Mobile Marketing 2008: Rethinking mobile segmentation and the iPhone's impact on advertising

Carlos Grande

This is one of a series of edited extracts from the Mobile Marketing Forum 2008. Other articles cover:

For all his reports from the event, visit WARC's Mobile Marketing Forum blog.


Do agencies really want the ad inventory mobile operators are currently selling to them? The question connected the opening sessions of the Mobile Marketing Forum 2008 in Budapest where the likes of Nokia, Yahoo, GroupM and telecoms companies discussed the opportunities of mobile as well as current flaws in its reach, measurement and technical complexity. 

It is a real dilemma because mobile operators want advertising expenditure to offset their declining voice call revenues whilst brands see the communications potential of the 3.3bn mobile devices in global circulation. As several speakers acknowledged, mobile advertising has often failed to deliver on both its creative and revenue potential. And in an audience largely drawn from operators, it was perhaps predictable that the most challenging intervention came from an agency executive. 

Jonathan MacDonald, a senior consultant at Ogilvy, was responding to a question about whether mobile advertising could in future be sufficient to subsidise customers’ voice bills and provide operators with a large new revenue stream. MacDonald argued it could if operators dropped their focus on selling display-type mobile campaigns on a cost per thousand (CPM) basis borrowed from traditional media. This, he contended, had discouraged advertisers willing to pay higher rates for more precisely targeted, response-type mobile campaigns.

He said: “This display inventory isn’t what advertisers want to buy. One hundred per cent you can cover bills with advertising…The advertising dollars are ready, the chequebooks are ready. These guys (the advertisers) are ready to spend. Get the inventory ready for us to buy.”

The case against mobile demographics (part one)

During his own presentation, MacDonald argued that successful mobile marketing also required a move away from using traditional demographic segmentation to profile mobile audiences. He told delegates: “I’m absolutely convinced that there is an enormous opportunity but it will involve layering other information on top of mobile operators’ demographic information (about customers). 

“We see this in citizen experience terms. If 100 people get something on their phone that one person in 100 liked, that’s not a 1 per cent success rate. It’s a 99 per cent failure rate. In medicine that failure rate would be judged malpractice. In advertising, it’s best practice”. 

He pointed to a satirical Microsoft film about the relationship between advertisers and consumers as a fair description of marketers’ over-confidence in traditional audience profiling.  Instead, he listed four key principles for successful mobile campaigns:

The case against traditional mobile segmentation (part two) 

Another critique of applying traditional audience segmentation approaches to mobile came from Stacy Fassberg, VP Marketing Celltick, which runs mobile marketing campaigns for operators in Asia and Latin America. 

Fassberg warned: “(Mobile) Advertisers just cannot live on demographics alone …Without the right segmentation, we will all fail. Despite all the predictions (for mobile advertising) we are going to fail unless we give the user what he or she wants. And the mobile gives us a lot of segmentation opportunities that don’t exist in any other channel today.” 

In her presentation, she addressed why mobile marketing had often failed to live up to expectations. She told attendees: “Early attempts at mobile marketing demonstrated a lack of understanding. Many brands adapted internet banners for the smaller screen and the results were less than stellar. That is because the mobile user experience is completely different. User behaviour is completely different and the capabilities of the device are completely different.” 

Early efforts at location-based targeting – to tailor campaigns to the whereabouts of users’ phones – had foundered on fears that this would be intrusive. But the industry had learnt since then, she said. For current marketers to exploit mobile’s “unique” personalization they would need to consider five factors in combination: 

For pre-pay customers, operators could use games and other applications to engage users to volunteer information about themselves via SMS responses). The combined input of these five factors would then shape a campaign designed to be response driven, time-sensitive, location-based and personalized to users’ interests. 

The company typically uses “cell broadcast” – a technique for sending out campaigns to the “idle” home screens of multiple users whilst their phones are not in use. The feature is typically embedded in SIM cards by Celltick’s operator partners. In case studies quoted by Fassberg, the client’s sector but not its brand was identified. Examples included: 

During questioning it emerged that the company’s clients were all in emerging markets where typically consumers had to opt out of receiving mobile marketing – as opposed to most Western markets where consumers have to opt in to receive such messages. Fassberg admitted this policy may change in future. 

In defence of demographics 

Michael Bayle, senior director, global mobile advertising at Yahoo! (an Ogilvy client), gave a more measured assessment of the merits of dividing up the mobile audience using classic demographics. Bayle said: “One has to work with the hand you’re dealt with”, arguing that audience segments such as 18-34 years olds were the accepted currency for media planners. 

Using as his target audience an imaginary 22-year old media planner needing to be trained in mobile marketing, Bayle counted down “Five Ways to Achieve Mobile Success” (the original programme had promised 10 but Mr Bayle improvised when some of the sessions over-ran.) 

His injunctions were:

He cited a Guinness application which Vodafone ran with Yahoo Mobile resulting in a 25 percentage point uplift in brand awareness. He admitted, however: “We have to have more of these studies: brands have to be more generous with the data as that will open up the (advertisers’) wallets.” 

Will the iPhone change the market? 

“The expression “game-changer” is over-used, but I do think this is exciting,” proclaimed Stephen Upstone, managing director of european development, AdInfuse, in his presentation on the early evidence of advertising using the iPhone. Upstone quoted an excited executive at Verizon, the US wireless group, saying that the iPhone could be a catalyst for mobile advertising in 2008, before presenting a range of statistics about Apple’s much-discussed device. 

His argument was that companies including Nokia, Sony Ericsson, Google and Samsung had all produced, or were producing, touch-screen, web-enabled phones. But the iPhone had had the biggest impact to date. Although they were a small base, accounting for less than 3 per cent of the US cellphone market, iPhone purchasers were attractive to advertisers. They were male-skewed with higher average levels of education and income than most mobile users, and were hugely positive about their phones. 

According to Upstone’s data (some of which was sourced from press reports) they were also much more likely to use mobile web browsing. Some 95 per cent of iPhone owners had used their phones to access the web, compared to a typical 50 percent on other webphones, and some 10 per cent of all mobile web usage in the US was now attributed to iPhone customers. 

iPhone customers were also much more likely to use mobile search than average mobile customers – outstripping even Blackberry and Smartphone business users - and more than 50 per cent had used their device to watch YouTube videos. 

“If with every 3 per cent of the US market which gets the iPhone, mobile internet usage doubles, imagine what will happen with other touch screen phones are launched?” 

Upstone also listed creative, functional and measurement benefits for mobile advertisers: 

Overall, iPhone users were found to have 17 times more interaction with WAP sites than was the case with owners of other web-enabled mobiles. Upstone said: “It is almost as if mobile video didn’t exist before. I think the iPhone will give us a very exciting future. We think it will drive this whole future, and between it and the other touch phones from Nokia and others, will bring mobile video to the mainstream.”

About the Author:

    Carlos Grande is editor of WARC Online. He can be contacted at

He joined WARC in 2008 after eight years at the Financial Times, where he was latterly marketing correspondent. Previously, he was acting deputy on the FT's UK companies newsdesk and a senior UK companies reporter. 

Prior to that, Carlos edited Creative Business, the FT's weekly print section and website covering media, marketing, advertising, PR and technology.