It’s been a long time coming – but 2007 will be the year that all the pieces fall into place for some successful and effective mobile ad campaigns. The infrastructure is there, the inventory is growing, and the operators - who were once the problem – are now seeking solutions to grow the market and their stake in it. That’s the view of Tom Burgess, CEO of Third Screen Media, a mobile ad company that entered the space four years ago. I spoke with Burgess to get his take on the mobile advertising hype. Sure the numbers are impressive, but will users buy into it? Burgess is convinced the next stage of growth is on the horizon, and shares some examples to back it up. “The research we’ve been involved in, especially with carriers and particularly with Sprint and Verizon, [shows advertising is] accepted very readily.  Subscribers are happy to see ads, it’s common for them, they don’t mind that so long as it [the ad] doesn’t cost them more, isn’t inundating and brings them some value.” But it’s not TV, and the industry shouldn’t get ahead of itself. “Video advertising is simply not there yet in mobile.  It is something that will be the same as online. [But] there’s going to have to be some research on how best to integrate that type of advertising in the mobile space.”

Under pressure: “Carriers are back with a vengeance” and turning up the pressure on media companies to come to the table. Now the “biggest barrier” is getting the relationships right and the business models in synch. “They need to get to the same table, work out their business arrangements and execute in the future.” More importantly, both parties have to get their head around mobile search. Search engine companies – Burgess doesn’t believe the branded vs. white label debate will be around much longer – provide an important stream of data that will allow operators and advertisers to deliver the right ads to the right users and drive the right results. “This quarter, and the first half of 2007, is when you’re going to see true, real targeting that is going to work in (mobile advertising) campaigns here in the U.S. and in Europe.” Burgess is currently working with two European operators “to build out their infrastructure so that advertising is possible.” The company is also working with “about 15 different media companies that have a European presence to look at how they’re going to take [advantage of] the opportunity of advertising.”

Models for money: Mobile search companies are billed as the missing link, making a slew of new monetization models possible (such as pay-per-mobile transaction or pay-per-mobile customer acquisition – since it’s all traceable on mobile). But for now, at least, it’s all about the performance-based model. “There will be higher, premium CPM-based models in the display side, say for video and mobile Web environments.” Burgess added: “I think there will be performance-based models and CPM based models. And, in addition to that, there will be bidding - and all of those models are going to vet themselves out as the audience increases and as the advertisers start to see better response rates.” But – and it’s a big “but” – none of the performance-based and/or the auction-based models will be valuable until there is solid targeting.  Quite honestly the industry is not quite there yet.”

Targeting – a trade-off?: “Targeting is the next thing that’s going to be very important for acceptance from the consumer side.  If you have good targeting, then the idea is that a solid ad campaign can be run to the right audience; therefore the audience is more accepting.  You don’t want a diapers ad showing up to a 15 year old kid or a 18 year old guy - you want to make sure you’ve maybe got an extreme sports ad that goes to those types of folks, something that’s more relevant to your audience.” But there is a potential downside to watch out for if operators and media companies get too good at targeting their audiences. “As you bring targeting in, you further diminish your reach – it’s a positive thing that you can reach 10 million people in a month by working with someone like us, but once you target down your audience, you’re obviously just going after pockets or segments of that 10 million.  So, if you do that same model in video today and you’re only starting off with a million people, and you start to target them, you quickly go down to a small audience.  That’s changing, but that’s the current situation.”

Mobile search: Another mouth to feed?: Or will they help everyone to have a hearty feast? “Therein lies the ongoing debate.” In his view there’s room for “partnerships –possibly co-opetition partnerships, where there is good demographic and behavioral targeting.” Third Screen partners with search engine companies for their analytics. “It’s the online world all over again…the primary value of search advertisement, a buy, is …the bidding on keywords. And you’ll see a very similar model in mobile.”

Stream the audio below (RSS readers will have to click through), or download the MP3 of the interview from here.