BusinessWeek writes about “The Sell-Phone Revolution“, the combination of behavioral and geographic targeting. The story is also covered in mocoNews by Peggy Anne Salz here.

The BusinessWeek article repeats many of the arguments I made in my recent post entitled “Mobilizing Advertising” — mobile phones provide great technologies for targeting highly relevant advertising to consumers, but consumer behaviors create enormous barriers to their effectiveness.

Encouraging are reports that 5% of consumers who see targeted ads respond to them in comparison to less than 1% of the web (per BusinessWeek, source not identified). But it is still quite early to know if those numbers are sustainable. Many of the more successful mobile advertisements have been content related (click on this ad to get a ringtone), where the consumer actually gets something tangible if they interact with the ad. Most web advertising is considerably less rewarding.

While advertising related to mobile search, a la Medio Systems, JumpTap, and Google, are obvious ways of providing relevancy, I don’t think search adequately models consumer behavior. I tend to search when I am looking for something unusual. But then again, I did argue in a previous post that search-related technologies such as Zi Corp’s QIX might be a critical component of the mobile user experience.

Long term, I think the biggest bugaboo is consumer privacy and location is probably more significant than behavior when it comes to that.

If we look forward to a more mature mobile advertising market, I think its reasonable to expect that brands or agencies will be “bidding” to get their advertisements in front of a certain demographic. By definition, consumers belong to many demographic categories from niche to generalized. With few exceptions, I expect big brands going after wide swath demographics (18-34 year old males, for example) will out-bid brands going after niche demographics[1]. Therefore, I am not too worried about consumers getting niche advertising that feels like it is invading my privacy.

But local advertising tends to be more effective than national advertising when there is a “call to action”. Mobile will be very effective at this type of advertising given the one-click responsiveness (click to call, click to text, etc.). Advertising that results in a high touch event (content is bought, a call is placed, a message is sent) will result in a bonus paid, making this type of advertisement lucrative compared to nationwide brand building -type ads. Personally, I find geographically targeted advertising (getting an Forever 21 advertisement blocks from the store) would be considerably more creepy since it knows where I am.

Perception is the rule here, not reality. We know that technically we can abstract a consumers identity such that the brand does not know the subscriber’s phone number, name, specific characteristics, or even the actual location. The brand could simply say “if a consumer fits this demographic and is near this location please send this advertisement”. But for the consumer, the sense is that the brand knows who they are and where they are.

I strongly encourage the industry to get ahead of this one and set up some common best practices & run those through focus groups. Hint: Transparency is probably the key. I would hate to see consumers afraid of targeted mobile advertising in the same way that many were & are afraid of buying something on the web.

[1] Don’t get me wrong — niche web sites will continue to attract niche advertisers. But this can be done independent of mobile technologies.