mobile advertisement - prospects in india

Table of Contents

Preface ............................................................................................................................. 1

Mobile Industry In India – salient traits .............................................................................. 2

Mobile Marketing – why the buzz??? ................................................................................. 9

Evolution Of Mobile Marketing - the global scenario ........................................................ 14

Mobile Marketing Ecosystem .......................................................................................... 19

Mobile Advertising Channels .......................................................................................... 22

Strategic Approach to Mobile Marketing .......................................................................... 29

Mobile Strategy in Action................................................................................................ 34

Mobile Advertising Business Models ............................................................................... 37

Brand and Mobile Network Operator - Opportunities in Mobile Advertising ...................... 42

Primary Research Report ................................................................................................. 44

Case Study...................................................................................................................... 51

Mobile Advertising | Preface 1

Preface

Business today has taken a sharp U-turn. From a product-focused mindset it has moved to marketing

oriented one, where the primary activity became crafting and communication of the right marketing

triggers to the target audience. With Customer centric principles

taking center stage, interactive dialogues to build relationships

with preferred customers on an individual basis became key.

There are two forces at work that are shaping the world of

marketing communication:

Reach is widening: Marketers are addressing ever-

increasing (global) audiences.

The Focus is sharpening: Within the widening

audience, one is tailoring communication to smaller and

smaller segments, down to the individual level.

The approaches being followed are primarily these:

Marketers that are already addressing global audiences

are now looking up to their focus from mass messages to

personalized ones.

Marketers already communicating individually to small

audiences are looking to expand their audience without

losing out on the individual touch.

Research Objectives:

Understanding the trends, opportunities and prospects of

the Indian Mobile Market from a marketer‟s standpoint.

Study consumer responsiveness to mobile marketing, in

terms of its impact on purchase decision making.

Gain an insight into the perception of mobile users

towards mobile marketing/advertising and their utility

value in terms of impact on purchase decision.

Gauge the effectiveness of SMS advertising compared to

traditional marketing communication for different aspects since the effectiveness of SMS

marketing highly depends on this.

Points to ponder…

How responsive is

Indian Customers to

Mobile Advertising?

What’s their

perception about

Mobile Ads?

How effective is

Mobile Ads in

reaching the target

audience?

Where will mobile

advertising stand 5

years hence?

Mobile Advertising | Mobile Industry In India – salient traits 2

Highlights: The Million Count

Mobile Subscribers: 391 Million

Landlines: 40 Million

Dec 2009 added Subscriber: 15.64 Million

Annual net addition to subscriber: 113.26 Million

Monthly Average Mobile Subscriber: 15.41 Million

Projected Cellular Subscriber: 500 Million

BroadBand Connection: 6.22 Million

Penetration: 37%

Mobile Industry In India – salient traits

The Indian mobile services market is highly competitive with six to eight players operating in each of

the 23 telecom circles that the country is divided into. The intensity of competition has increased in

recent months following the launch of GSM services by Reliance Communications (RCom) and Tata

DoCoMo, CDMA services by Sistema Shyam; and the continuing pan-Indian GSM rollout by Aircel,

Idea Cellular (Idea), and Vodafone Essar (Vodafone).

The competitive intensity is expected to increase even further as new licensees launch their services

and Mobile Number Portability (MNP) is introduced in India. The recent increase in competition in

the Indian mobile services market is evident from the aggressive tariff plans being introduced by

players, a move that has led to a decline in the average revenue per user (ARPU), revenue growth, and

profitability of the industry.

Besides, profitability of the mobile service

providers is also being impacted by the

increasing share of low ARPU

subscribers in incremental

additions, the bulk of which

is happening in the semi-

urban and rural areas where

the mobile penetration rates

are still low. The financials

of the telecom companies for

the second quarter (Q2) of 2009-

10 show the impact of the ongoing

tariff war and increase in competitive

intensity in the Indian mobile services market.

Although some of the incumbent operators with strong financials, extensive networks, and larger

share of high paying customers would be better positioned to withstand the kind of competitive

pressures anticipated, high capital expenditure on 3G may well lead to continued negative free cash

flows and push up funding requirements.

Intensified competition and the aggressive pricing strategies adopted by the existing operators could

challenge the sustainability of the new entrants as breaking even at lower tariffs would take longer.

This would also imply delay in the generation of positive cash flows for the new entrants. Given this


scenario, it is likely that the Indian mobile services market would see some consolidation over the

medium to long term.

India is among the fastest growing mobile markets in the world:

India, the second largest mobile market in the world, is also among the fastest growing mobile

markets globally.

The total number

of mobile

subscribers in

India (i.e., the

subscriber base)

has increased

from 6.4 million

in March 2002 to

around 350

million in

December 2008,

at a compounded annual growth rate (CAGR) of 81%, aided by a significant increase in network

coverage and a continual decline in tariffs and handset prices.

India, a relatively late entrant into mobile services, has benefited from a significant decline in mobile

network costs during the last three to four years. As compared with a capital cost of US$50-

90/subscriber to

provide mobile

service, it costs as

much as US$200-

350/subscriber to

provide fixed-line

services. This and

the added benefit of

mobility have led to

stagnation in the

total fixed line

subscriber base, which along with the significant growth in the mobile base has translated into India

having one of the highest ratios globally of mobile subscribers to total telecom subscribers.

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Global Growth in Mobile Base CAGR


Despite the growth, mobile penetration remains moderate:

As on end September 2008, India had a mobile penetration of around 27%, which is relatively lower

as compared to other countries as

depicted.

Given the moderate penetration

levels at present, mobile growth

in India is expected to continue in

the short to medium term albeit at

a lower level because of the larger

base effect.

Growth expected to be led by

B and C Class circles:

The growth in the domestic telecom industry has largely been concentrated in the Metros and Class A

circles in the past decade, with coverage reaching around 90% and 35%, respectively. However,

coverage in the Class B and Class

C cities is still low at 15-25%.

Moreover, within these circles

growth has largely been

concentrated in the urban areas

while penetration in the rural areas

remains lower. Thus future growth

is likely to come largely from Class

B and C circles and rural areas.

Keeping this in view, larger players like Bharti Airtel Limited, Reliance Communications Limited,

and Bharat Sanchar Nigam Limited (BSNL) are largely focusing on increasing their geographical

coverage in Class B and C circles.

Addition of low usage subscribers and competitive pressures lead to fall in ARPUs:

With growth coming from the lower economic strata and on account of strong competition in the

mobile industry, average revenues per user (ARPUs) have moved south over the years. The

movements in the ARPUs and minutes of usage (MoUs) for global system for mobile

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Metros44%

Tier A Circles35%

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21%

Subscriber Base

Metros Tier A Circles Tier B& C Circles


communications (GSM) and code division multiple access (CDMA) operators are presented as

follows:

In the past, with costs being amortized over a larger base and steps being taken to rationalize costs,

most telecom

operators were able

to improve their

earnings before

interest, taxes,

depreciation &

amortization

(EBITDA) margins.

However, in the

current market

conditions, the

margins and return indicators may come under pressure as ARPUs continue to fall.

Competition set to intensify further with market liberalization

The Indian mobile sector is an intensely competitive industry, featuring 10 mobile operators, of which

four, namely Bharti

Airtel Limited, Reliance

Communications

Limited, Vodafone Essar

Limited and BSNL,

together account for

almost three-fourths of

the entire mobile market

share. This is also partly

on account of the fact

that these four operators

have their presence in a larger number of circles as compared with other players. With licences being

granted to some of the existing operators for new circles and also to new entrants, competition is

expected to intensify further.

0

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Usage Vs Revenue per User

ARPU MoU

BSNL/MTNL, 14.50%

Reliance Communicatio

ns, 17.70%

Bharti Airtel, 24.70%

Others, 0.80%

Aircel, 4.60%

Idea, 11%

Vodafone, 17.60%

Tata Teleservices, 9

.20%


Paradigm shift from ARPU to revenue per min

Indian carriers stopped looking at the ARPU as one of the performance measures. They started

considering themselves as the producers and sellers of minutes. Hence the new metrics emerged like

the revenue per min and the cost per min. This meant that they needed 40% margin on every minute

they sold to achieve the objective of 40% EBIDTA margin. Once they defined the tariff per minute

that they could realize from subscribers, they got the target for cost per minute. I would rate this

single change in the mindset as the biggest game changer

Outsourcing non-core activities like IT, network

The Indian carriers created many firsts on their journey of cost

reduction. Network was considered as a core function of any

operator but in the quest of reducing the cost, the Indian

carriers outsourced their networks in the year 2003 to the

companies that best know how to manage the networks. They

roped in companies like Ericsson, Nokia Siemens to manage

their networks. Multi-year managed network deals were struck

that guaranteed continued business to the network companies

at a low cost. It was a win-win situation for both the entities.

The carriers managed to change the cost type from fixed cost

to usage based costing (based on erlangs per min) and more

importantly, they managed to scale up their networks faster on

consumer demands. The managed service companies charge

on the basis of peak capacity (in erlangs) and the carriers are

free to utilize it as they wish. This has resulted in creative

tariff plans like night calling to make the traffic pattern more

uniform and reduce the peak load.

Focus on Prepaid

The carriers in India have focused on the prepaid market

(currently over 99% of new additions are prepaid and over

93% of base is prepaid). Prepaid has a lower cost structure and

lower channel commissions which means lower cost to the

carriers. Currently, the prepaid card is much more attractive in

terms of value than postpaid. Postpaid is currently being subscribed only by corporate connections as

a bill is required by corporate. Higher prepaid proportion means lower billing costs, lower bad debt

Market Facts

In terms of market share,

92% of the subscriber base

in India is on pre-paid

connection, with the remaining

8% on post-paid

subscriptions.

This has also given rise to

opportunities for generating

increased revenue, through

exploring potential Value

Added Services

(MVAS) like

subscription packs of news,

alerts etc and more exclusive

roaming services tailored to

pre-paid subscribers


and even lower customer service delivery cost as prepaid customers are much less demanding when it

comes to service. The flip side to this is that the churn (3% of base every month) is very high as the

loyalty is low amongst prepaid subscribers. The acquisition cost being low, this is not yet pinching the

carriers but I believe soon the focus would shift to

consumer loyalty.

Economies of scale

With falling tariffs, the subscriber net additions started

to jump (a mind boggling 15 million subscriber net

additions in Jan‟09 in India). This ensured that the

operators reap the benefit of economies of scale. They

started to reduce the tariffs even further filling up the

network with minutes. Since the cost increase was in

steps due to outsourcing deals, the cost per minute

started to fall faster than the revenue per minute and

hence the EBIDTA margins stared to increase

Infrastructure sharing

Virgin Mobile may have introduced the concept of

site/infrastructure sharing but it is the Indian carriers

that followed it with whole heart. Currently, over 40%

of the total sites in the country are shared with an

average tenancy of over 1.5 per site. This has resulted

in huge savings in network running expenses. The

operators are now willing to share active infrastructure

if the Government so allows. There is strong co-petition

in the Indian market

Low cost distribution, e-Charge

Carriers developed the low cost distribution model

keeping the channel margins low and compensating the

channel by way of volumes. They also focused on

reducing the transaction costs and India was one of the first few countries in the world to introduce

electronic recharge. The electronic recharging eliminated the need of the paper coupons thus reducing

the need for multiple stock keeping units at the retail level. This resulted in lower cost to the carrier

Market Facts

The regulatory

framework has been very

strong in India and has

continuously ensured lower tariffs

and consumer

interest safeguard.

Regulators also ensured

sufficient

competition in the

market and are in fact planning to

introduce mobile number

portability soon.

They recently awarded licenses to

4-5 new players in

each circle taking up the number of

players in each circle to

12. This would mean that India

would be by far the most

competitive market in the world.


and low working capital requirement for the channel and on top of this, there were no stock out

situations as well. In 2005 itself, electronic recharge was over 85% of the total recharge in the market.

The electronic recharge facility helped carriers introduce micro-charge which exploded the market.

The recharge could be done with a value as low as 20 cents. This resulted in higher usage leading to

further reduction in cost on account of spreading of costs over a larger number of minutes.

Low Acquisition cost (no handset subsidy)

In India, the handset is not sold along with the SIM card. The handsets are distributed and sold

separately by the handset vendors. This significantly reduces the requirement of working capital and

other inventory carrying costs. The carriers can have a much leaner organization with no handset

subsidy burden. In a country like India, where there is no social security number and enforcement

agencies are weak, the bad debt should be significant for carriers. Carriers did a smart thing by staying

away from the handset subsidy game.

.

Mobile Advertising | Mobile Marketing – why the buzz??? 9

Mobile Marketing – why the buzz???

The advertising and marketing messages in our mobile phone inbox outnumbers the personal

messages. Right from mobile service providers‟ commercial offers through contests, downloads,

quizzes etc, fresh arrivals and recent launches in the major lifestyle retail chains you frequent to, e-

tutorials, insurance, credit card or other financial services, to spiritual courses such as Art of Living

deluge your mobile phone inbox throughout the day or even in the wee hours of night sometimes. No

wonder companies are vigorously trying to wire you to their products and services through this

wireless device.

More people in the world have access to an Internet ready mobile device than a PC with Internet

access. And by 2008, researchers expect 1.3 billion people to be connected to the Internet through

mobile devices. (GSM Association)

• Growth in mobile Internet phone sales is expected to rise from 450 million to 850

million by 2009. (T-Mobile, Credit Suisse First Boston and Pyramid Research)

• EJL Wireless predicts that the global mobile ad market will reach $9.5B by 2011.

• The Shosteck Group forecasts the global mobile ad market at $10B by 2010.

• Informa sizes the global mobile ad market at $11B by 2011.

• Strategy Analytics sizes the global mobile ad market at $14B by 2011.

• ABI Research sizes the global mobile ad market at $19B by 2011.

• eMarketer sizes the USA mobile ad market at $5B by 2011.

• FirstPartner sizes the UK mobile ad market at $1.1B by 2010.

The truth and logic behind all that is in the post-industrial era, with the emergence of high speed

wireless network technologies and the increasing market penetration of mobile phones, the marketing

paradigms have been gradually changing from mass marketing to relationship marketing, market

share to customer share.


Communicating and / or sharing commercial content, message or information has also been shifting

from analogue or broadcast medium to dialogue-oriented or interactive medium and many-to-many,

social networking based communication modes termed as smart-mobbing. Technologies enabling

such way of communication include the internet, computer-mediated communication such as internet

relay chat, and wireless devices like mobile phones and personal digital assistants.

Mobile has a wider base of audience compared to Internet, with large number of subscribers owning

personal handsets. Mobile is a very interactive medium and can engage with the audience effectively.

Marketing over mobile phone is profitable for companies offering niche products or giving discounts

on their products. It offers the advantage of targeted advertising. The consumers are segmented and

accordingly specific advertisements can be aimed at them. This specific targeting will give rise to

better response from the consumer‟s side. Mobile is growing more than any other digital media today

and with it the number of consumers and the applications used by them also increasing.

New experiments are being done to innovate and improve the delivery mode of advertisements.

Specific advertisements for handsets are being made by advertisement agencies. Globally the industry

was valued at Rs 3 billion in 2007. The main advantage of the medium is the personalization of a

message from the company to their consumer. Mobile marketing is about personal marketing. It can

be tailor made to suit the requirements of the target. Being new, there is some amount of novelty

attached with it.

FACT: SMS adoption has a higher penetration rate in Europe and Asia than in the U.S.

FACT: SMS text messaging is the most widely used data application on the planet, with 2.4 billion active users.

FACT: According to the GSM Association, four mobile phones are sold for every PC that is sold.

FACT: It’s not unusual to see a nomadic Maasai warrior in Kenya with a cell phone on his belt.


Mobile marketing is still in the experimental stage in our country. This will succeed only if the

handsets and the applications are well designed and can be easily used by the consumers. Mobile does

not just operate in the virtual space like internet. It is a combination of both physical and virtual space.

Say for instance, someone goes to mobile store and likes a particular handset. S/he can immediately

check on their mobile for shops nearby for cheaper rates. This way it merges both the physical and

virtual space. However, all this can happen only if mobile marketers are able to successfully

personalize the messages, localize it according to the consumer‟s location and provide information

immediately when asked for.

Positioning Map of users of various media


The advantages of marketing through mobile phones:

Besides the global penetration of mobile phones, other specific characteristics of the mobile phone

technology facilitate marketing measures pertaining to

Personalization,

Ubiquity,

Interactivity and

Localization - beyond the capacity of other media.

Personalization:

Mobile phones are mainly used by a single person and are often considered an intimate accessory and

a status symbol expressing individuality, especially by the teenage group and the youth. The various

ways they use to personalize their mobile phones include choosing a particular brand, size, colour,

and display logo and ring tone. It is continuously carried

by them within reach and is an important part of their

daily lives.

For business users, as well, the mobile phone has similarly

become a highly personal instrument. They also

individualize their mobile phones by saving contacts,

messages and important dates. Furthermore, the user of

each mobile phone and each user‟s personal instrument

are identifiable through the SIM (subscriber identity

module) card. The mobile phone therefore appears to be

the ideal medium for direct and personalized customer

communication.

Interactivity:

Being a highly interactive medium, mobile phones enable

the recipient of a message to respond immediately,

affecting the communication actively. It allows bi-directional mode of communication and direct

dialogue between the advertiser and the potential customer.

The industry that has benefitted

most from mobile marketing is

the entertainment

industry.

Shivaji, the Tamil movie

starring Rajnikanth had

a record of highest ever

monotone ringtone

downloads (50,000) in

one day. In a week, around

2,000,000 ringtones were

downloaded.


Localization:

Mobile marketing has a major advantage of “localization”. Location-based mobile phone services on

the Global Positioning System (GPS) or Cell of Origin (COO) platform to enable triggering impulse

purchasing or point of sale marketing by adapting and aiming the marketing effort to the place

wherever the user might be.

Ubiquity:

Through mobile phone communication, companies can reach out to the potential customers anytime

and anywhere, round the clock. Usually mobile phone users carry their handsets with them at all times

and may leave it on, on ‟standby‟ mode for an average of 14 hours a day.

Entertainment value: Customers are generally more receptive towards commercial communication

through mobile phones due to its high information, storage and often entertainment values.

Viral marketing:

Marketing campaigns through mobile phones also have the potential of being driven by „viral effects‟.

A commercial content when received as a forwarded message from a friend or acquaintance who is

supposedly a „neutral sender‟ and not a ‟self-interested sender‟, has more chance of being received

positively and re-forwarded to others for information dissemination. It helps the campaign by

enlarging its reach and credibility.

Mobile Advertising | Evolution Of Mobile Marketing - the global scenario 14

Evolution Of Mobile Marketing - the global scenario

Little known fact: In his farewell address, President George Washington predicted that 1797 would be

“the year of mobile.” Every year since, pundits have been telling us that mobile‟s big-time debutante

cotillion is definitely next year. For about the last 5-7 years, people have been promising that the year

of mobile is only months away. And every year they have been wrong. Mobile marketing is just

getting rolling.

For marketers, mobile marketing and advertising has great promise - it combines the wide reach of

television with the precision of direct marketing and the tracking potential of the Internet. Mobile

marketing campaigns using SMS, and more recently MMS, have already helped to open up the eyes

of the media world to the power of the mobile channel. Interactive TV and radio, product promotions

using coupons and competitions, even charitable giving, have exploited this medium. But things are

set to change as Internet style advertising, in the shape of display advertising (banner ads) and search,

and even TV-style advertising, come to mobile.

Analysis on the emerging market acr6ss the globe concludes that there is potential for this market to

grow rapidly over the next five years. Under the most optimistic scenario, the global market could

grow to US$9.6 billion by 2010 although, the market may not generate huge revenues directly for

mobile operators - less than US$2 billion by 2010 - but could facilitate the development of a much

healthier mobile Internet, from which mobile operators can benefit.

Consequently, the opportunities for marketers to reach and engage with consumers through this

medium will expand even further. Now, more than ever, marketers are looking for alternative ways to

reach customers. Traditional channels for advertising, like TV, radio and print, are becoming less

$-

$1,000.00

$2,000.00

$3,000.00

$4,000.00

$5,000.00

$6,000.00

$7,000.00

2007 2008 2009 2010 2011 2012

$878.00

$1,663.00

$2,808.00

$3,917.00

$5,194.00

$6,525.00

Estimated Total Mobile Advertising Spend


effective because consumers now consume information and entertainment very differently than in the

past, due largely to the digitization of content and the increasing ease of access to the Internet. This is

especially true of the highly coveted "youth" demographic - the 18 to 34 year olds with high

disposable income, high brand awareness, and short attention spans.

Studies conducted by different research organizations constantly ponder upon the fact that mobile

marketing and advertising could be an important driver of growth for mobile operators too. This

would be due to its strong influence on the future development of the mobile Internet and the

subsequent growth in demand for mobile content.

But, the point that demands sufficient stress is that mobile operators must act now to ensure that the

mobile marketing and advertising market prospers, and that they can fully exploit the opportunities it

affords them. It warns that the robust and profitable development of this market will only be possible

if the major players - operators, handset vendors, content providers, advertisers and Internet portals -

collaborate effectively. It also predicts that the extent of this collaboration may be limited, as the

motivations and objectives of some of the key players will inevitably conflict.

Courtesy: iMedia Connection

Given the immaturity of this market, the fickleness and impatience of consumers, and the

complexities and politics of the telecoms industry, we believe the next two years will be critical as

other technology and market trends could prove to be barriers to the anticipated growth of this market,

For example, a damaging consumer backlash against intrusive and unsolicited mobile marketing could

Already investing heavily

4%

Planning to invest4%

Thinking of investing

35%

Not recently33%

Depnds on Products

24%

Marketer Investment Plans


occur if overzealous marketers fail to respect consumers' right to privacy and inundate them with

unwanted and irrelevant mobile marketing messages.

Experts believe that mobile advertising will be a necessary driver for the development and

commercialization of the mobile Internet, just as online

advertising has been for the 'fixed' Internet to-date. In

tandem with this mobile advertising and mobile content -

are inextricably linked. The success of one will enable the

success of the other and vice versa.

For sure, the hype is building but the mobile advertising

market is still in its very early stages. There is little

consensus on how long it might take for the market to reach

the 'tipping point,' i.e. when, and indeed if, it reaches critical

mass to become a mainstream mobile market in its own

right. The rewards are there but the question remains as to

who benefits from them."

According to a report published by Nielsen Mobile on the

state of mobile advertising in the United States, although

76.8 million US mobile users recall viewing advertisements

on their mobile phones in Q2, 2008, mobile advertising has

not kept pace with the rapid growth of mobile media

consumption and ad response rates are flat. In the past

several years, mobile media services have developed

audiences that present scalable advertising opportunities.

63 percent of mobile ad viewers see mobile

advertisements just once a month or less frequently.

In addition, mobile advertising is present on less

than two-thirds of website homepage page views

across leading mobile websites, and roughly half of

that is unpaid house advertising.

Overall response rates to mobile advertising also

appear flat. In Q2, 13 percent of mobile data users

(45 percent of those who saw a mobile ad) report responding to it in some way. This

Nielsen Mobile

Survey highlights

-------------

As of Q2 2008, there were

258.9 million

wireless lines in the U.S. Of

these, some 69 percent

(178.6 million) used their

phone for at least one data

service.

76.8 million U.S.

mobile subscribers recall

seeing some form of mobile

advertising while using

their mobile phone. That’s

up 81 percent year-

over-year.

Despite this growth, the

majority of these mobile ad

viewers, 63 percent,

see mobile advertisements

just once a month or less

frequently.

Mobile Advertising| Evolution Of Mobile Marketing - the global scenario 17

compares with 12 percent of all data users (52 percent of those who saw an ad) who

responded in Q2 2007.

Although the US has witnessed a 23 percent year-on-year growth in mobile data services;

phones have become more capable and robust (the proportion of 3G and smart phone

handsets in the marketplace has doubled in the past year, to 28 percent and 10 percent,

respectively) and media companies have made substantial developments in the sheer quantity

and promotion of mobile content, there is still a stagnation in the market so far as mobile

advertising is concerned.

With the increased subscriptions of data service subscriptions, actual usage of these services have also

increased. SMS text message is the most popular. In the U.S. today; half of all wireless subscribers

use text messaging on a regular basis (53 percent, or 137.8 million). Meanwhile, audience size for

MMS, ringtones, mobile Internet, text alerts, instant messaging, mobile applications, location-based

services and even mobile video has surpassed the 10 million mark.

Current State of Mobile Advertising

As a percentage of mobile data users, mobile advertising exposure has also risen in the states. In Q2

2007, 23 percent of mobile data users recalled seeing some form of advertisement, and by Q2 2008,

that number rose to 30 percent.

Looking at users across different types of media:

57 percent of mobile ad viewers recall seeing mobile ads while

browsing the mobile Internet, up slightly from Q4 2007 (53 percent).

54 percent of viewers remember seeing text ads via SMS.

34 percent of ad viewers saw an ad during Q2 2008 while watching

mobile video, compared with 29 percent two quarters prior.

However, 63 percent of mobile ad viewers see mobile advertisements just once a month or less

frequently. In addition, mobile advertising is present on less than two-thirds of website homepage

page views across leading mobile websites, and roughly half of that is unpaid house advertising.

Mobile Advertising| Evolution Of Mobile Marketing - the global scenario 18

Overall response rates to mobile advertising also appear flat. In Q2, 13 percent of mobile data users

(45 percent of those who saw a mobile ad) report responding to it in some way. This compares with

12 percent of all data users (52 percent of those who saw an ad) who responded in Q2 2007.

Although the US has witnessed a 23 percent year-on-year growth in mobile data services; phones

have become more capable and robust (the proportion of 3G and smart phone handsets in the

marketplace has doubled in the past year, to 28 percent and 10 percent, respectively) and media

companies have made substantial developments in the sheer quantity and promotion of mobile

content, there is still a stagnation in the market so far as mobile advertising is concerned.

Mobile Advertising| Mobile Marketing Ecosystem 19

Mobile Marketing Ecosystem

The Mobile Advertising industry is a market still in its advent; with several players all trying to

establish and differentiate their own identity. However, in this hybrid Mobile Advertising value-chain

three distinct industries are coming to the fore: (i) the advertising industry, (ii) the content industry

and (iii) the telecommunications industry.

The Mobile Advertising value-chain, or ecosystem, needs to be further defined; but allowed the scope

to grow and change. This can be achieved through the establishment of best practises, standards and

guidelines. Going forward, the general acceptance and compliance throughout the Mobile Advertising

industry of these procedures is vital. Several different depictions of the ecosystem have been

presented by various researchers in this market. Essentially, all are in agreement with the key entities

within this ecosystem, noting that; the value-chain always commences with the Advertiser.

Following figure illustrates this Mobile Advertising Ecosystem as a value chain and the dynamic and

interchangeable relationships within this ecosystem.

Mobile Marketing Ecosystem is a strategic network encompassing all industries, marketing

disciplines, and economic and technical models. It is comprised of 4 interconnecting spheres–

Advertisers (Product & Services providers, brands, content owners and marketing agencies),


Ad Networks (discrete application providers and mobile ASPs),

Content Providers (media properties, “brick „n‟ mortar” and virtual retail stores), and

Mobile Service Providers (aggregators and wireless operators).

Various enablers provide the foundation for each particular sphere. Players within these spheres work

in concert to deliver a rich experience to consumers. This ecosystem is driven by a number of

technical, regulatory, commercial, social and legal components. It is a complex network of different

industries and companies, and to be successful in leveraging the mobile channel it is important for

brands, content owners, marketing agencies, and other industry participants to be aware of how value

is generated through this channel and within the system.

In the mobile industry, the value system is not limited to a simple linear two-dimensional view; rather

it is made up of a constellation, or a strategic network, of companies that do not necessarily work in a

serial fashion as in the traditional value chain models. A better way to understand the

interrelationships between each network is through the lens of the dynamic multidimensional strategic

network model, where each network within the Mobile Marketing Ecosystem described below is

labeled a sphere.

As the Internet and wireless networks

emerged, standards solidified,

globalization sped up, new processes,

technology, economic models, and

business practices formed, and the

landscape of doing business altogether

changed. This change does not mean that

fundamental economics no longer apply.

Everyone throughout the strategic

network must receive at least marginal

returns, otherwise they will not survive

in the network, or the network will be

unstable and lasting value will not be created. These changes are pervasive, dynamic, and encouraged

by participants in the mobile ecosystem, including mobile operators, marketers, aggregators,

application providers and other participants.

At their conception, mobile services with their unique capabilities and opportunities were exclusively

“bundled” within the mobile operators‟ technology network, a “walled garden” controlled by the


mobile operators with limited access provided to others. The mobile operator‟s value chain system is

going through a phase of unbundling that has opened mobile marketing to brands and content owners,

and created the fertile ground for existing and new industry players like mobile application providers,

aggregators, and enablers.

The discrete application providers and application solution providers are offering exciting and novel

technology for a wide array of mobile initiatives and mobile management systems. The aggregators

are providing single-point connectivity with all the different mobile operator networks.

The enablers are providing foundation technology, processes, regulations and related support to the

value activities within each sphere. With the controlled and managed opening of the mobile operator‟s

walled garden, traditional brands, content owners, and marketing agencies are now able to use mobile

networks for direct customer engagement. Brands are not only distributing services and content

through the channel, but are using it for brand awareness, prospecting, customer acquisition and

customer retention purposes.

It is imperative that companies from the different spheres learn to coordinate their efforts and develop

strategic relationships with players in the other spheres of the ecosystem. While it is tempting for a

company to try to be everything to everyone and attempt to horizontally integrate multiple functions

across multiple spheres, they should take heed before doing so since each sphere comes with its own

unique business models, regulations, technologies, relationships, norms and practices. It is vital that

companies focus on their core competencies and work collaboratively with other players within the

strategic network to best service the market. If major players attempt to control areas that are outside

of their core competencies, the most likely result would be an inefficient industry plagued by high

cost, slow reaction to market needs, consumer dissatisfaction, and the stunting of new technologies

and creative ideas.

Mobile Advertising| Mobile Advertising Channels 22

Mobile Advertising Channels

Mobile is not like TV, where you have basically three options: 30s, 15s, and product integration. The

breadth of data services is remarkable and growing almost daily. Here are the biggies, and a few

example ways one can use them.

Faced with declining voice revenues and having under-exploited the first SMS based mobile

marketing wave, Mobile Operators view mobile advertising as a key new revenue stream. However,

the size of these revenues will depend on how much of the Mobile Advertising value chain the

Operators manage to control and the extent to which they leverage their customer base through

effective use of their CRM data.

Implementing an end-to-end Mobile Advertising platform with multi-channel delivery capabilities on

their own network will enable Mobile Operators to build a strong position in the Mobile Advertising

ecosystem and to monetise their strategic assets. To overcome the problems of current mobile

advertising solutions, this platform must focus on the user experience and enable flexible ad-funded

business models. Most importantly, it must allow Operators to demonstrate the intrinsic value of their

network and successfully wholesale this value to the advertising ecosystem.

Mobile Advertising holds the potential to eliminate the cost barriers for the widespread adoption of

wireless data services. Just like Internet advertising helped drive Internet adoption by consumers in

the 90‟s, so too can mobile advertising drive mainstream mobile internet adoption through various ad-

0

10

20

30

40

50

60

POPULER MOBILE APPLICATION USAGE


funded business models. Operators can offer a wide portfolio of ad-funded services to subscribers that

subsidise access costs and deliver real value to the subscriber. Key to achieving this goal is support

for flexible business models and a personalised user experience.

The success of the Internet advertising model has proven that advertising business models can achieve

huge revenue growth. Yet despite the hype surrounding mobile advertising, there is much Operator

scepticism and mobile advertising is largely unproven. This is mainly due to the fact that current

mobile advertising solutions do not adequately address the business model and user experience

requirements.

Positioning Map of various user activities

Content and Media Brands have successfully extended their advertising strategies from TV to the

Internet. Subscribers are now used to paying for the data pipe (cable, satellite, broadband) provided it

comes bundled with a range of valuable ad funded services. Content and Media Brands are now

turning their attention to the mobile device. The mobile phone presents some unique characteristics,

most importantly the fact that it is a personal device, nearly always specific to one subscriber, but also

that it provides access to real time context (e.g. location, presence, device capabilities) and that it

combines multiple communication capabilities (voice, SMS, email, browsing) which can be

effectively used to deliver a more interactive advertising campaign.


From a mobile advertising perspective, the Operator has a unique advantage in all three areas, and it is

essential that a mobile advertising platform exploits these advantages.

However, most important to successfully extend advertising strategies to the mobile device is that

mobile advertising platforms must support ad-funded services in a manner familiar to both the

consumer and the Content and Media Brands.

Successful advertising is often described as requiring a combination of:

Analysis – a comprehensive and extensive analysis of the Target Market;

Reach - the number of people exposed to a specific media vehicle or schedule at

least once. Usually measured over a specific period of time. – i.e. the total number

of people who will see a given ad;

Purity - in marketing terms, the quality of information on the target market.

The popular channels used by marketers/content providers and operators to reach the target

audience are as follows:

Mobile Search

Mobile search works much the same way as web

search, placing prominent paid search results in

results. Mobile search is an ideal option for retailers

because mobile searchers are more likely to be ready

to buy than someone using a PC. They are out and

ready to walk in your door.

One key consideration before you do this is that you need a mobile friendly site to send people to. It

will likely be a “dumbed down” version of your regular site. Fewer graphic and more succinct texts.

Making a site mobile friendly means that the marketer needs to consider several differences between

mobile and PC browsing:


1. Screen size = That screen is a lot smaller and browsing a wide, long, and complex page

becomes rather difficult

2. Browser compatibility = there are more major browsers for mobile than PCs

3. Page Weight: The networks that support mobile phones distribute web content more slowly

than a high speed PC connection. Heavy graphics are generally a no-no for mobile.

One really important thing to consider is that unlike in web search, there are vastly fewer sponsored

search positions in Mobile. You‟re either a top bidder or you are invisible. Mobile search is purchased

on a pay per click basis just like web search. Pay for performance.

SMS

Texting is by far the most popular non-voice usage of cell phones, and for this reason many

companies have started their mobile efforts there. The first “S” in the acronym SMS stands for short,

and that‟s because a text message must be 160 characters or less in length.

So succinctness is critical in SMS. SMS can be used in a

variety of ways:

1. Develop a text CRM program that stays in touch with

consumers in short SMS bursts.

2. Sponsor text messages delivered by publishers, for

example Wall Street daily recaps.

3. Offer a promotional message stream through SMS.

4. SMS summary of new headlines available on your

site.

5. Offer SMS as a way of capturing email addresses and

phone numbers for later marketing.

6. Use SMS as a way of gathering feedback, votes, or other perspective from users and

prospects.

SMS can also be a revenue stream for certain types of businesses. “Premium SMS” charges

consumers an extra fee in addition to “normal” monthly SMS charges for certain services. Dating

services, horoscopes, psychic readings, stock tips, and other banal or profound bits of information are

delivered via premium SMS. The money can be staggering.


Ringtones, Wallpaper, and Other Bling

Ringtones and wallpapers and games are also enormous

businesses. Perhaps not relevant to most marketers, though offering

free ringtones and wallpapers might be a very compelling

promotion. The financial math in these businesses is nothing short

of fantastic.

Ringtone companies generally have a bad reputation. Part of this is

due to marketing practices that entice young (<18) people with free ringtones, with tiny print that

indicates that by accepting the ringtone you are enrolling in a pricey monthly subscription. Not all

companies have engaged in these practices by any stretch, but those that do have soured some media

outlets to their buys and have piqued regulator scrutiny of the market.

Also, a prime target of ringtone and game makers and sellers is teens, so the content tends to be…non

politically correct. Games can also be very profitable, though a key challenge here is developing a

game that works on a broad swath of handsets. Companies like Thumbplay and Flycell are leaders

here. One senses however, that the nav buttons on this kind of content are pressed so often that the

text is about to wear off, so it can be said that they‟re just giving people what they want.

Mobile Banners

Mobile banners are graphical ads, just like web banners.

They are usually purchased by CPM. One difference,

though, is that banners are not sold by size – instead, the

size of banners is optimized to the screen of the

recipient‟s phone. And that‟s only logical. If I have a tiny screen on a tiny phone, it makes sense that

the banner deployed would be smaller than on a phone with a big screen.

Targeting options are broadening rapidly. All of the major types of targeting are available including:

1. Contextual, meaning the matching of an ad to related content.

2. Demographic, enabling you to target by gender, age, income, and the like

3. Behavioral, indicating that you focus ads on people who have demonstrated certain browsing

behaviors on their phones. So, for example, a car company might buy ads on phones of people

who have visited car research sites.

4. Geographic, meaning internationally, nationally, by region, state, DMA, or even cell tower

area.


Full Screen Graphical Ads

Phones now offer the user the option to download applications like

games, tools, or other utilities. As part of a download, advertisers can

be sponsors. Sponsoring some applications like, for example, a game

or a mapping function, may entitle an advertiser to a full screen ad.

This will run as a pre- or post-application welcome screen or bumper.

These within applications can drive users to other sponsored pages in

the application, click to email capture, click to call, or click to send

MMS or SMS.

Because phone sets have different screen sizes, such full page

sponsorships will likely require you to make more than one creative size for your message. Consumer

receptivity to ads in downloadable applications is going to vary depending upon the cost of the app,

the level of intrusiveness of the marketing message, and the relevance of an ad to the application.

For example, if an advertiser offered consumers a good game for free instead of say $9.99 without

ads, a large proportion of mobile users will prefer the sponsored game version.

Own Applications

A variety of developers will help you create

applications specifically for your brand.

Consumer receptivity to such an app will

depend upon its utility. In many cases this is

going to be more relevant to a publisher

(like ESPN) rather than a brand. But there

are surely brands that can benefit from

mobile apps. One of the key marketing

strengths of building an app is the

opportunity to create a persistent consumer

relationship versus fielding impressions. A good app will stay there on a user‟s phone and get used

again and again. That offers hundreds – even thousands of brand interactions you can leverage to

build your consumer connection.

Mobile Advertising| 28

Mobile Widgets

Widgets have grown tremendously in popularity, and a subgroup of mobile widgets is growing

strongly as well. While widgets are applications, they deserve a separate discussion because they tend

to be easier to develop and because new standards are making it still easier to create compelling

mobile widget experiences. Yahoo, which is the leader of widgets, offers mobile widgets in the

following categories, many of which take existing Yahoo PC functions and port them to phones:

1. Local Search 2. Email 3. Photos 4. News

5. Sports 6. Finance 7. Entertainment 8. Weather

Mobile Advertising| Strategic Approach to Mobile Marketing 29

Strategic Approach to Mobile Marketing

Thus far we have demonstrated that the opportunity for brands to reach and influence consumers via

mobile is significant. We concede that the mobile advertising industry is in its infancy and we agree

that there are obstacles that must be overcome before it can become a mainstream advertising

medium, but brands such as Adidas, Microsoft and News Corp are increasing brand equity through

mobile media now; they are learning fast and potentially leapfrogging their competitors. This

opportunity must however be shaped through the development of a coherent mobile marketing

strategy that is fully integrated with your brands primary marketing strategy and clearly supports your

businesses objectives by demonstrating unquestionable ROI.

When developing any marketing strategy we need, in the simplest of terms, to define where we are

and where we want to be. This applies no less to our mobile marketing strategy. When we define

where we are we must look at our current market share, sales, profit, customer base, product

awareness and brand position. We can also look at our historical and current use of mobile media and

the use of mobile media by our competitors.

Then we can determine where we want to be using the same variables. At this point this will include

goals that mobile cannot exclusively achieve, or even influence, but brands in most sectors should be

able to identify one or more marketing objectives that mobile would be ideally suited to help meet.

Examples include lead generation to improve our customer base, brands awareness of a new line

Mobile

Marketing

Strategy

Customers

What Attitude?

What

Message?When &

How Often?

What

Action?

Measure -

How/What?


extension or CRM with busy, highly mobile twenty something office workers who only use their

homes to sleep.

We then come to the description of the process for making the transition. This will largely be

dependent on the sector you operate in, the demographics and media consumption habits of your

target audience and the resources you can allocate to mobile strategy development. Whatever your

position it is essential to be steered by some broad guidelines before we attempt to leverage mobile

media.

Much research exists to explain why advertising works across TV, Radio, Press and the Internet. Very

little exists for mobile as it is such a nascent medium. We can however draw analogies and inferences

based on generally accepted theories of how advertising works. If we accept this assumption we then

need to define clear reasons why mobile will be used and what it is supposed to achieve before

constructing the Big Idea. The steps involved in this process are summarized in Fig 3.0 and we

consider these to be the fundamental principles for the development of any mobile marketing strategy.

Where are our Customers?

Advertising is directed at a target market to enhance or change its behaviour. They may be heavy

users of a competitor, or infrequent users of our brand. They may have low awareness or negative

perception of our brand so we may wish to shift the pendulum of consumer perception back in our

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

send/receive calls

send/receive text message

send/receive photo/images

access music & videos

access internet

others

Evolution of Mobile Phone Usage

2007 2009


favour. To reach these consumers we need to track their media behaviour, understand their

demographics and gain insight into their values, personalities and attitudes

When targeting consumers on mobile we need to be mindful of media context effects. The same

source delivering the same message to the same audience on separate occasions might produce

different effects depending on the differing programming or editorial contexts in which the message

appears. This is particularly true of mobile as the context may also be environmental not just editorial.

Innovative firms such as Ad-Mob have launched

contextual text based advertising networks in the

US and Europe that mimic the paid-for contextual

advertising on Google or Yahoo! Inventory

currently is focused around mobile content

providers but these media owners command

significant volumes of youth mobile „thumbshare‟

and leading brands such as Adidas are beginning

to trial.

What should they feel?

Brand owners generally believe that to be

effective, their advertising has to affect what

people believe about their brand before they can

expect a change in their purchasing behaviour. So

when developing our mobile marketing &

advertising strategy we must decide where our

brand sits in its lifecycle to determine if we seek

brand awareness or brand salience. Whichever

route we choose, mobile advertising production

costs are very low compared to traditional media

so developing and testing your advertising can be

very efficient.

Mobile therefore allows us to develop highly

targeted campaigns with minimum wastage. This improves the chance that we are influencing the

right target with the right message to elicit the desired attitude toward our brand.

Customer Segmentation

Generation Mobile - single style

conscious 18 to 24-year-old students

or young adults in their first job

Phonatics - single 18 to 34-year-olds

who see a mobile as their most

important electronic possession.

Practical Parents - cost-conscious

young families under the age of 34

who choose their mobiles on price

grounds

Fingers and Thumbs - married,

middle-aged or retired people with

children or grandchildren

Smart Connected - affluent families

and professionals aged 25 to 44 who

use mobiles to organise their work and

social lives

Silver Cynics - affluent, married

parents who are approaching

retirement


We must also take into consideration the way that our consumers use their mobiles, and understand

the attitudes they have towards them, before creating a mobile communications plan that influences

how they should fee about our brand.

What’s our Message to them?

The message will largely be determined by the overall marketing strategy and whether our product is

„high consumer involvement‟ or „low involvement.‟ This will determine whether the message will be

informational or emotional. Whatever the message, unique skills will be required to translate it, and

the accompanying advertising metaphors, to the small screen whilst ensuring that the message stays

true to brand personality.

The mobile context means they have short

attention spans so communication must be

compact and high impact to be remembered.

Short message lengths however can actually be an

advantage to the advertiser - they stretch media

funds as they build frequency with less

expenditure. The message must also be relevant

(as mobile is considered to be the most personal

of digital devices) and it can be made even more

relevant if we can deduce, either technically or

intuitively, the context that the message will be

received in.

For example,

Is the consumer at the shopping

centre, at school or in their bedroom

when they receive our message?

Will they be talking, texting or

watching TV?

Some of these behaviours are more likely to occur at particular times of the day and technology exists

that allows us to track the approximate location of a consumer (with permission) so the relevance of

our communication to time and context can be very precise.

Mobile Ad Creative Considerations

Mobile content have short attention spans

so communication must be compact and

high impact to be remembered.

The message must also be relevant as

mobile is considered to be the most personal

of digital devices.

Strictly Customized ‘made-for-mobile’

communications need to be developed

rather than the wholesale repurposing of TV

or online advertising.

The message will also be determined by the

capability of the target consumers’ mobile

handset.


When should we deliver our Message?

Timing of our mobile campaigns will be determined by the purchasing habits of the consumer, but the

message should have greatest impact when the consumer is deciding to buy. A housewife may create

her shopping list and decide what she will buy on a Friday but she may make the purchase on a

Saturday. A decision to buy a car might take place during the Christmas holidays but the purchase

will take place in January. Our strategy therefore should specifically state what weight of message

will be allocated to mobile per time period.

How often should we deliver our Message?

There are two schools of thought on how consumer exposure to advertising works. The 3+/80 model

preaches a frequency of 3+ and reach of 80 using pulsing or fighting media schedules. A more

advanced method is Recency Planning. This method aims to expose the consumer right before the

purchase decision. This call for a continuous media schedule with low frequency (1+ exposure) and

high reach (85).

Which model is appropriate for mobile? This will depend on the media employed. If we are delivering

direct text or photo message communications to consumers then the Recency model is more

appropriate as the ad, taking up the entire screen real estate, has a higher chance of irritating the

consumer if the frequency is too high. If ads are embedded in WAP sites or we are „top and tailing‟

mobile video downloads for example then the advertiser benefits from media context effects and this

improves receptivity of message (whether consciously or subconsciously.) In this case the more

traditional method of media planning involving a 3+ frequency can be implemented.

Mobile Advertising| Mobile Strategy in Action 34

Mobile Strategy in Action

Strategy can be an ethereal thing and leave us asking how we practically address marketing problems

with mobile. Let‟s look at a number of popular sectors and assess how mobile might be used to tackle

typical communication problems in these industries:

Consumer Goods

FMCG manufacturers‟ today face a number of unique challenges; competition from private labels,

food lobbyists impacting media placement and dwindling control of the contact point where

consumers are most likely to make a brand choice – the aisle. Consumer goods manufacturers have

countered this with increased below-the-line spend to improve sales volumes and market share.

However, it is generally thought that this dilutes the hard fought for brand equity that manufactures

have built up over decades and topping up this „brand bank‟ is becoming increasingly expensive as

broadcast media costs rise against a back drop of audience fragmentation. In response to this a number

of high profile brands, including Heineken, have moved the majority of their budgets from TV to

below-the-line and online. So how can mobile help?

Retail

Retailers can benefit from using one of mobiles most powerful and unique aspects – it is with their

customers when they are on the high street. Retailers would benefit by extending their loyalty

programs to mobile to reduce the cost of customer contact and improve the reach and impact of their

CRM campaigns.

We also believe that retailers should leverage advances in mobile technology, such Bluetooth, to

encourage customers to interact with their stores and further encourage footfall. Interactive shop

displays that incentivise consumers to visit can create real cut through in the high street.

Automotive

Car customers of today are decreasingly loyal and increasingly discerning. This is escalating the cost

of retaining owners and acquiring new ones. And Car communications have to holler through ever-

increasing noise to be heard by audiences whose willingness to listen is waning. Consequently, the

quality of car marketing and advertising communications has improved greatly in recent years.

The car industry has begun to tentatively use mobile, and the sharp increase in mobile short-codes on

TV and print commercials that encourage us to text in for a brochure is evidence of this. But few have

integrated mobile with their CRM strategy. We are seeing however bold and innovative moves from


firms like Peugeot who are beginning to use rich viral mobile to extend the engagement of their 30-

sec spots and to increase the impact and reach of their TV media spend.

As phones become smarter we would recommend that auto manufacturers follow Peugeot‟s lead and

integrate and extend the TV, radio and print brand experience with rich mobile engagement. This

engagement may begin with a consumer experience that visually demonstrates the car and conclude

by providing value added mobile services (e.g. free mobile mapping) or brand relevant entertainment

that will be appreciated by the prospect. The auto industry‟s reliance on direct marketing is significant

and mobile can help reduce the cost of customer contact substantially whilst cutting through the

deluge of direct mail „clustered‟ noise. The author believes therefore that mobile will have a huge

impact on automotive CRM programs.

Travel

The big airlines have had it tough over the last few years with rising oil prices, passenger numbers

down and aggressive competition from low-cost carriers forcing price wars.

Leisure travellers now seek the lowest prices and are less concerned with service. Business travellers

however want more frequent schedules, a broad range of destinations and service quality, but large

corporations using their purchasing power to negotiate big discounts are placing pressure on the

business market. So airlines today need to meet the budget needs of leisure travellers and the premium

demands of business travellers. The reality up in the skies however is that the short-haul market shows

the most vigorous growth prospects.

All airlines now drive sales online to reduce costs and automate the booking process. This helps them

sell out their cheapest seats on any given flight as early as possible in order to best manage their

yields.

Airlines could encourage consumers to interact with their above-the-line advertising to sign up to alert

services that provide short haul price offers and promotions. The immediacy and impact of mobile is

such that it has the power to drive consumers online to book.

Finance

The financial services business accounts for a significant proportion of annual advertiser expenditure

on advertising and marketing but the ability of the industry to engage and be trusted by consumers is

limited. Very few consumers are either interested in, or know about, financial brands and far less care


about long term financial planning. This is particularly true of young adults who, burdened by debt,

are struggling to get on the first rung of the housing ladder.

Low interest rates make things more difficult for the financial marketer as it becomes harder to sell

products to savers that offer low returns. And all of this is compounded by strict regulation that is

tightening its grip in the consumers favour.

With the exception of predictable annual renewals such as insurance, many financial decisions are

made erratically and are difficult for marketers to track. Branding has become key to help firms stand

out in a crowded market. To perpetuate brand difference effectively, financial services businesses

need to engage their customers through touch points that best suit the customer. And increasingly this

touch point is mobile. Using mobile to cross or up sell products to consumers helps avoid a common

problem associated with „statement direct marketing‟. Bank CRM systems are not sophisticated

enough to know if the statement is bringing good or bad news to the customer and how the news may

impact the reception that the communication will get. Using mobile it is possible to cost effectively

disassociate the direct marketing message from the statement and time the delivery of the message to

better fit with a point in the consumers monthly financial cycle when they are more likely to be

receptive to the message - on the day their salary is transferred for example.

Telecoms

As mobile phone penetration rises, phones are increasingly being sold to replace users' existing

handsets rather than to first-time buyers. One of the most significant features of this market is the

increasing importance of the younger consumer and it is here that the future lies for the mobile

industry.

Most young consumers don‟t buy their handset by brand - the purchase decision is usually driven by

the features and the tariffs available with the handset. These young consumers have a voracious

appetite for mobile content and operators that are bold enough to freely distribute licensed content for

branding purposes will connect with their target market. A lack of brand development amongst

telecommunication operators has seen distribution and price competition favoured over brand

investment.

Mobile operator‟s use of mobile marketing to date has been driven largely by their CRM divisions,

and text and photo messaging promotion of new tariffs and products feature heavily. Mobile operator

sponsorship of TV programming, festivals and other content should be leveraged to extend the brand

to the youth market that they desperately want to attract.

Mobile Advertising| Mobile Advertising Business Models 37

Mobile Advertising Business Models

Mobile Advertising in its early stage is producing several new business models and brings new

lucrative revenue streams into the Average Revenue per User (ARPU) driven mobile network

operator economy.

“About 42% of mobile customers are open to Mobile

Advertising, if it is relevant, if they asked for it or if they get

coupons for free services.”

Yankee Group research finding

Clearly, mobile network operators should work more aggressively with Mobile Advertising value-

chain partners to create new business models and innovative On-Portal and Off-Portal service

offerings to better serve their customers‟ mobile web needs.

BUSINESS MODELS

There are several business participants in the Mobile Advertising value-chain and therefore also

several market segments to be considered in looking at Mobile Advertising business models. A recent

Frost & Sullivan research paper describes these mobile market segments, with the noted „WAP-based‟

services representing mobile web browsing.

Mobile Advertising Market Segments

Mobile Advertising

On Deck Ads

WAP Based

Video Ads - On Deck

On Deck Performance Based

In-Application Ads

Off Deck Ads

Messaging Based

WAP Based

Video Ads - Off Deck

Off Deck Performance Based

In Application Ads


On-Portal – Proprietary mobile network operator portals

Operators‟ On-Portal mobile web content offerings so far have been “Walled Gardens” by controlling

access to pre-selected information and content partners. Mobile consumers are mostly treated to

content where the revenue through data charges or access fees are collected by the mobile network

operator.

Mobile web based portals, such as Vodafone Live! in Europe or Sprint‟s Mobile Media Network in

the U.S., are starting to incorporate Mobile Advertising as text links or display ads (banners). Revenue

is mainly based on delivered advertisement impressions, and Cost per Thousand (CPM) rates vary by

country and carrier.

Europe has seen high CPM rates for example in Germany for Vodafone Live! around €50+ ($65) and

for O2 even up to €80 ($104), whereas France sees average CPM at $20 and the U.S. average at $15 -

$30 but increasing to $50 for targeted multimedia ads. The main advantage here for advertisers is the

high reach provided through the standard launch page of the mobile web browser, mostly mandatory,

which is fixed by the mobile network operator – the same as in the early days of the Internet (e.g. with

AOL).

The next generation of Mobile Advertising includes full

rich-media content. An interesting sector to follow is

emerging video-based Mobile Advertising which is part

of existing download (Mobile TV) or streaming

broadcast (DVB-H, MediaFlo, DMB) models.

Operator trials are well under way, but to date we are only seeing live services and promising usage

numbers in Asia. Video advertising will appear pre-roll and post-roll as part of the video stream. As

with the Internet, another big new revenue stream for Mobile Advertising comes through On-Portal

and Off-Portal mobile search, which will be a major portion of future advertising supported business

segments – active players include dotMobi, JumpTap, Google, MCN and Yahoo.


Off-Portal - Open mobile web experience

The open mobile web (or Off-Portal) offerings are gaining momentum and they might be the main

driver to push Mobile Advertising into the projected $11 billion industry by 2011, according to

Informa Telecoms & Media Analyst firm GP Bullhound states that Mobile Advertising is starting to

gain significant traction with some vendors within a 200+ mobile start-up universe, having established

an early leader / mover advantage.

Independent start-ups broadly expect increasing consolidation in the years to come as leaders extend

their product portfolio and geographical reach. Additionally, Internet and mobile companies are

acquiring startup Mobile Advertising ventures as witnessed by the recent acquisitions of Third Screen

Media by AOL, ScreenTonic by Microsoft and EnPocket by Nokia. The major differences between

Internet advertising and Mobile Advertising should allow both domains to grow in parallel.

As we have seen Off-Portal entertainment offerings flourish (e.g. ringtones and wallpapers) you can

expect independent major players emerge in the Mobile Advertising space. Since Off-Portal offerings

are more flexible and experience faster time to market there is already significant traction in the

market.

Millennial Media‟s Decktrade ad network has built a large number of text-based and graphical ad

impressions delivered through its self-provisioned mobile advertisement service. Decktrade is open to

Search & Display27%

Text, Picture & Messaging

24%

Mobile TV39%

Other10%

Global Mobile Advertinsing Forecast, Source: Informa Telecom


mobile publishers and small budget mobile advertisers. This offering is modelled after Google

AdSense, and Google recently announced AdSense for mobile.

Hybrid models

While mobile advertisements are delivered on mobile web sites, there are also hybrid models

emerging including in-application or in-game advertising models where advertisements point to

mobile web landing pages provided by brand advertisers. Hybrid models may also use On-Portal

advertising placement as a discovery vehicle and then point to Off-Portal mobile web content and

services.

In-Application Advertising with Click-to-Call Example

In a recent study Frost & Sullivan concluded: “In-application advertising is increasingly becoming a

popular ad mechanism. Consequently, ad enablers (like Smaato) can choose to serve the ads

themselves or partner with third-party providers such as Third Screen Media.”

A very exciting and promising market segment is the free ad-funded Mobile Virtual Network

Operator (MVNO) such as Blyk in the UK. Blyk, which is led by a management team formerly with

NOKIA, launched its teenage targeted mobile services in September 2007. Other players in Europe

are bound to follow, such as easyMobile (UK) and offerings from established mobile network

operators as well. These MVNO models could easily translate into ad-funded business models to

subsidize mobile data services from Operators for Off-Portal offerings.

Although most Mobile Advertising business models are based upon impressions delivered to an

audience at a negotiated CPM rate, performance based models are becoming increasingly popular due


to promising consumer response. According to GP Bullhound, one of the key metrics is the display

advertisement Click-Through Rate (CTR). According to the MMA, mobile has been delivering CTRs

that are orders of magnitude higher than the traditional web, averaging around 4% on the mobile web.

But the MMA is seeing some campaigns yield much higher results, as high as 7-12% for certain

campaigns. Ad-enablers, like Ingenio for click-to-call technology, are at the forefront of exploring

new ways how to combine the effectiveness of performance based billing with the calling capabilities

of the mobile handset.

With increased activity and creativity in the Mobile Advertising space, a greater share of budgets will

be dedicated to enhance the mobile user experience. Again, GP Bullhound research shows that

advertisers are now spending $75k to $300k on typical mobile web campaigns, vs. $25k to $50k in

2005. In 2006, advertisers were exploring the market, and campaigns of $75k to $100k were

uncommon. This year there are several campaigns with budgets greater than $1 million, leveraging

multiple options listed earlier.

“Google's CEO, Eric Schmidt, promised that the web and mobile network alliance would

enable phones that will give consumers a much fuller Web browsing experience. That

means Internet advertising could be a bigger part of revenue for the mobile industry than it

is today. As a result, carriers could have more options. They could give away phones for

free in exchange for a share of the ad revenue, which Google has already said it would do.

Or they could lower monthly subscription fees. In this environment, the phone companies

would still be better off because they would benefit from an explosion in consumer demand

for phones and services.”

News Excerpt from: Dean Takahashi of The Mercury News

However, even though more and more Mobile Advertising is emerging, only 8% of the Fortune 1000

Companies have mobile web pages or a mobile strategy. There is a lot of work to be done by

independent Mobile Advertising agencies and integrated global advertising conglomerates, such as

Carlson Mobile which is an active player and acquirer in the mobile market space today.

Mobile Advertising| Brand and Mobile Network Operator - Opportunities in Mobile Advertising 42

Brand and Mobile Network Operator - Opportunities in Mobile Advertising

The potential opportunity to make the mobile web "free or partially subsidized" via advertising

support is tremendous. As the world's best-known brands begin to realize the global reach of the

mobile web and engage within the Mobile Advertising Ecosystem, the mobile web „subsidized‟

opportunity will evolve and emerge in many forms if

fully supported by all the Mobile Advertising

Ecosystem participants.

The Mobile Advertising Ecosystem and its key players

have already been detailed in this paper; what has not

been conveyed is why brands, and mobile operators, are

only now beginning to realize the opportunity that is

Mobile Advertising.

Brands have yet to experience the true reach of

the mobile web

Globally, more than four mobile phones are sold for

every PC. Brands have been told that the PC-based

Internet is all-pervasive, when in fact, even though the

mobile web is only in its infancy; its reach is multitudes

greater than any existing PC-based website can offer.

Brands perceive their existing channels as key, and

engaging in a new channel like the mobile web is seen as complex and expensive. Of course there is

also a concern that, after investing in the development of mobile campaigns and mobile websites,

consumers will not access them.

However in reality, a lucrative Mobile Advertising market already exists and billions of Mobile

Advertising page impressions have been reported by mobile ad networks worldwide. The Mobile

Advertising industry is in fact a booming marketing medium, yet to reach its zenith.

Brands have yet to acquire the necessary skills

Successful advertising requires an ability to exploit the medium in which it is presented. For

television, advertisers are generally assuming a viewer is in a home context. For Internet-based

advertising, the assumption is a sit-down location that will, most likely, lead to a "click-through"

scenario.

Market View

Until now, mobile operators

have not actively encouraged brand

advertisers to get involved …

…they are afraid that consumers may

leave their service due to poorly

developed mobile web offerings

and experiences that could arise with

the improper use of Mobile

Advertising.

Mobile Advertising| Brand and Mobile Network Operator - Opportunities in Mobile Advertising 43

For mobile, advertisers have to rethink context completely:

Where is my user?

What do I want that user to do?

What will be a successful metric beyond a click-through rate?

How do I determine a realistic ROI?

How do I make my static brand meaningful in a mobile world?

Brands need to take an innovative approach

All brands are pioneers when it comes to advertising on the mobile web. Although many

organizations such as the MMA are providing guidelines for Mobile Advertising, there are no

textbook case studies on how to make it work. Some companies are taking steps to broaden the

possibilities of Mobile Advertising leveraging the .mobi domain trust mark, for example, Zagat

Survey, who is opening their service to the mobile world via zagat.mobi with subtle banner

advertising support from VISA Signature.

The Mobile Advertising world needs more services like this, so that existing barriers can be broken

down by engaging the brands with mobile operators to assume strategic Mobile Advertising

Ecosystem partnerships for On-Portal service offerings or when moving to an open, trust marked Off-

Portal platform like .mobi.

Brands, and Mobile Operators, have yet to experience real incentives

By acting as consumer‟s first access point to the mobile web, mobile operators have the capacity to

influence and control what content reaches the consumer in order to satisfy their Quality of Service

(QoS) and ARPU requirements. Mobile operators have exerted a level of control that many brands

find prohibitive; both in rules about what these brands can and can not do as part of their advertising

strategies on the mobile web and undefined delivery expectations to reach these consumers. Together,

the brands and mobile operators have been constrained by the lack of clear Mobile Advertising

service delivery models, defined business incentives and campaign measurement analytics when

delivering to the mobile web opportunity.

Mobile Advertising| Primary Research Report 44

Primary Research Report

Research Objective:

The primary objective of this research study is to gain an insight into the perception of mobile users,

towards mobile advertising and their utility value in terms of impact on the purchase decision. Hence

it was attempted to explore consumers‟ responsiveness to mobile marketing, taking into cognizance

the impact of demographic factors like age, gender, occupation, etc.

Research Methodology:

A sample of size 150 was chosen which comprised of both male and female respondents from the

following age groups: 18 - 29 years, 30 - 49 years, 50 - 64 years and 65+ years. Each of the

individuals was provided with a common questionnaire which they were asked to fill and submit.

Usually the responses were collected the next day. These responses were then analyzed to find out the

trends and behaviors. Among the 150 questionnaires circulated, about 85 questionnaires were found

complete in all respects.

An attempt has been made to keep the sample fairly representative across the demographic variables

by constructing quotas according to these factors e.g. age, gender, occupation, and level and purpose

of mobile usage. Almost 30% of the respondents were students, 27% were in service, 14% were

housewives and 29% were in business. 59.7% were males and 40.3% were females. Almost 85% of

the respondents rated their usage of mobile in the range of medium to high. 75% of the respondents

used their mobiles primarily for personal communication.

The area of sampling was the city of Bangalore (mobile density in Bangalore is estimated to be

around 80% which is justifiably at par with the major cities in India). The time frame of the study was

March 2009 to April 2007.

In the following pages there is an analysis of the findings of the survey that was conducted within the

scope of this research work.


Chart 8- Overall Mobile Service Usage Pattern

One objective of the research was to find out the usage pattern of mobile among the samples. The

above is the representation of the overall mobile usage pattern among the respondents. Typically this

does not take the demographic parameter of the respondents into considerations.

Some striking observations from this are as follows:

Message services (SMS/MMS) are the most prominent utility among the different VAS that

mobile users predominantly use today. But the future trend shows a complete reverse picture.

Use of mobile for GPS and Personal Communication in the form of E-mail and similar such

applications are having a great potential in the days to come. This should ideally be the focus

for the marketers and the advertisement agencies.

Search engine companies also have a major take away in the days to come, thanks to the

boom of mobile based internet services.

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Overall Mobile Service Usage Pattern

Presently Use


CHART 9- OVERALL MOBILE SERVICE USAGE PATTERN

This data set tries to capture the impact of age on the mobile usage pattern. As is quiet obvious that

more a person grows in age the less he/she becomes inclined to towards the flashy technologies and

the geeky applications. This data is pulled from the previous set of data and filtering the same as per

the age of the respondent.

Some striking observations from this analysis are as follows:

The primary target segment for mobile advertisement should ideally be people within the age

group of 18 to 50 years. Although as time progress this span can increase both ways.

Also, while advertising, the marketers must take into consideration the target audience for the

content advertised and accordingly set their advertisement channel. For example, if the target

audience is the student segment, then obviously SMS/MMS should be the preferred way of

communication, while for the corporate class search engines and emails can be considered as

the preferred channel.

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Age-wise usage pattern

18 - 29 Years 30 - 49 Years 50 - 64 Years 65+ Years


Chart 10 - Can SMS ads convey the right message

The primary requisite for any advertisement to be successful is that the content of the advertisement

should be clear and understandable. To add to this, in case of a mobile advertisement the content

should also be short in size due to certain inherent imitation of the media itself. The success factors

for mobile advertisement are discussed elaborately in the previous section.

When it comes to the Indian scenario, the overall perception of mobile advertisement is not too much

on the positive lines. The primary reason for this is obviously the fact that the concept is itself in a

very nascent stage here and as a result the perception cannot be expected to be very positive.

However, one thing that can be easily worked on is the suitability of the content to the target

customer. In India, very often the mobile advertises use a bulk sending option, where in the particular

information is sent in a bulk to the mobile numbers registered in their database. As a result, it so

happens that most of the time the right noise does not reach the right ear. This issue can be easily

sorted out by filtering the database and segmenting the database based on the advertisement content.

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less informative Not suiting personal needs

relayed at the wrong time

clutter as a result of too many ads

Can SMS ads convey the right message

Strongly Agree Somewhat agree Donot agree


Chart 11 - Perceptions about SMS ads

In line with the findings in the previous chart, here also we see that very prevalent perception is that

mobile advertisements are mostly junk ads. The reason for this can be attributed to the bulk approach

that marketers often take in India. The crux of success lies in sending the right information to the right

person and to do this, there is no alternate to proper market segmentation and targeting the right

segment.

One striking advantage of segmentation will be a huge reduction in cost, as the advertisers are often

supposed to pay the network provider on a per capita basis. That means, the advertiser pay depending

on the number of users to whom they send their promotion or advertising message. Also a proper

segmentation will lead to an increase in revenue as the success quotient will increase many fold due to

this.

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cause disturbance at work

junk ads without going through it

I find it time consuming to go

through ads

loss of privacy

Perceptions about SMS ads

Strongly Agree Somewhat agree Donot agree


Chart 12 - Brand Recall of Advertisements through Mobile

Coming to Brand recall factor, mobile advertising shows a positive response, with 24% of

respondents claiming that they bear a high brand recall and almost a sheer majority of them admitting

the fact that the recall is quiet prominent.

The primary reason for this is the fact that as the market is nascent, naturally those marketers who opt

for this channel of marketing stand apart from others. With more and more competitors coming in,

this factor may come down to a great extent as the distinguishing phenomenon will slowly fade and

consumers will start becoming used to mobile advertising.

For instance, when India‟s leading private sector bank came up with the concept of mobile banking

for the first time, it gained a huge success. But today almost a couple of years after, the concept of

mobile banking and receiving mobile updates of banking transaction done by a particular individual,

has become so common that it is now no more an USP.

Even with this kind of a future prospect, the brand recall of mobile will still be higher than other

advertisement channel is because of the reach of mobile devices and there by the advertisement

broadcasted through it.

High 24%

Medium 62%

Low 14%

Brand Recall of Advertisemnts through Mobile


Chart 13 - Positioning of Mobile Advertisement

Coming to positioning of mobile advertisement, the success factor is strikingly high, with just 8% of

the respondents showing negative response. This shows that consumers today are really inclined

towards mobile advertising and they do understand the need of the same.

This should be an inspiring factor for mobile advertisers. Those companies who have already forayed

into mobile advertising are scoring high on brand recall and positioning. Hence if they add the correct

segmentation factor to this, then their revenues from the ad spend can increase quiet satisfactorily

thereby giving them a significant return on investment.

As a conclusion from the primary survey and coupling it with the secondary data gathered in this

report, the following points can be drawn:

The mobile advertising market is having a huge potential of growth.

The success of the same lies in how efficiently can marketers change the perception of the

consumers.

A judicious segmenting and targeting strategy can really increase the revenues from mobile

advertisement significantly.

Market skimming will be a better option that market penetration for the initial couple of years.

92%

8%

Positioning of Mobile Advertisement

High Medium

Mobile Advertising| Case Study 51

Case Study

Universal Pictures Offers Compelling Mobile Ad Campaign with 4INFO

Background

To support the April 2008 launch of the comedy film Forgetting Sarah Marshall, Universal Pictures

launched a cross-media marketing campaign, including text message advertising on the 4INFO ad

network.

Forgetting Sarah Marshall, directed by first-time feature filmmaker Nicholas Stoller and written by

the film‟s star, Jason Segel, tells the story of Peter Bretter (Jason Segel), who has been dating the

ridiculously hot celebrity Sarah Marshall (Kristen Bell) and is about to ask to marry her when she

unexpectedly breaks up with him. In an attempt to rid himself of the media swarm surrounding their

celebrity break-up, Peter travels to Hawaii and finds out that she is there at the same hotel on vacation

with a new boyfriend.

Universal‟s agency, Ignited, selected the 4INFO ad network for their mobile campaign because of the

broad mobile reach possible with over 5 million opted-in consumers, and 4INFO‟s ability to target the

relevant audience with cross-platform mobile tie-in promotions, including mobile video trailers and

branded online widgets. 4INFO commissioned Insight Express to measure the impact of Universal‟s

mobile branding efforts for the film. Ignited hoped to engage users through targeted online and SMS

content, to drive both trailer views and theater visits.

Campaign Objectives

Engage male users ages 18-34

Increase awareness of the upcoming film release

Drive trailer views

Drive theater visits

Campaign

The campaign included SMS advertising on the 4INFO text message network, branded on-line mobile

registration widgets and mobile video trailers. Text message ads ran on the 4INFO network across

multiple channels, including sports and entertainment interests. Ad copy asked a question, such as

“Been dumped?” or “Looking for romantic disaster?” with an option to reply for more information.

Long ads included movie information and a link to a mobile-ready video trailer.

Mobile Advertising| Case Study 52

Interactive SMS Advertising Campaign & Trailer Link.

In addition to SMS advertising, 4INFO provided Forgetting Sarah Marshall branded mobile widgets.

These widgets, offered on Facebook and other social networking sites, allowed consumers to sign up

for free sports content delivered to their cell phones, providing the optimum access to the desired

target audience of men ages 18-34. These branded widgets included a link to the online movie trailer.

Key Results

The movie opened as the #2 movie in the United States, with a box office take exceeding 17.7 million

dollars in the opening weekend. The mobile campaign was a huge success in driving increases in

awareness and persuasion metrics for the movie.

Brand awareness increased 19.7%

Recommendation intent increased 21.6%

Viewing mobile trailer increased 14%

Intent to see movie increased 21%

This campaign outperformed both mobile and online norms by 7-20%. The campaign made those

exposed more aware of the movie, persuaded them to plan to see the movie, and more likely to

recommend the movie to their friends. These metrics held true for all respondents, regardless of age,

gender and overall interest in viewing movies.

mobile advertisement - prospects in india

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