A Wall Street Journal article fanned the rumor that Microsoft is in the process of buying Third Screen Media.
Third Screen Media is a leader in advertising on cell phones. Ok, so you haven't seen any ads on your own cell phone? Well, they are coming soon – whether you like it or not. And, it could come faster if Microsoft does shell out some cash to buy Third Screen Media. Hey, according to a study by Ovum, mobile ad spending is forecasted to grow from $45 million in 2005 to $1.3 billion by 2009. That's always something that gets the interest of Microsoft.
It's unnerving for Microsoft that – year after year – it is the continual #3 in the online advertising world (behind Google and Yahoo). Simply put, its huge cash hoard has not been enough.
But Microsoft is not giving up. And the company is going to continue to write checks – whether for R&D or M&A. For example, Microsoft recently purchased Massive, which provides advertising in video games.
But could mobile ads really be a fad, though? I talked to Lee Hancock, the founder and CEO of Go2, which is a leader in mobile apps and has advertisers like American Express, AOL, Jamba Juice, MasterCard and Volkswagon. According to him: "Mobile advertising is working. Last year we delivered over 50 million ad impressions on the various go2 mobile directories/websites and had click-through rates that typically exceeded online click-through rates. As a leading mobile, local search directory, we are able to target ads by specific search categories and geography. Our mobile ad click-through rates and our user surveys and feedback indicate that users actually appreciate the ads, at least in a mobile directory environment."
I also talked to Dipanshu Sharma, the founder of V-ENABLE. The company has technology that allows for mobile speech search and has deals with Verizon, ALLTEL, U.S. Cellular, and Cricket. He said: "We are seeing increasingly that carriers are having a tougher time justifying paying for plain search, although voice search is looked at as a user experience enhancement and is able to command dollars. But simple text-based on deck search is going to be free to the carrier sooner or later. In that scenario, the search providers will have to find alternate ways to generate revenue and all of them are following the successful internet ad-model. We are seeing that smaller carriers are moving into that model faster than larger ones."
So, Microsoft is definitely on the right track with this. Now, with video gaming ads – as well as the same capability for cell phones – its offerings will certainly be robust. And who knows, maybe the company realizes it's not just about money – but also about making some smart strategic moves in the fierce battle for online advertising?
Links:
My Interviews with V-ENABLE and Go2
Wireless Week: Report: Third Screen Media, MSN in Talks
Closing Bell: When We All Love the PIIGS (NBG, SQNM, PG, ERTS, KO)
Serious Money: Cheapest Stocks List Shrinks from 26 to 21
Chasing Value: Hasbro Earnings Makes My Point
Reader Comments (Page 1 of 1)
6-01-2006 @ 9:21AM
ashu mathura said...
It actually makes a lot of sense after seeing MS presentation on E3. They have a whole mobile strategy lined up, integrating Xbox Live, Vista and Windows Mobile seamless together. Games on Vista will extent to Windows Mobile where you can play them alone with high-scores or against others. The servers behind it will be Xbox live and therefore you can continue playing the same games on your TV as well. Microsoft already knows that playing games is something behind the TV or on the road (hence the MS portable game device which is supposed to be coming up). Anyway, with TSM they have the technology and experience to fill all those Windows Mobile games and sites with ads, making them free for the consumers.