How can mobile operators deliver the best value for brands and agencies? asks Keith Dyer
A new report from Juniper Research indicates a sharp increase in expenditures on mobile Internet advertising. According to the research firm, this jump will be due to growing consumer adoption of mobile Internet services and heightened brand engagement with mobile services.
The report, ‘Mobile Advertising: Delivery Channels, Business Models & Forecasts 2009-2014' predicts that with mobile being the preferred means of accessing the Internet in markets with limited fixed Internet access, adspend on mobile Internet will approach $500 million globally in 2009, and reach $2 billion per annum by 2014.
Juniper also notes that in India, mobile accounted for nearly 90 percent of all that country's Internet users in 2008.
The global increase in mobile Internet usage has also been attributed to operator transition from a walled garden environment to a more open model.
Author of the report, Dr. Windsor Holden, notes that popular mobile Internet sites attracting levels of usage provide a strong case for advertising and sponsorship options.
In addition, Holden says mobiles are far more personal than home computers and used only by a specific individual, so brands can build up detailed profiles of user responses and plan follow up campaigns accordingly.
Juniper's research also uncovered that mobile Internet will account for the largest proportion of total mobile adspend for the first time in 2009 a total value of adspend that will from just over $1.4 billion in 2009 to $6 billion in 2014.
This can only come as good news to mobile operators, can't it? With personalisation and targeted adverts seen as the key, doesn't that put them in control?
Well, AdMob, one of the pioneering companies in mobile advertising, passed a major milestone last month, serving its 100 billionth mobile ad.
Having launched just three years ago, this is a sign of the explosive growth that mobile advertising has undergone.
AdMob's, vice president and managing director, Thomas Schulz, said: "100 billion ads served is an exciting milestone for AdMob as a company, but also testament to the fact that the mobile phone is now becoming a mainstream advertising medium."
Another company citing rapid growth and the need to expand into international markets, is ad network mKhoj, which has has rebranded itself as InMobi. Traditionally focused on Asian and African markets, InMobi recently started operations in the UK with other European countries to follow.
mKhoj's traditional strengths have been mobile web-centric advertising in the Asian and African markets.
According to Naveen Tewari, Co-Founder and CEO, "So far, our focus has been on the Asian and African mobile markets. Now that we have achieved scale there, we feel it is the right time to make the leap to the global stage, especially given the requests from our partners for strong advertising and monetisation opportunities in Europe." InMobi began activities in the UK last quarter, and it also now live in France, Italy, Germany, and Spain.
The AdMob network now includes over 7,000 mobile sites, and over 2,500 mobile applications.
But its value to mobile operators is limited, operating as it does as a large network that puts brands in touch with mobile sites, which can include operator sites, but doesn't place the customer and network information that mobile operators hold at the heart of the network.
Adhish Kulkarni of marketing services company Buongiorno, says that operators in more mature markets have been trying to tap into the digital spend of brands.
"Here we see the CPC and CPM models in place with operators trying to extend online spend into mobile sites. But they have not had the pan-European presence that brands need, and this has led brands to feel they have no choice but to go over to a company like AdMob and work on that CPC exchange type basis.
"We have set up a pan-European operators, with local presence, to offer that opportunity for operators to be able to offer a service for companies with that pan-European budget. That opens up operator inventories to that sort of campaign."
French mobile advertising provider Sofialys is another that has targeted the operators directly, rather than go down the ad exchange route. Business development director Julien Oudart says the company, which has 30 employees and provides opt-in direct marketing mobile ads and messaging, has been funded from its own revenues and private backing so far. But now it is looking for investors to help it expand its customer base.
Oudart said his company is looking for another 1-2 operator customers, to add to its work with SFR and one North African operator, and about 10-20 major publishers with mobile sites they wish to monetise. The company is also launching with one European operator in September to offer free, sponsored, apps from the operator's app store.
As for other prospects, "We are talking to Vodafone, Orange and Telenor," Oudart said, "plus a pool of publishers averaging 50-100 million page views per month on their mobile sites."
How Sofialys works
So far Sofialys has two million SFR subscribers opted-in to received ads, promotional offers and messages from its ad network. That's 10% of the entire SFR subscriber base. Oudart claims that the opt in model achieves higher click through rates of around 15-20% compared to a "maximum" of 5-10% for non opted-in subscribers.
He said because the model is multi channel, incorporating SMS, WAP banners and sponsored search terms which brands can bid for. All this offers operators more of a chance to match brands to users, driving high responses to competitions. Sofialys asks users to tick one of 12 categories of interest, and can tie that to operator CRM data to build profiles of subscribers.
"It can be done. It's a nightmare, but you have to do it," he said.
With Google, Yahoo! and Microsoft all targeting the market, the opt-in model will give operators an advantage, Oudart argued.
"At one point location was the sole property of the mobile operators, but now Google has got the base station locations, and that control is slipping bit by bit. Where they [operators] can remain ahead of other players is on opt-in, and deep customer segmentation," he said.
"Exchanges that rely on volume can't spend quality time with their customers, whereas we can choose to work with operators. Working with an operator is a full time job for 4-5 people."
Jo Wall is Proposition Manager for Mobile Advertising at Acision. Her view is that there is no single approach that will work for operators.
"It varies, of course, on the strategic ambition of the operator. Some operators establish an ad team and take control of the brands and running that business. Others are more conservative and risk averse."
But Wall says there is common ground amongst operators in "asking what platforms they can leverage for mobile advertising."
"My point of view is that the network and user information they can get is very valuable but it still needs to be supplemented by operators really engaging with their users. I think operators could do more to really gauge their users' level of interest in information and services, by creating a dialogue with the end user.
"The role of the operator is really to be an ambassador for the mobile channel, the custodian of it, and they shouldn't allow the bombardment of their users. It should be a communication that is based on user preferences and interests, and relationships."
Wall says that the extraction of those user interests needs to be done as an extension of all the operators' other activities.
"It's the consolidation of all your activities that's important."
And once operators have built these capabilities, they then need to convince the agencies and brands that what they have is of real, measurable, value.
Henry Stevens, Director of Media and Entertainment at the GSMA, is heading up an initiative with the trade body to bring together metrics around mobile advertising.
"We've had a strong message from brands and agencies and publishers that delivering robust measurements will really make a difference in persuading brands to put more money into mobile."
Stevens says that the first target for the GSMA is to enable the market to quantify the mobile audience – but says that beyond that it's not obvious that mobile will follow the online measurement model.
"It's a long roadmap in terms of what we want to do in measurement. It's not clear that mobile will ultimately use the same measurements that online does. We hope in five years to have specific KPPIs around location and engagement, for instance. But for now we need to be delivering the basic measurements of reach, exposure, and impressions."
Stevens says that getting stable measurements will help medium and small sized agencies to come up with new ways of working with mobile.
"For that cycle of innovation to happen they have got to have a grown-up medium to work with. Measuring the audience is where you start." Stevens says he is very close to announcing a growth in the level of commitment to his programme by the end of the year from the operators themselves.
"One way I?frame what we do is that we are a part of making sure that they don't become a dumb pipe. There is a load of value in the network and in general we are working to see what they can do to open that up on a broad basis."
Yet there is a company out there that has been down this road.
It launched in a targeted, specific way, engaging with users and asking them for their preferences and interests. That company is Blyk, which became something of a cause celebre with its entirely ad-funded MVNO business model.
But the company has now ceased operating as an MVNO. Its spin is that it is now taking advantage of the scale of a host operator, having proved the validity of its business mode. Others are not so sure.
Industry site MobiAd news said that from Orange's perspective, there are several major reasons why this partnership makes sense.
"First, Orange subscribers will receive the kind of offers that caused Blyk subscribers to view the ads more as content rather than advertising. For media houses, they would like to have campaigns with the very high response rates that have been seen on Blyk. And finally, for Orange, it allows them a level of conversation with their customers they have not had before.
"It will be interesting to see if in fact these high response rates and customer enthusiasm can maintained as Orange begins to implement Blyk-type advertising."
It also said that even though Blyk had a specific business model, there are wider lessons for the industry.
"While the initial approach was clearly successful, it depended on tightly controlling all parts of the advertising process. As Blyk in some markets forgoes the opportunity to build an independent brand, that level of success may drop.
"But perhaps more interesting will be to see how Orange is able to adapt Blyk's mobile advertising approach to the opportunities and constraints of a major mobile operator. Many in the mobile industry have remarked that much of today's mobile advertising is simply a copy of successful internet advertising strategies. If Blyk's style of message-based conversational advertising can be successfully brought to an operator with the reach of Orange, perhaps this will become the first truly mobile centric ad format."