Two consumer advocacy groups plan to file an FTC complaint about mobile marketing and its emerging practices. The advocacy group Digital Democracy filed its complaint in conjunction with U.S. Public Interest Research Group.  

According to an article in MediaPost, Jeff Chester, founder of Digital Democracy, says, “We’re filing a complaint to force the FTC to take a proactive stance. Mobile ad companies incorporate the same problematic business practices that we witnessed with PC-based broadband marketing, including behavioral targeting and profiling techniques — except that this time they know your location.”  

The main focus of the complaint is behavioral targeting in general since this type of data is often captured without first obtaining consent. The Federal Communications Commission already prohibits marketers from sending text message ads to consumers without their opt-in consent, but some other types of mobile ads — such as wireless application protocol banners or search ads — are not similarly restricted.  

The Kelsey Group forecasts the mobile marketing segment to grow from a current $33.2 million to $1.4 billion by 2012. Our forecast also predicts the mobile Internet population will grow to 91 million by 2012, making the mobile advertising market too attractive to ignore.  

The goal of the FTC complaint is to place restrictions on mobile advertising while the category is still developing. The downside is that these types of restrictions are the very things that have kept the mobile advertising industry from developing in the U.S. With search growth slowing, mobile advertising is the next logical platform for growth and investment particularly by the major portals, meaning it will be a hard-fought battle to maintain the freedom to experiment with advertising formats and data gathering techniques to determine what consumers will and will not accept on their mobile handsets.   

Today at DDL, Call Genie Director of Product Evolution Gary Galinsky pegged the lineup of mobile ad formats (SMS, pre-roll audio, post-roll audio, banner, etc.) as “interruption marketing.”

The only way to skirt this is relevance, and like real estate, he says, the greatest source of relevance in mobile is “Location, Location, Location.” In mobile search, location comes ahead of primary decision drivers in other media, such as brand and price.

“Even if I’m a loyal Starbuck’s customer, if there is a Tully’s closer, I’ll opt for that,” he says. The point is well taken but probably loses credence the further away one gets from commodity products (coffee).

Location is also gaining importance as more and more mobile devices are equipped with location awareness including GPS, cell tower triangulation, cell site ID, Wi-Fi ID, etc. More importantly, the way we communicate should be taken into consideration in the way that mobile search content and ads are indexed and served.

“We don’t communicate by address; we reference things based on landmarks,” he says, pointing out that directions you give friends and family will generally involve at least one “take a left at the water tower” or something similar. People are also naturally inclined to search for local businesses using terms like “near SFO” (San Francisco Airport).

How to approach this problem from a data standpoint is one issue, and companies such as Urban Mapping are working to better index mapping data based on local colloquialisms (albeit, more in the online mapping arena).

Galinsky’s vision also reminds of the important challenge of natural language search. This is something that will be a major area of development in online search, and is at the heart of the semantic Web, coined already by some as “Web 3.0” (sigh).

Given a big move toward multimodal search and the fact that the mobile device is, after all, a phone, natural language processing will be as important in mobile as anywhere else.

A lot has happened so far this week with directory assistance and voice search providers.

Call Genie yesterday launched a new product suite. This includes three platforms that let DA providers, Yellow Pages publishers, carriers and search engines build branded mobile local search products. These products will utilize the assets gained in Call Genie’s November acquisition of BTS Logic and Phonespots. It also signals another evolutionary step for Call Genie in moving beyond voice-driven category search to more comprehensive mobile local search functionality for the above players. This will be a sizable opportunity, as stated many times here and in TKG’s recent mobile forecast.

V-Enable also launched a downloadable client version of its WAP-based FreeMobile411 for Sprint phones. The WAP-based version was released earlier this month and differentiates itself from other free 411 offerings by offering live human support (see video here). The product includes business and residential search, maps and directions, and category search, in addition to live operator assistance. The client version will allow users to speak queries while holding the talk button and receive visual results — multimodal functionality that will be one of its main selling points.

Speaking of multimodal, Tellme (one of the first and leading providers in voice/visual mobile search) launched a new search app for BlackBerry today at the Web 2.0 conference. The application will carry Tellme’s voice in/visual out functionality and will include business lookups, movies, traffic, weather, maps and driving directions. See the video demo here.

Lastly, The Kelsey Group has learned from knowledgeable sources that Jingle, which runs 1-800-FREE411, is for sale.

Local retailers are increasingly going beyond store locators to drive sales. The extensions to store locators include brand locators, coupons, menus, trip planners, and even guides to where Wi-Fi, nonsmoking and RV parking can be found.

A leading vendor in providing retailer solutions is Anaheim, California-based Where2GetIt. Roughly 280 companies and 550 brands are using Where2GetIt today, representing 700,000 brick-and-mortar locations. These include manufacturers, retailers, restaurants and agencies.

Brands that use Where2GetIt include such mainstays as Office Depot, Hancock Fabrics, Columbia Sportswear, Mountain Hardwear, Patagonia, Monster Cable, Mitsubishi Digital, Sony, ViewSonic, Outback Steakhouse, Red Lobster, Applebee’s, White Castle and Cracker Barrel. I ran across the firm looking for an Alpine car stereo, for instance.

The 25-person company got its start in 1997, when it won an assignment from Seiko to build online maps showing where its watches could be bought. Since then, Where2GetIt has extended its “locator” capabilities to a wide range of brand-specific products.

It provides a “turkey locator” for Popeyes Fried Chicken, a “running locator” for Reebok, a “pie locator” for Bakers Square and a “job locator” for recruitment firms. What ties them all together is a focus on helping consumers find brand-name products.

Where2GetIt CEO Manish Patel says the firm’s “Business Locator” continues to be the firm’s mainstay — typically one of the two most used features on a retail Web site. But the supplemental products have become increasingly important to the firm’s business model, which is based on licensing. For instance, adding coupons to Popeyes’ site doubled the chain’s Web site traffic, he says.

The firm’s other services tendered tend to be more strategic (i.e. future oriented). Firms such as Office Depot, for instance, use Where2GetIt’s mobile products. They include mobile locators, mobile browsers, SMS text messaging and toll-free 800 interactive voice response.

The firm is also heavily engaged in site analytics to drive sales conversion. “We try to figure out how far people will drive” using crowd sourcing and other techniques, says Patel.

Citysearch made a recent announcement that it will partner with Scanbuy to offer a mobile application that lets users get information and promotions about local businesses by scanning bar codes placed outside their locations.

Technically, it’s not a bar code scan but more of a picture that is being taken (camera phone required) and read by the application (download required). The company is largely in an experimental stage with the product and has bar codes like the one below placed on about 500 San Francisco restaurants and billboards.

Currently bar codes will take users to a mobile version of the Citysearch page for a given business, including all its standard content and features (promotions, business information, user and professional reviews, etc.)

“Citysearch is driving consumers to businesses doors every day,” said VP of Product Strategies Rob Angel in a conversation earlier. “This gives access to Citysearch content in another way. They can find out special offers or reasons to interact with a business. It’s also a tangible way for advertisers to get impact from Citysearch in driving people in the door.”

The New Outdoor Advertising

In some ways this is an evolution of the centuries-old practice of hanging a menu outside restaurant windows. Think of it as a last push to get consumers in the door when they are already in close proximity and have shown at least some interest in a business.

It also opens up some tracking possibilities in having users redeem offers that they found through the mobile application. But a great deal of the ROI will be seen anecdotally, contends Angel, as proprietors see people snapping pics outside, milling around, and/or entering the restaurant or bar.

For these advertisers, it won’t come with any additional cost or upsell just yet. It could end up being a value add to the existing Citysearch ad spend and an enticement to its value proposition. But none of this has been determined yet, as the rollout is still in pilot phase.

Keep it Simple

Stepping back, this is another example of the new mobile creativity and innovation that is starting to take form (see mobile social post yesterday) to drive mainstream adoption. One driver will be enabling technologies that make it easier to use mobile search apps (location awareness, for example). This product can be considered in the same boat because it replaces opening and navigating a mobile browser with the more user-friendly action of snapping a picture.

We’ll see how it does, as will Citysearch. This type of thing has been speculated about by local search watchers here and there, and has been seen to work in some Asian markets. Adoption is the issue (at least in this country), and the question is whether now is the right time. The time could be soon, as improving device standards and application development drive down traditional adoption barriers and get more people used to the idea of searching for local content on their phones.

Citysearch, for one, is interested in continuing to have the mobile device be an outlet for its content and has a few more projects in the works that it will be ready to talk about soon.

Michael Arrington scribes his vision for mobile social mashups in a TechCrunch post yesterday. He argues social networking could be the killer app of the mobile device, and one of the biggest beneficiaries of the expected surge in application development (we argue it will be local search):

Imagine walking into a meeting, classroom, party, bar, subway station, airplane, etc. and seeing profile information about other people in the area, depending on privacy settings. Picture, name, dating status, resume information, etc. The information that is available would be relevant to the setting - quick LinkedIn-type information for a business meeting v. Facebook dating status for a bar.

He correctly identifies location awareness and privacy controls as technical and social enablers for this to happen. More importantly it will be the open development environment of Google’s Android and the iPhone SDK that will get us there. He contrasts this with the current environment:

The space is wide open at this point - no one has created an application that has gotten enough traction to go mainstream. That’s party because of tech limitations - browser-based networks don’t leverage the power of the mobile device, and client based applications are blocked by service providers and handset limitations.

IPhone techno-elitist early adopters are the perfect base to get this mobile social graph started, given the camaraderie among their ranks. From there, he says, it will grow, hopefully in sync with greater iPhone penetration — or that of cheaper copycat devices that will soon become standard issue for the mobile mainstream.

Questions are: Will the development-to-market timeline and the social acceptance be in step? And what local search mashups will we see, given that bars and restaurants are a central part of this vision?

Yahoo! announced today at CTIA that it will integrate voice search capability into its OneSearch mobile search application. The new “OneSearch 2.0″ will be powered by Vlingo, a speech recognition technology company that also received a $20 million B round today (led by Yahoo!). This all comes the day after human-powered search engine ChaCha did the same thing with its mobile product.

The increased mobile search adoption expected from the buzz and usability standards of the iPhone is beginning to lead to a land grab of product development to convert early users. Many of the announcements coming out of CTIA this week are testament to this.

Yahoo!, like everyone else, clearly sees mobile as an opportunity and a “greenfield” for search growth and, eventually, ad support. OneSearch should get some good traction, since Yahoo! has formed carrier and manufacturer partnerships that give it access to 600 million mobile users. Through this, voice search will get the bump in exposure that was forecast in TKG’s recent Mobile Market View report. Other sources of this exposure include Goog411 and Microsoft’s Tellme.

OneSearch currently is only available on BlackBerrys, but Yahoo!’s goal is to plant it on the home screens of devices that run on its 29 carrier partners’ networks.

Google meanwhile has a different approach to the mobile world. Through Android and its Open Handset Alliance, it is sidestepping the need to partner with carriers to get its search apps on the carrier deck. Instead they’ll be built into, or closely tied to, mobile operating systems on devices that support Android and its open source applications.

Either way, there is clearly a great deal of development happening in mobile, and local search will be a clear beneficiary of this innovation. It’s almost become a cliche by now … but the mobile world is where the Internet was 10 years ago. There is an exciting ride to come (hopefully without sock puppets).

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Graphic Courtesy of GigaOm

“Human-powered” mobile search engine ChaCha announced today that it has integrated voice search capability. The company started in late 2005 as an online search engine that tapped human operators to return results, with the thought that directly answering natural language queries differentiated it from the machine-powered search engines that rule the world.

But after realizing that trying to change users’ online behavior is more than a difficult proposition, it shifted its focus to the mobile search environment. Not only is this virgin territory (relatively) where users’ habits and expectations have yet to be formed, but there is a great deal of growth expected here, as we and others keep saying.

ChaCha’s mobile product, launched in January, is a text-based service that allows users to ask any question, which is then answered by human operators and texted back. Voice capability now makes it even more attractive and broadens the use case to include searches while driving or at other times when talking is preferred to texting.

Talking the Walk

It will be interesting to see if this brings the product into the range of appeal of those who are inclined to use directory assistance. The experience is in fact similar to automated DA queries such as Goog411, but it allows for a greater universe of queries, beyond “city and state” (i.e., “Who is pitching in the Oakland A’s season opener against the Red Sox tonight?”).

Other uses have come to light at the CTIA Wireless Show this week, according to President and Cofounder Brad Bostic, as many large brand marketers have expressed interest in using it for specific types of searches. These could include a virtual information desk at theme parks where visitors can text in park-specific questions, or a Weight Watchers application that lets users text names of various foods to have their “point values” texted back.

“One of the keys for us is to build partnerships for big brands and big user bases,” says Bostic. “There will be some creative ideas for how they can use ChaCha in different ways.”

The company is close to closing a deal with Indy 500 to have its service used for specific searches related to Indy Car racing at Indy events. In addition to these licensing deals, it will also monetize with transactional-based advertising such as appointment scheduling, restaurant reservations or travel bookings.

“Say I call and ask for what time a Southwest Airlines flight is from Las Vegas to Indianapolis at 5, and results are returned for an AirTran flight leaving at 5 and a Southwest flight at 6,” says Bostic. “This could then carry forward into a process of completing the transaction, possibly through a tie in to a third-party site like Orbitz.”

Location, Location, Location

There are clearly lots of possible local applications along these lines. The local appeal can be enhanced by texting “set loc” to the service, which remembers your explicit city or ZIP for future local searches and finds answers and human guides accordingly.

This local relevance will only grow, according to Bostic, as location awareness (GPS and triangulation) will be integrated to make local searches smarter. Location awareness, as we’ve mentioned, also knocks down an adoption barrier, and will be another enabling technology to prod mobile local search along in its slow march toward mainstream adoption.

So all this looks good on paper and holds up to the few test queries we gave it. The proof for ChaCha will be in getting users to adopt it. Here, a boon could come in the overall growth expected for mobile search, including voice search applications, which will get more mainstream exposure through the promotional efforts of Goog411 and Microsoft’s Tellme.

Bostic is seeing positive metrics in repeat usage (55 percent after the first query) and word of mouth (70 percent referral rate). After all, despite the hype about iPhone and smartphone adoption, talking and texting are still the primary functions used on mobile phones.

Local search platform provider Local Matters has announced it will acquire mobile search platform provider mobilePeople for a combination of cash and stock. In a nutshell, this will extend Local Matters’ publisher partners’ ability to sell mobile and DA-delivered voice advertising in addition to print, IYP and a growing media bundle.

We’re seeing lots of talk and lots of development of the mobile industry on the consumer side, as the iPhone and other factors are bringing advanced mobile features — including local search — further into the mainstream. As this penetration grows, advertiser interest will follow and mobile search query volume (inventory) will increase.

To fulfill this advertiser demand, ad serving products will have to be developed that are easy to digest — especially those that target SMB advertisers. Like paid search, geographically targeted mobile ad buys that are bundled on to existing media buys, such as Yellow Pages, will probably be most salable (and scalable).

Local Matters has been smart in the moves it has made to provide much needed online functionality to Yellow Pages publishers, and its global partner/client list speaks for itself. The mobilePeople acquisition follows this trend and shows that the company is ahead of the curve in getting ready for an uptick in demand for mobile ad placements (and voice search) in the coming years.

This also comes weeks after the launch of its new social media-driven city guide platform, which similarly broadens its capability to serve local media publishers. Local Matters and mobilePeople have an existing relationship and also work with a lot of international Yellow Pages publishers (mobilePeople’s list here). More to come after we’re able to talk with Local Matters later this week.

M:Metrics released a study earlier this week that makes big claims about the iPhone’s impact on the mobile market. It points to the high percentage of iPhone users who are accessing mobile data such as search, browsing and mobile entertainment.

This all makes sense because iPhone users are mostly a self selected segment of mobile power users or early adopters who, not surprisingly, have a propensity toward mobile search and data (not to mention that all iPhones are tied to unlimited data plans).

Similarly, Google announced a few months ago that the majority of Google mobile searches were happening on iPhones.

But I’m still split on the quantitative impact the iPhone is having. I have an iPhone, most of my friends have one, EVERYBODY at SES New York this week had one. But is there a “Silicon Valley effect” going on here? What about the rest of the U.S. and those outside the tech world who make up the real bulk of the consumer population?

In fact, iPhone penetration has reached less than 1 percent of the 219 million U.S. mobile subscribers, and it accounted for 2.2 percent of U.S. handset data delivered in February, according to AdMob. M:Metrics numbers above only look at the iPhone’s use with decidedly more fun applications; when you consider all mobile data consumed (e-mail, etc.), the iPhone’s share is put into perspective.

TKG’s recently released Mobile Market View study similarly showed lower than expected interest from mobile users to purchase an iPhone (data below). These data suggest the iPhone isn’t as mainstream as the media would lead us to believe. It’s certainly a mainstream phenomenon in terms of people talking about it, but in terms of actual usage …

But…

All that said, the iPhone will have a real impact. But rather than near-term penetration, this impact will come in the form of pushing new standards into the mainstream mobile market. This is especially true for mobile search and browser capabilities (a focus of the M:Metrics study), which are the most relevant for local.

In other words, Apple has considerably raised the bar with hardware standards. Combined with the SDK release (and Google Android), this will improve mobile products and finally push mobile search and browsing beyond the early adopter phase where it’s been stuck for years due to a low-quality experience (mostly WAP).

As this happens, prices will drop for the iPhone and copycat devices that inevitably flood the market. With greater mobile search penetration comes implications for search volume, search inventory, advertiser interest and better ad serving products. This will likely come in the form of a mobile extension to online or search based ad campaigns such as AdWords.

Panelists on TKG’s mobile panel at SES this week agreed it will take at least a few years before all these things come together to form this ad serving capability for businesses of all sizes to get in front of mobile users. But the wheels are finally in motion (thanks Steve). One thing that is clear now is that since mobile and local are inherently related, local search apps will benefit from all this development.

For local, important questions to start asking in the meantime are: What role will IYPs play in reselling mobile search marketing? Will they do the same as they are doing with online search and video? And given the chance, how quickly will they jump on this opportunity?