Mobile Advertising for Operators - Analysys
25 January 2007
The latest column from Analysys explains why customer information is the key to unlocking revenue potential in mobile advertising.
Mobile operators worldwide are currently experiencing stagnating voice ARPUs as data services fail to generate significant new revenues. Mobile advertising, if correctly executed, may represent an opportunity for operators to create ARPU benefits from data services.
Although mobile advertising is still in its infancy, several business models are emerging (see Exhibit 1). The most established is SMS "push" advertising, which tends to be poorly targeted and largely bypasses the mobile operators. Prices for bulk SMS are very low and this business model does not represent a large revenue opportunity for mobile operators.
Exhibit 1: Mobile advertising business models
Exploiting Web-based content and multimedia
There are two developing areas of mobile content that are opening up opportunities for advertisers: Web-based content and multimedia services.
Advertising-funded Internet players such as Google and Yahoo! see mobile subscribers as the source of future growth. Yahoo! Go for mobile (which enables access to Yahoo! services and personalised Internet content) has been available on all Windows Mobile-enabled handsets since August 2006, and was available on Symbian handsets from the start of that year.
Similarly, Google has recently allowed developers to exploit the mobile version of Google Maps in order to promote new business models that will drive mobile advertising. The threat of these models for mobile operators is that the value-added services that generate premium revenues remain under the control of content generators, and mobile networks are reduced to simple data carriage.
The development of new multimedia services, such as mobile TV and games, has also given rise to several other new business models for mobile advertising. For example, in Germany, O2 has launched a youth-oriented mobile TV series in conjunction with Burda, a print media group, using product placement revenues from McDonald's.
In South Korea, a group of major broadcasters have rolled out a T-DMB network to offer mobile TV. This service is free of charge to customers who have T-DMB-compatible mobile handsets, and is funded wholly by advertising.
Advertising-funded downloads of games and other small packages of content are another potential market. Several big brands including Coca-Cola, Saab and Societe Generale have signed up to Orange France's current trial of advertising-funded game downloads.
The critical advantage of advertising-funded content is that, because it is discounted or free of charge for customers, a significant barrier to take-up is reduced.
The challenge for mobile operators is to capture the value created by this beyond simple data carriage. To succeed they must take full advantage of the main strength that they alone possess: their detailed knowledge of the end customer.
The customer is key
Mobile operators hold large databases of customer information that is potentially very valuable to advertisers. This includes demographic and credit data for post-paid users, calling and SMS behaviour and location behaviour. Such data can be used to target advertising efforts more effectively.
In order to maximise the value they can extract from mobile advertising, mobile operators must overcome a number of challenges, principally by:
If mobile operators can successfully influence the business models that eventually dominate the market, and exploit their marketing, data mining and content aggregation capabilities, mobile advertising may represent an opportunity to extract significant new revenues from mobile data services.
Andrew Kloeden is a consultant with consultancy and research firm Analysys, global advisors on telecoms, IT, and media (www.analysys.com).
Although mobile advertising is still in its infancy, several business models are emerging (see Exhibit 1). The most established is SMS "push" advertising, which tends to be poorly targeted and largely bypasses the mobile operators. Prices for bulk SMS are very low and this business model does not represent a large revenue opportunity for mobile operators.
Exhibit 1: Mobile advertising business models
Exploiting Web-based content and multimedia
There are two developing areas of mobile content that are opening up opportunities for advertisers: Web-based content and multimedia services.
Advertising-funded Internet players such as Google and Yahoo! see mobile subscribers as the source of future growth. Yahoo! Go for mobile (which enables access to Yahoo! services and personalised Internet content) has been available on all Windows Mobile-enabled handsets since August 2006, and was available on Symbian handsets from the start of that year.
Similarly, Google has recently allowed developers to exploit the mobile version of Google Maps in order to promote new business models that will drive mobile advertising. The threat of these models for mobile operators is that the value-added services that generate premium revenues remain under the control of content generators, and mobile networks are reduced to simple data carriage.
The development of new multimedia services, such as mobile TV and games, has also given rise to several other new business models for mobile advertising. For example, in Germany, O2 has launched a youth-oriented mobile TV series in conjunction with Burda, a print media group, using product placement revenues from McDonald's.
In South Korea, a group of major broadcasters have rolled out a T-DMB network to offer mobile TV. This service is free of charge to customers who have T-DMB-compatible mobile handsets, and is funded wholly by advertising.
Advertising-funded downloads of games and other small packages of content are another potential market. Several big brands including Coca-Cola, Saab and Societe Generale have signed up to Orange France's current trial of advertising-funded game downloads.
The critical advantage of advertising-funded content is that, because it is discounted or free of charge for customers, a significant barrier to take-up is reduced.
The challenge for mobile operators is to capture the value created by this beyond simple data carriage. To succeed they must take full advantage of the main strength that they alone possess: their detailed knowledge of the end customer.
The customer is key
Mobile operators hold large databases of customer information that is potentially very valuable to advertisers. This includes demographic and credit data for post-paid users, calling and SMS behaviour and location behaviour. Such data can be used to target advertising efforts more effectively.
In order to maximise the value they can extract from mobile advertising, mobile operators must overcome a number of challenges, principally by:
- Ensuring that they have the marketing, database management and data-mining capabilities to be able to target specific audiences. This is necessary to ensure high-impact, targeted advertising that has high value for advertisers;
- Pushing the development of business models that do not bypass their networks, to counteract worrying developments for operators such as Yahoo!’s direct deals with handset manufacturers such as Nokia, Motorola and RIM;
- Overcoming data protection and privacy concerns.
If mobile operators can successfully influence the business models that eventually dominate the market, and exploit their marketing, data mining and content aggregation capabilities, mobile advertising may represent an opportunity to extract significant new revenues from mobile data services.
Andrew Kloeden is a consultant with consultancy and research firm Analysys, global advisors on telecoms, IT, and media (www.analysys.com).
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