Mobile-phone manufacturer Nokia expanded its reach with the recent acquisition of Enpocket, now called Nokia Ad Business, a mobile-advertising company that matches consumers to advertisements by considering their tastes and needs. Mike Baker, vice president of Nokia Ad Business, describes this as an “advanced targeting infrastructure.” Baker says that the matching system gives advertisers new kinds of opportunities that could be particularly beneficial for selling tickets to local events, for example, or for offering time-sensitive discounts. If the system is deployed properly, consumers would be automatically delivered ads about products that they want at the ideal time and place.

Context is already a cornerstone of online advertising, as it leads to more-effective campaigns and higher payouts for advertising providers. Google’s Gmail, for example, automatically extracts information from your e-mail, which is used to target campaigns. Facebook uses information saved in personal profiles to present more-relevant advertisements. Similarly, Nokia already has access to critical contextual information about consumers, such as demographics, which Enpocket can capitalize on. Information from Nokia’s OVI Web portal could eventually be incorporated as part of the data set to accurately match up people with relevant ads. For example, user histories from OVI social-networking and media-sharing site Mosh could be employed to track which pictures and movies users are sharing, signaling an interest in certain products.

Nokia believes that, by leveraging such information, it can offer higher response rates than current online marketing campaigns can, because the company delivers a message that consumers want to hear, where and when they want to encounter it. Contextualized advertising would also be more integrated into the services, so it might seem less irritating than a distracting pop-up window online, for instance. Initial response rates to contextual mobile advertisements are high, partly because of the novelty of the medium. According to Enpocket, the company’s recent mobile campaign for Land Rovers was wildly successful: 70 percent of people who were exposed to the campaign chose to download videos that promoted the automobiles. Baker says that consumers may be paying more attention to the ads purely because they are so novel, and he admits that this number will likely go down as the mobile-advertising space becomes increasingly saturated, as has occurred in more mobile-friendly markets like Asia.

Some consumers might perceive directed, contextualized advertising as an invasion of privacy. Some demographics might find the fact that their personal information is being shared annoying. Gary Pearl, CEO of Community Hotspot, says, “There’s a certain segment of the population which will accept it, and another segment that won’t.” He sees online and mobile business as being in a constant flux between subscription services and advertising-driven revenue.

At the moment, hardware is the biggest obstacle to delivering contextualized mobile advertising broadly. According to Nokia, there are nearly one billion Nokia mobile devices worldwide, or nearly twice the number of PCs. However, relatively few of these mobile devices are capable enough to handle the kind of contextual campaigns that Enpocket would like to deliver. Currently, campaigns rely on technologies such as SMS and WAP to deliver messages to devices that couldn’t otherwise provide a compelling multimedia experience. As more and more multimedia-friendly phones are sold, this will become less of an issue.

Nokia’s sheer market share ensures that its decisions will be closely watched and mirrored by the industry. Philip Stanger, CTO and founder of BluBlast, a company that specializes in ads for mobile networks based at specific locations, such as trade-show and showroom floors, views this favorably. If Nokia Ad Business takes off, it could create a more consistent business model and standard software-development tools for ads, potentially benefiting mobile-advertising companies of all sizes. “One of the big problems in the mobile space has been lack of standards and coordination between any of the systems,” Stanger says, citing lack of developer support. “It’s a nightmare developing [multimedia ads] for 50 different phones.”