CLOSE-UP: LIVE ISSUE/MOBILE PHONES - T-Mobile and Orange overlap in ads for picture messaging. Networks risk missing the bigger picture with their ad strategies

The stuttering mobile phone market has just found what it hopes will be a new financial lifeline. After paying the Government billions of pounds for the 3G mobile licences, the mobile phone networks are pinning their hopes on getting a return from some of their investment with the new picture- messaging services.

At around 40p a go on Orange or £20 a month with T-Mobile, picture messaging (or multimedia messaging) will increase the revenue derived from each subscriber. But, more crucially for the network operators, the idea is it will kick-start the stagnant and saturated mobile phone market, which has stalled since the spectacular disappointment of WAP technology.

The picture-messaging technology, although 2.5G rather than 3G, will give consumers a small taster of the delights that 3G can offer. These include links to data services and phones capable of playing videos.

The TBWA/London managing partner Gav Thompson, who works on the Hutchison 3G account, thinks the precedent has already been set. "Picture messaging is a great stepping stone to 3G and if the evidence from Japan is anything to go by, there will be huge demand, he says.

The operators hope that the revenue they derive from data services, including picture messaging, will make up between a fifth and a quarter of their income by 2004. Thompson thinks that a sizeable chunk of this could come from cannibalising the profitable postcard market.

All this, of course, depends on the levels of take-up - clearly it's no use being the owner of a picture-messaging-enabled phone if no-one else has one.

Because of the importance of picture messaging, the networks have embarked on expensive high-profile advertising to promote the service.

T-Mobile was the first off the blocks with a campaign that hit the airwaves in June through Bartle Bogle Hegarty. This was followed this month with an ad created by Lowe for Orange. Both campaigns seem to follow a similar vein - people going about their everyday business before being confronted by the image of a face.

BBH used a picture of a baby girl that appears on posters, bags, T-shirts and television screens, while Orange uses a similar contrivance but this time the face is an image created by the natural environment. Although the other networks have yet to unveil their work, there is a clear danger that the advertising will all morph into one homogeneous lump, much like the seemingly indistinguishable traditional mobile phone campaigns.

Matt Gladstone, a planner at Bartle Bogle Hegarty, agrees that achieving standout in mobile phone advertising is a challenge but claims the "baby campaign allowed the agency to create an incredibly strong icon.

"The baby's face went across everything and could be used across other media than just TV, he says.

Gladstone also thinks that being first to the market with picture messaging was extremely important to his company.

"What T-Mobile has done is be the first to launch so the others are catching up and there is a lot of kudos attached to that, he says. "Picture messaging is the most important development since text and our strategy is to make the most of imaging, because pictures are emotionally important to people."

Because of the nature of the technology and the cost of owning a picture-messaging compatible phone - around £200 - the advertising so far seems to target the affluent young early adopter.

But Gladstone points out that although only some phones will have cameras in the future, all phones will have the ability to view pictures, so the target market is really everyone.

"No network owns the technology for picture messaging - it's a universal service and the 'baby' campaign was asserting T-Mobile's credentials in the first place, he says.

Because of the intense competition in the market, Thompson was unwilling to discuss TBWA's strategy for Hutchison.

But Charles Vallance, a partner at O2's agency Vallance Carruthers Coleman Priest, disputes Gladstone's claims that being first gives you a head start. He believes that, even though the technology is universal, the networks also have to get it right before a campaign can be launched.

Vallance thinks that some agencies are missing a trick by only concentrating on the picture aspect of the new technology and that the campaigns so far seem a little lost and detached.

"The main point is that it's not just picture messaging - it also includes sounds and text. The competitors all seem to have conspired to focus on just the picture service, which is odd marketing to say the least, he says.

Vallance promises that VCCP's advertising for O2 will be going for street excitement, something he thinks has so far eluded the other campaigns.

"Picture messaging, and the other associated technology, will be a cultural phenomenon. The target market is mobile-initiates, for example, the people who took up text messaging and developed that into what it is now, he says.

Analysts expect it will be months before picture-messaging-enabled mobile phones take off, and there is unlikely to be anything like a run on the handsets until Christmas at the earliest.

And one criticism levelled at the mobile phone operators is that they have not co-operated with one another in ensuring that picture message technology is compatible with other networks. For this reason, the introduction and expansion of the technology could be hindered by obstacles of their own making.

Commercially, picture messaging is incredibly important for the debt-laden networks and being able to ensure picture messaging takes off is one of their biggest challenges. Between them the companies have spent £65 billion acquiring the 3G licences and have yet to reassure the City that there will be a return on the investment.

Without successful advertising making the technology compelling to the consumer, the launch of 3G services looks even more remote. This will mean that the mobile companies' original investment in acquiring the licences might never be recouped.

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