Overview of Mobile Advertising
Today, the mobile phone can be used for doing many more things than just the voice calls. SMS, internet, games, content download and many other things are possible on the mobile phone which gives marketers the opportunity to connect with consumers beyond traditional and digital media. Mobile advertising is in its infancy but is still catching the imagination of the marketers. Most of the organizations have increased the outlay for digital media and it is expected to lead other forms of advertising in terms of growth.
Size of Mobile Advertising
There are many estimates on the current size of mobile advertising and they vary a lot due to differences in definition and methodology. Similarly the forecasts also differ substantially but all the analysts have the same conclusion – the growth in mobile advertising is huge and is likely to exceed any other form of advertising. Recently, Juniper Research estimated that in 2009, the market size for mobile advertising globally was $1.4 billion and is expected to cross $6 billion by 2014. Strategy Analytics expects the mobile advertising to reach $10 billion by 2012 from $1 billion in 2008. Gartner estimates that it would exceed $12 billion by 2011. Wow this is getting bigger and bigger!!!
Kelsey forecasts that the US mobile advertising would increase from $160 million in 2008 to $3.1 billion by 2013.
Benefits of Mobile Advertising
Mobile phones are personal devices and have managed to add so many features that it offers many advantages over traditional advertising:
- User base – There are over 4 billion mobile phone users across the world compared to only 1 billion internet users and 1.5 billion PC owners. It is likely that on a few years time there would be more users of internet on the mobile than on the PC. The high penetration of mobile phones is an opportunity that most of the marketers cannot afford to ignore.
- Targeted – Mobile phones have typically one user per phone and hence the advertisements can be personalized. Studies have shown that the personalized advertising is more effective. Carriers have a lot of data on the user including his usage pattern and that is very handy when it comes to advertising.
- Locally relevant advertising – Mobile phones have the ability to provide information on location using GPS or Cell-id. This enables targeting users in a specific locality. Local shopkeepers can give ads in a very cost effective way to a selected audience.
- Viral Advertising – Mobile phones users can easily share content with friends and family and if an ad is catchy, it is possible to trigger viral marketing. We have already seen the impact of viral messaging in various countries where revolutions have taken place against dictators by viral messaging
- Ubiquitous – user carries his mobile phone at all times and he also reads everything that comes on the mobile. This means that the ad would at least be read and hence there is a more likelihood of action on it.
- Interactive - This is one significant feature that mobile phones bring to marketers. They are interactive devices and their users will invariably use them to receive and originate communications. Marketers therefore do not have to battle to get their audience to respond and interact as in traditional forms of media.
- Permission based advertising – it is possible to take user permission for the advertisement. The advertisements in this case become more targeted and highly actionable.
- Multiple Forms of Advertising – Mobile phones have various features like SMS, MMS, gaming, etc. and hence the opportunities to advertise are also many times more.
Forms of Mobile Advertising
Mobile phones provide various opportunities to interact with the user and hence an opportunity for advertising. A few forms of mobile advertising are listed below:
- SMS/MMS Based
- In-Game
- In-Application
- Display on Web
- Search
- Bluecasting
- Mobile Coupon
- In-Maps
As per Strategy Analytics, Search, In-Game and In-Application form of advertising has the maximum potential as they are non-intrusive and pull based and hence there are no privacy issues in it. The figure below gives the split of mobile advertising across various forms.
Mobile Advertising Ecosystem
The mobile advertising ecosystem is a complex ecosystem with varied entities. The role of the operator is the most critical in the user experience but the role of handset vendor cannot be ignored. The value chain and the ecosystem entities are depicted in the figure below.
There are multiple handset types (basic, enhanced and Smartphone) with multiple features that make the permutation and combination tough to deliver the mobile advertisement consistently. A advertising agency might decide to send a MMS ad without realizing that only 25% handsets have MMS capability or the banner ad may be seen differently depending on the screen size. Hence it is critical that the advertisers, advertising agency, handset vendors and operators work in tandem. The ad network is in the middle of the value chain and hence assumes higher responsibility in managing this complex relationship.
Measurement Metrics
There are a few measurement metrics that mobile advertising has directly borrowed from the online advertising and then there are a few measurements that are still in the development stage. A few established measures are:
- CPM (Cost per Thousand Impressions) - Each time an advertisement loads onto a user’s screen, the ad server counts that loading as one impression. CPM is the cost of thousand such impressions. In other words, if CPM is $2, then for every thousand times the ad is viewed, the advertiser has to pay $2
- CPC (Cost per Click) – In this method, the advertiser pays only when the advertisement is clicked. Most of the advertisers are unsure if they would be able to get visitors only by way of impressions and hence are interested in paying only when a consumer clicks on the ad and reaches its site. In such a scenario, the ad platform may decide to quote a CPC rate based on the performance it expects from the ad placement. The ad agency/platform calculates the CTR (Click-Through Rate) by dividing the number of users who clicked on an ad by the number of times the ad was delivered (impressions) and then quote the rate on CPC basis. E.g., for a CPM of $2 and expected CTR of 1% (i.e. one out of 100 people who saw the ad would click on the ad), out of 1000 ad impressions, 10 people would click on the ad. To recover $2 CPM, the CPC based rate should be $0.2. However, this is only an indicative way of determining CPC rate and there are two primary models for determining cost per click: flat-rate and bid-based.
- CPA (Click per Action) – This is method in which the advertiser pays for each specified action (a purchase, a form submission, and so on) linked to the advertisement.
Other measurements that are still under development are branding measurements (ad recall, purchase intent, etc.), reach and frequency and the viral impact.
Future Drivers of Mobile Advertising
- Better feature handsets – Smartphones
- Evolution of local search
- Faster networks – 3G/EVDO/LTE
- Flat Data Plans
- Better Web Browsers – xHTML
- Better location capabilities – GPS
- Highly Localized Communication – WiFi/Bluetooth
Issues that need Urgent attention
Despite the clear advantages, mobile advertising revenues are still small. There is a distinct need to address a number of key areas if mobile advertising is to truly take off and gain credibility among its marketing counterparts, as well as securing a sustainable business model. Below are a few areas for consideration:
- Privacy issues – Users do not want to be disturbed which means the operators would need to strike balance between revenues from mobile advertising and respecting the privacy of its subscribers. Consumers place their trust in their operator – and they cannot afford to abuse this trust by delivering irrelevant or unwanted content to their mobile device. At the same time, they must drive wider user acceptance and illustrate the tangible benefits of mobile advertising from an end-user perspective. The only way they can balance these two requirements is by providing the option for the consumer to easily opt-in/opt-out and by ensuring that the content that is delivered to them is relevant, by enabling subscriber control of the advertising experience through Ad Exposure Management. The legislation on privacy is also weak around the world
- Ecosystem – The players in the mobile advertising ecosystem are from different industries and backgrounds. The operators need to engage with different entities to be able to effectively secure the revenues. With the opening up of the mobile ecosystem, the influence of operators is diminishing. New entities are appearing in the mobile ecosystem that now have an enhanced stake in the mobile revenues. The operators still have inherent advantage of having more data about its subscribers and hence they can make the ads more targeted. However, the operators would need to understand that they cannot do everything and would need to let go of the advertisement platform development.
- Measurement - Informa also recently revealed that Proctor & Gamble, the world’s largest advertiser, spent approximately $6 billion on advertising in 2008, of which $10 million (approximately 0.17% of its total advertising budget) was allocated to mobile advertising. From both perspectives, the difficulty of effectively measuring the success of a mobile advertising campaign is often cited as one of the main reasons why this channel remains unproven by the advertising industry. The industry is still working on CPM model as it still does not have the capability to measure CPA and CPC forms. Similarly, clarity is needed on how to price and measure ads on maps.
- Technical Challenges - The mobile audience is fragmented across multiple platforms, with multiple sellers, multiple carrier networks, multiple devices, and multiple business models, all of which hinder consistency of execution. In such a highly fragmented landscape, identification of a user, user session, browser, or device can pose a significant problem, hindering the ability to deliver the right ad to the right user at the right time. We need to find a solution to this.
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Given the dwindling ARPUs of Mobile Operators in India, it is imperative that the scope for revenue expansion has to be through innovative channels and one of which is certainly going to be in the canvas of mobile advertising.
Having said that, it would take some soul searching and innovations in Ideas or products for all the stake holders in the value chain (operators, brands or advertisers or mobile application providers or ad network / media agenceis) to find out how to deliver VALUE to the consumers.
For some customers VALUE could mean FREE calls supported by ad inserts which could act as a trigger for adoption whereas to some it could mean CONTEXTUALITY which means that one should get what one is supposed to get based on profiling.. and so on and so forth…
Most important successful factor for adoption for advertiser of this NEW MEDIUM is to bring RESULTS to them as compared to other digital mediums. RESULTS would depend on the stated OBJECTIVE of the activity, be it BRAND SALIENCY to CONVERSIONS to say combination of both….
Any NEW medium would be tested by the Spenders on that medium in terms of ROI and instead of rattling out a rate of response of a campaign by the agency or marketeer (which is most likely the case)… one needs to be willing to learn with each step and gain significant exposure and experience on this new medium before making sales pitches because if the advertiser does not get what has been communicated, it may lead to disappointment vs the expectation leading to losing confidence in the medium.
I being a media person in the industry for over 10 years can say that yes, mobile marketing is the way of the future.
However, it is a very regulated ecosystem in many other countries unlike India and Asia. In Europe the privacy and intrusion issues are so well structured that mobile companies have yet to find very creative ways to break this structure.
In the Indian context, mobile marketing is already a pain in the…hand! Well, it is not nice to receive push messages and such and most of the times you delete them without seeing them. Success rate of these push messages needs to be really measured and effective campaigns designed to actually create interest and subtle messaging that will stand the test of time.
Balance and creativity in the mobile marketing ecosystem is the key.
India must consider stringent laws for privacy and intrusion since telemarketing and push messaging are already a menace.
Hi Mohit
Great article. I also read all the comments. While I cannot disagree with anything that has been said because it is, sadly, all true, I remain flabbergasted that no one seems to see the wood for all the trees.
The mobile phone is a device that allows marketers for the very first time to achieve their actual objective: build and nurture one-on-one, personalized, two-way communication relationships. And yet, all I hear are ideas about how you can use mobile to “advertise”. All I hear are ideas on how to force an ad down a mobile users’ throat and do it in ways that sort of kind of bypass legislation.
Why would you want to do that instead of allowing consumers the choice of whether they want to engage you or not? In this way you speak ONLY to people who are really interested in your products and services! Why would you pay someone to look at your ad? Wouldn’t you rather want to talk to people that are interested in your actual products and services, instead of in the money you are willing to pay them to pretend that they are?
When are people going to wake up and smell the coffee? Sure, you can use the mobile phone as yet another outlet for your advertising, but why should you if you can do so much better with so much less effort? Why involve Peter, Paul and Mary (and pay them) if mobile allows you to finally create a personal relationship with your customer? Why on earth, for example, involve the networks? Why complicate everything?
This all sounds to me like a traveller who wants to, say travel from New York to Timbuktu. In the olden days he had to use many different modes of transport, change a lot, spend much money and time. This is advertising with traditional media. Today there is a direct flight from New York to Timbuktu, and if the traveller would just take it, he would save a lot of time and money and have an alltogether much more pleasurable travel experience. This is mobile marketing. But instead of just buying a ticket and boarding that plane, the traveller is caught up in the old ways and tries to find solutions on how to involve all the outdated modes of transport that he was used to in traveling with the new, direct plane. Makes absolutely no sense!
But then again it does make sense for those companies who are are misinforming others and, as a result, make their money on presenting “solutions” for problems that don’t really exist…
Excellent article Mohit – a treat to see such quality.
Mobile advertising might be looked at in a new way: ‘mobile facilitating’.
Advertising on mobile devices have the unique ability of becoming immediate, socially connected, efficient, and multi-directed.
Immediacy is powerful because it breaks through limits, enables action, and is efficient. Humans brains work on information in temporary and stored memory and interaction.
Social connectedness using voice, text and real-time and web-access video enables advertising to harness individual and group interaction to leverage advertising beyond static impressions. A picture is worth a thousand words, a friend’s added content and recommendations is worth millions.
Mobile advertising is more efficient because it places ads where purchases can be made or referenced. GPS-mapping lessons confusion, quickens decisions, and enables payments.
Mobile advertising can take become self-directed and viral: through entertainment and useful value, good advertising can spread easily by ‘word of the web’.
Thanks Robert, Rajnish and Ruchita for your comments
Regards,
Mohit
Mobile marketing has a wide definition as described clearly by Mohit. If you are only looking at adverts on your mobile I agree with Jay Kreizer (LinkedIn discussion) that the general public will not be amuzed when they receive an unsolicited advert.
But there are more ways to achieve your goals. The mobile market has huge potential and I believe we have only just begun to tap into the possibilities.
Of course there are always technical or regulatory challenges to overcome but I believe Creativity will be the key factor in a successful Mobile Marketing campaign. But isn’t this the case for any Marketing campaign
When it comes to effective advertising, better results from mobile advertising could be achieved to grab the targets’ attention at the right time rather than annoying them by sending unsolicited ad through SMS. I mean something similar to a hoarding i would notice and read if am waiting at a traffic signal. So when a person calls another there is a time lag in between till the other person picks-up, or when his number is busy or out of network, at that time. Similarly when you send or receive a message the message might come with an ad background. That would be more innovative, more effective and non-disturbing way to attract the prospects.
If used this way- Mobile marketing has a great future ahead as an effective Ad Channel.
-Pavitra Saraf
THE FOCUSED VIRAL – key to the Mobile Handset Relationship
It’s common knowledge now that advertisers desire to be closer to their consumers, and that consumers want to be closer to advertisers – and in an honest relationship based more on fact, education, and mutual benefit.
As such, the more that marketers can get the two sides in touch with each other, the better job the marketer has performed. In Mohit’s article he goes into the Future Drivers of Mobile Advertising – perhaps there is another: Accessibility of in-store purchase data
My personal view is that mobile advertising will be at its most effective when it steps in to the consumer’s line of sight only once the consumer has already purchased the product several times. Or when a friend introduces the consumer to a free product entitlement!
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EXAMPLE:
When the consumer is tracked having purchased 12 bottles of Super-Duper Anti-dandruff Shampoo, the advertiser suddenly announces to the consumer’s mobile handset that s/he has been promoted to a level of “high status”, with the power to give away 3 bottles of the marvellous medicinal shampoo. This “high status” consumer uses their handset to pass on the free products to whoever they choose, and receives an automatic discount for doing so …. and so on and so forth continues the Focused Viral …
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The concept of an expert (Key Opinion Leader) user being the best person to endorse a product has been around in PR circles since time immemorial.
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The handset must directly record consumer in-store and online purchases.
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Consumers clearly in love with a brand must take on the role of ‘marketer’
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In Japan, when we are not buying online at our computers, we are paying for our goods by scanning our mobile handset at convenience-store registers. Ideally this should become ubiquitous, with the purchase data used for research and consumer reward promotions. It sounds ordinarily simple, but good-old coupons and special entitlement to discounts will be the ultimate winner I believe.
We see in the above example that the job historically performed by the marketing agency can now be in the hands of the consumer, AND the extent to which a consumer is bombarded with typical ‘awareness-heavy’ advertising is based on the consumer’s actual needs, and is initiated by the consumer’s own behavior.
This mission we are tasked with to harness purchase data for immediate real-time promotion, and to reward the social networking of brands by influential consumers will not only be a breakthrough of sorts due to the size and scale, but it will survive long-term, which is critical in bringing the big-brand players to the mobile marketing table in earnest.
N.B. The head of UNIQLO in Japan came up with the idea of marketing fleece-material sweaters in fashionable colors as a super-comfortable item that everyone wanted – unbelievable results were achieved. Sometimes the best idea is simple, clear, and is simply able to be done a very large scale.
I feel this would work great, it will just take some time to lift, but it will work.
The sms, mms are the tools for the marketing..
Just need to develop 3G or 4G application which should be available cheap or tele com operator should give these application free of charge or built in with their package.
Mohit – I read thru your writeup on telecom circle and I guess I’m not sure what the potential of mobile advertising is. My experience has been that anything left to the imagination of the marketers (direct quote) generally won’t turn out to serve the best interests of the customers.
While mobile advertising may be a significant revenue opportunity for telcos and partners, I believe it carries with it the risk of a customer backlash, if the ad presentment mechanism is not well designed and managed.
Today I avoid websites that rudely paste ads in my browser, especially ads that are designed to be hard to cancel or disrupt my interaction with the content. I cannot imagine that mobile ads will be any less offensive.
A likely scenario is that mobile ads will be used to drive a revenue model that allows users to opt out of ads for a price – for (say) 20 bucks a month, a user will have to click thru 5 ads per hour, for 50 / month, its one ad per hour, etc.
I could even see opportunities for niche carriers who offer services without ads.
If the mobile ad delivery model follows the one we see today on the public internet, the user experience will not be great. What about network bandwidth? Cell networks are already saturated in many markets, and I believe this problem would be made worse by broadcast ad delivery to millions of mobile devices.
“Mobile Marketing” isn’t an individual channel like Media Buy or Direct Mail. Mobile includes SMS, MMS, internet, e-mail, apps, etc. which should be accounted for as individual channels. Access to the user via these channels is dependant on the user’s communication preferences, their service plan, and the phone’s software/capabilites.
I agree that Mobile will provide the way to identify with a very desirable and often evangelistic crowd. It opens the possibility of 24/7 direct access. This is the one piece of technology at our side all day and night. I believe it will grow exponentially as soon as brands figure-out how to connect without proving a nuisance.
In place brands will need to keenly understand user demographics by channel and the unique messaging which resonates. No new theory here, just a more refined approach. In my opinion, it will be tricky, but surely a major weapon once applied expertly.
The way tariff war is happening in India ( 1/2 paisa per second)…..am sure the next wave will be mobile advertisement to get the money from Advertisers and improve some margins / sustain the business model. Voice will be almost free for the consumer.
Devices need to improve to take the load / clarity about the content. Moroever there must be optimization to make the content lighter.
Regarding the handsets, iPhone’s screen still appears to be the most prominent real estate for mobile advertising.
Some data points like – Mobile advertising network AdMob, which recently caught the eye of web giant Google, said that 50 per cent of ad requests from smartphones in its system in October were from the Apple mobile OS. Symbian, which dominates the smartphone market in terms of platform, was only responsible for 25 per cent of requests, followed by Android with 11 per cent and BlackBerry with 7 per cent.
Regards
Neeraj
+91-9810434619
Now a days Mobiles are not only for conversation. It is beyond all that .We use in for many other things like net surfing.marketing etc.so now it has been more useful than ever it was.