Mobile ads becoming a business reality

Companies are looking to mobile advertising as a new revenue stream and platform to build business brands, reaching desired audiences via their mobile phones.
Written by Billy Teo, Contributor

COMMUNICASIA, SINGAPORE--Falling access rates, increased data speeds and multimedia-rich handsets are laying the path for mobile advertising to be deployed as a way to build business brands, say industry players.

Various analyst reports have pegged the global mobile advertising market to be worth between US$14 billion and US$19 billion by 2011. According to ABI Research, this market was worth an estimated US$3 billion last year.

Mobile advertising is commonly categorized as a subset of mobile marketing, and refers to the delivery of advertisements to mobile phones--often in an interactive way, and usually to customers who fit a desired profile or behavior.

Coupled with falling charges of mobile Internet access services and increase in access speeds, industry watchers say mobile advertising is poised to take off in a big way.

A key element in mobile advertising is the popularity of rich multimedia handsets that offer improved usability, such as the Apple iPhone or Nokia's N series devices, said Maurie Dobbin, managing director of TeleResources Engineering, during a track session at this week's imbX show.

The delivery of mobile ads also encompasses the use of WAP sites, mobile Web banners and posters, streaming or downloads of movie trailers and video clips, and applications that include "="" target="_blank" class="c-regularLink" rel="noopener nofollow">Vringo, for example, lets users create video ringtones from their own videos or sourced content including content designed for branding purposes, Dobbin said.

Stephen Dieter, managing consultant at Detecon Consulting, said during another session at the show: "Mobile advertising is not hype; it is no longer a niche market. The effectiveness is no longer in question."

Pointing to Blyk, a U.K.-based MVNO (mobile virtual network operator) which operates on an advertising-based business model, Dieter said: "The average response rate to the advertisements is 29 per cent."

Blyk, which garnered 100,000 subscribers just six months after its September launch last year, offers its customers 217 text messages and 43 minutes talk time for free. In return, subscribers have to agree to receive up to six text advertisements a day, tailored to match their hobbies or interests.

All about the dollars
Telcos that own the mobile networks have shown interest in developing mobile advertising as another revenue stream to augment voice and SMS revenues, especially since they can capitalize on their subscriber database.

For instance, Vodafone in the United Kingdom uses its Vodafone Live mobile Internet service to offer subscribers free content, such as video clips, in exchange for watching advertisements.

Handset manufacturers such as Nokia, are also jumping on the bandwagon. The Finnish company launched its Nokia Media Network in February with over 70 publishers and operators.

Other giants in the tech and Internet industry are also eyeing a piece of the pie. Google CEO Eric Schmidt said mobile advertising would generate more revenue than Web advertising in a few years, noting that the next big wave in advertising is the mobile Internet.

In fact, analyst firm Oppenheimer estimated that Google's mobile ad revenues would clock between US$2.1 billion and US$4.8 billion per year in one to two years' time.

With an estimated 3 billion mobile phone users worldwide, this market represents a potential goldmine.

Dieter added: "The market [for mobile advertising] is still immature, but the future market share and market positions are already being decided today."

However, there are challenges ahead.

Strict privacy laws in Europe, for example, prevent network operators from exploiting personal information without permission, Dieter said. Also, some users view push-advertisements as intrusive, and any resulting backlash could be counter-productive, he added.

However, service providers could offer an opt-in model that provides incentives to encourage consumers to provide their data willingly, according to the Mobile Marketing Association (MMA), a trade association representing more than 550 companies involved in mobile marketing.

Other barriers, Detecon's Dieter said, include missing interoperability among operators, as well as the limited competency of advertising agencies and businesses in this emerging space.

In February, Vodafone, O2, T-Mobile, Orange and 3 in the United Kingdom partnered to offer a common mobile advertising system. The alliance aims to make it easy for advertisers to run campaigns on mobile phones, in much the same way as broadcast or print media.

Jimmy Poon, China managing director of mobile marketing company Puca--who is also the chairman of MMA's Asia-Pacific arm--said the association issues yearly guidelines to its members, as a framework to achieve consistency in mobile advertisements. Poon was also speaking at the imbX show.

Billy Teo is a freelance IT writer based in Singapore.

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