Cellphone screen is today's hip billboard

In an ad-saturated world, the cellphone screen is a nearly pristine canvas.

But a number of area companies are helping to transform the device that 220 million people are loath to leave at home into a personal, pocket-sized billboard, hawking everything from the latest ringtone to Fabio-favored "I Can't Believe It's Not Butter!"

"We're calling the phone 'the brand in your hand' -- you're never more than a foot away from it, 24 hours a day," said Fareena Sultan , associate professor of marketing at Northeastern University's College of Business Administration. The challenge, Sultan said, will be to produce an advertisement for the phone "that excites the person holding it."

Fueled by faster wireless networks, more capable phones, and increasingly popular data services, the cellphone ad space is poised to grow, according to industry watchers, and a cluster of Boston start-ups have positioned themselves as the middlemen who bring brands to the screen.

Boston-based Enpocket Inc. partnered with Sprint Nextel Corp. to place banner ads on the carrier's mobile browser homepage last year. Third Screen Media Inc. , also in Boston, builds cellphone-sized banner ads for major brands such as Burger King Holdings Inc. , Bank of America Corp. , and Toyota Motor Corp.

uLocate Communications Inc. in Framingham plans to unveil mobile advertising that uses global positioning technology to send ads to phone users in specific locations later this year. Lexington-based Mobot Inc. used its mobile visual search -- in which users search and browse the Web using pictures taken with a cellphone camera -- to power a Starbucks Corp. visual scavenger hunt and Acura sweepstakes this summer. VeriSign Inc. bought m-Qube Inc. , a Watertown company that provided mobile marketing services, for $250 million last year. MobileLime in Watertown turns the phone into a mobile membership card that receives coupons and store alerts from grocery stores and fast-food restaurants.

"Boston does have a good technology base, but the fact is we're close to New York as well, with its strong advertising companies," said Eric McCabe , vice president of marketing for JumpTap Inc., a Cambridge company that offers mobile search on Alltel Corp. and Virgin Mobile USA and auctions search keywords to advertisers, the same way Google Inc. does online.

For now, people are "pulling" ads toward them -- visiting mobile websites supported by ads, clicking on banner ads, reading sponsored search results like the ones that show up on Google, or sending short text messages to enter contests and get product information.

But carriers who have been hesitant to turn the potentially lucrative cellphone screen into ad space because of concerns over privacy and consumer patience are beginning to test the waters, said Roger Entner, analyst at Ovum.

Sprint Nextel began posting banner ads on its mobile Internet homepage last fall. Verizon Wireless Inc. has been "exploring the possibility of banner advertising" on its mobile Internet browser, according to spokesman Mike Murphy. Cingular Wireless is planning to add advertising to its mobile search engine.

"We're trying to be very prudent," said Steve Krom , vice president and general manager for Cingular in New England. "The big question is : Are users going to find it acceptable to see advertisements and pay for service, too ?"

Cellphone carriers, which generally know a lot about their customers, are trying hard to avoid the mistakes of the Internet. The Federal Communications Commission prohibits companies from sending unwanted spam to wireless devices, and telemarketers are prohibited from auto-dialing cellphone numbers.

Eventually, a business model could evolve in which consumers opt in to see ads every time they open their phone, but get a discount on content or services, Entner said. The cellphone could develop into a medium supported by both ads and subscriber fees, like cable television.

But mobile ad spending is a tiny fraction of marketing campaigns today. Last year, companies spent $421 million, or 2.6 percent of total online ad spending, on mobile campaigns in the United States, according to eMarketer Inc.

Major advertisers, ranging from Ford Motor Co. to the US Navy, have begun testing the space with videos, mobile Web pages, and mobile extras -- such as "Fabio-grams" promoting Unilever NV's butter substitute.

Research firm eMarketer projects US mobile ad spending could grow in 2011 to $4.8 billion, or 12 percent of total online ad spending. A year ago, a typical ad campaign at Third Screen Media was about $30,000; today a typical campaign is more than $150,000 and ad slots fill up months ahead of time, according to chief marketing officer Jeff Janer .

"Last year was about people starting to realize mobile was becoming a legitimate new advertising medium," said Maria Mandel , executive director of the two-year-old Digital Innovation Group at OgilvyInteractive. "When you have 220 million-plus people with a mobile phone, it's a wake-up call to advertisers that this is a significant way of reaching eyeballs."

Marketers think the mobile ad channel may be a good way to catch the attention of 18- to 34-year-olds who eschew traditional media channels, skipping commercials with digital video recorders and reading news online.

Also, "the phone is a device that can be with the consumer . . . right there in the aisle. That's called the moment of truth," said John Hadl , a strategic advisor for major brand marketers including Procter & Gamble Co.

Mobile ad campaigns typically cost more than advertising online, but online consumers click on banner ads .2 percent of the time, versus a 2 to 3 percent click-through rate on the mobile Web, according to eMarketer.

Mike Baker , chief executive of Enpocket said that his company reports 3 to 6 percent click-throughs.

A mobile campaign run by OgilvyInteractive's Digital Innovation Group and Third Screen Media for Lenovo Group Ltd. documented a 6.66 percent click-through rate.

Last month , Third Screen Media began using outside, third-party data to measure the efficacy of its ads -- a move it hopes will help to legitimize the medium in the eyes of potential clients.

But to be successful rather than annoying, the ads have to be targeted, relevant, and even cool.

Such companies are still experimenting -- figuring out how to tap the potential of the mobile marketing ecosystem without starting a backlash.

"It's a very, very private space. People have a tremendous emotional attachment; we've got to be really careful," Sultan said. "If you think spam is bad, it's really, really bad on your cellphone."

Carolyn Y. Johnson can be reached at cjohnson@globe.com.