As advertisements arrive on cellphones, privacy concerns grow

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As advertisements arrive on cellphones, privacy concerns grow

Wed Jan 2, 1:10 PM

By Anick Jesdanun, The Associated Press

NEW YORK - Your cellphone is a potential gold mine for marketers: It

can reveal where you are, whom you call and even what music you like.

Considering the phone is usually no more than a few metres away,

these are powerful clues for figuring out just the right moment to

deliver the right coupon for the store just around the corner.

But first marketers will have to wrest the personal profiles from

mobile carriers worried that annoyed subscribers might defect to

rivals.

" It's proceed with caution, " said Jarvis Coffin, chief executive of

advertising distributor Burst Media Corp. " Are consumers going to be

spooked by the idea that suddenly their phone goes beep and it's a

Starbucks offer, and they are standing next to a Starbucks? "

rs are now guarding the data zealously, but many people believe

it's only a matter of time - over the next year or two - before

marketers can routinely target ads to a potential customer's location

and actions.

Imagine getting pitches for rental cars and hotels the moment you

land in San Francisco because an analysis of past calls suggests you

tend to take weeklong trips there. Or if day trips to Boston are your

thing, you might get an offer for cab service instead.

" My phone has a lot of very specific and detailed information about

myself ... information that isn't always going to be resident when

I'm at a number of PC browsers, " said Rob Adler, chief executive for

mobile web company go2 Media Inc.

The research firm EMarketer estimates that U.S. spending in mobile

ads, at about US$900 million in 2007, will grow more than fivefold to

nearly $4.8 billion in 2011. By contrast, paid search and other

online spending will only double, to about $42 billion in 2011.

Mobile ads today are mostly blasted at the mass audiences, with a few

carriers offering limited targeting based on users' age, gender, ZIP

code and other characteristics.

That should change. Ever since the U.S. Federal Communications

Commission ruled in 1996 that wireless carriers must help 911

dispatchers identify a caller's location, technology companies and

privacy advocates alike have been speculating about making phones'

location information available to commercial services and

advertisers.

" It's always been the next big thing around the corner the last 10

years, and now we really feel that it is, " said Levin, chief

executive for Liberty Media Corp.'s Useful Networks Inc., a company

that helps outside developers tap location information from cell

carriers.

Americans are finally using cell phones for more than calling,

joining European and Asian counterparts in embracing data services

like text messaging and ring tones.

Devices also are improving, and last summer's release of Apple Inc.'s

iPhone unleashed an era of bigger screens and friendlier interfaces

for mobile web browsing.

Advertisers, meanwhile, are starting to experiment with mobile ads.

With a boom in GPS devices and location services like maps and child

tracking, it's only natural that advertisers, too, will want to take

advantage of location information.

The phone's highly personal nature will mean more privacy red flags

compared with what's collected when someone surfs the Internet from a

regular computer.

Two industry trade groups - CTIA and the Mobile Marketing

Association - have committees developing guidelines, including how to

properly get a customer's permission and periodically remind them of

any tracking.

Companies are also developing ways to share profiles with marketers

while stripping out sensitive information like names.

On Sprint phones, all targeting to such attributes as age and ZIP

code is done on Sprint Nextel Corp.'s end; advertisers give Sprint

the ads for the company to place without having to share any data

with anyone, spokeswoman Emmy said.

Meanwhile, an ad-delivery system from Ad Infuse Inc. can be installed

entirely on a carrier's own premises so that data remain under the

carrier's control.

The wireless industry deserves credit for its caution, said Ari

Schwartz, a privacy advocate with the Center for Democracy and

Technology. He said advertising and technology companies are the ones

having to first prove to wireless carriers " that they have put in a

lot of thought about how to do it in a way that won't raise the

creepiness factor. "

Telecommunications companies face unique U.S. federal privacy

regulations, requiring notice and permission to use and share calling

records for marketing, but carriers believe competition is as

important.

" We have great expenses with customers leaving one company and going

to another, " Verizon Wireless spokesman said. " One

thing I can guarantee Verizon Wireless will not do is get a bump of

short-term advertising dollars while scaring and losing our customers

in the process. "

The challenge will be getting consumers at the right state of mind.

You might appreciate that restaurant discount when you're hungry but

not if you've just finished lunch.

The mantra, for now, is to avoid the type of backlash that online

hangout Facebook recently faced when it enlisted users as endorsers

of movies and other products, initially without them necessarily

realizing it.

" We know this is a great opportunity for targeting, but we don't want

to blow it by overdoing it, " said Eswar Priyadarshan, chief technical

officer for Quattro Wireless Inc., a mobile ad distributor.

Initial ads tied to location tend to revolve around search terms and

other user input rather than GPS detection. If you search for movie

theatres in Chicago followed by a search simply for " pizza, " Google

Inc. will assume you are looking for a pizzeria in Chicago.

Go2 Media lets users enter cities, ZIP codes or specific addresses,

but users can activate an " auto locate " feature on some phones.

But current location isn't always as useful as where you're going or

what you're doing.

Figuring that out means pairing location information with other

behavioural data.

For instance, advertisers might also target to the beginning of a

billing cycle, when a customer might be more willing to spend, said

Dan Olschwang, chief executive of JumpTap Inc., which is offering

targeting technologies to mobile carriers and websites.

Working with Britain's Vodafone Group PLC, Yahoo Inc. has been able

to target to basic demographics like gender. Now, Yahoo is looking to

tap calling patterns, such as whether you make calls to a certain

region on weekends but to another on weekdays - all without the

carrier having to reveal anything about the customer's identity.

One day, the mechanism might be in place to even marry location data

with purchase history. Say, you've bought a movie ticket for a

particular theatre and show time, and the phone senses you're at the

theatre, Yahoo could infer you are waiting in line and perhaps

deliver coupons for popcorn.

Or consider a fast-food chain targeting youths looking for a midnight

snack. They may deliver late-night ads to those who send several text

messages a month or have bought a Death Cab For Cutie ring tone -

activities popular among youths, said Wood, an executive with

mobile ad company Amobee Media Systems.

" These are scenarios that will unfold in the next 24 months, " Wood

said. " The technology is absolutely there. The players have to become

more comfortable. We believe they are doing so rapidly. "