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Moving targets; Smartphones and tablets

What advertisers love, and what they hate, about mobile devices

MARKETERS' MANTRA OF reaching "the right person, with the right message, at the right time" has become a lot more achievable in the past few years. Mobile devices, unlike desktop computers, are typically used by only one person, which is a great help to advertisers who want to target specific users. Being closely connected to people's personal lives and daily habits, the mobile device is the true "mini-me". This year, for the first time, Americans will spend more time on mobile devices (not counting talking) than they do on desktop computers. In Britain that tipping point will probably be reached in 2015.

Global spending on mobile advertising has advanced rapidly, nearly doubling to $19.3 billion between 2012 and 2013, according to the IAB, an industry group. Mary Meeker, an internet analyst at Kleiner Perkins, a venture-capital firm, has noted that advertising on mobile devices has not kept pace with the amount of time people spend on them. In the next few years mobile will be the fastest-growing part of internet advertising.

From a commercial point of view, a mobile's best feature is its location-tracking capability, which shows exactly where the phone is. Advertisers are experimenting with "geofencing", which allows them to reach people within a particular area. For example, 1-800-Flowers, a flower retailer, has tried sending ads to mobiles within driving distance of a shop. Pantene, a shampoo brand owned by Procter & Gamble, got together with the Weather Channel to target people with ads for specific hair products to suit the weather in their postcode.

Beacons--small wireless devices that use radio signals to communicate with nearby mobile phones and tablets--will become an integral part of in-store marketing within a couple of years, says Ann Lewnes, chief marketing officer at Adobe, a software firm. Some retailers, including Duane Reade, an American drugstore, and Tesco, a British retailer, are already testing them. Beacons can communicate with apps to offer consumers coupons and deals. Within large stores they could also help with mapping and navigation.

Advertisers are also starting to think about other special features of mobile phones. One of them is voice-recognition technology, which would enable consumers to talk back to ads, says Michael Barrett of Millennial Media, a mobile-ad exchange. In India, where not many people have smartphones, companies such as Facebook are experimenting with "missed call" ads, which allow a user to make a brief call to an advertiser and get him to ring back with an ad along with some entertainment, such as a sport score or music.

Too small to count

In spite of the attractions of mobile advertising, there are several reasons why companies are proceeding with caution. Some worry about the accuracy of the data they work with, including location and demographic information, because mobile is so new. Smartphones' small screen size, too, remains a problem, which helps to explain why mobile-advertising rates are lower than those for desktop display. Mobile consumers do not pay much attention to "baby banners" at the bottom of a screen, and spend less time on long-form content, which reduces their tolerance for long video ads. Ads that encourage people to download apps account for a large proportion of mobile-ad spending. Firms have had to retool their advertising offerings for mobiles to allow for the small screens and the different way that people use them. Google has introduced a format that allows users to ring firms whose ads pop up when they search.

Most firms have found that people engage more with "native" ads--which camouflage as content within apps--because they have to scroll through them when reading, and the small screens make it hard to spot the tiny icons indicating these are "paid posts". But even on desktops the line between content and advertising has become less distinct. Ben Edelman, a professor at Harvard Business School, notes that over the past decade the yellow background which used to mark the ads in Google's search results has faded every year and has now disappeared altogether. These days search ads just show a miniature "ad" icon.

Consent to being tracked is more complicated on mobile phones, where firms' privacy policy (assuming they have one) comes in very small print, and many consumers are not tech-savvy enough to know when their location is being monitored, even if they have agreed to it.

Some apps do not make it easy to tell how they collect information and with whom they share it. America's Federal Trade Commission has already brought a handful of cases, including against Path, a social-networking app that was taking information from address books on people's phones, including names and numbers, without their consent or knowledge. Another one was against Goldenshores Technologies, a firm whose free flashlight app did not tell consumers that it was sharing location information with third parties, including advertising networks.

Beacons will cause new complications, because they can open up apps without a user's express permission. "No one has yet defined what is OK from the standpoint of consumer privacy, because mobile is a brand new platform," says Adam Foroughi, the boss of AppLovin, a mobile-marketing company. "Nothing has been regulated."

Most importantly, advertisers are worried about annoying their customers. Consumers have come to expect (if not welcome) advertising on desktop computers, but not on their phones, which they regard as more personal. "I don't want to cross the line with a client and repent for making a mistake. There's no commercial upside to that," says John Wren, the boss of Omnicom, the advertising company. So advertisers are proceeding with caution.