Commercials On The Go
Laurie Burkitt, 07.14.09, 07:24 PM EDT
Michael Jackson‘s memorial service drew a surprising number of eyes to TV sets July 7. Even more surprising was the number of people who watched the farewell on their phones–nearly 1 million.
Turns out there are more than a few folks rallying around 2.5-inch screens to watch breaking news or their favorite shows, if only a few minutes of them. Over 13 million Americans tuned in to handsets in the first quarter of the year, a 52% spike from the year before, says Transpera, the largest mobile video ad-network in the U.S. If the numbers keep rising, so will the ad dollars–or at least that’s the hope of television networks, which have been mourning their own loss: $1.5 billion in ad revenue in the first quarter of 2009, a drop of nearly 11% from $12 billion at the same time last year, says the Television Bureau of Advertising.
Television networks and viewers have shifted from the tube to the Web in the last few years. Now they are migrating to mobile devices. CBS ( CBS – news – people ), ESPN, MTV and Disney ( DIS – news – people ) have launched programming specifically for phones. Some are live broadcasts that air the same commercials as seen on TV. Others are on-demand videos with pre-roll ads, similar to what is found on video-streaming site Hulu (which is expected to launch an iPhone application soon).
In late-April MSNBC rolled out a Rachel Maddow iPhone app, one of the network’s three for the smart phone. Fans can watch three- to five-minute snippets of the show as well as the entire episode. The iPhone capability, along with formats for other phones, including the Blackberry and Palm Pre, pulled in $750,000 for MSNBC in June.
Mobile efforts aren’t raking in enough to make up for the ad drop from TV advertisers, says Jeff Maurone, MSNBC’s product manager, but they are bringing in some extra cash. The U.S. mobile TV broadcasting market, subscription-based and advertising-funded, was estimated at $200 million in 2008. It is expected to jump 50% in 2009, says research firm Strategy Analytics. Advertising across all mobile platforms, including mobile display and short messaging, jumped 35% to $648 million in 2008.
Advertisers, including Ford and Microsoft ( MSFT – news – people ), are buying spots within mobile network content because it helps them reach younger audiences, says Frank Barbieri, chairman and CEO of San Francisco-based Transpera. Other brands prefer it because the phone is captivating and free of clutter. Screens are too small to have multiple ads on one page and mobile viewers can only activate one Internet page or iPhone application at a time. The average cost for ads on mobile TV ranges from $5-$10 per thousand impressions for a banner ad and $30-$40 per thousand impressions for video.
Mobile TV is rather new to the U.S., as American telecommunications have been slow to develop cellular technology that would enable video viewing, and consumers–until now–weren’t interested in it. South Korea led the development, and now half of the country’s 45 million cellphone users are watching from their handsets. Japan and Hong Kong have latched on to the practice as well.
Now the U.S. audience is expected to grow, as broadcasters and technology companies have created a technical standard for transmitting video to portable devices. The technology, known as Mobile Digital TV (DTV), will be tested in Washington, D.C., later this month, and the standard will be set by September. Five of its local TV stations, including local affiliates of CBS, NBC, PBS and Ion, will broadcast programming fit for phones.
Emeryville, Calif., company MobiTV, which provides subscription-based content across 20 mobile networks, such as AT&T ( T – news – people ), Alltel ( AT – news – people ) and Sprint ( S – news – people ), boasts 7 million subscribers, a 600% growth in the past three years. Qualcomm‘s ( QCOM – news – people ) subscription fee mobile television service, Flo TV, is in the midst of expanding to 100 major U.S. cities.
The million viewers who tuned into Jackson’s memorial service are just a start. “Mobile TV will only get bigger,” Barbieri says. “And for advertisers too; they know that when you do something on your phone you’re paying attention.”