“Operators themselves know they can’t charge customers more for service, users are not willing to pay,” Zohar Levkovitz, CEO of Amobee.The stars have aligned — at least in the mobile phone advertising space: A number of basic, but essential conditions in the industry now make it possible for cell phone operators to deliver rich and targeted advertising to the cell phone. And Israel’s Amobee is coming to a cell phone near you.
While it seems obvious that ads delivered to cell phones are the next frontier, only now are the conditions right, explains Amobee’s CEO Zohar Levkovitz: Faster networks, speedy enough to deliver multimedia content, handsets with large screens capable of showing rich ads, paired with a slumping economy in the US, makes the timing right, Levkovitz tells ISRAEL21c.
“Advertisers are much more willing today to try new channels of advertising,” he tells ISRAEL21c. “Teens are not watching TV anymore,” he explains, adding that they get most of their entertainment fix online. “That fact and the recession means that advertisers need to find creative ways to reach their customers. Operators themselves know they can’t charge customers more for service, users are not willing to pay.”
Operators realize their next dollar will come from companies like GM and Coca Cola, says Levkovitz, whose company won the most promising start-up award in Israel, at a recent conference organized by Israel’s financial daily Globes and Ernst & Young. In a country where everyone and his sister is developing some sort of high-tech company, this award speaks volumes about Amobee’s potential.
A barter by choice
But who’ll buy into it? Until now, except for SMS messages, cell phone owners have enjoyed an ad-free space. This is unlike the Internet which has gone through a decade or more of seeing billions of dollars of ad revenues change hands. How will users respond?
According to Levkovitz, most people in the future will not be downloading or streaming content through websites they find online, rather, they’ll be looking to the cell phone operator to provide new music videos, and games, for a fee. Says Levkovitz: “Our key strategy is that the user will always need to consent, whether or not they will view an ad.”
Instead of charging a fee for access to premium content such as games (costing about $5 a piece), the ad companies — thanks to Amobee’s technology — can offer the client an ad-sponsored option. With an ad viewed at points during the play, or at the beginning and end of a video, ad companies get the eyeballs they so desperately need to attract; the cell phone companies get an added source of income, and Amobee gets its cut.
Sprint, and 50 million others in the US sign on
One of America’s major cell phone operators, whose name cannot be disclosed, has already signed on with Amobee, bringing its 50 million subscribers onboard. A division of the US company Sprint has signed with Amobee, and so have nine others.
Amobee was founded in 2005, and saw its first customer this year. With business headquarters in Redwood City, California and London, Amobee maintains an R&D and product development team in Herzylia, Israel. A total of 85 people work for Amobee. Investors include Sequoia Capital Israel, Accel Partners, Cisco Systems, Globespan Capital Partners, Motorola Ventures, Telefonica, and Vodafone Group.