MOBILE AD TRENDS IN FRANCE AND GERMANYMomentum Builds, as Multinationals Lead the Way

MAY 2013

Karin von Abrams

Contributors: Victor Aka, Tobi Elkin, Natalie Marin-Sharp

Read this on eMarketer for iPad

MOBILE AD TRENDS IN FRANCE AND GERMANY: MOMENTUM BUILDS, AS MULTINATIONALS LEAD THE WAY ©2013 EMARKETER INC. ALL RIGHTS RESERVED 2

CONTENTS3 Overview: Mobile Advertising in Western Europe

10 France

15 Germany

20 Conclusions

21 eMarketer Interviews

21 Related Links

21 Editorial and Production Contributors

EXECUTIVE SUMMARY

The UK remains by far the largest mobile advertising

market in Western Europe, and eMarketer estimates

it will account for nearly 53% of mobile internet ad

spending in the region this year. By comparison,

France and Germany will represent 12% and 6.8%,

respectively, of the $2.92 billion mobile ad spend total.

Yet those shares are beginning to add up to serious

money, with $349 million projected for Germany and

nearly $200 million forecast for France in 2013. Within

five years, mobile ad spending is expected to reach

$1.8 billion in Germany and $792 million in France.

As smartphone and tablet penetration rises, consumers in France and Germany are growing more accustomed to seeing ads on these devices. Familiarity generally breeds acceptance, and mobile ads prompt many recipients to research or purchase.

For their part, advertisers increasingly recognize the need to reach and engage consumers via mobile channels, if only to prevent their competitors from doing so more quickly or effectively. So far, though, planning and execution of robust mobile strategies—such as mobile-optimized websites and high-spec campaigns that really pack a punch—have been largely restricted to megabrands that can afford to risk the investment and buy the talent that helps ensure success.

KEY QUESTIONS ■ How quickly are mobile audiences expanding in

France and Germany?

■ How much will advertisers spend on mobile

platforms in France and Germany this year?

■ What are the distinctive features of the mobile ad

markets in France and Germany?

■ How do mobile phone users in France and Germany

feel about ads delivered to their mobile phones

and tablets?

millions

Mobile Internet Ad Spending in France and Germany,2013 & 2017

2013

$349$198

2017

$1,800

$792

Germany France

Note: includes display (banners, video and rich media) and search; excludesSMS, MMS and P2P messaging-based advertising; includes ad spending ontabletsSource: eMarketer, April 2013156659 www.eMarketer.com

MOBILE AD TRENDS IN FRANCE AND GERMANY: MOMENTUM BUILDS, AS MULTINATIONALS LEAD THE WAY ©2013 EMARKETER INC. ALL RIGHTS RESERVED 3

OVERVIEW: MOBILE ADVERTISING IN WESTERN EUROPE

Usage of mobile devices such as smartphones and tablets is skyrocketing in Western Europe, but ad spending on mobile platforms remains disproportionate to the size of the audience. eMarketer calculates that mobile’s share of 2012 digital ad spending was very small—less than 5% in both France and Germany, compared with 6% on average across Western Europe. The consultancy Capgemini estimated the proportion to be even lower: just 1.8% of all digital ad spending in France last year. While most advertisers are now aware of the need to address mobile consumers, actual spending is lower than one might expect, given the level of mobile engagement.

In terms of ad spending on the mobile web, Germany is emerging—very gradually—from the shadow of the UK. The UK remains far larger than any other Western European market and is expected to account for 52.5% of mobile internet ad spending in the region in 2013. Nonetheless, firms in Germany will invest an estimated $349 million this year in mobile ads, and those in France will spend nearly $200 million. Fueled by a bigger population and better economic health than other nations in the region, Germany will claim an increasing share of spending between now and 2017, while France’s and the UK’s will decline gradually through 2015 and 2017, respectively.

millions

Mobile Internet Ad Spending in Western Europe, by Country, 2011-2017

UK*

Germany

France

Italy

Netherlands

Sweden

Norway

Denmark

Spain

Finland

Other

Western Europe

2011

$323

$112

$87

$63

$45

$21

$23

$26

$21

$10

$50

$780

2012

$806

$208

$130

$104

$78

$57

$50

$45

$36

$20

$90

$1,622

2013

$1,532

$349

$198

$168

$129

$96

$84

$70

$62

$33

$199

$2,920

2014

$2,451

$566

$295

$252

$187

$144

$126

$104

$102

$50

$366

$4,643

2015

$3,554

$879

$417

$365

$268

$195

$183

$146

$162

$71

$632

$6,872

2016

$4,621

$1,286

$578

$470

$372

$244

$238

$190

$252

$88

$939

$9,277

2017

$5,684

$1,800

$792

$588

$502

$288

$281

$237

$378

$102

$1,318

$11,968Note: includes display (banners, video and rich media) and search; excludesSMS, MMS and P2P messaging-based advertising; includes ad spending on tablets; numbers may not add up to total due to rounding; *eMarketer benchmarks its UK mobile ad spending projections against the IAB UK/PwC data for which the last full year measured was 2011Source: eMarketer, April 2013

154868 www.eMarketer.com

Multinational firms and top brands are responsible for the bulk of mobile ad spending—and innovation—in both France and Germany. For example, most campaigns reaching the final stages of the Cannes Mobile Lions Awards in 2012 came from global players with deep pockets, such as sportswear manufacturers Nike and adidas; mobile service providers Nokia and Orange; automakers including Audi, Ford Motor Co., BMW and Volkswagen; consumables giants such as Procter & Gamble, Kraft Foods, McDonald’s and The Coca-Cola Co.; and media brands such as MTV Networks. Economic factors probably contribute to this situation; most European economies are struggling to emerge from a severe downturn, and many advertisers with limited budgets have been slow to spend money on mobile when it represents unknown territory in marketing terms and challenges their existing skill sets.

Financial questions apart, staking a claim to mobile competence is a priority for many major advertisers, according to Paul Amsellem, CEO of Mobile Network Group/Bemobee: “These brands are investing a lot of money to be sure they will be big in mobile. We’ve done campaigns for Nissan, Renault and McDonald’s. Like several luxury brands, including Chanel and Dior, all these brands are making a move. They are now big players in mobile in France.”

Web users in France and Germany may be less likely to access social sites via mobile devices than users throughout the rest of Europe. As a result, social networks don’t yet attract as large a proportion of mobile ad expenditure as they do in the UK. But some research suggests that relatively slow adoption of social networking in the two countries is now picking up speed. If that is true, advertisers in France and Germany will soon be following their UK and US counterparts onto Facebook and other social sites, aiming to capitalize on the social-mobile link.

MOBILE AD TRENDS IN FRANCE AND GERMANY: MOMENTUM BUILDS, AS MULTINATIONALS LEAD THE WAY ©2013 EMARKETER INC. ALL RIGHTS RESERVED 4

The arrival of rich media is fueling a further surge in mobile ad spending. Historically, much mobile advertising was text-based or composed of static, rather unimaginative graphic elements. With millions of consumers now using smartphones and tablets with high-resolution screens and robust data packages, advertisers have a chance to engage them with more appealing visuals, including video. Top brands are leading the way, but all marketers targeting mobile audiences will face pressure to move in the same direction—or risk losing brand value and market share. As Jens Oberbeck, general manager for Germany, Austria and Switzerland at mobile advertising firm InMobi, commented in an interview with GIGA: “I believe that one of the driving factors behind mobile ads will be rich media—large animations and videos, seen not just as pre-rolls before other videos, but as ads in their own right.”

Wider use of HTML5 and responsive design will also boost mobile advertising in Europe’s largest markets. At the moment, the variety of available mobile handsets and their technical specifications is an obstacle for many brands. For example, advertisers often choose to target either Android or Apple devices because devising ads for both operating systems (OSs) can be costly and time-consuming. HTML5—a markup language for internet content designed to support advanced multimedia and ensure better interoperability—will help overcome some of these hurdles. The same is true of responsive design, a programming approach that aims to deliver optimal text and graphics to many different devices and screens, removing the need to program separately for each device type. These advances will enable advertisers in the region to reach more mobile consumers than ever before, with far greater efficiency.

THE GROWING MOBILE AUDIENCE eMarketer estimates that 340.3 million people in Western Europe will use a mobile phone in 2013, including 66.8 million in Germany and 51.4 million in France. In 2015, the number of mobile phone users in the region is expected to pass 351 million. There will also be 161.1 million people in Western Europe who use smartphones this year.

Mobile devices account for an ever-greater share of mobile web traffic in key European markets. In a November 2012 study from InMobi, 40% of mobile web users in France said their internet usage was evenly split between a mobile device and desktop or laptop. But more than one-quarter (26%) said they went online mostly via mobile, and 14% said their mobile phone was their only web access device.

The pattern was similar in Germany: 36% of mobile web users said their internet access was divided between mobile and a desktop or laptop, 25% said they used a mobile device more often, and 17% went online only via mobile.

In both France and Germany, 10% of total page views in February 2013 came from internet traffic via smartphones and tablets combined, according to Adobe’s “Digital Index” report. Tablets had the edge in both markets, accounting for 6.1% of all page views in France and 5.7% in Germany.

In most European countries, young adults ages 18 to 29 were most likely to be mobile web users in 2012, according to Pew Research Center Global Attitudes Project. In France, 65% of mobile phone owners in that age group used the device to access the internet, compared with 40% of those ages 30 to 49 and 14% of respondents 50 and older. In Germany, 56% of 18- to 29-year-olds said they went online via mobile, compared with 34% in the 30-to-49 age group and 15% of adults in the older age bracket.

By some accounts, phone owners in France and Germany are relatively uninterested in social networking via mobile. According to comScore MobiLens, around one-quarter of mobile phone owners in the two countries accessed social sites with their phones in July 2012. The UK’s Office of Communications found similarly low percentages of mobile social network users in France and Germany in October 2012, at 27% and 26% of mobile phone owners, respectively, compared with 43% in Spain and 40% in the UK.

MOBILE AD TRENDS IN FRANCE AND GERMANY: MOMENTUM BUILDS, AS MULTINATIONALS LEAD THE WAY ©2013 EMARKETER INC. ALL RIGHTS RESERVED 5

% of mobile phone owners

Mobile Social Network Users in Select Countries, Oct 2012

Spain 43%

UK 40%

US 40%

Australia 40%

China 37%

Japan 35%

Italy 32%

France 27%

Germany 26%

Note: Australia n=759; China n=899; France n=733; Germany n=790; Italyn=869; Japan n=531; Spain n=883; UK n=837; US n=684; ages 18-64Source: Office of Communications (Ofcom) - UK, "InternationalCommunications Market Report 2012," Dec 13, 2012152269 www.eMarketer.com

Evidence from Médiamétrie//NetRatings contradicts this data. A study by the firm suggested that in France, at least, Facebook’s mobile site was second only to Google in unique visitor numbers in December 2012. Similarly, eMarketer’s own calculations indicate that in Germany, 38% of web users—more than 27% of the country’s population—will visit Facebook at least once per month in 2013. Inevitably, greater smartphone and tablet penetration will lead many of those visitors to access the site via mobile as well. It appears that mobile social media use—in parallel with social networking in general—is simply taking longer to develop in France and Germany than in the UK, Italy and Spain.

MOBILE ADVERTISING eMarketer predicts that mobile internet ad spending in France will reach $198 million this year—6.8% of all mobile spending in Western Europe. Germany will claim a larger slice, estimated at 12% of the total, or $349 million.

As a proportion of 2012 digital ad spending, eMarketer estimates that mobile was very small in France and Germany, at 4.8% and 4.1%, respectively. But both countries can expect steep rises in mobile ad spending between now and 2017, with compound annual growth rates (CAGRs) of 43.6% and 54%, respectively. Overall, eMarketer estimates that mobile ad spending in the region will benefit from a CAGR of 49.1% between 2012 and 2017.

Mobile, Digital and Total Media Ad Spending CAGRand Share in Western Europe, by Country, 2012-2017

Digital% of total

Mobile% of digital

CAGR (2012-2017)

UK

Denmark

Norway

Netherlands

Sweden

Germany

France

Finland

Spain

Italy

Other

Western Europe

2012

40.4%

31.4%

29.4%

28.1%

24.4%

19.7%

17.9%

17.6%

17.5%

13.8%

18.6%

23.6%

2017

51.1%

41.8%

37.3%

37.3%

29.9%

26.6%

24.6%

22.1%

25.2%

21.9%

23.7%

31.5%

2012

9.3%

6.5%

6.1%

5.4%

6.2%

4.1%

4.8%

6.4%

3.2%

6.6%

3.3%

6.2%

2017

43.9%

24.2%

24.6%

25.0%

23.6%

24.8%

20.3%

24.2%

20.7%

21.2%

32.9%

31.1%

Mobile

47.8%

39.5%

41.5%

45.0%

38.4%

54.0%

43.6%

38.9%

59.8%

41.3%

71.2%

49.1%

Digital

8.4%

7.4%

7.0%

6.7%

5.8%

7.6%

7.7%

6.4%

9.8%

12.0%

7.9%

8.1%

Totalmedia

3.4%

1.4%

2.0%

0.8%

1.6%

1.3%

1.1%

1.7%

2.1%

2.1%

2.8%

2.0%

Source: eMarketer, April 2013156913 www.eMarketer.com

As these figures suggest, France and Germany are not among the European nations spending the most on mobile ads per internet user. In fact, they rank rather low by this measure. eMarketer estimates advertisers in France spent an average $8.01 per web user on mobile ads in 2012, while their counterparts in Germany spent $12.25—both a far cry from the average of $36.35 spent in the UK. Denmark, Norway and Sweden also posted averages between $21.25 and $35.71 per internet user.

Most Western European countries showed tremendous growth in mobile ad impressions served in 2012. In more mature markets such as the Nordic nations, the number of mobile impressions that Velti, an ad serving firm, delivered rose by several hundred percent between January and November 2012. But changes elsewhere were even more remarkable: 501% growth in France and 655% in Germany.

Mojiva, another ad serving company, noted phenomenal growth between 2011 and 2012 in ads delivered specifically to tablets in the EU-5. In France, the number rose more than elevenfold—from 45 million to 519 million ads. In Germany, tablet ad requests jumped from 54 million to 459 million during the year.

MOBILE AD TRENDS IN FRANCE AND GERMANY: MOMENTUM BUILDS, AS MULTINATIONALS LEAD THE WAY ©2013 EMARKETER INC. ALL RIGHTS RESERVED 6

millions

Tablet Ad Requests Served by Mojiva in the EU-5, 2011 & 2012

2011 2012

UK 109 1,610

France 45 519

Germany 54 459

Italy 40 372

Spain 65 362

Source: Mojiva, Feb 25, 2013153197 www.eMarketer.com

However, clickthrough rates (CTRs) for mobile ads served by Velti in France, Germany and most other Western European countries remained relatively low in 2012, at less than 2%.

Real-time bidding (RTB) for mobile ads is accelerating, reflecting a general shift toward RTB on all digital platforms in more mature markets, including the UK. This is a direct consequence of rising mobile usage, according to Vincent Pelillo, COO of mobile agency madvertise: “Because mobile traffic is growing exponentially, there is a need to defragment the supply of mobile inventory and make it available for marketers. Programmatic buying of mobile ads and RTB are going to boom in the next three years.”

The Rubicon Project recently investigated the rise of mobile RTB, canvassing the opinions of agency media buyers across Europe.

The online advertising company found significant increases overall in the percentage of total spending going to mobile display. While 83% of respondents in 2012 said they spent less than 5% on mobile ads, just 17% said the same thing in 2013. More than half (57%) of those surveyed in 2013 said they were now spending between 5% and 10% of their digital display budgets on mobile advertising.

Striking, too, was the fact that in 2012, just 4% of media buyers in Europe had devoted between 10% and 20% of their budgets to mobile, and none put the percentage any higher. One year later, nearly one in 10 said that mobile accounted for 20% to 40% of all spending on digital display.

% of respondents

Mobile as a Percent of Total Digital Display AdSpending According to Agencies in Europe*, 2012 & 2013

<5%83%

17%

5%-10%13%

57%

10%-20%4%

17%

20%-40%9%

2012 2013

Note: *Denmark, France, Germany, Italy, Netherlands, Spain, UKSource: Rubicon Project as cited in company blog, Feb 26, 2013154234 www.eMarketer.com

Asked what kind of mobile inventory they planned to buy in 2013, the agencies showed a near-equal preference for standard web ads delivered to tablets (35% of respondents), in-app ads (32%) and ads placed on mobile-optimized sites (32%).

But agencies still had several concerns about buying mobile ad placements; 21% of respondents cited targeting as an issue, and 20% were worried about the quality of inventory. Technology was also a challenge, mentioned by 15% of those polled.

Pelillo’s agency is one of those aiming to solve such problems and is doing so by offering advertisers a comprehensive mobile ad service. His colleague Christof Wittig, the firm’s CEO, said: “At madvertise, we are the largest independent local mobile ad network in Germany. In many ways, I think we have captured the high ground of what we call premium performance. … We think that Germany is still a very brand- and premium-oriented marketplace. The market here is driven by brand-oriented advertising budgets. But campaigns use a lot of performance components like independent tracking, which is a big differentiator for our agency. Advertisers welcome tracking, which allows them to measure the lifetime value of the customer and the ROI [return on investment] of advertising dollars. Also, accessing the vast supply of ad inventory through RTB makes a lot of sense to the advertisers in our marketplace.”

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Another aspect of technology that’s vital to further development of mobile ads, including rich media and video, is the provision of Wi-Fi and high-speed 4G networks. Cities and semiurban areas in France and Germany are quite well served by Wi-Fi, and 4G has begun to appear in major cities. But there are rural parts of both countries that will not have robust network coverage for years to come. Fortunately for most advertisers, relatively few of their existing or potential customers live in these more remote locations.

CONSUMER ATTITUDES TOWARD MOBILE ADS In February 2013, Ipsos OTX released data from a survey of 18,500 web users in 24 countries indicating that only 28%, on average, had seen an ad of any kind on their mobile phone. Perhaps surprisingly, the report stated that 28% of respondents in France had seen a mobile ad, compared with 21% in the UK and 19% in Germany. In Western Europe, Spain registered the highest response rate, at 53%.

Consumers who are more accustomed to seeing mobile ads may accept them more readily. According to InMobi, mobile web users in many Asia-Pacific markets, who had much greater exposure to mobile ads, were among those most likely to say they were content to receive them. Yet respondents in several emerging markets were also quite tolerant—perhaps because mobile ads were an intriguing novelty. Worldwide, an average 59% of mobile web users polled in late 2012 said they were either as comfortable or more comfortable with mobile ads than with other types of ads.

Interestingly, France and Germany registered far lower response rates in this study—with 34% and 42% of mobile web users, respectively, saying they were comfortable with mobile ads. Around one-third of respondents in both countries said they were less comfortable with mobile ads than with other types of ads.

% of respondents

Comfort Level with Mobile Ads Compared to Other Ad Formats According to Mobile Internet Users in Select Countries, Nov 2012

More/equallycomfortable

Lesscomfortable

Kenya 89% 5%

Nigeria 83% 4%

South Africa 70% 13%

India 66% 10%

US 65% 16%

South Korea 62% 19%

Singapore 59% 24%

Australia 54% 22%

UK 52% 26%

New Zealand 52% 21%

China 49% 24%

Japan 44% 31%

Germany 42% 33%France 34% 39%Worldwide 59% 20%Note: excludes text messagingSource: InMobi, "Global Mobile Media Consumption" conducted byDecision Fuel and On Device Research, Feb 27, 2013153534 www.eMarketer.com

It may be a coincidence, but the same study also found that 16% of mobile web users in both France and Germany said they either frequently or very frequently tapped mobile ads without meaning to.

MOBILE VIDEO ADVERTISING The “Consumer Mobile Streaming Survey” from Rovi Corporation probed consumer reaction to mobile video ads. In January 2013, more than two-thirds of both tablet and mobile phone video streamers in France said they had seen an ad while watching mobile video. This percentage was marginally lower among video streamers in Germany.

There were striking differences, though, between the types of ads the two populations viewed. In Germany, more than 80% of tablet and mobile phone video streamers had seen pre-roll ads. Around half had seen video banners, and 20% or fewer had seen an ad mid-roll. The results were essentially reversed in France: Around 85% of mobile device owners had viewed video banners, while no more than one in five had seen a pre-roll ad.

MOBILE AD TRENDS IN FRANCE AND GERMANY: MOMENTUM BUILDS, AS MULTINATIONALS LEAD THE WAY ©2013 EMARKETER INC. ALL RIGHTS RESERVED 8

These results suggest that advertisers in Germany, like those in the UK, have a strong preference for pre-roll placements but are also careful to ensure a presence in banner inventory. Mid-roll ads in the country are not as great a priority as they are in France. But consumer viewing habits may also play a role here. If significant numbers of video streamers in France typically avoid pre-roll ads, advertisers will be less likely to invest in that format.

% of respondents

Types of Mobile Video Ads Seen by Mobile and TabletVideo Streamers in Select Countries, Jan 2013

TabletBanner ad

Pre-roll (video ad playingbefore the video youselected starts)

Mid-roll (video ad playingin the middle of the videocontent you are viewing)

Takeovers (static ad thatbriefly fills all or most ofyour screen)

Mobile phoneBanner ad

Pre-roll (video ad playingbefore the video youselected starts)

Mid-roll (video ad playingin the middle of the videocontent you are viewing)

Takeovers (static ad thatbriefly fills all or most ofyour screen)

France

84.7%

19.0%

31.5%

-

86.3%

20.3%

34.5%

-

Germany

53.0%

86.5%

20.0%

29.7%

50.3%

81.8%

13.8%

23.3%

Italy

43.4%

88.8%

9.1%

32.9%

40.5%

83.5%

9.1%

33.1%

Spain

31.1%

83.1%

12.2%

23.6%

37.4%

76.2%

15.4%

31.3%

UK

57.6%

77.7%

20.1%

23.1%

51.7%

72.7%

20.6%

20.6%

US

55.6%

81.7%

40.7%

33.2%

61.1%

75.6%

31.3%

30.1%

Source: Rovi Corporation, "Consumer Mobile Streaming Survey," Feb 25,2013152998 www.eMarketer.com

Overall, Rovi’s survey seemed to confirm better results with full-screen video ads viewed in connection with primary content than with other ad formats mobile video streamers saw—such as branded infotainment or ads containing coupons or discount offers. Viewers in France and Germany who had seen video advertising before, during or after they streamed content had better recall of the brands and products featured or were more likely to take action prompted by an ad.

% of respondents

Most Effective Type of Mobile Video Ad According toMobile Video Streamers in Select Countries, Jan 2013

Video ads (before, duringor after the video)

Location-based ads (ads for stores/servicesnear you)

Ads with discount coupons or special offers

Banner ads (static display ads)

Branded video ads (infotainment ads, e.g., extreme sports videosponsored by Red Bull)Ads with QR codes (scanto get more information)

France

32.5%

13.2%

20.1%

9.4%

17.5%

7.3%

Germany

36.2%

17.4%

18.4%

11.6%

8.2%

8.2%

Italy

28.8%

10.6%

21.2%

15.4%

16.8%

7.2%

Spain

33.0%

9.0%

14.4%

14.1%

22.5%

6.9%

UK

40.8%

10.7%

12.9%

18.0%

13.2%

4.4%

US

42.6%

16.6%

14.3%

12.6%

9.1%

4.8%

Note: help to remember brand or product, or prompt action; numbers maynot add up to 100% due to roundingSource: Rovi Corporation, "Consumer Mobile Streaming Survey," Feb 25,2013153000 www.eMarketer.com

THE ROLE OF SEARCH Few research firms have issued estimates or forecasts for spending on mobile search in France or Germany. Most sources focus on mobile display as the basis for their calculations of the total mobile ad market and use varying methods for arriving at a figure for search if they include it. The methodologies for assessing search are often unclear. For that reason, eMarketer, which released new figures for UK mobile search spending in April 2013, has not produced comparable estimates for those countries.

What can be said is that search claims a substantial proportion of mobile spending in both markets, as is the same in the UK and the US. There appear to be important differences, however. FirstPartner, a source that does estimate spending on search placements, projected that search placements will represent more than 53% of all mobile ad spending in France this year. It expects the share in Germany to be lower, at about 43%.

It’s difficult to pin down the reasons for this variation—if it exists. It doesn’t appear to reflect patterns in digital spending as a whole. That is, advertisers in France will actually spend less on search in 2013 (42% of all digital ad spending, eMarketer calculates) than their counterparts in Germany (47.4%).

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Patterns of device usage and preference may be a factor. Smartphone penetration is higher in France—eMarketer estimates 50% of mobile phone users in France will own the device this year, compared with 42% in Germany—and the search process is more user-friendly on a smartphone than on a feature phone. But by the same token, smartphones offer better screens for display ads, which should encourage investment in display.

The 2012 Google report “Our Mobile Planet: Understanding the Mobile Consumer,” carried out by Ipsos OTX and Ipsos MediaCT, stated that 48% of smartphone users in France visited search engines via mobile at least once a day, compared with 46% of smartphone users in Germany. This small gap doesn’t seem sufficient to warrant such a big difference in spending levels, however.

It’s also possible that FirstPartner’s estimates, made some months ago, are simply out of date. While commenting on mobile search and display in France, Mobile Network Group’s Amsellem said:

“At the moment the most investment is in mobile display. Then, probably, mobile search and mobile video. … One reason for this is that in the French market Apple is quite big. But also the mobile web is not really popular. So people prefer investing in apps on iOS. … Marketers are doing display advertising on mobile apps … and less through mobile search.

“It will change in the future because the Android OS is starting to take a bigger piece of the market now, so marketers will probably develop more advertising for the mobile web. That’s also because more people are used to mobile browsing and searching, which was not the case initially. … They were going online with apps.”

He added that there are still challenges: “People are ready to search, and when they search and go to a site that’s not optimized for mobile, they are really disappointed. … Less than 20% of sites in France are optimized for the mobile web. … When you see a site that you cannot read on your mobile, you’d rather take the app. … But that will change.”

By contrast, Germany’s mobile users are already big Android fans. Around 67% of smartphones in the country used Google’s OS in December 2012, according to Kantar Worldpanel. In France, the proportion was about 59%. If Android is associated with higher levels of search activity—and potentially, spending on search—one would expect advertisers in Germany to invest heavily in the tactic this year.

In fact, that’s what madvertise’s Pelillo is seeing, though he does anticipate rising investment in display in leading regional markets. “In Western Europe, mobile search is between 50% and 60%. Text messaging is still between 10% and 15% of mobile advertising. The less mature the market, the bigger that portion. And the rest is display—between 30% and 40%, or maybe 45%, depending on the maturity of the market. The bigger markets for display advertising are clearly Germany and the UK.”

If spending on mobile search is proportionately much higher in France than in Germany, another reason may be that firms in France are more likely to be feeling an economic squeeze—and dealing with more budget constraints. Money spent on search may well bring a higher ROI than spending on the more complex process of creating mobile display ads.

MOBILE AD TRENDS IN FRANCE AND GERMANY: MOMENTUM BUILDS, AS MULTINATIONALS LEAD THE WAY ©2013 EMARKETER INC. ALL RIGHTS RESERVED 10

FRANCE

THE MOBILE AUDIENCE eMarketer estimates 51.4 million residents of France will use a mobile phone in 2013, equivalent to 78% of the country’s population. More than 23 million will be smartphone owners, and an estimated 10.8 million will be tablet users.

millions, % of population and % changeMobile Phone Users in France, 2011-2017

2011

49.0

75.0%

3.3%

2012

50.2

76.5%

2.5%

2013

51.4

78.0%

2.5%

2014

52.5

79.3%

2.1%

2015

53.6

80.5%

2.0%

2016

54.5

81.5%

1.7%

2017

55.0

82.0%

1.0%

Mobile phone users % of population % change

Note: individuals of any age who own at least one mobile phone and usethe phone(s) at least once per monthSource: eMarketer, May 2013157055 www.eMarketer.com

The rate of mobile usage among internet users in France is higher than among the country’s general population. A survey by Ifop and Psychologies found that 45% of resident web users ages 18 and older had a smartphone in December 2012, while 18% owned a tablet. Sixty-five percent of 18- to 34-year-olds had a smartphone, and 21% of those ages 25 to 49 owned a tablet.

% of respondents

Mobile Devices Owned by Internet Users in France, by Demographic, Dec 2012

BlackBerry Smartphone Tablet None

GenderFemale 6% 40% 14% 50%

Male 6% 51% 22% 38%

Age18-24 8% 63% 13% 30%

25-34 6% 67% 22% 24%

35-49 8% 47% 20% 41%

50-64 5% 37% 16% 52%

65+ 1% 28% 16% 62%

Socioeconomic statusPCS+ 12% 56% 28% 29%

PCS- 4% 47% 15% 44%

Inactive 5% 35% 15% 54%

Total 6% 45% 18% 44%Source: Ifop and Psychologies, "Les Français et les écrans numériques," Jan 29, 2013151976 www.eMarketer.com

According to InMobi, in October 2012, mobile web users in France spent an average of 106 minutes per day with their mobile phones and 34 minutes with their tablets—an average of 2 hours and 20 minutes each day when they were, in principle, reachable by mobile advertisers. Note, though, that simultaneous multitasking with both devices would decrease that period of exposure.

minutes

Average Time Spent per Day with Select MediaAccording to Mobile Internet Users in France, Oct 2012

Internet 107

Mobile 106

TV 98

Radio 64

Tablet 34

Newspapers/magazines29

Note: n=626Source: InMobi, "Mobile Media Consumption In France: A 'New Wave' TakesShape" conducted by Decision Fuel, Dec 3, 2012151047 www.eMarketer.com

Moreover, the rapid expansion of mobile activity will translate into much greater potential exposure in the next few years. Cisco Systems predicted that the number of smartphones in France will more than double between 2012 and 2017 from 26 million to 57 million, while the number of tablets connected to the web will leap from 1 million to 12 million.

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Mobile Data and Device Metrics in France, 2012 & 2017

Mobile data trafficConsumer mobile data traffic (TB/month)

Business mobile data traffic (TB/month)

Total mobile data traffic (TB/month)

Mobile users (millions)

Mobile data traffic per user (MB/month)

Mobile devicesSmartphones (millions)

Connected tablets (millions)

Total mobile connected devices (millions)

Mobile connected devices per capita

Mobile data traffic per deviceSmartphone data traffic per device (MB/month)

Tablet data traffic per device (MB/month)

Laptop data traffic per device (MB/month)

4G mobile broadband4G connections (% of total mobile connections)

4G data traffic (% of total mobile data traffic)

2012

10,781

3,004

13,785

54.4

244

26

1

78

1.2

209

424

1,528

0.1%

1.2%

2017

97,575

24,762

122,338

58.1

1,813

57

12

141

2.0

1,111

2,045

2,710

14.8%

37.8%

Note: 1 terabyte=1 million megabytes; includes only devices connected tothe mobile network; excludes devices connected via Wi-FiSource: Cisco Systems, "Cisco Visual Networking Index (VNI): Global MobileData Traffic Forecast Update, 2012-2017," Feb 5, 2013151784 www.eMarketer.com

As Cisco Systems’ data indicates, 4G is still little used in France. The mobile operator SFR has offered 4G to limited audiences in seven of France’s cities since the end of March 2013. Orange provided it only to select recipients in four cities and parts of Paris until early April 2013, when the service rolled out to 10 more urban centers. Yet all operators are racing to extend 4G to additional customers this year and next. Bouygues Telecom has announced nationwide coverage starting on October 1, 2013.

Cisco Systems projected that nearly 15% of all mobile connections in France will come from 4G within five years and that 4G data traffic will be nearly 38% of mobile data traffic. Technical hurdles are not the only ones to overcome, however. Mobile providers must also convince consumers of 4G’s value. Results of an April 2013 poll on industry website Le Journal du Net suggested that that process may take a while. When visitors were asked whether they were ready to pay an additional €10 ($12.82) per month to get 4G, 91.2% said no. Of course, it should be noted that when mobile owners upgrade their devices, it is often near-impossible not to upgrade their service packages as well. In many parts of France, mobile operators will likely make it difficult for consumers who upgrade to choose a package without 4G.

MOBILE ADVERTISING Mobile ad spending in France will continue to rise rapidly through 2017, though annual growth rates will decline. eMarketer estimates that total spending on mobile ads—including banners, rich media, video and search placements, and excluding message-based formats—will leap by 53% this year.

millions and % changeMobile Internet Ad Spending in France, 2011-2017

2011

$87.1

43.6%

2012

$129.5

48.7%

2013

$198.1

53.0%

2014

$295.3

49.1%

2015

$417.3

41.3%

2016

$578.0

38.5%

2017

$791.8

Mobile internet ad spending % change

Note: includes display (banners, video and rich media) and search; excludesSMS, MMS and P2P messaging-based advertising; includes ad spending ontablets; converted at the exchange rate of US$1=€0.78; CAGR(2012-2017)=43.6%Source: eMarketer, April 2013154920 www.eMarketer.com

37.0%

Players in the mobile marketing industry have noticed the momentum building. According to Amsellem, “Clients are asking for mobile advertising for smartphones and tablets, but the smartphone is the most important thing they’re asking for at the moment. They’re asking for traditional HTML5 campaigns, rich media and things that are really special, like campaigns where you can scratch the ads. You can feel that the French market is evolving in the right way. Marketers now want to allocate a big piece of their digital investment to mobile, which was not the case a year ago.”

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Admittedly, advertisers in France have been somewhat slow to embrace mobile options—with notable exceptions. Certainly ad spending on mobile platforms bears little relation to the number of consumers using them. Médiamétrie reported that 41.2% of consumers in France were mobile internet users in September 2012. The same firm, in collaboration with NetRatings, calculated that the top 20 mobile websites in France attracted 21 million unique visitors in November 2012, while the top 20 internet sites drew 43 million. Yet mobile ads accounted for just 1.8% of all digital ad spending in France in 2012, according to Capgemini.

Of course, that figure doesn’t include investments in mobile search or in-app ads. When those are factored in, total mobile spending in 2012 would be closer to “€150 to €200 million [$192.3 million to $256.4 million],” according to a statement cited in Le Journal du Net from Julien Billot, deputy director general of the PagesJaunes Groupe, owner of the classifieds site PagesJaunes, France’s Yellow Pages.

What’s driving the interest in mobile advertising? Amsellem sees several factors at work: “Most of the big ad agencies, like WPP and others, have now set up dedicated mobile teams. So they’ve got experts, which was not the case before. Another reason for the growth is that multinational brands like Kraft, Procter & Gamble, Unilever and others are investing in mobile in developing markets, so now French marketers think, ‘Why not test and develop a mobile strategy?’ The other thing is that unlimited mobile usage plans and penetration rates for the smartphone increased significantly last year. … All of these factors encourage brands to go mobile now.”

Another potential game changer may be the increasing importance of social networks in the mobile experience. Thirty-eight percent of mobile web users polled by InMobi in late 2012 said they expected to access social media more often via mobile in the next 12 months. That kind of behavioral change will persuade many more advertisers to invest in ads on social sites.

% of respondents

Mobile Activities that Mobile Internet Users in FranceExpect to Conduct More*, Oct 2012

Social media38%

Play games30%

Search/download apps27%

Watch videos/listen to music22%

Search for general information19%

Search for local information and deals18%

Send and receive email18%

Shop15%

Mobile banking and bill payments13%

Note: n=626; *in the next 12 monthsSource: InMobi, "Mobile Media Consumption In France: A 'New Wave' TakesShape" conducted by Decision Fuel, Dec 3, 2012150884 www.eMarketer.com

Patrick Hoffstetter, director of Renault’s ‘digital factory,’ on the role of mobile:

“Mobile has become a medium in its own right, if only because of its high level of penetration. Rising usage means that the consumption of data and content keeps on growing. Today the issue is knowing what role mobile should play in a communications strategy. With geolocalization, for example, we can create a real ‘drive-to-store’ dynamic, prompting users to visit shops nearby. For that matter, in-store usage of tablets or smartphones that are effectively up-to-date brochures is also revolutionizing physical sales. The obstacles reflect the size of these opportunities—in particular, the need to target the right person at the right time. That’s where Big Data—so often talked about—really comes into its own, allowing us to adapt the message to the behavior of individual mobile users.

“So, different medium, different content. The attributes of the mobile screen and its potential for interactivity mean we can’t be content to replicate the models proven to work on the web. When all those parameters are taken on board, the results soon follow. Specifically, we’ve done SMS programs highlighting promotional offers that have generated very positive results.”

—In an April 9, 2013, interview with Le Journal du Net

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CONSUMER ATTITUDES TOWARD MOBILE ADS Inevitably, France’s mobile display ad market is largely shaped by the mobile sites with the biggest audiences. According to Médiamétrie//NetRatings, 10 sites attracted at least 3.6 million unique visitors in December 2012—among them Yahoo!, Wikipedia, Apple.com and YouTube. Facebook alone registered nearly 16 million visitors that month, though Google topped that with an estimated 16.7 million.

millions

Top 10 Mobile Internet Sites in France, Ranked byUnique Visitors, Dec 2012

1. Google 16.7

2. Facebook 15.9

3. YouTube 12.0

4. Apple 8.7

5. Orange 7.1

6. Wikipedia 5.8

7. SFR 5.0

8. Yahoo! 4.6

9. Dailymotion 4.1

10. Bouygues Telecom3.6

Note: ages 11+Source: Médiamétrie//Netratings as cited in press release, Feb 8, 2013151914 www.eMarketer.com

On the other hand, mobile web users in France were much more likely to notice ads in an app than on a mobile site, according to InMobi. Nearly two-thirds (64%) of users surveyed said they had seen an in-app ad. Two in five (41%) had observed an ad on a search engine, such as Google’s mobile site, while less than one-third of respondents said they had noticed mobile ads elsewhere.

% of respondents

Channels on Which Mobile Internet Users in FranceNoticed Mobile Ads, Oct 2012

In an app 64%

On a search engine 41%

On a video website 31%

On a retailer website 25%

Other 18%

Note: n=414Source: InMobi, "Mobile Media Consumption In France: A 'New Wave' TakesShape" conducted by Decision Fuel, Dec 3, 2012150886 www.eMarketer.com

Wherever mobile ads are seen, France’s mobile audience is becoming more accustomed to them, and presumably, more willing to receive them—or at least more resigned to their presence. Mobile ads also appear to have a definite influence on mobile web users. According to an October 2012 survey by InMobi, more than three-quarters (77%) of mobile internet users said they had downloaded an app after seeing an ad, and 53% had been to an advertiser’s website.

In addition, InMobi found that mobile advertising served as a significant purchase driver. Some 40% of respondents said they visited a store after seeing a mobile ad in order to investigate or purchase a product, and 30% said they bought an item directly from their mobile phone. Such actions are one factor in a growing trend for mobile buying. According to the Fédération du E-commerce et de la Vente à Distance (FEVAD), mcommerce sales in France (excluding app downloads) were 2.6 times higher in Q4 2012 than in Q4 2011, reaching 2% of total digital sales in the country for the first time.

Mcommerce still has a long way to go in France, though, as Amsellem pointed out: “I think marketers using mobile advertising for lead generation and other actions is the next step for us. Advertisers are going to pay for results, and they want to be sure we are generating leads that they can convert directly via mobile. That means that ecommerce will be the next step. A couple of companies are doing this, but I cannot say that it’s taken off. You can buy event tickets, you can buy plane tickets, but at the moment you cannot book a restaurant or order food on mobile. You know, people are not doing it.”

MOBILE AD EXAMPLES Many mobile campaigns, as Amsellem noted, actually focus on apps. They use display ads as a prompt, encouraging viewers to download an app and enter into a longer-term dialog with a brand. Apps also enable advertisers to measure engagement and solicit feedback, all within a relatively secure environment where the quality of the experience is assured.

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Nestlé: Crunch cereal, ‘A Short Film with Norman’ Created by the JWT agency in Paris, this Nestlé Crunch campaign starred the young podcaster Norman, well known in France for the videos he has posted on YouTube—all shot in his room at home.

Crunch had used crowdsourcing before to help create ads featuring Norman. In a previous campaign on its Facebook page, Crunch sent him on a world tour. Once a week for four weeks, brand fans were encouraged to vote on where Norman should go next. So Norman traveled for an entire month, posting videos from the four selected destinations, as well as many others, and creating a timeline of his journey.

This time around, Crunch invited fans to submit ideas for what Norman should do in a short movie. Every idea was passed to a jury (rumored to be Norman himself) and then voted on by web users. The best ideas were kept, and the web user responsible for the top entry was invited to take part in shooting the film, destined for launch on May 20, 2013.

Smartphone and tablet users could download an app to take part in the vote for the best film idea. The app also provided access to exclusive behind-the-scenes content from the set during filming.

Bazarchic.com: Mobile loyalty through push alerts Ecommerce site Bazarchic.com offers registered members up to 70% off designer fashion brands in limited-period sales. In November 2012, it decided to revamp its mobile activity completely and develop a new loyalty program. A new app allowed it to gather more information about mobile users and alert them to their favorite sales at their preferred times so that they never missed a deal.

BMW i: Tailored invitations and priority sign-on Digital ad agency Come&Stay worked with mobile agency Bemobee to develop this campaign—an extension of Apple’s Passbook. It allowed automaker BMW to invite consumers interested in new technology to its stand at exhibitions. If recipients opted in, the invitation automatically appeared on their mobile screen and remained there while they were near the stand, encouraging them to visit. A QR code identified the recipients, their location coordinates and the source of their opt-in, enabling the system to issue a personalized welcome and an exclusive presentation of BMW models.

Orange: Les Applis Days During two weeks in October 2012, network operator Orange mounted a campaign to raise awareness and usage of its mobile apps in France. Mobile device owners could scan a QR code to obtain a range of entertainment, map and information applications. They could also take part in an augmented-reality hunt for apps, with the chance of winning a smartphone, tablet or PC.

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GERMANY

THE MOBILE AUDIENCE eMarketer predicts that more than 82% of the population in Germany will use a mobile phone in 2013—nearly 67 million people in total. An estimated 42% of those users will have smartphones—but that proportion is climbing rapidly. In 2017, four out of five of all mobile users will use a smartphone.

Smartphone Users and Penetration in Germany,2011-2017

Smartphone users(millions)—% change

—% of mobile phone users

—% of population

2011

15.8

151.2%

24.5%

19.3%

2012

21.6

37.4%

33.0%

26.6%

2013

28.0

29.6%

42.0%

34.6%

2014

35.4

26.2%

52.0%

43.7%

2015

44.8

26.6%

64.8%

55.4%

2016

51.0

13.8%

73.0%

63.1%

2017

56.4

10.6%

80.0%

69.9%Note: individuals of any age who own at least one smartphone and use thesmartphone(s) at least once per monthSource: eMarketer, May 2013157061 www.eMarketer.com

At the end of 2012, the demographic profile of Germany’s smartphone population showed a substantially younger skew than the mobile population overall, according to comScore’s “Future in Focus: Digitales Deutschland 2013” report. While 29% of mobile phone users were 55 and older, just 18% of smartphone users were in this age bracket. Some 22% of smartphone users were 13- to 24-year-olds, while 21% were ages 25 to 34.

InMobi reported that between August and November 2012, mobile web users in Germany spent, on average, 107 minutes on a mobile phone and 18 minutes on a tablet each day. The time spent on several mobile activities had risen since the previous year. These included social networking (up 22%), games and entertainment (up 20%), email, general browsing and searching (all up 12%) and shopping (up 7%). As a result, the total time spent with mobile devices exceeded that spent online (95 minutes, on average).

Yet data from Bundesverband Digitale Wirtschaft (BVDW), also from late 2012, showed that smartphone owners in Germany were less engaged in many mobile activities—including emails, app usage, mobile search and mobile web use—compared with the European average. This may be because mobile users in several other countries, notably Italy and Spain, are more likely to use a mobile device for internet access and are far keener on such activities. Both these factors push up the regional average.

As noted earlier, Germany has traditionally shown a strong preference for the Android OS. Two-thirds of smartphones in the country used Android in December 2012, according to Kantar Worldpanel ComTech. Apple’s iOS had gained a slight share since the end of 2011, but less than one-quarter of smartphones used it.

There’s no doubting the rate at which mobile device use is escalating in Germany. Cisco Systems projected that mobile data per user will multiply more than ninefold between 2012 and 2017, as the number of smartphones in Germany reaches an estimated 68 million and the number of connected tablets rises to 13 million.

Mobile Data and Device Metrics in Germany, 2012 & 2017

Mobile data trafficConsumer mobile data traffic (TB/month)

Business mobile data traffic (TB/month)

Total mobile data traffic (TB/month)

Mobile users (millions)

Mobile data traffic per user (MB/month)

Mobile devicesSmartphones (millions)

Connected tablets (millions)

Total mobile connected devices (millions)

Mobile connected devices per capita

Mobile data traffic per deviceSmartphone data traffic per device (MB/month)

Tablet data traffic per device (MB/month)

Laptop data traffic per device (MB/month)

4G mobile broadband4G connections (% of total mobile connections)

4G data traffic (% of total mobile data traffic)

2012

14,525

3,609

18,134

71.7

245

25

2

120

1.4

274

611

1,449

0.7%

6.5%

2017

157,238

32,647

189,885

74.5

2,245

68

13

188

2.2

1,458

3,222

2,842

20.5%

52.1%

Note: 1 terabyte=1 million megabytes; includes only devices connected tothe mobile network; excludes devices connected via Wi-FiSource: Cisco Systems, "Cisco Visual Networking Index (VNI): Global MobileData Traffic Forecast Update, 2012-2017," Feb 5, 2013151785 www.eMarketer.com

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In Germany, as in France, Wi-Fi is widespread except in remote areas. High-speed network infrastructure was completed across the country in November 2012, and the three largest operators—O2, Vodafone and Deutsche Telekom—currently offer 4G. That said, in early 2013, the service was restricted to major cities such as Munich, Berlin, Frankfurt, Cologne, Hanover, Kiel and Leipzig, and the actual capacity of networks is variable. Achieving comprehensive 4G coverage “will take years,” according to one spokesperson. Nonetheless, Cisco Systems anticipated 4G data traffic growing from 6.5% of all mobile data traffic in 2012 to more than 52% by 2017.

MOBILE ADVERTISING In 2013, spending on mobile web ads in Germany will rocket by more than 68%, eMarketer estimates, and approach $350 million. Annual growth will remain above 40% until 2017, when total investment in mobile ads is expected to reach $1.8 billion.

millions and % changeMobile Internet Ad Spending in Germany, 2011-2017

2011

$112.4

73.7%

2012

$207.7

84.7%

2013

$349.1

68.1%

2014

$565.6

62.0%

2015

$878.8

55.4%

2016

$1,285.8

46.3%

2017

$1,800.1

40.0%

Mobile internet ad spending % change

Note: includes display (banners, video and rich media) and search; excludes SMS, MMS and P2P messaging-based advertising; includes ad spending on tablets; converted at the exchange rate of US$1=€0.78; CAGR (2012-2017)=54.0%Source: eMarketer, April 2013154921 www.eMarketer.com

The “MAC Mobile Report” from BVDW and Nielsen forecast a similar rise for 2013—70%—based on the remarkable increase in mobile device use in Germany. This report suggested that ad spending on mobile platforms would reach €105 million ($134.6 million), compared with €62 million ($79.5 million) in 2012.

This estimate is based on monthly Nielsen reports of gross mobile and in-app advertising sales of several major marketers, including Axel Springer Media Impact, InteractiveMedia, United Internet Media and YOC.

Nielsen alone released a slightly lower estimate of €55.8 million ($71.5 million) for comparable mobile ad spending in 2012.

Just as mobile ad spending in France bore little relation to the amount of time consumers spent with mobile devices in 2012, so too in Germany. BVDW estimated that adult smartphone users went online with their phones for 2.5 hours each week, on average. The average time spent online on a PC or laptop was 9.7 hours per week. Yet advertisers invested only €121 million ($155.1 million) in ad spending on mobile platforms, compared with the €4.4 billion ($5.64 billion) devoted to internet ads. As a result, advertisers spent around 10 times more to reach web users with PCs than those with mobile devices.

Three industry sectors—automotive, telecoms and services (such as travel and hotels, property, and recreation)—accounted for almost half of all mobile display ad sales by the leading firms BVDW monitored in 2012. The automotive industry was the heaviest investor, spending €11.7 million ($15 million), or 18.9% of the total spent. Telecoms companies spent €10.8 million ($13.8 million) and services €7.6 million ($9.7 million). Other significant spenders included the media and finance sectors. This is a common pattern in other countries too, as large-scale, highly competitive businesses spend heavily in all media channels in an attempt to gain a competitive edge.

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millions of €

Top 10 Industries in Germany, Ranked by Mobile AdSpending*, 2012

1. Automotive€11.7

2. Telecom€10.8

3. Services€7.6

4. Media€5.4

5. Miscellaneous advertising€4.9

6. Finance€4.6

7. Computer and office€4.1

8. Retail and mail order€2.7

9. Energy€1.6

10. Personal care€1.5

Note: excludes self-advertising; *gross mobile and in-app ad sales of 9leading marketers in GermanySource: Bundesverband Digitale Wirtschaft (BVDW), "MAC Mobile - Report2013/01," April 3, 2013155604 www.eMarketer.com

More than 81% of ad impressions served by InMobi in Germany in August, September and October 2012 were delivered to smartphones, according to its “Germany Market Overview” report. Tablets accounted for less than 17% of ads served. Around three-quarters of mobile ads appeared in apps, and nearly 60% were seen on Android devices.

% of total

Mobile Ad Impressions Served by InMobi in Germany,by Type, Oct 2012

By deviceSmartphones 81.1%

Tablets and connected devices 16.7%

Feature phones 2.2%

Web vs. appApp 73.0%

Web 27.0%

By OSAndroid 58.4%

iOS 33.2%

RIM OS 3.6%

Note: 3 months ending Oct 2012Source: InMobi, "Germany Market Overview," Dec 2012149045 www.eMarketer.com

Pelillo does see a preference for in-app ads among firms he works with: “Taking the example of madvertise clients, I would say that the split is probably 60/40 now between apps and mobile sites.”

Advertisers’ preference for in-app vs. web ads is also in line with data from comScore MobiLens, which indicated that in late 2012, mobile phone users in Germany were more likely to access news and weather information, email and social media through apps than through a mobile web browser. Search was the only frequent activity carried out as often in a browser as through an app.

In Germany, as in France, Facebook is beginning to play a larger part in the mobile ad landscape. According to mobilbranche.de, 14% of the $152 million spent on mobile ads in Germany in Q3 2012 went directly to Facebook’s newsfeeds. That was roughly equivalent to the amount advertisers in Germany had spent on mobile display ads during the previous five years.

CONSUMER ATTITUDES TOWARD MOBILE ADS Historically, consumers in Germany seem to have had a lower tolerance for mobile ads than those in many other markets. According to Millward Brown’s “AdReaction 2012” study, this is still the case, though acceptance of ads on mobile devices is growing.

“In the past three years, the acceptance of mobile formats among German consumers has grown rapidly. We expect that the positive attitude to mobile marketing will continue to increase strongly, as soon as marketing decision-makers emphasize the quality of mobile content and users in Germany become more accustomed to mobile ad formats,” said Dr. Bernd Büchner, head of Millward Brown for Germany, in an interview with Marketing magazine in Switzerland.

Millward Brown found that 65% of those surveyed were prepared to accept in-app ads, and 68% said the same about ads on mobile sites. On the other hand, only 10% of respondents viewed mobile ads positively.

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November 2012 data from InMobi painted a more encouraging picture—though of course, a mobile advertising firm has an interest in portraying mobile ads as effective. The company reported that 87% of smartphone users polled in Germany had seen mobile ads on their phone. Of those, 64% had observed an ad in a mobile app, and 41% had seen one on a search engine. One in five respondents reported seeing an ad on a video site. Of all smartphone users who had viewed an ad, 34% said they felt just as willing to receive one on a mobile device as they were to see one on TV or the web.

InMobi also discovered that after seeing a mobile ad, 61% of mobile web users in Germany had downloaded an app, and 45% had visited the website of an advertiser. One in five said they had bought something via mobile after seeing an ad, though they may not have bought the item or service advertised.

The study also documented some attitudinal changes in those who had seen mobile ads. More than half of those polled said mobile ads had introduced them to something new or helped them find something nearby. Thirty-seven percent said a mobile ad had alerted them to a better option, and 26% claimed that a mobile ad had caused them to reconsider a product.

% of respondents

Effects of Mobile Ads According to Mobile InternetUsers in Germany, Nov 2012

Introduced you to something new57%

Helped you find something nearby56%

Provided you with better options37%

Caused you to reconsider a product26%

Influenced your in-store purchase23%

Influenced you to buy via your mobile15%

Source: InMobi, "Global Mobile Media Consumption" conducted byDecision Fuel and On Device Research, Feb 27, 2013153866 www.eMarketer.com

Consumer reaction can depend on ad format, of course. In Accenture’s 2012 “Mobile Web Watch Survey,” 35% of consumers in Germany who had seen text ads said they found them annoying. Yet 76% had a positive reaction to promotions and discount offers sent to their phones.

The “Mediascope 2012” report compiled by BDVW in collaboration with the Interactive Advertising Bureau Europe (IAB Europe) also noted that 58% of Germany’s smartphone users were very or somewhat interested in receiving location-based vouchers on their phones, and 22% were interested in QR codes.

According to research by comScore, young adults were more alert to mobile ads and offers than other consumers in Germany. For example, 27.4% of smartphone users ages 18 to 24 said they had clicked on an ad on a social networking site in Q4 2012, compared with 15.2% of all smartphone users over the age of 13. Similarly, the former age group was more likely than the latter to have seen an in-game ad, at 21.8% vs. 10.3%.

% of respondents in each group

Mobile Ad Activities Among Smartphone Users inGermany, Ages 18-24 vs. Total, Dec 2012

Social media—have read reviews of companies/brands/events43.5%

22.8%

Have seen a web-/app-based ad30.3%

19.7%

Social media—have clicked on an ad27.4%

15.2%

Social media—have received coupons/deals24.0%

13.8%

Have scanned a barcode/QR code23.1%

17.6%

Have seen in-game ads21.8%

10.3%

Ages 18-24 Ages 13+

Note: three-month average for period ending Dec 2012Source: comScore Inc., "2013 Future in Focus - Digitales Deutschland,"March 14, 2013155145 www.eMarketer.com

There is clear evidence that combining mobile advertising with ads on other platforms—such as online or TV—is a winning strategy. In one study from Online-Vermarkterkreis (OVK) cited by BVDW, both aided and unaided recall following cross-media campaigns were higher than recall after mobile-only or online-only campaigns.

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Mobile ads increasingly shape shopping behavior, too. Nearly one-quarter (23%) of respondents to InMobi’s survey said ads seen on a mobile device had the greatest influence on their purchase decisions and as noted earlier, 23% said mobile ads had influenced their purchase in a physical store. Moreover, buying directly via mobile is catching on. Half of respondents polled by InMobi had already bought something—most often digital goods such as apps, music or video—with their mobile device, and 58% planned to make a mobile purchase in the next 12 months.

MOBILE AD EXAMPLES As in France, many advertisers in Germany use apps as the focal point for mobile display campaigns. Apps provide a completely designed environment for consumers to learn more about brands, provide personal data and offer feedback. Apps can also “anchor” a campaign that involves other media, along with the real world—as in the first case below. The second example involved a mobile website rather than an app, but the goal was very similar: using technology in an innovative way to immerse mobile users in an intriguing experience.

Audi: A1 ‘Heartbeat Run’ Directed at a relatively young target audience, this 2013 mobile campaign from Razorfish used the call to action “Time to start your first Audi.” The automaker hid a total of five keys in the Rhein-Ruhr region and around metropolitan Stuttgart. Each week for five weeks, a “Heartbeat Run” was scheduled, with one key to be found. All finders were entered into a final draw to win an Audi A1.

Central to the campaign was an app presenting a virtual heart and linked to a Facebook site. That site told users when a race started and provided clues to the location of that week’s key. The heart in the app began to beat when a mobile user first joined the Heartbeat Run, and—thanks to integrated GPS—beat faster the nearer the hunter got to a hidden key. Contestants could download the app via a Shazam icon in an Audi A1 TV ad posted on YouTube or enter the competition by visiting a dedicated microsite.

Nokia: Lumia 800 ‘Mystery Ad’ Created by YOC and Carat, the “Mystery Ad” rich media execution won the Gold Award at the 2012 Cannes Mobile Lions. The ad targeted iOS and Android devices in Germany. Mobile web users browsing on such devices found themselves suddenly looking at the Windows Phone interface of the Nokia Lumia 800. Those who clicked on the ad were taken to a landing page that delivered a high-quality, user-friendly experience—including a slideshow of Lumia 800 features, an embedded video and descriptions of the phone’s features. The ad was praised for its concept—showing iOS and Android users a very different OS—as well as its “state-of-the-art” rich media and its precise targeting, which reached the audiences of most importance to Nokia. Initial results were extremely good, with a CTR of 29.7%.

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CONCLUSIONS The mobile ad markets in France and Germany are still at a fairly early stage of evolution, but they’re developing rapidly. In both countries, global brands are at the forefront of spending and thinking about what mobile advertising can do, and how best to integrate it with efforts in other marketing channels. But companies of all sizes will soon benefit from the knowledge gained by these early pioneers. Advertisers will also learn from a growing body of consumer data, as mobile device users become more sophisticated in their response to mobile ads and research firms work harder to monitor that behavior.

Standardizing ad formats and technologies will reassure advertisers that mobile is a viable marketing platform that can yield substantial ROI in France and Germany. This is already happening to some extent, particularly in the UK, but more needs to be done across the region. One initiative, the AdEx Benchmark Mobile Working Group, with the help of the IAB Europe, aims to monitor the current mobile marketplace, identify trends in mobile advertising, and “establish what is desirable and practical for mobile ad measurement.”

Some national industry bodies have their own programs, too. Earlier this year, Germany’s BVDW launched a “Do Mobile!” scheme to address the need. Key industry players, including the Deutsche Post and Google Germany, are joining with the mobile division of BVDW to demonstrate the value of mobile and offer concrete practical tips and recommendations about which types of mobile solutions are suitable for specific companies. Ventures of this kind should persuade more brands in France and Germany to take the mobile plunge.

At madvertise, “the writing is on the wall,” according to Pelillo and Wittig. “We see two trends coming. The first is measurability, and the second is tracking. There will be a need to track everything that happens in terms of engagement post-download. That’s really what will cause major dollars to flow in the mobile market. Clearly, when the market is more standardized, more targetable, advertisers will be more likely to invest more of their money and measure their ROI,” said Pelillo.

The emerging relationship between mobile device usage and commerce in France and Germany will strengthen connections between mobile operators, advertisers, retailers and consumers. Recipients of mobile ads generally respond well to relevant information about new products or useful promotional offers. And several advertisers in Europe, including a number of major retail groups, are already using mobile platforms to drive customers to physical stores or encouraging mobile buying with user-friendly apps, mobile-optimized websites and mobile coupon schemes. But because the initiative lies chiefly with individual firms, large-scale advances in mcommerce are likely to happen piecemeal—at least in the short term.

MOBILE AD TRENDS IN FRANCE AND GERMANY: MOMENTUM BUILDS, AS MULTINATIONALS LEAD THE WAY ©2013 EMARKETER INC. ALL RIGHTS RESERVED 21

EMARKETER INTERVIEWS

Marketing in France: Advertisers Eye More Mobile Advertising

Paul Amsellem CEO

Mobile Network Group/Bemobee Interview conducted on April 22, 2013

Marketing in Germany: A Brand- and Premium-Oriented Mobile Marketplace

Vincent Pelillo COO

madvertise Interview conducted on April 25, 2013

Christof Wittig CEO

madvertise Interview conducted on April 25, 2013

RELATED LINKS

Accenture

Adobe

Bemobee

BMW Deutschland

Bundesverband Digitale Wirtschaft (BVDW)

Capgemini

Cisco Systems

comScore

Fédération du E-commerce et de la vente à Distance (FEVAD)

FirstPartner

Ifop

InMobi

Interactive Advertising Bureau Europe (IAB Europe)

Ipsos

Kantar Worldpanel

madvertise

Médiamétrie

Millward Brown

Mojiva

Nielsen

Nokia

Office of Communications (Ofcom) - UK

Online-Vermarkterkreis (OVK)

Orange

Pew Research Center

Procter & Gamble

Rovi Corporation

Rubicon Project

Velti

EDITORIAL AND PRODUCTION CONTRIBUTORS

Cliff Annicelli Senior EditorKaitlin Carlin Copy EditorJoanne DiCamillo Senior Production ArtistStephanie Gehrsitz Senior Production ArtistDana Hill Director of ProductionNicole Perrin Associate Editorial DirectorHeather Price Copy EditorAllie Smith Director of Charts