Mobile ads: The next big ring

Mobile ads: The next big ring

Bangkok Post (6 October 2007)

It's only a matter of time before the new medium catches on in Asia, predicts a research company

The media industry in Asia, which is already encountering heavy turbulence from the shift of adverting revenues to new media, is set to face a new challenge in the near future as advertising on mobile phones becomes more of a trend in the region, a leading research house predicts. ''Mobile advertising has the potential to become more successful than internet advertising as the delivery medium is more immediate and personal,'' Jeff Teh, a senior research analyst at Frost & Sullivan, said in a recently issued report. ''The mobile audience in Asia is indeed larger and more immediately reachable than the online users, and with the increasing ubiquity of internet access over mobile handsets, the web browsing experience is available to a large new audience.'' Mobile advertising, something that is gradually picking up in more technologically developed countries such as Germany, South Korea, Italy and the United Kingdom, is emerging as the medium in which global giants such as Google, Yahoo and MSN are all taking a keen interest and are looking to tap into to expand their reach and profitability. The big UK mobile company Vodafone, according to Mr Teh, has already carried out trials with both Yahoo and Google in various markets of a new ad-based model. Nokia, the world's largest mobile handset manufacturer, has already launched Nokia Ad Service and Nokia Advertising Connector in order to position itself as managed mobile ad service provider and to act as the intermediary in bringing participants in the value chain together. As Asia is witnessing a boom in the mobile-phone industry, and the region is skipping a generation in certain countries such as China and India, the hotbed for future growth of this industry is likely to be this part of the region, Mr Teh says. Japan, he says, is the market leader in Asia for such services. Mobile-phone operators in Japan are required by regulations to provide subscribers with an option to enable reception of mobile ads or to turn it off if they wish not to receive commercial messages. Mr Teh says that operators in India and some Southeast Asian countries are also developing platforms for delivery of such services in the near future, although technological advancement of the network is crucial to the delivery. He says that in Asia Pacific, the initial introduction of mobile advertising is expected to focus on mobile search services and WAP-based advertising. Initially, mobile operators' approach to advertising is expected to be driven largely by partnerships with big brands that are keen to explore new media alternatives, since television advertising is increasingly failing to capture an audience's attention. He added that big brands could now enjoy the opportunity to reach consumers through mobile advertising although many are hesitant to take the plunge. Traditionally, media buyers need case studies and research to back up a proposition to a client. Therefore, the brands are seeking proof that an investment in leveraging the mobile advertising medium would be justified. He says that as mobile operators have a direct relationship with their subscribers, this results in very valuable raw data that can be used to provide targeted ad campaigns. Further, the operator also has a strong influence as it acts as the gateway to the subscribers. To this end, operators must realise their significance and position in this industry, and should act quickly not to let this alternative revenue stream merely contribute via traffic charges and minimal revenue shares. But he says the anticipation is that mobile operators will only start to become more involved in advertising when the industry develops further in the areas of consumer acceptance and the willingness to receive ads over the mobile phones. Despite the potential the new medium carries, it is still in its infancy and key challenges remain that needs to be sorted out before the industry can move forward. Mr Teh says that several factors are expected to drive the proliferation of mobile as an advertising medium, which includes improvement of mobile data delivery, 3G services, which would enable the delivery of richer media services, and consumer awareness in mobile data services. Despite the notion that the emerging markets were keen adopters of mobile advertising, Frost & Sullivan believes that the continued improvement of mobile penetration rates and increasing mobility trends are expected to drive the growth of this segment across the Asia Pacific markets. Among the other challenges is the fact that there is no clearly defined successful business model to convince companies to advertise and to allocate budgets to the mobile medium. But Mr Teh said that a change in the content provided in the model was likely to be the key driver for the growth of the industry in the near future as having web access through the handheld devices starts to catch on among consumers in the region.
He says that one business model that has shown the most positive indications of success is the ad-funded or sponsored-content model, where subscribers get to download or access content for free in exchange for receiving selected ads either as a precursor to the ad or embedded within a downloadable application. Incentive-based ads such as offering cash, free minutes, downloads and discount coupons are also an attractive way of pushing content. He added that despite offering free downloads the key here would be how much advertising a user was willing to accept in exchange for a free service. ''Ultimately, Frost & Sullivan believes that mobile advertising will be successful with hybrid combinations of targeted mobile advertising campaigns coupled with traditional print ads,'' he said. Citing the example of Blyk, a European mobile operator, he says that this first pan-European ad-funded mobile network, which offers customers free mobile phone calls and texts in return for receiving ads on their mobile handsets, could be a recipe that Asian operators could look into.