This year, their agency delights in the name Spank.

It’s Christmas, so like a proper agency, they decided to put on a party, as you would. But how to showcase their creativity? Well, if the name of the agency is Spank, you have your theme pretty much there. But how do you invite people?

This is the email I received:

Google yourself from anything BUT a mobile device.

If you cant find what we’ve hidden for you, it means you don’t google yourself enough and you need to start doing it more often.

Naturally enough, I googled “Russell Buckley”. And what did I see at the top of results, in the form of a Google AdWords

Click on the link and you get through to the Spanking Good Party website.

How cool is that?

I’ve been very critical of Bluespamming – the indiscriminate blasting of a marketing message to all mobiles in the vicinity who happen to have their Bluetooth switched on, as if that was consenting to the spam. I’ve also been pretty sceptical that it would make it as a stand-alone marketing channel. And while there may be ways of legitimate opt-in Bluetooth marketing, I’m not sure that they ever provide the scale that makes things work.

Of course, many disagreed and set out to prove me wrong on all counts. I’m not aware that anyone has succeeded yet, but I’m always interested to have an update from anyone who has had an outstanding success with the channel or who has a thriving business model somewhere.

One entrepreneur who had a lot of early success was South Africa’s Petros Kondos. Sadly for him, the star which shone brightly at first eventually waned and he closed the business. However, Petros knows that there’s certainly no shame in failure – in the words of the legendary entrepreneur and investor, Vinod Khosla, “I’ve failed more times than I’ve succeeded”. And my own success in mobile marketing was built on the failure of my first foray into the industry with ZagMe.

Petros has written a warts-and-all account of his years as a Bluetooth Marketer. This includes some great case studies of success, but also specifies all the lessons he learned over the years, including what Bluespam is (and isn’t) and why his venture didn’t make it. If you have any interest in this area at all as a marketer or potential entrepreneur, this is a must-read book.

Great entrepreneurs learn from their own experiences for sure. But I think it’s especially admirable when they make those lessons public and share them with the world in the belief that it will save others repeating the same mistakes.

You can get your free PDF of Petros’s book by mailing him pk AT telkomsa DOT net or tweeting him @petros99.

Petros is moving to Toronto shortly, so look him up if you’re in the area. Or better yet, recruit him for your company or startup.

So here’s my attempt at a wooden stake through the heart. I know my stake won’t work. I know entrepreneurs will keep trying it. But this is at least a reference point I can point them to, rather than re-stating the same arguments again and again and again.

By the way, the reason I know this is because I’ve also been sucked in to this kind of thinking. So it’s the voice of experience, rather than my little pet theory.

Just to set the context here, I’m specifically talking about Permission Based Marketing (PBM), though the points may well apply to other models too.

1. You don’t need to

If you think citizens need paying to see advertising, you’re on the wrong track. It’s the wrong way of thinking about the messages you’ll be sending out.

Instead, you need to think about the content in the same way as an editor of an old skool newspaper thinks about her editorial. Will this be of interest to the reader? Will it add value to their lives? Will it be welcomed as part of the ongoing communication? If you can honestly answer “yes” to this, you can send it. if it doesn’t pass this test, don’t. Simple as that.

5 years ago, I wrote a post about what constitutes value and it’s probably worth a look if you’re interested in this area. But the basic point was that adding value was about providing the user with an IDEA – or Information, Deals, Engagement or Advertainment. More detail in the original post or in my White Paper on LBS, which I’ll send you if you email me russell AT mobhappy DOT com.

2. The Consumer Won’t Earn Enough

Once you start crunching through the numbers, no matter how you slice and dice it, it’s hard to find a scenario that earns a person a (very) maximum of $10 a month. Why? Because advertising is about scale. You have to deliver ads in very large volumes to make money or earn money.

Let’s do some basic maths. If you charge the advertiser $50 CPM (by the way – approximately 5 times the going rate) and give say 10% of that to the consumer, that would seem reasonable, right? So, every 1000 ads the consumer sees, earns them $5, which equates to 2000 in a month to earn $10.

Don’t forget we’re talking PBM here, so that’s 2000 messages (think SMS or email) over a month or 66 a day. It’s just not going to work.

Now, people will say. Yes, but this is a new form of marketing. It’s post-advertising advertising. Maybe it is, but with inflated cost you get minimal advertisements to sell, which means the consumer earns less than ever.

Of course, I can’t cover every scenario here. It maybe that providing the value in some other form of currency with a high perceived cost, but low actual cost is possible. But if you heed my first point above, you don’t need to worry about this element at all.

3. Contingent Liability

When you issue your user the right to claim money from you, from an accounting perspective (this may depend on where you’re based), you have to make provision on your balance sheet that you will pay them. Even when it’s perfectly clear (like 5 years later) that you won’t be paying them.

This can create a huge liability for a small business, hogging increasingly large amounts of precious cash.

Of course, there are ways to get round this, like having an expiry date, but this makes it less attractive for the consumer. Back to Point 1 again.

4. The Wrong Users

If you do pay people and they are really doing it to get their grubby little hands on $10 a month, how attractive do you think this audience is going to be to an advertiser? If they really need money that badly, are they going to be able to afford anything that the advertiser wants to sell?

Even if they really are a great audience, you’re going to find it hard to overcome this widely held belief among agencies, especially. It’s just another reason not to try your groovy channel out.

5. The Nick Syndrome

Apologies if you’ve read this little story before.

I had a friend I shall call Nick, because that’s his name. When he gets very drunk and happens to be in a restaurant, he calls the waiter over and asks for 15 eggs and 15 wine glasses. The bemused waiter normally brings them and Nick spends about 20 minutes building a complicated pyramid of eggs and glasses. By this time, most of the restaurant are watching in suspense.

Nick then announces that he’s going to pull the table cloth out and all the eggs will break and fall neatly into their corresponding glasses. The suspense is palpable as it would be truly amazing if he managed to pull this trick off. With much theatre, Nicks grasps the table cloth, (even the kitchen staff are watching now) and with a flourish, he yanks it hard.

Glasses and egg fly everywhere, coating the immediate vicinity in broken glass and yolk. It’s also noticeable that not one egg has broken cleanly into one glass. The restaurant is hushed in shock and Nick stares at the wreckage. He then shakes his head and says, after a 4 second pause:

“It never works….”

Paying consumers doesn’t either.

Happy for a startup out there to prove me wrong and maybe it is possible. But I doubt it.

However, it does raise an interesting issue about advertising and brand association. The generally accepted wisdom in the Brand Manager’s Basic Manual is that brands should avoid advertising in controversial media. These days, a good example of this might be media containing User Generated Content. UGC must be a BAD THING as the advertiser doesn’t know what it might contain and HAS NO CONTROL over the content. Thus, the advertising might appear in conjunction with NASTY STUFF like partial nudity, men wearing skimpy lederhosen or recipes for twee cup cakes.

The other side of the coin is that people who are viewing this perverse content don’t find it controversial or offensive, otherwise they wouldn’t be looking at it. Well, unless they’re trying to be offended, for reasons too strange to consider. So, if they implicitly like the content they’re consuming, why would they find any brand associating itself with that content inappropriate? Or worse, would they not buy the brand which has associated itself with material they like to imbibe?

OK, I realise that this somewhat disingenuous. If a brand associates itself with some kind of extreme political view, as an example, it can come across as endorsement and that can’t be a good thing. But overall, I think brands are far too precious about this issue.

As far as FCUK is concerned, this is a great idea which will earn them millions in free publicity, as well as demonstrating their grasp of the zeitgeist to their brand fans. And when the inevitable “Yes, it was an actual penis” articles appear in The Daily Mail, they’ll be laughing loudly at quite how clever they’ve been.

The article says that users who come within a half-mile of one of TNF’s urban stores (or 1 mile of its suburban stores) will get sent some sort of come-hither message (like “The new spring running apparel has hit the stores! Check it out @ TNF Downtown Seattle.”), and eventually, they’ll send messages to people who visit certain hiking trails or ski slopes with weather conditions or other info. Placecast has evidently set up 1,000 geofenced areas across the US that will trigger messages from The North Face to users.

It’s great that the system is opt-in; that answers one of the major criticisms of the Starbucks example. The geofencing is a slightly more advanced location technology; adding in areas other than the stores is definitely new. But do these additions make the overall concept any stronger?

That’s not totally clear. Placecast says they won’t send a user more than 3 messages per week, but it’s the content of those messages that’s more important than their frequency. If you go to downtown Seattle and get messages you aren’t interested in from TNF every time you’re near their store, how long will you stay opted in? What will be the effect on your perception of the brand? And further, what value does a “come into the store to see some new stuff we want to sell you” message offer to the recipient? Not much, I’d say — even less if it’s not well-targeted.

What seems to often be forgotten in the discussion around LBS advertising — especially models like this — is what they offer the recipient. Simply delivering better targeted ads is a benefit for marketers, and is not inherently one for customers, too. If a customer opts in to receive messages from a brand or retailer, they’ve got to offer something of value. That doesn’t mean that every message has to be a hugely valuable coupon or be something else of tangible value, but they have to be worthwhile in some way.

Every message sent out has a negative value potential. That is, each time you contact a customer there’s the potential that the message is hurting your relationship with them, rather than helping it. If you’re setting up all these geofences that will trigger your messages, and thereby increasing the volume you’re sending, it puts quite a burden on you to ensure that each message is meaningful and valuable. Location targeting doesn’t help you get around this, regardless of how well it works.

This one was about a marketing stunt that’s badly backfired in Latvia, causing Tele2 to lose its Government contracts. Not all publicity is good publicity – the proof.

I’ve also been writing at Media Week about the implications of the imminent take-off of Android for mobile advertisers. Exciting times.

I went to buy some lovely Full Sail LTD 03 beer at my local liquor megamart the other week, and was greeted with the above sign pasted on the front door. Being the adventurous type, I figured I’d turn on my Bluetooth and see what they were up to… but my Bluetooth was already on and by the time I finished that thought, I’d already gotten their first message (I’ll skip over the “What Constitutes Opt-In?” debate).

That first message? A business card with the store’s address and phone number:

I’ve never called my local liquor megamart, never had the need to and thought “if only I had their phone number!”, nor do I foresee such a need arising in the future. But thanks anyway, I guess. I then got a second message:

Sweet. If only I liked vodka and/or Red Bull. The targeting isn’t poor, so much as non-existent, but what I really didn’t get was how this was any better than setting up a display of this brand of vodka in the front of the store, just past the entrance, touting the offer. Wouldn’t that have actually been better? That way, it’s not limited to the small subset of folks who bother to turn on their Bluetooth, it doesn’t irritate those whose BT was already on, and didn’t want the message, and anybody who’s interested doesn’t have to go searching through the store for this particular brand of vodka and then find the Red Bull.

What is it about mobile marketing that makes people forget so much of what they know about marketing in general? It’s as if people get so besmirched with the idea that they’re doing something really cool by sending messages to peoples’ mobile devices, that any good sense goes out the window.

I see this quite a bit here in Vegas, and it perplexes me. The casinos spend so much time mining customer data and tracking behavior and all sorts of things through their loyalty cards and direct-mail programs. They’d never think of sending out some sort of promotion that they couldn’t track through their traditional methods, since they’re constantly trying to figure out the most effective ways to get consumers to put more money in their machines. But when it comes to mobile, very few of them do any sort of tracking, or really, do anything very useful.

For instance, I signed up to receive text offers from one major strip casino, and received an SMS offering a 2-for-1 drink at one of their bars. First, this was at 8 in the morning. Second, paying for drinks isn’t that big an issue on the Strip, assuming you’re gambling. Third, if you are the sort of customer who will be lured in by such an offer, how much value do you offer to the casino? Finally, they don’t know anything about me, and don’t have any way to track the responses. Furthermore, I can simply forward the message to anybody who’s interested in some cheap drinks. Perhaps the point for the casino is that any additional traffic is good, which at this point in their business cycle, might be true. But it’s hard to see how effective the message will be — not that the casino has any way to really measure it.

What spurred this was seeing a post over at Symbian-Guru about a software company that’s made its whole catalog “free.” To get the “free” content, users have to earn credits by viewing ads — and the ads are prompted by phone events like ending a call or getting an SMS (heh, brings to mind something like: “This hangup was brought to you by Coke! Have a Coke, a smile, and shut the hell up!”). Ricky from Symbian-Guru says he didn’t find the ads too intrusive, but personally, I feel like having common phone events generate ads would bother me.

Another example comes from US operator Cricket, which recently launched its Myperks program. Users can sign up for it and get content delivered to their idle screen, along with ads and coupons. This sort of thing’s been mulled over for a long time, and lots of people seem to feel like a phone’s idle screen is fair game for ads mixed in with some content. Again, I’m not so sure, both personally, but also because the ads don’t take any sort of context into consideration.

What do you think? How best should content providers balance this? Do these examples go too far?

Spotted on a sign in The Venetian.

I spoke to MADS’ CEO, Ashu Mathura a little while back, and he talked me through their multi-channel system that publishers and marketers can use to insert ads in mobile web content, messaging, applications, video and other types of mobile content. They also have an offering for operators that allows them not only to create inventory in their own content, but to use their subscriber CRM data, as well as behavioral data, to better target ads and create more compelling campaigns for advertisers.

As consumers worldwide seek to rein in their spending, companies like MADS that can enable ad-supported content and free services should do well. The big assumption, of course, is that marketers will keep spending — but like others in the field, MADS is seeing very high clickthrough rates (up to 10%) relative to standard web advertising. MADS also says it’s currently processing 300 million ads per month, an increase of 50 million in two months, and it’s now touting its ability to let marketers create campaigns across 15 European countries through its interface.

This is a great time to be in the mobile advertising business. More and more publishers are becoming interested in monetizing their mobile web traffic, and with good reason. Personally, I continue to be amazed at the performance of ads on MobHappy’s mobile web site relative to the Google ads on our standard web site (noting that I’ve done little to optimize the standard ads). We get a clickthrough rate that’s roughly 15 (yes, fifteen) times higher on mobile and the eCPM is about three times higher, generating very impressive revenues relative to AdSense on the standard site (but still not enough to let Russell and I retire ). For publishers that have large or growing mobile web traffic, these sorts of figures are mouth-watering. Add in the ability that companies like MADS can offer to enable ads in other channels and craft new ad-supported mobile services, and their enthusiasm is easy to understand.

Meanwhile, operators’ interest in advertising is growing as well, as they look to supplant direct consumer spending and boost flagging revenues. They already have the potential to create significant inventory thanks to their portals and other content; I’m very optimistic that new technologies and companies like MADS will help foster the creation of new ad-supported services so that users, as well as publishers and operators, can benefit as well.