Smooth Operators: Mobile Shops

Meet the agencies that really work the phones

For something in its infancy (both literally, and in dollar terms), mobile advertising makes a lot of noise. It’s suddenly a required part of every digital ad package, and traditional agencies are scrambling to work up their own mobile offerings. In the trendy world of app building, nascent efforts at mobile display ads and transaction-based mobile platforms may have generated only $550 million to $650 million in revenue last year, according to the Interactive Advertising Bureau—compare that with the larger category of online advertising, which brought in $26 billion—but it’s growing fast. Last year’s revenue in the category was roughly 30 percent higher than 2009’s, and BIA/Kelsey predicts the market will swell to $2.9 billion by 2014.

The average U.S. advertiser reserves around 2 percent to 5 percent of its overall ad budget for mobile apps, according to Kai Buehler, CEO of Mobile Messaging Solutions. While that money previously came out of the digital pool, Buehler said it’s increasingly common for advertisers to dedicate a budget and even an in-house position to the category.

But even as mobile devices evolve at an ever more rapid pace—including the introduction of tablets—mobile advertising is still deciding what, exactly, it is. What advertisers have learned is that a mobile campaign isn’t as simple as cramming a display ad into a smartphone. “Brands don’t just want ads in an app experience,” says Steven Golus, general manager of mobile at DataXu. “They want cross-selling, m-commerce, and in-store advertising.”

They also want exciting creative, and to enhance a customer’s experience in their stores with apps utilizing geo-tagging, for example. And as anyone who has used an iPad or Xoom can testify, the proliferation of high-definition tablets allows for high-quality display ads.

But many brand managers, as well as the creative at traditional agencies, are still far from mobile savvy. That’s where the agencies on our list come in. These shops, devoted exclusively to mobile advertising, are among a selection of agencies as steeped in digital technology as they are creative. While some have been around for a decade or more, it’s “still the early days [of mobile],” says Mark Mackenzie, head of digital media venture capital at AllianceBernstein. “The pieces aren’t all there—the analytics, the data. [But they’re] being built out.”

5th Finger

The San Francisco-based mobile firm has launched more than 5,000 campaigns since its genesis in 1999. And no, that year is not a typo. 5th Finger has been at it since the days of Zach Morris’s brick-like mobile phone. It’s kept up, of course, with the song-recognizing, GPS-enabled, video-recording mini-computer times, and now focuses on the retail, consumer packaged-goods, and health sectors. It raised $7 million in venture backing from Starfish Ventures in 2008; the firm is also partially owned by Microsoft through its parent company, Ninemsn. Clients include Victoria’s Secret, My Coke Rewards, Safeway, and Bath & Body Works.

Mobients

Mobients has been designing mobile apps for complex interactions since before the iPhone. The Atlanta-based agency’s pre-iPhone mobile banking apps were adopted by Wachovia, Citigroup, and 40 other banks, and later ported into iPhone as the first app of its kind. Now its offerings span operating systems: the shop created a mobile site for Verizon designed to attract users surfing the Web on non-Verizon phones. It’s also created a usability assessment program for AT&T, and a mobile retail system for Home Depot. Mobients was founded in 2007 by former BMX racer Matthew Perry; the company’s employees call themselves “scalability ninjas.”

Phonevalley

Founded in Paris in 2001 by Alexandre Mars, Phonevalley prefers to work on mobile campaigns that are closely tied to advertisers’ Web work. Mars has decried “innovation for the sake of innovation” without identifying milestones for a mobile campaign. An augmented reality app without a concrete engagement goal, for example, does not equal a marketing campaign. In 2007, the agency—which also operates from Chicago and Singapore—was bought by Publicis Groupe; Mars was promoted to head of mobile at the holding company. Phonevalley’s offerings include mobile media planning, and its clients have included Nissan, Purina, and H&M.