South-Westerns' Economic News Summaries
Maybe we’ll like having advertisers up in our face and on our phone
Subject advertising via cellular phones
Topic Monopolistic Competition; Product Markets
Key Words advertising, cellular phones, technology, demographics

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Reference ID: A140936378
News Story

Marketers are discovering the potential of sending advertising messages to individual cellular phones, arguing that it’s a way of further refining the target audiences for their advertising messages.

Marketing firms envision the possibility of synchronizing global positioning systems with cellular technology, so that as you walk down the street, a message can be beamed to your phone, informing you of the 40%-off sale at the store on the next block. While the technology isn’t available quite yet—and consumers would have to consent to be tracked in this way—the possibilities are making advertising executives sit up and take notice.

Cellular firms have to be careful, though, because it’s illegal to sell the names of their subscribers, and carriers can exclude content providers, such as CBS or ESPN, who send out unsolicited advertising messages. Consumers would have to be invited—and convinced—to ‘click’ to see an advertising message, for example.

The market is beginning to grow, though. Mobile marketing revenues were only $45 million in 2005, but are expected to be $1.26 billion by 2009, as technology and accessibility both increase. Advertisers are betting on the fact that the click rate on Internet advertising is only 1% on computers, but 4% on cellular phones with Internet technology. To marketers, that indicates that mobile marketing has the potential of becoming more personalized. And wouldn’t a cup of coffee go really well with this article you’re reading now?


In a culture with “no-call lists,” with consumers who don’t want to be bothered with advertising, why would marketers want to pitch advertising to an individual’s cell phone?

2. Assume that the scenario outlined in the summary is correct, and advertisers are able to synch global positioning systems with advertising messages. What are they hoping is true about how individuals value their time?
3. What does such advertising do to individual elasticity of demand? Why?
Source Matt Richtel. “Marketers interested in the small screen.” The New York Times. 16 January 2006.
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