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Last Updated: Wednesday, 18 May, 2005, 07:58 GMT 08:58 UK
3G advert set to break new ground
Motorola 3G phone
3G operators are looking for sources of revenue
The first advertisement to be displayed on a UK 3G mobile phone network will appear this month, in what the industry hopes could be a new source of revenue.

Mobile phone network 3 has struck a deal enabling 100,000 3G customers to download a movie trailer for free.

Handset owners previously had to pay for film clips, and the deal marks the first time that an advertiser has bought space on a UK 3G network.

3G firms are desperate for ways to recoup their vast outlay on licences.

But analysts are divided as to how lucrative selling adverts could be for phone companies.

Some argue that 3G phones offer a small market for advertisers compared with mass media such as television, radio and newspapers but others say these adverts will be targeted and cost-effective.

Big battle

Flytxt, the marketing company which did the deal with 3 in conjunction with RedBus Film Distribution, said there was potential for 3G advertising to become a lucrative source of revenue for network operators, as it had become in Japan.

"There will be a big battle among advertisers to own the [3G] handset," said Flytxt's director of corporate development Pamir Gelenbe.

"It is a piece of real estate that people will have with them 24 hours a day and which advertisers will want their brands to be on."

It [video] is something unique which the 3G operators bring to the party as a channel for advertising
John Delaney, Ovum

Vodafone, the UK's leading mobile phone operator, said it was watching developments closely but was making no "firm commitments" about advertising on its 3G network.

It said its users were currently more interested in appealing content.

Limited prospects?

Analysts cautioned that 3G's prospects as a advertising medium could be limited by the fact that users - unlike TV viewers - could opt not to be exposed to adverts.

Many consumers were also highly skilled in shutting out anything remotely resembling spam, it warned.

"The unique selling point of 3G is video as it is something unique which the 3G operators bring to the party as a channel for advertising," said John Delaney, analyst at telecommunications consultancy Ovum.

"Movie clips are a special service that people want to receive, however. If it was just washing powder, it may be a different story."

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