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Tue 15 Sep 2009 04:00 AM

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Advertising goes mobile

Mobile advertising is a fast-growing industry, but how can telecom operators cash in on the trend?

Advertising goes mobile

Mobile advertising is a fast-growing industry, but how can telecom operators cash in on the trend?

Advertising is an essential ingredient of communication, letting the world know about the availability of a product. And as each successive mass medium has arrived, humanity has sought to place advertisements in it. The internet was envisaged as a key means by which advertisers could reach out to their target audience. After a false dawn in the late 1990s followed by the dot.com crash in 2001, online advertising has indeed flourished, most notably through the online search giants Google and Yahoo!

 While the size of the overall advertising market is not in doubt - it stood at around US$500 billion globally in 2008 - it is currently a market in decline, due overwhelmingly to the impact of the global recession. The global market grew by under 1% in 2008; it is expected to decline by 6-7% in 2009 as budgets are cut.

Mobile, as one of the most budding advertising media, could be grievously impacted given that brands may be reluctant to transfer their adspend to channels with comparatively low levels of inventory. Against that, however, can be set the remarkable successes experienced by those companies which have already chosen to advertise via mobile, measurable both in terms of click through rates and uplift in brand recognition. The recession could represent an opportunity for mobile in that brands will increasingly be seeking to transfer spend to more targeted, measurable media.

Mobile distribution channels

One point worth making is that a mobile advertising campaign may utilise a number of different channels within the mobile, including idle-screen, mobile TV campaigns, display advertising and SMS. Successful campaigns will not merely utilise these different channels, but will integrate mobile within a campaign across multiple media. The following are the key mobile distribution channels:

• SMS advertising (A2P advertising); SMS is a globally available and accepted wireless service. It is a mechanism for transmitting short text messages of up to 160 characters (and 7 bit per character) to and from a wireless device or IP address.

• MMS advertising (A2P advertising); allows subscribers to send and receive multimedia content such as images, audio and video apart from regular text on their mobile phones.

• P2P messaging advertising; consumers are increasingly being offered the opportunity to receive advertisements within their personal messages.

• In-content download advertising; brands are perceiving that other content services, such as games and ringtones, could provide valuable inventory for advertising services.

• On-portal advertising; as the network operators are at the heart of the mobile entertainment value chain, advertisers are naturally keen to ally with them.

• Mobile internet advertising; there are essentially three forms of advertising upon the mobile internet: clasifieds, display adverts and search engine advertising.

• Idle-screen advertising; during idle periods handsets are almost always in close proximity to their owners, thus they represent a further opportunity for advertisers.

• Mobile TV and video advertising: the opportunity for advertising within mobile TV channels mirrors that in the traditional TV market, in that ads can be placed before, during and after TV programmes.

The market for mobile advertising

Juniper Research estimates that, by 2014, total annual adspend on mobile services will have exceeded $6 billion, representing an annual average growth rate in adspend of 34%. While this growth rate - and adspend - are impressive, it should be pointed out that this $6 billion figure equates to just 1.2% of total global adspend.

When we break down the mobile adspend by channel we can see that the traditional dominance of SMS advertising has already been significantly eroded by both mobile internet and on-portal advertising; indeed, during 2009 mobile internet adspend will exceed that of SMS. Nevertheless, SMS will remain a significant contributor to overall adspend, although its share of adspend will diminish over the period.

The promising idle-screen channel is likely to account for just less than 1% of the market in 2009. But by 2014, as more operators and vendors deploy idle screen solutions offering personalised advertising, this proportion will rise.

Dr Windsor Holden is principal analyst with Juniper Research.


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