.

The overall growth for the online sector is expected to be a respectable 17% in the six year span from 2008 to 2014. However, the rate of growth for the mobile advertising industry is expected to be much higher, at about 27% per year, and for social network advertising, the growth is expected to be at an explosive rate of 34% per year compound annual growth rate (CAGR).

Actual figures are likely to go from the current $716 million to $3.1 billion during the six-year period ending in 2014. The overall interactive marketing spend in the U.S. is expected to just double, from $25.5 billion to $55 billion during the same period.

Forrester Research Vice President and Research Director, Christine Overby said, “Marketers don’t need to start revolutions in order to innovate, they need to solve problems”. She further says, “Social technologies allow for accessible innovation where the risks and costs are not as high, but the return is significant”.

According to latest reports from Forrester Research, the vast majority (83%) of marketers think that mobile advertising will grow several fold in about 3 years from now, and to be able to make the most of the boom when it occurs, advertisers should start preparing themselves from now.

One of the biggest obstacles advertisers will have to deal with is the lack of awareness among the masses about mobile ads. It is reported that only about 7% of users trust mobile ads.

Advertisers will need to start analysing data on how clients use their mobiles. Prior research and data from network operators indicates that 42% of users use their mobiles for SMS, 25% for picture messages, and just about 15% use it for email, apart from making and receiving phone calls.

33% of users have come across some form of marketing on their phones, and this figure is expected to increase with time. According to data collected by Forrester, only 1% of users said that they had clicked on a banner ad, while using their mobile phones, although new arrivals on the mobile market such as Blyk have made claims of very high click through rates.

Acceptable Advertising

Marketers can use the ‘send to a friend’ feature and referral incentives to improve the acceptability of mobile ads. They can also distribute branded logos and graphics that can be used as screen savers or wall paper by customers. Using ads containing keywords that are common in that region or local language would also be a smart move.

Sponsored links are prefered over ads that appear while the page is loading, as most users find the latter to be quite tiresome. Marketers can also put in pre-roll ads before mobile video clips and games, as this seems to be the most acceptable video ad format on mobile. Advertisers must remember that it is extremely important to keep their ads short and sweet – preferably under 15 seconds.

It is also necessary to consider that the size of the mobile screen is small in this case and users make use of the mobile to collect information while on the move. As of now, only 23% of mobile users feel that accessing the web through their mobiles is a pleasant experience. Advertisers should use fast-loading content and use only miniature versions of their regular sites on mobiles.

T-Mobile + Yahoo!

T-Mobile’s deal with Google to provide search to their customers was one of the first of its kind when they launched their Web ‘n’ Walk service. Today that partnership has been terminated in favour of a new deal forged with Yahoo! Beginning in March, T-Mobile customers in 11 European countries will see Yahoo!’s mobile oneSearch by default on their phones.

Official press release: Yahoo! and T-Mobile Partnership

“T-Mobile’s decision to work with Yahoo! is a clear demonstration of the strength of our industry-leading mobile search service and our ability to work with partners to give consumers the best possible mobile Internet experience,” says Marco Boerries, executive vice president, Connected Life, Yahoo! Inc.

Nokia + Google

Nokia Search, the new facility powered by Google will be launched on Nokia’s N96, N78, Navigator 6210 and classic 6220 models in a few select countries. Eventually Nokia plans to make this service available in over 100 countries and it will run in 42 different languages.

Official press release: Google and Nokia team up on search

The Google search box is already available on Nokia Internet Tablets and Nokia also supports Google’s YouTube videos on their N95 8GB model. This latest deal between the two companies will enable written and oral search services with document and photo sharing facility through audio and video applications. It will also provide Internet navigation and online music. In other words, it will allow users to browse around, access maps, messages etc. through just a click on their mobile phones.

Google VP Vic Gundotra says, “Google search combined with the high quality applications on Nokia devices (will) help make information available to Nokia device users wherever they are and provide an excellent overall experience.”

Digging Deeper

On the surface this might seem like everyday business… winning some clients, and losing some to the competition. However, considering what’s at stake here, the ramifications are much, much deeper.

T-Mobile, like most UK operators considers Google to be a serious threat to their future revenue streams. All operators want a large slice of the mobile advertising pie. Google has played hard ball, and severed a few relationships along the way. T-Mobile’s decision to drop Google and partner with Yahoo! has likely little to do with Yahoo!’s superior mobile search product offering and more to do with a strategic move to decrease Google’s dominance in mobile.

Nokia has been debating about its mobile search strategy for a while now. They have considered launching their own search facility within their phones, partnering with Google, or using a white label mobile search provider. This announcement most likely indicates that in spite of the fact that the two companies are rivals in many ways (Nokia’s S60 software competes with Google’s Android platform), the world’s largest handset manufacturer has accepted the fact that they could never develop as good a search service as Google, and if they tried to compete with Google’s brand recognition in search, they would most likely lose.

Forging a relationship with Google allows Nokia to tap into the mobile search market rather than ending up being completely excluded from it.

In return, Google could potentially gain direct access to 40% of worldwide mobile users and 50% of the Smartphone users via their handsets.

This means that even the T-Mobile customers who would have otherwise no longer seen Google search, might once again see it in the near future on their Nokia phone itself without even having to access the operator portal. Nokia and Google’s deal could thereby cut off operators like T-Mobile and competitors like Yahoo! completely. Few tears are likely being shed at Google for the loss of the T-Mobile contract, in the face of this potentially huge new opportunity.

A vast number of mobile phones do not allow JavaScript to run on their browsers. Furthermore, even with those that do allow JavaScript, many do not allow cookies. In fact, a number of mobile network operators block cookies as well as session details from being passed on to third parties such as Google AdWords.

Without cookies, the vast majority of conversions resulting from AdWords ads on mobile devices will go undetected. This is a serious issue, as it implies that the ROI calculations many mobile advertisers make for their campaigns will be far from the actual figures.

Not only is this a serious problem for Google, who has traditionally bragged about the exceptional accountability and reporting capabilities of its advertising platform, but it is also one that cannot be solved by the search giant.

Google needs to either find a better, more innovative way to provide accurate conversion tracking for mobile ads, or advertisers will shrug their shoulders and accept it as a flaw till a better, more reliable system is introduced, probably by a network operator.

An account manager at Google AdWords has confirmed this is the case. Her reply to our query is quoted below:

“A significant percentage of mobile browser and carrier combinations do not support cookies. Google adds cookies to a user’s mobile device when he or she clicks on an ad to track conversions. Therefore, if users are using mobile browsers or carriers that do not accept or support cookies, they will not be included in your conversion tracking statistics.

Additionally, cookies on mobile phones expire faster than the ones created for PCs. Therefore, a significant number of conversions for your site may go unrecorded after a certain period of time. When viewing conversions for a specified time period, note that conversions are assigned to the date on which the ad click occurs, not the date on which the conversion occurs. In addition, we will not be able to report conversions for users who disable cookies.

Conversion tracking is also not supported when users disable images on their mobile phones.

Although Google cannot record every conversion due to the reasons mentioned above, your conversion rate, cost-per-conversion, cost-per-transaction and value/click are adjusted to reflect only those sites from which we can track conversions.“

Update:

The post has been updated to clarify that the lack of JavaScript support on a mobile device is not a problem in and of itself. The problem lies in the cookies being rejected by mobile operators. Since the time of publication of this post, Google has updated its conversion tracking platform, and now offers an improved solution for conversion tracking on mobile searches.

JuiceCaster’s MVS is the first application of its kind and it will be free! Anybody who has a mobile phone capable of viewing video can utilise this service. All one has to do is send an SMS message with the desired video name or keywords to ’84462′ in the USA. The search tool will reply back immediately with links to the queried video. The service works on almost all video-enabled mobile phones.

The Mobile Video Search engine is primeval in its search technology. It merely matches keywords to videos based on their metadata. It will, however, enable users worldwide to view all sorts of content – commercials, music, entertainment, documentaries etc. directly on their phones, prompting further development of the mobile Internet market. Students and  businessmen can now quickly and easily mobilize and share information by uploading their videos and tagging them appropriately.

MVS might not be extremely innovative but it will be a pathbreaker, leading to the creation of better mobile search applications combining wireless, video and search operations into one simple procedure. JuiceCaster will offer a free WAP and SMS version as well as paid Brew and Java versions for download.

Visit JuiceCaster

This re-launched Go mobile platform from Yahoo! will open the doors to third-party application developers, just like Google’s Android project does. Yahoo! Go is relatively popular… quite a few users have actually downloaded the software onto their mobile phones. Other developers don’t need to convince users to do the same with their applications as well; they can just piggy-back on the Yahoo! platform now.

Download Yahoo! Go

Go 3.0 itself offers some impressive improvements, in the form of a more personalised homepage and an “upgraded user-interface“. The improvements make the entire user experience more conducive to browsing the Internet, or at least the Yahoo! Go-related Internet from a mobile phone. Some of the nicer features we liked were:

• Smooth browsing through Flickr photographs
• Easy integration with Yahoo! Mail
• Quick, free access to local information including traffic and weather

Yahoo! has also been busy developing what it likes to believe will be the next generation of web services, within a social setting. The CEO of the company, Jerry Yang personally attended CES 2008, where he demonstrated a new service that he called “Life with an exclamation point”, which aims to integrate different applications such as email, structured data, tags and other information in a social context and thus help users in multiple facets of their life through advanced technology.

This interface too will be open to third party application integration. Like Facebook, the new service’s homepage will also highlight relevant updates from various connections instead of just showing an inbox. Dan Farber at ZDNet has details and screenshots of the demo system.

As TechCrunch have noted, similar such platforms and strategies have been adopted in the past by the likes of Microsoft, Google and Facebook. It remains to be seen whether Yahoo! Life!, which sounds eerily similar to Microsoft Live, will really provide anything new or if it will turn out to be just another copy of the same old platforms.

Yahoo! hope the two new offerings will enable their customers to use the Web more productively and more easily. However it will take a while for the complete new social package to be available due to security concerns, which must be addressed first. They expect to see some form of the platform during the year, but full functionality might not be available in 2008.

One hopes that these latest innovations will help to restore Yahoo! to its earlier place of pride vis-à-vis the internet, considering the fact that they used to be the stars of the Internet before Google came and rained on their parade. Share prices of Yahoo! Inc. have taken a beating off late while those of their competitor, Google Inc; have risen significantly, often at Yahoo!’s expense.

Blyk’s business plan is based on mobile display advertising. This ad supported system targets youngsters aged 16-24 in the UK. Subscribers of the Blyk network get free mobile call minutes and messaging in return for viewing six advertisements that they receive daily. The ads are highly targeted, based on selections made by the user at the time of subscription. Users of the Blyk network therefore only receive ads that they have opted-in for and are likely to be interested in.

This kind of advertising works because the users know what they are opting in for. Moreover, all the ads are sent according to individual preferences, which means the subscriber is more likely to be interested in finding out more about the products and services being advertised. The novelty factor and the fact that subscribers are compelled to view the ads in order to receive their free mobile minutes probably helps improve click through rates as well.

Do the privacy pundits approve?

The advertising system employed by Blyk should not ordinarily be perceived as obtrusive advertising because all the subscribers know what they are getting into. The choice is theirs, whether or not to opt in to use the operator, in the first place, and also to choose the products and services they would like to see ads about.

The future for ad-funded MVNOs

Early results seem to show that the concept of an ad-funded MVNO has is backed by a viable business plan. Advertisers will definitely be interested in purchasing ad inventory if these high click through rates can be sustained. The 16-24 mobile market is also notriously fickle, and an operator that can tie these subscribers down will definitely be able to attract top advertising budgets.

The next challenge lies in convincing not only youngsters to sign up but also professionals and middle-aged users who have higher spending power. If the service can be marketed well, then Blyk could could be a trendsetter and spell a bright future for ad-funded mobile networks as well as mobile advertising.

At present, an estimated 85 percent of mobile phone handsets do not include in-built GPS systems. Converting a simple, useful application like Google Maps into a desirable feature (i.e. GPS) is a smart way to prompt users to adopt Google technology on their mobile devices.

Google Mobile Maps + My Location

My Location vs. GPS

My Location provides indoor coverage. Its battery consumption is low and its location tracking service is faster than GPS. On the other hand, GPS systems are much more accurate and can track down the location of a user to a within 10 meters or less. Google’s tracking system does not show this level of precision. Google have stated that users can be traced within a range of 400 meters to 5 kilometers of their exact location.

In order to put Google’s pseudo-GPS accuracy in perspective, consider this: In a city like London, a distance of +/- 400 metres could cover an area serviced by three different tube stations! It may be easy to locate a user’s neighbourhood through My Location, but quite a task to navigate the city streets.

Privacy Concerns

Google has addressed privacy concerns at the outset. However, in spite of assurances from Steve Lee, Google’s Mobile Maps product manager, that My Location won’t collect “revealing” personal information, it remains to be seen how true Google stay to their promise. My Location presents the means through which Google can enter the realm of location-based advertising. Google are rather unlikely to miss an opportunity to capitalise on this by selling location-specific mobile ads.

My Location can be quite a handy utility tool but there are a few loopholes that Google needs to close quickly. The backing database of My Location is not yet ready. To avoid privacy related issues and potential mobile spam, Google will also need to take care that the privacy of its users is respected. Most importantly, though, Google need to improve the level of accuracy to make the tool useful to city dwellers, who will end up being the main adopters of such technology.

For those interested in learning more about the technology behind My Location, Google has created this nifty little video:

Over the past few months the blogosphere has been buzzing with rumours about Google’s next foray in the mobile market. While most knew the announcement would go far beyond just another mobile search feature, speculation ranged from Google introducing a revolutionary piece of hardware, nicknamed GPhone, to launching special software that would run on mobile phones.

Google have ended all speculation by finally confirming that they have founded the Open Handset Alliance, in partnership with over 30 mobile and technology industry leaders. Members of the alliance are committed to creating an open mobile ecosystem, allowing companies to innovate and be part of the astonishing growth in mobile device adoption.

Official Google Blog Announcement – Where’s My GPhone?

Android^TM is the first result of this alliance – a complete set of software for mobile devices: an operating system, middleware and key mobile applications. A Software Development Kit (SDK) will be made available on November 12, to allow developers to build rich mobile applications. Handsets based on the Android platform, however, will only be available in the second half of 2008.

Android^TM

This open platform strategy is no different than the OpenSocial strategy that Google have adopted for social media, and will probably benefit them in the long run in the same way – by making it easy for developers to include Google AdWords mobile ads onto their applications.

While most of the world’s mobile phone owning population of 2.7 billion people might never use Android, Google have nevertheless made yet another strong move towards expanding their target market from 850 Million PC users to an audience that is three times as large.

Founding members of the Open Handset Alliance include the following companies:

• Broadcom
• China Mobile Research Institute
• Deutsche Telekom
• Ebay
• Google
• HTC Corp.
• Intel
• LG
• Marvell Semiconductor
• Motorola
• NTT DoCoMo
• Nuance Communications
• NVIDIA
• Qualcomm
• Samsung
• Sprint Nextel
• Telecom Italia
• Telefónica
• Texas Instruments

Introducing Android – A word from the founders

According to the report, Skype will be teaming up with mobile operator 3 from the end of November. They will release a fully integrated mobile phone that will mean free mobile to mobile phone calls for anyone swapping networks.

This should be good news for 3. Providing free mobile to mobile calls from anywhere in the world, in association with Skype, could cause all the other operators enormous pain.

Rattling the competition

Speaking to the BBC, Per Lindberg, a telecommunications and IT analyst at investment bank Dresdner Kleinwort said, “Whether they win market share depends completely on their competitors’ reactions.” He thinks a move such as this could prompt all the operators to cut their prices, “If Vodafone or Telefonica move to ‘all-you-can-eat’ then the situation may change.”

Skype’s phone could even be a threat to other new entrants such as Apple’s iPhone or Google’s rumoured GPhone. Sprint Nextel could also take over Vonage and integrate VOIP services into their products even more seamlessly than Skype can.

Three is the mobile business of Hong Kong based Hutchison Whampoa, better known in Asia and the USA for Hutchison Telecom and the Harbour Plaza hotel group. Skype was acquired by Ebay back in 2005 for $2.6 Billion. Recently, though, Ebay was publicly dissatisfied with Skype’s performance, when it was forced to announce to shareholders that it would have to pay an impairment charge of $900 million because it had over-valued the group.

If the Skype – 3 deal delivers on promise, it could prove to be a turn-around point for Skype as well as the sagging VOIP industry on the whole.

BBC Report: Skype teams up with 3