Payments Watch

Targeted advertising on mobile devices has not escaped the notice of such heavyweights as the CEO of Google:

Schmidt said … that as mobile phones become more like handheld computers and consumers spend as much as eight to 10 hours a day talking, texting and using the Web on these devices, advertising becomes a viable form of subsidy.

Source: MSNBC

Of course, if advertising drives down the cost of owning a cell phone, more people will use them, arguably for longer periods of time and for more applications, such as mobile payments.

One could look at this from another angle: that revenue for any service (e.g. mobile payments) can be augmented with advertising or promotions, or likewise, the cost of the mobile payment can be subsidized by advertising. What is interesting about mobile advertising is that is can be narrowly targeted not just to the specific person (unlike PC’s, people carry their cell phones everywhere and typically do not share their mobile device) but to the context of a specific location. For example, when paying for a purchase via mobile phone at Store X, the mobile payment service could advertise a promotion at another retailer for a related item in the local vicinity on the purchaser’s cell phone.

What I like about this line of thought, is that the effectiveness (and subsidy) of such highly targeted advertising could make mobile payments the least expensive form of payment for the consumer and/or merchant. Such economics alone could drive the use of mobile payments.