A wireless advertising trial run that involved sending ads to 1,000 users of mobile computing devices in Boulder, Colorado, has buoyed the hopes of some companies eager to reach potential buyers with the new technology.
The study was conducted by Skygo Inc. in Redwood City, Calif., during a four-month period that ended Jan. 31, and preliminary results were released Monday. About 50 advertisers took part in the test process, pushing ads to L.M. Ericsson-made cell phones via the AT&T Wireless network several times each day.
Ads offered goods and services including movie tickets, sporting goods and restaurant information, as well as simple trivia games designed to enhance the brand of the company involved.
After outdoor gear-rental and sales company geardirect.com took part in the study, CEO John Siewierski said about 2 percent of the users in the study bought something from the Boulder-based company. Geardirect.com has two brick-and-mortar stores as well as online and catalog sales.
"I'm intrigued by wireless advertising, and it truly has my interest," Siewierski said. The response rate meant that wireless users bought at least US$2,400 in goods from geardirect.com, about twice what he might have expected from a print advertising campaign.
An additional 50 percent of the 1,000-user sample visited the geardirect.com Web site from a wired-world connection, according to Skygo's surveys. Siewierski said company executives "know we got sales out of that."
San Francisco-based Visa USA. Inc. also participated in the study, backing payments for movie tickets from cellular phones to credit card information stored on a secure server, according to Annette Merriman, director of technology at the company's e-Visa division.
E-Visa officials were encouraged that 37 percent of the 1,000 participants agreed to enter credit card account information at the start of the study to be eligible to purchase movie tickets online wirelessly by typing in a special personal identification number to authorize the credit card payment, Merriman said. When the tickets are purchased this way, the users show up at the movie theater and show a Visa card to get the tickets and gain admission.
"The study was very exciting for Visa, because for the first time it allowed Visa to learn about consumers in the direct market," Merriman said. "People were actually making purchases from the device [and showed] interest in making purchases from mobile phones."
Skygo officials said the focus of the ads and the type of ads were found to make a difference to users. Ads featuring interactive trivia questions generated the highest rate of response, followed by ads that allowed consumers to participate in polls, they said.
In all, about 500,000 ad messages were sent out, using 565 unique advertising campaigns. About 64 percent of the ads sent were opened by users.
During the study, users were asked to respond to questions several times about ads they recalled seeing. Overall, the ad recall rate was 58 percent, which is about 10 times greater than the average ad recall rate for a banner ad viewed on a desktop, said Darren Tsui, CEO of Skygo. By comparison, one TV ad for E-Trade featuring two monkeys that was shown during the Super Bowl had a recall rate of about 65 percent, he added.
"This wireless medium proves to be very effective for branding types of advertising, which is really just to build an awareness" of a product or company, Tsui added. "Lots of times with branding, there's no call for action, but you build confidence that this is a product you trust or rely upon."
The findings about recall rates and the effectiveness of branding over wireless devices are somewhat different from the original hypothesis, which suggested that wireless ads would be useful for driving users to go to a brick-and-mortar store and show a wireless coupon to buy something, he said.
Overall, the study showed a 2.9 percent purchase rate for all the ads, meaning somebody bought something after seeing the ad. That rate is more than 10 times higher than the traditional purchase rate from direct mail advertising, Tsui said.
A disappointment in the study was the infrequent response by users to embedded phone numbers with ads. For example, if a phone number was listed with a Kentucky Fried Chicken restaurant, users were reluctant to call the number, Tsui said. Less than 1 percent of the users clicked through to a phone number to make a call, compared with 52 percent who clicked through to answer trivia questions involving a product or service, he said.
The future of wireless advertising is far from established by the study, despite its many favorable findings. "The biggest downside to wireless advertising is if they price it too high, which means I wouldn't use it," Siewierski said. But so far, he hasn't seen a rate card for wireless ad prices.
Tsui and several wireless analysts said the cost of wireless advertising and location-based advertising and services are just beginning to be discussed between handset manufacturers, wireless carriers and advertisers.