Mobile network operators are hard-pressed to tap new revenue streams to keep their businesses buoyant amid ever-decreasing user revenues from traditional services. Mobile ads add to operators’ range of options for fresh revenues from new services, content and existing resources.
While some analysts were professing in early 2009 a slowdown in the take-up of mobile ad due to the recession, it seems that by the end of the year it was the traditional ad industry that had felt the pinch. The new comer on the block, mobile advertising, actually saw an increase in its use globally.
In the more sophisticated markets of Asia, brands and ads have for a long time been employing banner adverts. More recently, the brands have been placing targeted ads into applications. Some of the advertising is passive -- simply placing brand images on screens when the devices are idle -- while others are interactively eliciting reader or viewer response and engagement.
Much of the growing success of browsing and app ads is a direct result of the increase in the use and availability of smartphones, particularly across Asia, with more time being spent accessing the internet on such devices. The ability to accurately segment, profile and consequently target users with available and detailed data is a major reason for such success. Industry observers expect that in the future campaign success will be based on the purchase statistics by the consumers and not simply their behavior. Did they just look or did they buy?
If we take the UK as an example of how things are moving in Europe, data from the Internet Advertising Bureau and PricewaterhouseCoopers show that the entertainment and media sectors accounted for 61% of mobile ad spend. This reached £37.6 million (about $56 million) in 2009 when search and display were the two main mechanisms of ad delivery.
While this may well show an upward trend, such figures are small change in the ad business and the mobile ad sector still accounts for only a small slice of total digital advertising.
In the US, some key brands such as Toyota, General Motors and Capital One are now repeat users of mobile ads while the video ad format is also now proving increasingly popular in the motion picture and entertainment business. Indeed, all major brands see the app itself as a key element of the digital presence. More importantly, app developers see ads within apps and games as very attractive. The future breadth of mobile advertising possibilities is huge.
However, before app-related mobile advertising really takes off and reaches its full potential, most mobile ad in many parts of Asia will continue to be delivered via more traditional mobile channels such as SMS, MMS, unstructured supplementary service data (USSD) and ringback tones. This is because smartphone penetration in the high-growth markets is still relatively low and the only real way to reach all subscribers is through messaging. Penetration is barely 10% in places like India and Latin America.
The growth of smartphones is strong in mature markets with half of all handsets sold in Japan classified as smartphones. In the US, smartphone penetration is forecast to account for half of all handsets by the end of 2011.
Today, messaging channels such as SMS and USSD allow brands to communicate with any consumer with any phone in any market. Whether for its ability to ‘reach’ a target audience, its ability to obtain an immediate response from that audience, or for a creative simplicity provided by the medium, it is hard to beat messaging as a communication vehicle.
Campaigns are run by inserting adverts into top-up, missed call messages or ringback tones. The adverts are sent to mobile customers who have volunteered to receive selected communications as well as to consumers who text in to win, to learn, or just to engage with a brand. To reach those consumers that cannot be reached through other channels, messaging and call-based media remain the key.
Cathal O’Toole heads mobile advertising at Jinny Software