Media: All About ... Advertising via 3G technology

3's streamed video ad marks a milestone for the platform.

It was perhaps unfortunate that the 3 mobile network chose 1 April as the date to announce that it had three million third-generation customers in the UK.

But, in fact, it turned out to be true. And it's hardly 3's fault that some us find it so hard to take the next generation of mobile technology seriously. After all, 3, which is owned by Hutchison Whampoa, has put a substantial amount of marketing spend behind its fledgling service.

Many of its rivals haven't, however - and though the likes of Vodafone, Orange and O2 spent billions acquiring their 3G licences, they have seemed lukewarm when it comes to developing them. Vodafone, for instance, is number two in the UK market with somewhere in the region of 300,000 3G customers, but its network provision has been criticised in some quarters for being patchy.

And then there are those who can recall the embarrassing debacle that was WAP - the second-generation mobile technology that failed to get even close to the hype it generated in launch mode.

Ironically perhaps, now unsung but with the technical gremlins removed, WAP is flourishing. But, despite its problems in this country, 3G is clearly progressing - and last week's announcement by 3, that it is running the first "streamed video" 3G ad, is being heralded in many quarters as a milestone moment for the platform.

It's basically a trailer (repurposed by the Creative Partnership and technically formatted by 3 with input from the digital media agency MEC Digital and the mobile marketing specialist Flytxt) for the British film comedy It's All Gone Pete Tong.

This, new-media evangelists say, is the UK debut of the ultimate 21st-century advertising medium - highly targeted, highly accountable moving pictures delivered on a mobile basis, anywhere, anytime.

1. Launched in 2003, 3 is marketed as a "video mobile network". One of its big selling points is the fact that it offers high-speed, high-capacity streaming. To pursue an internet analogy, if previous mobile technologies offered the equivalent of a dial-up connection, 3G is the broadband equivalent.

2. Despite spending billions securing their 3G licences, the other mobile companies have been relatively slow to develop their propositions. For instance, Vodafone spent £6 billion acquiring its 3G licence in the UK and £14.7 billion in total around the world. The total spent by 3, Vodafone, Orange, T-Mobile and O2 on UK licences came to £22 billion.

3. Orange, which launched its 3G service in December, announced last week that it will become the first mobile operator to offer live TV on the latest Nokia 3G phone. It will offer free access to nine channels, including CNN and Cartoon Network, plus live streaming from reality shows such as Big Brother.

4. Last year, Vodafone spent £13 million on the launch campaign for its Vodafone Live! 3G services in November. It wants ten million 3G subscribers by March 2006. O2 launched in February with no real fanfare and thinks take-up will be slow.

5. An Ofcom survey discovered most UK consumers still do not understand what 3G can offer. Meanwhile, interim technologies have continued to gain ground. At least half of UK mobiles are WAP-enabled or operate on the 2.5G platform. Some analysts believe the market will be satisfied with these services.

6. There have been several UK ad campaigns offering video downloads to 2.5G phones, such as the launch of the Adidas 1 shoe. New digital campaigns coming onstream this year, such as the Peugeot 1007 launch, will continue to offer 2.5G video downloads rather than streaming.

7. However, 3G is very clearly the future, according to a report on the Japanese market by Flytxt. Japan already has 70 million 3G subscribers - around half the population. In 2003, mobile marketing spend was estimated at around $100 million, including banner ads, promotions and customer acquisition schemes. Last year that had risen to $177 million.

8. Flytxt remains confident that 3G will soon start emulating this pattern in the UK and is forecasting that 3G ad revenues will grow by more than 50 per cent a year for the next five years.

WHAT IT MEANS FOR ...

ADVERTISERS AND AGENCIES

- The hype so far has tended to focus on the video streaming capacity of the platform - for instance, the ability to access Premier League goals or watch television channels. So some in the advertising business have assumed that this may be an environment in which TV commercials will flourish.

- But mobile handset screens are relatively small, so the images that make the most impact are close-ups, graphics and simple yet dynamic action sequences. Few 30-second television commercials sustain the concentrated visual intensity needed.

- The 3G experience is more about browsing than opting in to a TV-type linear flow. So internet advertising models will be more important. According to Pamir Galenbe, the marketing director of Flytxt, the big opportunity will be for advertisers to "own the screen" - for instance, through various forms of sponsorship.

MOBILE COMPANIES

- The prospect of an additional revenue stream will make break-even seem that little bit more achievable.

- On the downside, there's a relatively high charge levied on streamed commercial messages and there's no clear agreement on who should pick up that bill. It's likely in the early stages of the medium's evolution the advertisers will make their commercial content free in the early days of a campaign but thereafter ask the consumer to stump up.