Ready for cell-phone ads? Advertisers aren't

Another of Sizemore's favorites is Single Touch Interactive Inc., which plans to unveil in February a program that lets customers activate electronic coupons at drug stores and other retail chains simply by dialing the pound sign on the phone followed by "SAVE." Discounts are automatically applied at the register.

"I don't want to increase the line and have customers be frustrated because someone's fumbling trying to find a coupon" in a text message, said Anthony Macaluso, Single Touch's chief executive. "What we need to do today is not change the behavior of the retail point of sale or the behavior of the customer."

There are still a number of hurdles before mobile advertising can truly take off.

Advertisers now have a good idea what a typical desktop computer can do. Handsets, however, vary in screen size and features — even the same model can be configured differently depending on a customer's carrier.

And there are also big differences among users: Some people use phones only for calling, some have dabbled with text messaging and others are comfortable surfing the mobile Web and watching video.

"In mobile you can't assume anything," said Derek Handley, chief executive of The Hyperfactory, a mobile ad company. "You need to build programs and campaigns around this fact."

In addition, many users pay for services by the minute, message or kilobyte. Seven ads via text messaging could hike a phone bill by a dollar.

The uncertainty has led to some experimentation in business models, as some wireless carriers and ad companies bet that consumers will embrace ads for free minutes or ring tones.

Virgin Mobile USA LLC, which offers prepaid mobile services, said more than 10 percent of its 5 million customers have signed up for Sugar Mama, a program that lets customers earn up to 75 minutes of free airtime each month simply by watching ads or responding to mobile surveys. PepsiCo Inc., the U.S. Navy and Nintendo Co. have been among the brands participating.

Expect the experimentation to continue in the new year and beyond.

"That's how a new market is being created," said Dan Olschwang, chief executive of JumpTap Inc., an ad-technology company. "People adopt all kinds of stuff they know from other medium and gradually the industry learns how to utilize the best in this new medium that's called the mobile phone."

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