Messaging is the future

Mobile messaging is the optimum format for mobile advertising and is an untapped opportunity for mobile operators, said Blyk co-founder Antti Öhrling.

Messaging currently accounts for about 55% of mobile advertising, with 25% going to apps/website and 20% to search.

Instead of being overshadowed by more sophisticated formats in the future, he believes messaging will continue to dominate because when a message is relevant, it creates engagement with the customer and actually enhances an operator's service instead of deteriorating from it.

Öhrling, a keynote speaker at the TM Form Management World Asia in Singapore, said customers say they preferred their services with the ads.

He pointed to a number of key advantages over other formats.

"It's a simple, low-tech communications tool - based on a natural behavior that happens on a mobile phone. In addition, the in-box is always on, it's viral and for advertisers it's a fantastic platform that verifies that the message has been read."

Yankee Group's Declan Lonergan agrees messaging will be an important technology in mobile advertising's future. In a report last year he said, "It's well understood, reliable, ubiquitous and highly personal."

Mobile advertising on its own already provides fairly high response rates, Öhrling said.

"They are several times those of fixed internet. What we have discovered is that when you profile an opted-in audience beforehand, and you engage them with contextual advertising that really fits them, you get really high response rates." 

Effective results

He said because mobile messaging can be measured and tracked, it's easy to prove it works for advertisers. Based on 2,600 campaigns done in the UK over 18 months, he said the average response rate was 25% - "that's ten times more you'd expect on any mobile campaign or traditional messaging-based advertising and 100 times more than a mobile banner."

"For the advertiser it's by far the most efficient way of reaching its target audience," Öhrling said.

To deliver the same results through banner advertising on a mobile phone, he said, you have to send 125 million banners, where you'd get the same results you would when you send a million messages.

"Obviously, that's the direction where we should be going. People don't need unnecessary stuff in their mobile phones. They need relevant, good, contextual advertising, and mobile messaging can bring this to people."

He doesn't see mobile operators missing out on any revenue opportunities to other parties, such as the over-the-top players going direct to the customers, with something like the App Store model.

"I feel that the Apples and Googles of the world do see mobile operators quite rightly, in some cases, as an unnecessary evil. And they'll try to get a basic model that wouldn't have mobile operators in it. But I think that the mobile internet as such, the dumb-pipe question, really addresses that issue.

"The thing with mobile operators is that they can develop much closer relationship with their customers than the so-called internet players. And that's the strength the operators should really utilize."

Looking at what the operators have that advertisers need that will make them a critical part of this new value chain, rling pointed out that the key is they know their customers.

"They don't know always that they know them. That's really an industry issue. But that's what's critical: that I do know you, that it's you who are using this service. You have opted into this. I have your profile. I know what you're interested in, and I can address those interests."

The advertisers are interested in this, he said as they don't want to address people that aren't interest in their advertising.

"Our experience is that people using our service like it with advertising more than without advertising, because we have established a dialogue with them. So we know what you like, and we ask you questions. 'Would you like this? Would you like that?' And then when you answer, we can respond. And that dialog is something that has been missing in the operator world."

Blyk started in 2006 as an MVNO in the UK. Last year it moved from that retail model to a wholesale model, partnering with operators to give them the capability to quickly open up additional revenue streams.

Orange UK announced in early February it would launch a mobile advertising service using the Blyk platform. Orange had been testing the platform but launched the full services, called Shots, on February 1.

He said it will soon announce fresh partnerships with Vodafone Netherlands, and an unnamed Asian carrier. Unlike the Orange partnership, the new deals will be branded Blyk and be more consumer facing.

Öhrling said the reason for the change was a scale issue.

Just add ad engine

"The scale of this operation is crucial. If you look at the operator world today, every operator in every country already has the needed infrastructure in place. There's no need for us to come and rebuild that. So rather than rebuilding it as an MVNO, we go in there as a partner to an operator utilizing their existing infrastructure, just adding our ad engine to the end of that and start to operate this messaging-based model, which has proven to be highly sucessful."

While operators could of course build this on their own, the question is, which one is the better route?  "Using our experience over three or four years as we've learned how to use it, or operators facing all the errors by themselves," he explained.

He says the advertiser-pays model has had a shaky start because people are thinking of advertising on its own.

"It always has to be linked - there has to be something else, it's about communication. It's about content within a context. It's not just 'I'll deliver some ads and banners to you phone. Are you happy now?'"

He says the model has changed and has evolved over the years. Advertisers are now seeing that mobile could at its best offer them response rates and interaction with customers they cannot achieve anywhere else.

"Before this has been proven, there have been many different start-ups, many different approaches. Advertisers haven't really known where to go and what to look for."