What kind of consumer value do mobile ads really add?

Back in the prehistoric days of the mobile data era, when cell phones were the size of canned hams and Nokia's preloaded Snake was the cutting edge in mobile gaming, more than a few startups pinned their hopes on location-based mobile advertising, although no one called it that at the time. The basic concept was instead lumped in under the mobile commerce umbrella, with the standard elevator pitch going something like this: "Say you're walking by a Starbucks, and you receive a coupon as a text message. You show the coupon to the barista, and get a dollar off your latte. That's m-commerce." Needless to say it never took off, but with so many mobile content providers and search services now mortgaging their futures on advertising revenues, it seemed inevitable that sooner or later, location-based ads would again generate interest.

That time is now. This week, CBS Mobile embraced location-based advertising in a big way, announcing a partnership with social-mapping and communication service Loopt to deliver personalized ads via the CBS Mobile News and CBS Mobile Sports sites. The opt-in service will reach out to participating consumers with mobile ads tailored specifically to their current physical location, promoting stores and restaurants within a radius of a few blocks. "The key is to add value," CBS Mobile head Cyriac Roeding told The New York Times. "At the end of the day, if the consumer doesn't win in this game, there is no game." A day later, Nokia-owned navigation and location-based solutions provider Navteq announced an equity investment in location-based advertising service provider Acuity Mobile. According to Navteq, its partnership with Acuity will bolster its efforts to meet demand for interactive advertising on location-aware devices. "Our research indicates that the more finely we target advertising, the higher value it brings to consumers and advertisers alike," said Navteq executive vice president John MacLeod, more or less echoing Roeding's earlier comments.

"Value" is a slippery and subjective term at best, but it seems to me the real consumer benefit in the CBS Mobile/Loopt partnership--and in location-based advertising as a whole--has less to do with The Tiffany Network's reach as a content provider and more to do with Loopt's reach as a location-aware social network … even if that isn't how the companies are promoting the service. In a press release touting the CBS Mobile deal, Loopt co-founder and CEO Sam Altman spins it this way: "If you're hungry and we take into account your location and time of day to display an ad for a restaurant offering free appetizers during happy hour, we've really blurred the line between advertising and content." Fair enough, but if you're out and about looking for a place to grab dinner or drinks, which is more persuasive: A mobile coupon from a nearby restaurant, or a mobile comment from a friend recommending the same restaurant? Given the number of people who rely on word-of-mouth buzz to determine their dining and entertainment choices, Loopt's geo-tagged user comments and critiques would seem a far more valuable consumer tool than CBS Mobile's paid advertisements.

The bigger question here is this: Do consumers even want the line between advertising and content blurred? I don't think so, or at least not where mobile commerce is concerned. A location-based advertising service that delivers personalized alerts on cheap gasoline prices, fast-food coupons and big-box retailer discounts seems like something worth signing up for--an advertiser-sponsored nightlife recommendation engine, not so much. Knowing where to go and what to do is what social networking is for. Time will tell if the two services can co-exist. - Jason

P.S. Check back with FierceMobileContent all next week as my colleagues Sue Marek and Brian Dolan join me in Barcelona for live, up-to-the-minute coverage and analysis of the news coming out of Mobile World Congress 2008. Follow all the latest developments here.