Yesterday I wrote about the likely slow demise of the so-called mobile internet and mobile operator portals (if they don’t shape up). But what does this portend for mobile advertising?

Just this week the Media Guardian in the UK made the case for mobile advertising in article titled Pocket-sized powerhouse. They trot out familiar pro mobile as ad platform arguments:

• Unlike the TV or the PC its always switched on.
• You always have it on you.
• It’s possibly the most interactive gadget we have (not true but it is interactive)
• 95% of us have one.

“Mobile has the potential to be the most exciting advertising medium ever,”

That’s marketese hyperbole in overdrive for you. Thanks Geraldine Wilson, vice-president of Connected Life at Yahoo! Europe. Connected Life handle the display ads on mobile portals for Vodafone, T-Mobile and 3.

Yes. Mobile as advertising medium has never been knowingly undersold.

These arguments for mobile advertising have been made for quite some time now.

But as the Guardian asks quite rightly, if mobile is such a good advertising medium, why does it account for less than 1% of all ad spend?

General SMS campaigns seem to be well and truly over. Brand owners have figured out how unwelcome this intrusion is in our personal space. Such is the personal nature of a mobile that the reaction it generates is even stronger than the reaction one gets from an ad in your Facebook personal newsfeed.

Whether these ads can be tailored and targeted to such an extent that consumers welcome them, AND brands will take the risk, remains to be seen.

I concede that the mobile operator portals have made some money selling display ads. In the US Admob have sold quite a lot on all manner of sites.

But as I mentioned in my previous post. Operator portals are about to start discovering what Yahoo! and MSN did on the web not too long ago. If your product is not as good as a rival’s, your customers will go to your competitor no matter how much cross promotion, and brand awareness you have. They are likely to begin a slow bleed in their audience.

As mobile devices sophistication grows, there is a chance that mobile ads will just become part of the general web ad mix. The only panacea I see are creative use of location based targeting, mapping and other mobile typical stuff like the accelerometer. Only that can make reaching customers via mobiles more relevant. Time will tell.

In the short and medium term brands looking for the wow factor will have to look at brand sponsorship of mobile applications or building them themselves. This includes viral strategies like Carling’s recent iPint application, which converts your iPhone into an interactive pint of virtual lager.

Advertising as content so to speak. You will hear about this a lot.

Interesting to note the plethora of fan videos of the iPint on YouTube.

According to Jason Calacanis the amount of money made from the selling of virtual goods in virtual worlds in China exceeds the amount made from all internet advertising in China.

Techcrunch50, the list of 50 (actually 52) hot new tech start-ups being announced today focuses heavilly on virtual worlds. In a video (below) Michael Arrington and Jason Calacanis decribes the growth in virtual world technology and membership outside the US as a major trend. Also that the cost of setting up virtual worlds is falling.

Virtual worlds are a youth phenomena. So brand advertisers looking to reach that allusive 16 to 24 year old demographic should take note (See my previous post – Can the joy of text satisfy the brand builders? ).

Unfortunately for advertisers the business model making traction so far is mainly the selling of virtual goods. A phenomena also seen on Facebook. But there are some companies looking to develop virtual world advertising.

The purported influence of the internet and digital has been said to be threatening the media landscape with enormous change for some time. But could it be that major shifts are now actually taking place?!

A few news items that recently caught my eye. The Lostremote blog reports an increase in the consumption of news online, a good thing, because The Media Guardian reports that not even the interest created by the stunning success of the British Olympic team in Beijing could prevent all the British quality dailies registering a year-on-year fall in circulation for August.

But theirs trouble on the advertising front. According to Techcrunch the decline in newspaper ad revenue is accelerating. Yes, and even their ad revenue online is decreasing.

In TV the situation is as dire. The Media Guardian reports that although event shows and soaps are holding up, the traditional UK TV peak time has been decimated.

But it is the layer beneath the top tier where ratings have collapsed and hit the average peak time share, defined as between 5.30pm and 11pm, of the main channels over the past five years. BBC1’s share of evening viewing has fallen from 27% in 2003 to 23.1% in 2008 to date. On ITV1 the decline is more marked – from 28.4% to 21.8% over five years. Among 16-to 34-year-olds it is steeper still. BBC1 fell from 23.9% to 17.1% and ITV1 from 23.6% to 15.6%.

This comes hot in heels of news of media entities that are making money.

Applications can make money. Some of those apps on Facebook are making money. (Yes, even the inane ones.) And so are some of the useful apps on the iPhone making decent returns in sales.

And there has been other more predictable news: Search based text advertising is making even more money. The advertising spend has not disappeared. It has moved.

The result? Google is not just withstanding the advertising downturn. Google’s search based revenues are still growing according to the Wall Street Journal. Even when other forms of online advertising (like those on newspaper sites mentioned above) declines.

Spending on Internet advertising is climbing at a healthy clip — rising 20% in the U.S. in the second quarter — and growth forecasts are strong despite the weak economy. But that growth isn’t being enjoyed by everyone.

It’s internet display advertising in particular that has taken a massive hit.

The gap is widening between spending on simple search ads, Google Inc.’s core turf, and spending on flashier display ads, which companies such as Yahoo Inc. and Microsoft Corp. had hoped to use to gain ground on Google.

Faced with a slowing economy, advertisers are sticking to what they view as the safest way to reach online customers directly: the plain text…

Another item of note. In line with the failure of online display ad revenue is the news of the failure of online video ad revenue. Even Google is not making much money from YouTube yet.

And Rhythm New Media (disclosure – I used to work for Rhythm), the groundbreaking start up that placed dynamically targeted ads around a number of UK operator’s mobile videos, has announced it’s pulling out of the UK. It’s worth noting that Rhythm has recently released a very succesful iPhone application in the US.

What to make of all this?

If your an advertiser – It’s been the case for some time that if advertisers wanted to reach young people, they could not really do so through TV. This trend is accelerating. This demographic is to be found online. Expect this trend to spread to older demographics sooner rather than later.

If your a brand owner one has to wonder how and where your going to advertise to build your brand. With TV audiences dwindeling and online growing the answer should be – on the net. But successful brand advertising is measured in reach (the amount of people who saw and add) and frequency (the amount of times they saw the add).

With online display advertising the former is hard. Users are often spread over thousands of websites, not a few TV channels. The later, how many times users have seen an add, can be even harder to achieve or measure. Unlike TV advertising which interupts and dominates TV viewing, web display ads rarely do. Have people really noticed your ads?

Perhaps it’s time to sponsor those large live events?

If your a creative type there’s reason to be worried. Particularly during this recession and particularly if your working in video. You might want to take a cource on search engine marketing and Google Adwords, but job satisfaction is unlikely to come with Google Adwords.

If your a new media agency specialising in flashy display ads, its time to consider moving into building apps or perhaps social media.

If your a newspaper or magazine or TV channel one has to wonder how one could arrest the steady fall of readership or viewers. How does one compete with the wealth, quality and immediacy of online content? How does one compete with the volume, quality and low cost of user generated content?

(Jeff Jarvis does make some suggestions as to how newsrooms will have to adapt.)

At least newspapers and magazines have a more clearly defined and more niche identity: A more rounded brand that can be leveraged online. TV stations do not. TV is supposed to be a mass medium. A prediction – TV stations are dying dinosaurs and will only survive to bring us mass live events.

“If we all had perfect information” (Continued from will social media save the marketing star?)

During my stint as Lycos Mobile Product manager I learned a valuable lesson.

Vodaphone, the colossus that bestrides the UK mobile sector was launching Vizzaviz (now no more), a web based mobile community site, one not dissimilar to ours at Lycos. It catered for 18 to 24 your olds and their mobile life styles. This launch was more or less at the same time as Lycos launched its new Mobile channel.

I was slightly perturbed by the fact that I read that Vizaviz was to spend around £100 million – if my memory serves me correct – on marketing their site. We were due to spend ziltch.

I need not have fretted. We kicked their big budget butts. Lycos’s Mobile channel soon became the largest site of its kind in the UK, attracting 800, 000 unique users to its site per month.

Why? Nice design. It wasn’t all bad. Easy peasy and a pleasure to use? Err… not really state of the art in that respect.

But we had a killer app. We were very very useful. We offered a really compelling service. You could send 5 free SMS messages per day from our web based app.

In no time everybody knew about us. Even if we spent zero on marketing, our customers did our marketing for us.

Is marketing obsolete?

My boss at the time, Damian Glover commented wryly.

“The web is making marketing obsolete.”

The arrival of the web has brought us closer to a state of perfect information he said. If all consumers knew everything and could easily find out about a product, it’s cost, it’s quality – then whats the point of advertising?

A good point. But it does beg a few questions.

• But do we live in a world of perfect information?
• And, is buying based purely on rational consideration? (Or why are there so many iPods and so few iRivers?)
• And if advertising is under threat on the web, why is Google making so much money?
• And what are all the ad people going to do if ads are pointless?
• And why are marketeers so excited by social media?