Mobile advertising is fast becoming one of the most profitable sub-sectors in the telecoms industry. Fuelling this growth is the popularity of advanced mobile services and the willingness of consumers to receive advertising that appeals to their tastes. David Knox examines the potential of this new marketing
initiative and how charging and monitoring solutions can help mobile operators provide flexible and profitable ad campaigns while enhancing the consumer’s user experience
ubiquitous technology in the world, it was only a matter of time before advertisers caught on to the idea that a highly effective new way to reach a mass audience was not by radio, television or newspapers, but through a wireless handset. Mobile advertising has definitely become the latest 'it' word in the telecoms industry, with analysts predicting billions of pounds in revenue over the next five years. According to one recent report published by Informa, the mobile advertising market is going to be worth $871m this year, and will jump to $11.35bn in 2011.
Big in Japan
One of the countries to embrace the concept of wireless advertising is Japan, which has the second largest advertising market in the world behind the US and the first country to exceed 50 per cent 3G penetration. According to some estimates, mobile advertising revenues for 2006 in Japan are expected to exceed $300 million and to double that figure by 2009. This is higher than any other country in the world. Almost 60 per cent of Japanese consumers already use mobile coupons and discounts more than once a month.
Following in the footsteps of Japan is the wireless industry in Western Europe, where the idea of mobile advertising is also being explored by some of most pioneering mobile operators around, such as Hutchison's 3G mobile group, 3. The operator is currently subsidising usage and phones through advertising on the phone. These models are also being offered through downloads, subscriptions, and video streams. It has also supported various mobile advertising campaigns in exchange for free content such as the launch of the first ever first movie video ad in Europe on behalf of Redbus, the film distributor, for the movie 'It's All Gone Pete Tong'. In partnership with 3, a banner on the carrier's wireless portal home page links to a microsite with more information on the film. At that site, subscribers have already requested more than 100,000 downloads of the movie trailer.
What is astounding about the access rate of the aforementioned movie clip is that it shows how the average response for mobile advertising is up to 10 times greater than Internet response rates. This is due to the fact that there are only a handful of links to choose from on a typical mobile web page. If one of them is an ad, it is more likely to get clicked than the same ad on the Internet.
Tackling the mobile ad market on an even bigger scale is wireless heavyweight Vodafone, who recently announced a strategic alliance with search engine Yahoo! to create an innovative mobile advertising business as a means to inject new revenue streams for both companies.
Through this partnership, Yahoo! will become Vodafone's exclusive display advertising partner in the UK. Yahoo! will use the latest technology to provide a variety of mobile advertising formats across Vodafone's content services. The initiative will be rolled out in the UK in the first half of 2007.
Under the plans, customers who agree to accept carefully targeted display advertisements will qualify for savings on certain Vodafone services. In other words, Vodafone subscribers would pay a lower rate for data services if they were prepared to accept ad banners from Yahoo! when signing up with the mobile provider.
This promotional deal would also extend to key Vodafone mobile assets including the Vodafone live! portal games, television and picture messaging services.
Vodafone and Yahoo!'s approach to tackling the mobile ad sector is a strategic one. It's all about understanding what each user wants from their mobile phone and providing a truly unique individual advertising experience. In a way, the mobile handset will be transformed into a wireless 'magazine' filled with all sorts of adverts, only it will be slicker – since the advertisements will be live, potentially interactive, and most importantly, targeting the tastes of the mobile user. It can also be based on user location at the time.
Matching user interests
This brings us to the subject of profiling, which is indisputably the most important aspect of mobile marketing and one of the key ingredients to success. In order for Vodafone, 3, or any other mobile operator to make any money, they must know the interests of their users so that the advertising campaigns directed their way actually appeal to them.
This is where charging and rating applications can help operators conduct effective ad campaigns. These solutions are all about control – allowing operators to implement sophisticated, value-based charging strategies that help to differentiate between innovative packages, bundles and promotions. Subsequently, VoluBill's 'Charge it' real-time data control and charging solution, for example, could be installed in a wireless network to detect subscribers and, thereafter, display or redirect them to advertisements that match their user profile if they have chosen to receive advertising.
Information about the brand tastes and interests of the wireless user would be gathered by the mobile carrier before the user agrees to subscribe to advertising. This information would then be stored in the network and accessible to the Charge it solution to ensure that advertising is targeting the right audience. So, for example, if one mobile user is identified as a die-hard fashionista who loves to read Vogue magazine each month, then Charge it could access the profile information in-real time and automatically redirect the consumer to an advert for the film 'Devil Wears Prada' when they next establish a data connection via the handset. If the consumer has previously received the ad for the film and has responded to the link, then Charge it can also identify that the user has previously accessed the advert and block it from being sent again to the consumer. This helps ensure that the target audience doesn't get put off by seeing advertisements they have already responded to.
This method of monitoring can also be used to track the success of a particular campaign and the revenue share that is generated as a result. If every single fashionista that signed up for mobile advertising clicked on the film link for the 'Devil Wears Prada' advert, for example, and also agreed to receive a free copy of the book which was simultaneously promoted in the movie advert, then Charge it would be able to provide the operator details on how many and which subscribers saw the ad, and how many of them bought the book. Most importantly, Charge it could calculate the income generated from the advert – which would be divided up by so many parties, including the operator and its service providers, the advertising agency, the film distributor, the book publisher and, last but not least, the writer.
Indeed, what solutions like Charge it provide are extensive advantages to operators both in charging and managing the user experience, whether subscribers are surfing the Internet or downloading content-rich premium services. As mentioned before, charging and monitoring solutions are all about controlling the mobile advertising medium and ensuring its success.
Most, if not all, of the mobile content and adverts provided on the handset would be managed by search engine platforms such as from Google or, in the case of Vodafone, Yahoo!. As such, charging and monitoring solutions providers can provide the additional user profiling, traffic redirection and charging functionality required to be able to offer a complete mobile advertising and charging solution.
Apart from accessing profile information, Charge it could also be configured to respond to other factors that would enable operators to redirect a subscriber's wireless Internet session to a specific advertising page. One way would be through location identification. If a user went online to a particular website that didn't match their profile, for example, like a fashionista accessing rugby match details, then Charge it could be configured to track and monitor this activity and record it for future marketing purposes. The next time an advertising campaign was launched concerning the sport, the aforementioned user would be sent the advertisement during their next Internet session. Again, this data would be monitored in order to enable Charge it to monitor the adverts and to redirect or block the information when necessary.
If users accepted the ads sent to them, then Charge it could also be used to help operators to offer flexible price plans. This could include charging customers who access ads at a cheaper rate for services, or granting them a free Internet usage allowance per day. Consumers could also potentially receive periodic adverts like commercials on TV. The more frequent the adverts, the less they would pay for services.
Although widely ignored for many years as a possible income spinner, mobile advertising has finally been accepted by the business world as an innovation that can combine the wide reach of television with the precision of direct marketing and the tracking potential of the Internet. All of this adds up to serious revenue potential. Mobile advertisements also benefit all the participants involved in its new marketing game. While carriers get to boost their data and content revenue streams, advertisers gain a new and effective way of targeting a mass consumer audience. Meanwhile, mobile users get to benefit from great promotions and offers for the products and services they want to hear about, as well as cheaper mobile Internet usage.
Before mobile advertising and marketing can reach its full potential, however, certain technical and business requirements need to be met. This includes putting in place the right charging and monitoring infrastructure, as well as building relationships with quality advertising partners. Once installed, and with the right commercial models in place, there is nothing stopping mobile advertising from possibly becoming the most successful sub-sector in global telecoms history.
David Knox is Product Marketing Director at VoluBill