Partnering for strength in mobile advertising

The global mobile advertising market will, according to some industry sources, be worth over $18.5 billion by 2010

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By  Cathal O Toole Published  October 16, 2008

The global mobile advertising market will, according to some industry sources, be worth over $18.5 billion by 2010. Not only will it offer operators a new revenue stream that has, as yet, not been fully ascertained by them, it also offers the media industry one of the most exciting means of mass-audience targeting and message delivery in the history of advertising.

Mobile advertising is still evolving, with multimedia content and latest 3G-and-beyond network capabilities creating major opportunities for high-speed service and advertising delivery. TV, for example, already one of society’s major advertising vehicles, is now reaching the mobile and mobile TV advertising is a forgone conclusion. Funding future mobile content is likely to rely on a degree of mobile advertising with brands gathering to support and sponsor the most popular content received by subscribers.

In the Middle East and Africa, where both saturated and developing mobile markets exist, what is apparent is that each of these market profiles will gain from mobile advertising in different ways.

In saturated markets, the primary concern of the senior management of mobile operators is where further growth will come from. With their shareholders demanding further returns but with subscriber numbers and ARPUs level, at best remaining static, operators must pursue alternative revenue streams. Advertising is a very compelling, alternative revenue choice that can augment the traditional product lines of messaging and minutes.

In the region’s developing markets, the main issues are often the low ARPU per customer and the difficulty in expanding profitable product usage in environments where per-capita incomes are low. Mobile operators have multiple customer touchpoints and mobile advertising allows them to bring a second payer to the market. Now, instead of each minute or text just being paid for by the mobile subscriber, the costs can be part-subsidised by the advertiser in return for the placement of advertisements on the subscriber’s traffic. In addition, operators can place advertising within traditionally non-revenue-generating traffic like missed call notifications. In this way, traffic growth can be part-funded by the advertising industry in return for gaining access to a brand new channel through which to communicate with consumers. In situations where the choice between feeding your family, or using your mobile phone is very real, the potential advantages, to the operator of introducing mobile advertising are considerable.

However, it is vital that any advertising campaign takes into consideration the appropriate advertising mechanism to deliver the message to the target consumer segment. In markets where the handsets are low-end and are unlikely to be used for anything other than calls, texts and alarm calls, the right advertising medium is text based. Where browsing is more commonplace, or where subscribers are more used to multi-media, then MMS or browsing-based advertising makes sense.

One important factor in the early stages of this new business model for advertisement delivery is that strategic partnerships between key mobile industry players and the media / advertising industry will be crucial. The principal point here is that in order to successfully build an advertising business – and indeed to make it a success in any operator’s environment – the operator must work with a solution provider that is partnered with a market-leading media agency. Without this level of partnership and without the expertise that both the media agency and the solution vendor bring to the table, it will be very difficult to deliver successful campaigns.

Addressing Prepaid Users
In Africa and the Middle East mobile advertising presents an ideal opportunity for prepaid users to receive the latest mobile services, until now priced beyond their reach, but now potentially at a much lower cost because the services can be funded by advertisers and the operators. MMS, WAP and VAS, like mobile downloads, can all now be made affordable to the typical prepaid user.

In these markets operators are very proactive building subscriber communities, which offer users products and services like IM (equivalent to Google Talk, Yahoo IM etc). For example, Zain is appending its own brand adverts on instant messages so reaching its own subscribers across 20 networks, or with local messages within a single country or even urban region.
Other operators like Wataniya, Etisalat and the MTN Group are building subscriber communities to offer more services like VAS and roaming at lower rates, which will only be possible when linked with mobile advertising. This applies particularly to the huge prepaid segment.

Mobile advertising is also a way of reaching those members in a population with low literacy levels. Although they have a mobile, these people would otherwise not see daily newspapers and other advertising media other than outdoor advertising, which is widespread through the MEA region.

Mobile Advertising Delivery
Methods of mobile advertising can be categorised three ways: advertising over messaging, advertising during browsing sessions, or advertising that employs media or VAS applications.

Advertising over messaging is where advertisements are sent using SMS, MMS, Instant Messaging, or other messaging media. The advertising engine will recognise and append the message appropriately with a targeted advert for the receiving subscriber. Selection of the advertisement is based on user profile criteria, time and date, type of message and in the case of Peer to Peer messages , keywords in the original message body. Once the advert is inserted into the SMS/MMS by the Ad Engine, it is then sent back to the SMSC (or MMSC), to complete message delivery.

Advertising during mobile Internet browsing sessions, offers an experience similar to advertising on the Internet. With a surge in the number of mobile Internet sites available to advertisers, typically as companion sites to traditional web pages, together with a more sophisticated mobile subscriber base, display-type ads on such mobile sites are a more viable option for advertisers. Mobile Internet ads consist of text, graphics, or both, and offer the audience a number of response options, such as a simple click-through, which may reach a product registration page, or a click-to-call option to a call centre, or a click-to-buy option with a purchase appearing on the user’s mobile phone bill.

Media and VAS-related advertising and handset/content-related advertising is the final category. Here an advert is inserted into a service experience such as: Ringback Tones or Interactive Voice Response (IVR), on mobile TV or using idle screen time on a mobile device. For example, an IVR message may promote a brand by telling the caller, “before entering your PIN to retrieve you messages did you know that ‘Brand Name’ is on offer…?” Though similar to messaging-domain advertising an ad in this case is received via an application such as Ringback Tone service or Voice Messaging from outside the network provided by a third party content provider.

Future Imperatives
For mobile advertising to gain effective momentum and reach its optimum potential as quickly as possible, there is an absolute imperative for the industry to work together. Advertisers / agencies need to work with mobile operators and vendors to build a supply chain that can deliver good quality advertising, and can report on this in ways that are useful for all parties.
This new media space is a very complex development, unlike that of, say, broadcast media, so platforms implemented by operators need to adhere to commonly-agreed guidelines – and it’s not just the platforms, it’s about the reporting / planning / campaigning – effectively, the design of the whole mobile advertising eco-system that requires agreement and co-operation, now.

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