Sprint Nextel to start sending you ads on your cell phone!

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Operator cautiously approaches idea of targeted mobile advertising

By Colin Gibbs

Story posted: July 2, 2008 - 5:59 am EDT -- Story modified: July 1, 2008 - 6:46 pm EDT

U.S. CARRIERS ARE EVER SO SLOWLY BEGINNING TO SHARE consumer demographics and other coveted information in an effort to deliver highly targeted wireless ads. And Sprint Nextel Corp. — very quietly — appears to be leading the way.

Advertising agencies and high-profile brands have long salivated over the mountains of data that network operators have accumulated about their customers, and for good reason. A typical profile of a postpaid user could include everything from name, age and billing address to location, usage habits and real-time location. Want to send a pitch to a middle-aged road warrior who’s constantly checking his phone for sports scores? Easy enough. Looking to target women in their early 20s who live in college towns and carry an iPhone? Done.

“We have to be very careful, but it’s sort of the Holy Grail,” Tribal DDB Worldwide President Paul Gunning said at the Mobile Marketing Forum in New York three weeks ago. “We could know where these people are, who they are, we could even know their credit history.”

But carriers have been terrified to share such sensitive information lest they be seen as violating the trust of their customers. So mobile advertisers often find themselves with precious little to go on when it comes to delivering the right message to the right user at the right time.

“When you think about it, there is less information for us to act upon than in most media channels,” said Michael Collins, CEO of Kinetic Mobile, a free-standing mobile ad agency within the giant WPP Group Plc. “There’s far less than on the Internet, and in some cases there’s less data to act upon than print.”

Sprint Nextel is stealthily moving to change that, however. The carrier — which declined to speak to RCR Wireless News for this story — in 2006 became the first operator to sell ad space on its deck, tapping Enpocket (which has since been acquired by Nokia Corp.) to monetize inventory. And Enpocket has stepped up its efforts lately, sharing general information with advertisers in an effort to spur revenues.

“Sprint invited me down with about four other (mobile ad executives) to talk about what they can do differently,” said Andy Miller, co-founder and CEO of Quattro Wireless, a Boston-area mobile ad startup. “Sprint said, ‘What do you guys need to make (mobile ads) more successful?’ I think they had a misconception that we needed (precise location information), and we said we just need an area code. It’s not the local pizza guy advertising in mobile, it’s the car dealers of New England.”

And it’s Sprint’s foresight that is making such efforts relatively painless, Collins said. The operator installed forward-thinking privacy policies early in the game, eliminating the need — thus far, at least — to contact customers in response to policy changes, potentially drawing attention to itself and alienating subscribers.

The strategy contrasts with that of Verizon Wireless, which last year drew attention when it sent letters notifying customers that they had 30 days to opt out of a program that allows the carrier to share customer proprietary network information (CPNI) with its partners.

The notice, which was quietly included in customers’ monthly statements, drew the wrath of a few industry observers, one of whom called the move a “sneaky tactic.”

“Sprint had seen this coming, and for whatever reason had properly worded their privacy policies to protect consumers, yet make some of this data available for marketing purposes,” Collins observed. “They were very progressive in making certain parts of demographic information available to serve ads on.”

Sprint’s move is a very small first step for U.S. carriers looking to monetize subscriber information, but Google Inc. may be looking to move the needle in a much more dramatic way. The Internet giant’s Android effort, which is set to come to market by the end of this year, will seek to leverage consumer data much more aggressively than today’s network operators. If Android manages to succeed by using the sensitive data to deliver targeted ads — and, presumably, to subsidize service and handsets — some carriers may have no choice but to follow suit.

“What we’re champing at the bit to see is if that model can win out. If Google’s model can win it will dictate a lot,” Collins said.

“If Google can get some traction with their model, it would be exciting, and you’d see a better balance of power showing up. Once that balance of power is there, and there’s more competition for eyeballs and marketing dollars, you might start to see some real innovation.”

SOURCE: Sprint Nextel wades into targeted-ad waters - RCR Wireless News