eMarketer analyst says that mobile marketing is not likely to become the instant cash cow agencies hope it will be, but like the internet it's here to stay.

Mobile marketing is ripe with promise but to some extent it is still surrounded by hype as well. Those looking to the wireless channel would do well to remember that it is still in an incipient phase.

The staggering demographics of the global wireless market cannot be discounted: Mobile penetration has begun to reach and even surpass 100 percent in many of the more advanced markets, and consultancy Deloitte & Touche recently predicted that wireless subscribers would number close to two billion worldwide by the end of this year. This figure, which is higher than the 1.7 billion projected by the Economist Intelligence Unit in October 2004, represents close to one-third of the world’s total population.

That said, the ways in which most people use their handsets continue to evolve, with voice still by far the most dominant application.

With this uncertainty in mind, eMarketer has put together three potential scenarios that plot spending growth for wireless advertising and marketing over the next five years. Each starts with the supposition that in percentage terms, wireless advertising is at roughly the same level relative to interactive advertising that online advertising was in relation to traditional ad spending in the mid- to late 1990s.

In each of the scenarios that eMarketer has constructed for the U.S. market, the assumption is that as the buzz surrounding mobile marketing builds to a fever pitch in 2005-2006, firms initially will throw money at this new channel, much as many did in the early day of the internet -- i.e., some campaigns will succeed, but the environment will be somewhat hit or miss.

For this reason, eMarketer predicts a short period of disenchantment with wireless around 2007. Although spending will continue to climb, growth rates will dip briefly before resuming upward momentum as the medium grows to maturity toward the end of the decade.

So how should marketers go about exploring the wireless opportunity?

Many of the same principals that are critical to any successful online marketing promotion also apply to the wireless channel. Although there are also some mobile-specific factors to bear in mind, marketers must remember to:

• Get users’ permission (this is especially important since wireless users pay to receive short and multimedia messages (SMS and MMS)
• Make sure the messages they are sending are relevant and appropriate to users’ interests and tastes (i.e., target the right audience with the right offer)
• Keep close tabs on both the ways consumers are using their wireless devices and the growing variety of devices and platforms
• Strive for synergy with other channels (e.g., put a five-digit short code on a billboard, right next to the company’s URL).

The key remains focusing on the types and formats of content that consumers want, and making it easy for them to opt in and/or out of campaigns.

In a still-emerging medium, marketers will need to pick their targets carefully. The first place to look is younger users. Because young people are key early adopters of wireless content and services, they play a vital role in determining what does and does not work on a handheld device. According to an SMG IP survey, more than half of active wireless users ages 21 to 27 are receptive to SMS communications from sponsors -- as long as the information is relevant and gives them something they might not otherwise have access to.

Europe and Asia-Pacific, where wireless markets are more developed than those in the Americas, offer greater initial potential for marketers. According to a May 2004 study of 250 mobile subscribers, 30 operators and 25 advertising agencies across Europe by Empower Interactive -- a supplier of mobile data infrastructure products for wireless carriers -- 84 percent of European wireless users are open to the prospect of receiving SMS promotional offers on their phones. Half the region’s subscriber population is even enthusiastic about the idea, provided that the products being promoted are appropriately targeted toward their individual preferences. In fact, 39 percent said that they would welcome messages from companies in which they had expressed interest. Just 16 percent of the subscribers surveyed said they would not accept mobile promotions from any company.

This article is drawn from “Mobile Marketing and M-Commerce: Global Spending and Trends,” an eMarketer report. Mr. Elkin is a Senior Analyst for eMarketer.