This is part 2 of a 2 part article. Read the first part here.

While our views on this kind of advertising have evolved since the publication of the original research note, our basics beliefs remain unaltered. However, we have recently started to think about other ways in which mobile advertising could work. The mobile device is increasingly playing the role of an entertainment provider, fostering an evolution in user behaviour where it becomes acceptable to look to the handset with no specific purpose in mind, simply to fill some ‘dead’ time.

Blyk, the advertising-funded MVNO which plans to launch in the UK later this year, has talked about the idea of making advertising a form of enertainment in itself. When we met with Blyk’s management in the pre-launch phase, they spoke of encouraging a new form of multimedia content which has an inherent value to both the user and the advertiser. In traditional media, this kind of behaviour can be observed in customers who buy magazines like Vogue or Elle just to look at the latest advertisements, or cinema-goers who arrive early to ensure they can see the latest trailers.

This is when advertising starts to become more about ‘exploration’ and less about ‘mission’.

I met recently with Stephen Dunford, CEO of Celltick, a company pioneering a new method of delivering advertising to mobile devices. Its Livescreen platform uses the cell broadcast channel built into almost all GSM networks and handsets to push advertising content to the idle screen. This is the same technology which can be used to display the cell ID on your device, but hitherto has not been utilised by most operators.

It has several advantages. First, it is already widely deployed. The underlying technology has been shipping in network equipment and handsets for many years. The additional investment required to launch the service commercially in each market is minimal. According to Dunford, the Celltick system is powered by £50,000 to £100,000 worth of back-end hardware and bar a small set-up fee, Celltick works on a revenue share basis with the operator.

In technical terms, the use of cell broadcast also has benefits. It does not require any user set-up or intervention to deliver advertisements to the idle screen. The software is installed via a SIM Toolkit application or pre-loaded onto open OS devices. It sits in the background accepting new content without a traditional wireless data connection being established or any prompts from the user.

The resulting user experience is excellent. Dunford demonstrated an example where text links scrolled across bottom of the screen on a Nokia N70. The Celltick software caches a limited amount of information about each advertisement on the device, so the first click provides an instantaneous response without needing to connect to the server. The user is presented with a simple sub-menu, providing options such as calling a number for more information, opening a mobile internet site or downloading content. Dunford was keen to emphasise one of the key design requirements: nothing should ever be more than two clicks away.

Celltick ‘s system is already deployed on about 40m handsets worldwide, primarily with operators in emerging markets such as Russia, India and Thailand. Some are using it to promote sales of their own content, but increasingly they are opening the system to third party advertisers.

In Thailand, for instance, Celltick worked with operator AIS and automotive manufacturer Honda to create a series of advertisements targeted at the large number of moped owners in Bangkok. The campaign was built around an infomercial-style offering providing ‘life saving’ tips to the millions of moped owners who travel on the capital’s dangerous roads. AIS and Celltick were able to generate about 5,500 responses (defined as a user completing the request for more information) per day by broadcasting the advertisement twice daily. The campaign generated 110,000 responses in total from a target audience of approximately 5 million.

This is a very different kind of advertising. It is more generalised and presented in a way which does not interfere with the user’s process flow, but rather waits in the background for a spare moment when the customer is looking for something to occupy their eyeballs. This would suggest it is of lower overall value than the more targeted methods described previously. However, Celltick’s low deployment and support costs could still make it worthwhile.

Dunford cited another example of their work with AIS, where whisky brand Johnny Walker used the system to promote an exclusive party they were holding in Bangkok. Johnny Walker paid about USD 1.00 per lead generated in a market where the average mobile content download sells for about USD 0.30. In this scenario and with Celltick’s revenue share approach, it is easy to see how operators could make an attractive return on investment.

Celltick has worked closely with the operators, advertising agencies and clients during the start-up stages and Dunford sees a continuing role for the company in liaising with marketing firms to share its insights into customer behaviour, editing the content of the advertising channel and scheduling advertisement delivery to get the best response. He believes Celltick’s responsibilities will evolve as the agencies become more adept at building mobile campaigns, but describes the current level of expertise in the creative community as ‘patchy’. As this improves, Celltick will rely more on the agencies to source and manage the advertising clients, while it will broker the relationship between the agencies and the operators.

The value of being able to understand the customer and pass that knowledge on to others in the value chain is clearly not lost on Dunford.

The service is the best example of an idle screen advertising experience I’ve seen so far. However, I have some concerns. The use of cell broadcast is a unique differentiator, but it may also be the system’s Achilles Heel: there are limitations on the type of content which can be sent using the existing technology and, while standardisation work is underway to enhance the system, it may be some time before this is completed. This may cause some operators to hesitate when considering Celltick as a long-term advertising solution.

Also, technology suppliers such as Celltick have a poor record of maintaining a high value role in the industry pecking order. Dunford has correctly identified that developing editiorial, scheduling and customer insight competencies will give the company its best chance of success in this area, but there is the potential for strategic tension to develop if operators and agencies feel they can boost their margins by cutting out the ‘middle man.’ There will always be other suppliers who can fulfill Celltick’s role but are willing to do so in exchange for a lower percentage of revenues.

That said, the company has some crucial advantages, not least of which is momentum: with more than 40m users, 90 percent of whom opt to keep the service switched-on and 40 to 50 percent of whom are regularly clicking on its ‘teasers’, Celltick already has an attractive platform to lure advertisers. In the mobile advertising land-grab, Celltick has quietly stolen an early march on its competitors.

I’d be very interested to hear from anyone who has views on this subject, so please post your comments on mobileuserexperience.com.

The MEX conference on 2nd/3rd May 2007 will address this topic in detail and, through our unique event format, everyone who participates will have an opportunity to shape the agenda. The session will start with a 20 minute presentation from one of the leading executives in the mobile advertising space (who we will be announcing shortly), after which there will be 10 minutes for Q&A. The conference will then break into small workgroups of 8 – 10 people for 30 minutes of discussion facilitated by our user experience experts – this is your chance to respond to the presentation and share new ideas on mobile advertising. When the breakout groups return to the main conference room, there will be a further 40 minutes for exchanging insights between breakout groups and an open debate, led by the chairman.

Delegate attendance is priced at GBP 1349 for the 2 day conference – to register and see details of our other sessions, please visit www.pmn.co.uk/mex/register.shtml.

This is part 2 of a 2 part article. Read the first part here.