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Feature phone ads still a draw

Feature phones remain primary way of engaging users in large emerging markets which makes it worth focusing on, but advertisers should already be formulating smartphone strategies, say industry watchers.
Written by Ryan Huang, Contributor

Feature phone ads remain a popular marketing channel for businesses to tap due to the sheer size of the user base in emerging markets despite the current popularity of higher-end smartphone devices, market observers say.

Tarik Fawzi, CEO of Aeneas Strategy Consulting  & Management, said features phones still dominate, especially in emerging markets, and will remain the primary channel for businesses to communicate their products and services to this large user demographic.

"Even though smartphones are growing rapidly, above 50 percent of all sold phones in some markets, it will still be a few years until smartphones are a majority of the installed base in all markets," Fawzi said.

Jake Saunders, vice president of forecasting at ABI Research, added that he has seen interest among operators, especially in India, to focus on the feature phone ad market. The "sheer size" of the Indian market, for example, where users would still be on such devices in the near future would be hard to ignore, he noted.

Additionally, this market also has plenty of upside in terms of growth potential. "The average revenue per user (ARPU) in India was US$5, whereas in China it was at US$10," Saunders said.

ABI Research also estimates that the number of feature phone shipments to India will hit 238.1 million by 2017, from 182.4 million this year. This is compared with smartphone shipments, which are forecast to hit 97.2 million from 20.3 million within the same timeframe.

Both their comments come on the back of Singapore Telecommunications (SingTel) indicating an interest to further invest and develop the feature phone ad market during its earnings call in May. It said for a large group of people in the emerging markets, the only way for advertisers to reach them was through mobile devices which they are more likely to own than TVs, newspapers, and other forms of media.

Currently, only about 5 percent of global advertising revenue goes to the mobile segment but this is expected to grow, supported by developing markets, noted Allen Lew, CEO for group digital life at SingTel, during the May briefing.
Targeting customer habits

Ultimately, the advertiser's target is the specific profile of users and feature phone consumers have different consumption habits from regular smartphone users, said Saunders. "For example, some of them are likely to continue to mainly use only text messages, regardless of the device they use," he said.

One form of advertising on feature phones that is still popular is though multimedia messaging service (MMS), he added.

Fawzi pointed out there were also other ways that advertisers can reach customers over such handsets, including short recordings which are played in instances such as when retrieving voicemails, during call waiting, or in advertisements tagged onto text messages while users check prepaid phone balances.

Smartphone strategy remains vital
That said, the ABI Research analyst pointed out that with smartphones getting more affordable, the lines between a feature phone and a smartphone will become "increasingly blurred". "In 10 years' time, there will probably be no more pure voice- and text-based devices," he surmised.

The research firm's findings corroborates Saunders' prediction, stating that by 2017, shipments of feature phones to the Asia-Pacific region will drop to 326 million units from 412.8 million in 2012. Meanwhile, smartphone shipments would more than double to 493.6 million units in the same period.

Thus, operators will still need to have an eye on smartphones because "that's where the action is", said Jayesh Easwaramony, head of business development for Asia-Pacific at mobile advertising network InMobi. He noted that with the arrival of sub-US$100 Android smartphones, the feature phone market is rapidly shrinking.  

"Feature phone ads attract a narrow segment of advertisers; they are also restricted to text-based banners or other methods like click-to-charge or click-to-download," noted Easwaramony.

"Most advertisers [will] want to experiment with the better capabilities of smartphones since they offer better engagement," he said.

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