Nokia Picks Enpocket in Mobile Ad Grab

No. 1 handset maker Nokia (NYSE: NOK) said Monday it will buy Enpocket, a startup that focuses on creating and delivering targeted brand advertising to mobile phones.

Finland-based Nokia did not disclose the purchase price it paid for the privately held firm, but said it will use the acquisition to "accelerate the scaling of its mobile advertising business."

Enpocket's "mature leading edge platform" and expertise make a good fit with Nokia's own mobile advertising capabilities, said Nokia Chief Technology Officer Tero Ojanpera.

'A Game-Changing Move'

"This acquisition is a game-changing move to bring the reach and depth of Nokia to organize the market across the world, and make it easier for an ecosystem to develop," he added.

The acquisition is part of a larger strategy by Nokia to ensure it is a player in the emerging mobile marketplace, where high-level services are being made increasingly possible by advances in network speed and reach, by improvements in handsets and by consumer confidence in the security of mobile networks.

As carriers roll out next-generation services -- just last week, Sprint Nextel (NYSE: S) announced the availability of a mobile shopping platform, for instance -- handset makers such as Nokia are eager to position themselves as the technology provider best equipped to provide phones to work with those services.

Global Reach

Founded in Boston in 2001, Enpocket received approximately US$25 million in venture capital backing and opened offices worldwide, including New York, Los Angeles, Chicago, San Francisco, London, Singapore and Mumbai, India.

Enpocket's Boston headquarters will become the worldwide center of Nokia's mobile advertising efforts, it said, with the firm's CEO, Mike Baker, heading up that unit.

Enpocket has created mobile ad campaigns for brand advertisers such as Pepsi, Ford, Expedia, Toyota and Snapple. For instance, around the time of the 2007 Super Bowl, the firm created a campaign in support of a Pepsi contest that delivered some 9 million ad impressions to phones on the Sprint Nextel network and saw a 4.5 percent click-through rate overall. Some 175,000 consumers also downloaded Pepsi wallpaper images for their phones.

The firm handles creative advertising content creation and delivers the ads via its own platform, targeting users most likely to be receptive to the ads based on data analysis and other considerations.

Other Deals

Web-based players have recently scooped up a number of mobile ad firms as they begin to prepare for the next big thing in reaching consumers wherever they go.

AOL bought Third Screen Media in May; in August, Yahoo (Nasdaq: YHOO) purchased Actionality, which makes in-game advertising and marketing solutions for mobile devices. Earlier in the year, WPP Group, one of the largest advertising agencies, bought a stake in privately held mobile ad firm JumpTap.

While it's unusual for a handset maker to be jumping into the ad creation and delivery business, it fits with Nokia's larger push to be a player in the mobile Web space, said JupiterResearch analyst Thomas Husson.

"Nokia is moving from being a pure handset manufacturer to being a service provider," he told the E-Commerce Times. "Nokia simply wants to deliver a more integrated experience and make sure consumers are ready to pay a premium for their devices."

The strategy, however, underscored by the Enpocket buy and the recent creation of a separate business unit -- known as "OVI" -- to handle Internet service businesses, creates a tension in Nokia's relationship with network operators, forcing it to walk a fine line, across which it becomes an outright competitor with their own service offerings.

Anywhere, Anytime

The mobile handset is increasingly being viewed as the next frontier in advertising, even as Internet marketing is still being perfected. The handset is seen as a key channel for marketers because most consumers have their with them nearly around-the-clock. With GPS-enabled phones providing carriers information on where a person is traveling, ads can be targeted not only by interest but by location as well.

"The stage is set for an explosion of mobile marketing and advertising," said eMarketer analyst John Gauntt.

eMarketer forecasts mobile ad spending will reach $4.8 billion by 2011 -- when it will make up as much as 12 percent of the total Web advertising spending.

It will take time for that trend to take hold, however, with consumer reluctance to such intrusive ads a hurdle that needs to be negotiated carefully. "There are things people are comfortable with and things that they won't be," Gauntt told the E-Commerce Times.

With Enpocket on board, Nokia will be among the major players trying to clarify those rules of engagement. For instance, the platform enables display advertising, as well as text messages and even video ads, depending upon the campaign's goals and other factors. Over time, more users will be willing to accept advertising on their phones as way of reducing their monthly billing changes, Gauntt added.