Here’s a case from Sweden I have been part of myself as the advertiser. Publisher: Aftonbladet (largest tabloid in circulation and also top 10 in Sweden in terms of unique visitors on their mobile site). Initial offer: CPM 28USD list price. This was negotiated down to 4.65 USD. Negotiation tactics was mainly to say no and be slow in responding to emails. The campaign started but CTR was far below what the publisher had stated.  Break even would have been at around 2 USD. What can be done?  Devaluate entire inventory. Yeah, right. Like hard pressed media companies would do that. Prices will come down eventually when publishers get comfortable with long-term partnerships and yearly budgets from its partners instead of having to chase a multitude of advertisers for test campaigns at inflated prices.

The craft of susccessful ad campaigns is the same as for online advertising. It requires good analytics and close attention, adoptions and changes. Many versions of banners and copy, clear call to action, mix in many channels. Mono-channel campaigns can be a high risk. On the surface two channels might look very similar, yet perform very differently. Two operator portals with same placement of ads can be hugely different.

Search advertising in the mobile is coming of age. In many cases it has tremendous performance in CTR, but currently many markets have too low volume to be the main driver. However it is a growing force and it is good to start working this channel already now. Google seems to have somewhere above 5% of their searches from mobile devices now. This can only grow.

Business models are slowly becoming transparent and spreads the risks in a better way than CPM deals where you pay for a number of showings of an ad. This as opposed to the “Google-model” where you only pay when someone click on your ad. Even better, and common on the web are CPO deals where you only pay when you get an order/purchase/sign-up or whatever you define as the actual event where the consumer becomes valuable to you as an advertise. These type deals can ease the pain for advertisers and might be the road to build a steady volume of recurring ad buys in mobile channels.

Targeting can also be improved. Here the source of the targeting data can vary. If the publisher has data in terms of registration or profile data like age, gender and interestes etc. this can be fed through to the ad server in real time. More and more ad networks are capable to make use of this targeting data now. It is also an area for the mobile carrier to be part of the advertising value chain. They have user data as well that adds value at the ad serving moment. One is the position of the phone for instance. Other data are customer data and behaviour. This of course requires consent from the consumer to have its personal data used in this scenario. If benefits can be communicated properly to the consumer opt-in should follow.

There is a caveot with location and advertising. Location data is often touted as the holy grail of advertising. In many scenarios it is questionable. Just because O2 knows that my phone is in my pocket as I walk down Kings Road in London, they don’t know where my mind and body is heading. Is it the Starbucks on the corner? The Barclays bank branch office there? The Boots next to Starbucks or the H&M store across the street? Opt-in local advertising is one solution that might be more powerful. Sign-up with stores/shopping centers where you usually shop and get offers from them at an agreed frequency. This allows advertisers to run micro-campaigns with huge returns. The small independent watch store can target a campaign for a Saturday to sell 4 more watches and turn a profit on that. It also allows for flash campaigns – sell out of overstocked items. This last example fits well with the mobile loyalty club 2.0 presented in the post last Friday

Another large area that use location data is of course augmented reality (AR) services. Layar is probably one of the more prominent ones. It is only with good use of positioning that we unlock one of the most hyped values of the mobile. So sorry for  uttering these words that would generate “boo!!” cheers and tomatoes if mentioned from the stage at any mobile conference. “The mobile is always with you”. Well, if the service knows where you and your mobile are, the service can do more for you. Pretty basic stuff. As often with new technology entertainment is the first area of application. Therefore we see gaming and online dating as the first obvious areas of application. Search is the first utility type application and it makes sense. (Try the wikipedia layer in Layar for instance and you will get a good WOW feeling!)

Many express fear of breached personal integrity with LBS services. That is often a misconception, especially with all the services I have mentioned so far. They are all location aware only and are not revealing to anyone else what your location is. As mentioned above, the service you use need to know where you are to deliver real value to you. This is all seamlessly happening in the background.

Take the dating scenario. For the user the end goal is to meet a new person in real life. With location in the matching algorithm you get more value. Now you know the persons on top of the list fits your criteria best and is nearest to you. If you want to send an invite to meet up for a coffee this afternoon it is likely you are near enough to make that possible. Disclaimer: I am the founder of Souldate, a full-blown dating service in your mobile with positioning.

Games and communities with location involved has a large potential. From the location information you can extend that thought to RFID and touch based things to prove you have been at a place or met a person. This opens up for scavenger hunts, detective/mystery games to mention a few. Stand alone titles/services in this area or even more interesting maybe is to extend this into advertising in sponsored games.

There are some impediments of course. The cost of LBS data from providers of the data, be it operators or aggregators. A cost per location request will kill most ideas. Companies building business model on monetising location data sold wholesale are doomed. Way forward via APIs to data from handsets with apps for positioning or GPS. Examples are of course Android, iPhone and Vodafone 360 API. This is also one great example why carriers do not have to become dumb pipes. They can be smart pipes by offering these APIs and others.

What are your thoughts on LBS? Is it still BS or will it really happen in 2010?

This week I am launching a new section on the site called Expert Articles. The aim is to gather information around a few topics where I think a deeper article that develops over time would add value. The initial topics will be LBS, mobile gambling with a focus on poker and how to monetize mobile social networks. I will write some myself but also invite guests to add their expertise and experiences. Stay tuned!

LBS has been one of the long lasting hyped functionalities in mobile services. One of the classic cases is the location aware advertising model. I am walking down a street, approach a Starbucks and voila I get an MMS with a voucher for a half-price latte. Only thing is, I need to be signed up to or have downloaded an app that tracks me in realtime. But the big challenge is the targeting. Just because I am approaching a Starbucks does not mean I am in the mood for coffee. I might be on my way to the health clinic next door to Starbucks for an appointment with a cognitive therapy expert to kick my caffeine addiction.

But location awareness has a strong value added in many cases. Lately I have spent much time thinking about LBS in the context of dating and matching. The reason being the recent launch of Souldate (that I am a shareholder of, to be clear and transparent).

In the dating scenario locaion awareness makes a lot of sense. Even without precise realtime location a la GPS. Just a quick positioning at sign-in of the service that is then used to rank all matches in order of geographic proximity without revelaing the location of any member adds value. As a user you know that the people at the top of the list match your criteria and vice versa, they are also the ones nearest to you. Since dating services are all about getting people to meet in real life, I know that the top results are the ones that most likley are easiest and quickest to meet up with.

Makes sense? Let me know what you think. Take the poll!