Nokia Corp. announced on September 17, 2007 that it has reached a definitive agreement to acquire Enpocket, Inc. [1] The move is set to boost Nokia’s products and services in the area of mobile advertising. [2]
I. Nokia Corp.
Nokia has already announced its plan to be a market leader in consumer Internet services. [3] This acquisition will hasten the scaling of its mobile advertising business. To achieve this, Nokia plans to utilize Enpocket’s platform and strong partnerships with advertisers, publishers and operators. [4] This acquisition will give Nokia Corp. instant credibility and a “leg up” in mobile advertising. [5]
I. Enpocket
Enpocket is a privately owned company founded in 2001 in Boston, Massachusetts. [6] Enpocket claims on its website to have developed the “industry leading technology platform for delivering rich and relevant mobile advertising.” [7] Enpocket currently provides three distinct products: its platform, its mechanics and its network. [8] The Enpocket platform powers mobile advertising for both mobile carriers and large publishers. [9] The mechanics include items such as mobile web sites, texting programs and mobile couponing. [10] Finally, the network currently boasts millions of mobile subscribers from all over the world. [11]
II. Agreement between Nokia and Enpocket
The agreement is subject to the customary closing conditions and is expected to close in the fourth quarter of 2007. [12] The companies, however, did not disclose the financial terms of the deal. [13]
III. Implications of the Acquisition
While this deal is not set to close until the fourth quarter, it displays a trend of several online service giants, mobile carriers, and handsets manufacturers to get into this area. [14] With giants like Google Inc., Yahoo Inc., AT&T Inc., and Verizon Inc. all jockeying for position in this expanding market, consumers will see the results sooner rather than later.
A. Market Implications
For years mobile advertising has been thought to be fertile area with great potential, but these expectations have been unrealized. [15] However, it is expected that this small area will quickly expand into a considerable market. It has been forecasted that mobile search and advertising spending in the U.S. will surpass $33 Million this year and grow annually at 112% until 2012 where the spending will total around $1.4 billion. [16] Globally, mobile advertising spending is expected to reach $1.5 billion this year and expand to over $11 billion by 2011. [17] Mobile phones are quickly becoming a viable vehicle for advertising with mobile phone users accessing the internet predicted to grow from 37.9 million in 2007 to 91.7 million in 2012. [18] This would put the number of online mobile phone users at 92 million in 2012. [19]
B. Consumer Implications
While the acquisition of Enpocket is a first step for Nokia to gain a strong position in the mobile advertising market, it is part of the larger trend that will have an effect on consumers. With mobile advertising in its relative infancy, consumers have not been exposed to advertising on their mobile phones, but with advertising in almost every other facet of life, it is not hard to imagine how it will end up. From an attitude standpoint, a majority of consumers likely view mobile advertising negatively. [20] The empirical study found that the opinion of the poll base was slightly below the neutral position on the scale. [21] The researchers hypothesized that this may be due to the users viewing the ads as irritating due to the personal nature of mobile phones. [22] However, the research also identified that permissive advertising has positive feedback, while unauthorized spamming generates the negative feedback. [23] Initial attitudes, however, will not stem the flow of mobile advertising although it might impact its form.
From a benefit standpoint, mobile advertising provides a new revenue stream to content providers. [24] This will offset the costs of offering richer content and media to the consumer. [25] It is expensive to generate and offer, so mobile advertising will provide consumers with access to a better mobile product. Another obvious benefit is that mobile advertising can steer users to content that they were previously unaware of. [26] When a consumer is directed to beneficial new content, both sides of the transaction profit.
IV. Conclusion
While it has been expected to explode for the last few years, mobile advertising is still in its infancy. However, the market finally seems fertile enough to see the expected growth and consumers will see the results. Nokia Corp.’s acquisition of Enpocket is a building block toward a potentially huge mobile advertising market. Consumers will likely find advertising on their mobile phones shortly. This may not be received well, but advertising can provide the cash flow to produce high quality content and media for consumers.
[1] Press Release, Nokia Corp., Nokia to Acquire Enpocket to Create a Global Mobile Advertising Leader (Sep. 17, 2007), http://www.nokia.com/A4136001?newsid=1153772, [hereinafter Press Release, Nokia to Acquire Enpocket].
[2] Id.
[3] Id.
[4] Id.
[5] Juan Carlos Perez, Nokia Buys Mobile Advertising Company, IDG News Service, Sep. 18, 2007, available at http://www.pcworld.com/article/id,137262-c,mergersacquisitions/article.html.
[6] Press Release, Nokia to Acquire Enpocket, supra note 1.
[7] Enpocket Solutions Home Page, http://www.enpocket.com/solutions (last visited Sep. 19, 2007).
[8] Id.
[9] Id.
[10] Id.
[11] Id.
[12] Press Release, Nokia to Acquire Enpocket, supra note 1.
[13] Enpocket Sold to Nokia, Daily Business Update, Boston Globe Business Team, Sep. 17, 2007, http://www.boston.com/business/ticker/2007/09/enpocket_sold_t.html.
[14] Juan Carlos Perez, Nokia Buys Mobile Advertising Company, supra note 5.
[15] Matt Booth, U.S. Mobile Advertising Forecast, 2007-2012, The Kelsey Group, Sep. 5, 2007, available at http://blog.kelseygroup.com/index.php/2007/09/10/us-mobile-advertising-forecast/
[16] Id.
[17] Juan Carlos Perez, Nokia Buys Mobile Advertising Company, supra note 5 (citing market researcher Informa Telecoms & Media).
[18] Matt Booth, U.S. Mobile Advertising Forecast, 2007-2012, supra note 15.
[19] Id.
[20] Melody M. Tsang, Shu-Chun Ho & Ting-Peng Liang, Consumer Attitudes Towards Mobile Advertising: An Empirical Study, Int’l J. Elec. Comm., Spring 2004 Vol. 8, No. 3 at 75.
[21] Id.
[22] Id.
[23] Id. at 70-71.
[24] Laura Marriott, Mobile Advertising: What’s in it for the Consumer?, The Clickz Network, Oct. 5, 2006, available at http://www.clickz.com/3623589.
[25] Id.
[26] Id.
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