Here come the ads, over your cellphone

Satellite surveillance and high-tech communication gadgets aren't just for government spooks anymore.

These days, you can take a cellphone spiked with a few special circuits, and locate anyone, anywhere on the planet, anytime, to within 25 feet. It might seem an Orwellian nightmare. But it's also a marketer's dream.

The military's global positioning system (GPS) has been put to civilian use for a few years now – helping lost motorists, for example, find their way with blinking maps on fancy car consoles. But as mobile devices become more advanced, able to receive rich text and video images, many marketers see them as part of the new frontier of advertising.

Indeed, with the mobile-phone market exploding – over half the US adult population carries mobile phones – it was only a matter of time before advertisers found a way to push their products through devices ever at their targets' sides.

"It's the dream out there about GPS," says Rich Person, a managing partner of Direct and Interactive Marketing at Mullen, a Massachusetts communications agency. "It's the soccer mom, picking up her kids, and she gets into the car and she gets a discount ad targeting her for McDonald's, just as the kids are finishing up practice."

It may not happen anytime soon, but some forecast that wireless advertising will be part of a multibillion-dollar mobile landscape in the near future. Industry watchers have already coined "m-commerce" and "m-advertising" to describe sales related to mobile online services, and these could account for more than $25 billion in revenues by 2005, according to Forrester Research, a Massachusetts-based tech firm.

Technology and advertising have long been allied, of course, and much of American pop culture was shaped by mass-market jingles and well-crafted brands. Today, e-mail and Amazon.com shape culture with computer cookies and personalized, targeted ads.

But mention phones and marketing, and most people gnash their teeth at the thought of telemarketers who always seem to call just when dinner's served. And with text-messaging the hottest thing in mobile phones, many worry that "wam" – wireless spam – will be the next addition to the digital lexicon.

Last year, Rep. Rush Holt (D) of New Jersey resubmitted his Wireless Telephone Spam Protection Act, which would allow users to sue "wammers" for $500 per transmission, and slap repeat violators with penalties up to $1,500 per incident. Most in the industry find the bill premature, since wireless advertising is only in the crudest stages. Before people toting phones into buses and restaurants find themselves wammed, advertisers must overcome significant barriers.

"The primary thing is the notion of privacy," says Subimal Chatterjee, associate professor of marketing at the State University of New York at Binghamton. The ideal way to market with mobile technology, he says, is the scenario in which cellphones give their locations to advertisers, then alert users to local retailers and special discounts.

"But to do that, you have to give somebody permission to track you all the time," Mr. Chatterjee says. "It's a very interesting trade-off – highly customized ads and alerts, but at the same time, you give up your privacy." Consumers will trade some of their privacy, he says, if they feel in control. If a mobile-device user can control when he's being tracked, he may not mind receiving useful ads.

"Can we push ads out to people?" asks Ira Sussman, executive vice president at Initiative Media in New York City. "I think the model for that will be an opt-in: We're not going to be able to ring people's phones to bring you an ad, but if somebody says, 'Tell me if something goes on sale,' or if there's certain information they're willing to get which is sponsored by advertisers – like weather or sports scores – I think they will opt in. It's instant gratification."

Advertisers believe that consumers seeking this kind of gratification will give "situational permission," and agree to be tracked and targeted, say, when they're traveling: Information about flight gate changes or local restaurants in an unfamiliar place could be welcome.

For now, wireless advertising is hampered by a myriad of technology standards among carriers such as AT&T, Verizon, and Sprint, each of which have different specs for their phones. Even if mobile devices could handle complex media images – which they currently can't – advertisers would have to remake each ad to fit different phones.

"This is a very complex technology, and you've got devices that have variation in terms of screen sizes and the technology being used," says Mr. Person. "And then you have the publishers' needs, which require ad standardization or format standardization for the ads in order to ... exchange them and get them done in a reusable way."

In Europe and Asia, where mobile-device technology is uniform, advertising over cellphones is a small but growing industry. Mobile commerce revenues were $15 million in Europe and $500 million in Japan in 2000, compared to only $10 million in the US, according to Jupiter Communications, a New York-based research firm. Because of uniform technology standards and a wider cultural comfort with mobile-phone browsers, analysts forecast most of the growth of m-advertising overseas.

"It may be a fairly small market now, but looking at my kids, I think it's going to be a big market in the future," says Mr. Person.