Mobile Advertising

Mobile Phone subscriptions in India recently crossed 300 Million making it the 2nd largest mobile market in the World. The growth is exponential and we are already heading to 500 subscribers before 2010.

Mobile vs. Internet

Of all the countless people I know personally, I don’t know of any not having the mobile phone but only about 10% have a PC at home with a broadband connection. That gives me fair idea of not to compare the two mediums.

Why mobile?

Because it addresses the need of mine being connected and demanding any time access to the ENFORMATION (entertainment +information) I want, silly.

So the plumber in the society if had a web portal to help you login your complaints would certainly not have been better than giving you a mobile number to dial. Would it be? Or would you have preferred to order vegetables from a vendor outside the society over the web instead of calling him.

So mobile is enabling businesses, digitally and is making our life simpler.

My mom at home would have found it much tougher to login to web to order vegetables instead of calling the vendor up and asking for it after telling him that how the last time the vegetables he had sent were not fresh and she feels that they were under weighed too.

And not to forget that to offer you web service the vendor would have needed to first invest into buying a laptop, server space, connectivity etc. and the way things are it would have taken him quiet long to read the order (we all know how air card connectivity is) and then execute them. And Collateral Damage – Vegetables would cost you much more, he has to recover the cost of expensive operations, preventing my mom to buy them from him.

The model fails, so instead he just bought a Mobile Phone and that too with free incoming for three years. No collateral damage, you see…

Now What?

Monetization. The average earning per subscriber in India is currently at an average of about $7. The idea is to look at newer and better ways to increase this figure and they are already toying with the ideas like VAS, Mobile TV, M-Commerce, Location based services and Advertising.

VAS as it currently stands in India is primarily SMS based. The standard cricket alerts, astrology alerts, caller tunes, ringtones and the like are bringing in some amount of revenue for mobile phone operators. This however seems to be a saturated market. It was the “low hanging fruit” as a lot of people in Mobile like to call it.

Mobile TV is still a few years away as admitted by Manoj Dawane, the CEO of Mauj Telecom. GPRS is still inaccessible to the critical mass although the number of people using GPRS is growing fervently. Simplicity in Mobile is the key to future revenues. That’s one lesson that can be learnt from SMS driven VAS.

Advertising:

This is the area which is becoming more prominent for the players to explore. There are many services already built around it but none successful because the credentials are not in place.

Paid to Read was the first genre to launch where you subscribe to receive the ad messages and you get paid for it.

Is there a problem? It’s most likely that consumers will be paid for listening to ads and thus they might sign up for this service only to save their mobile bills negating the idea that they are signing up because ads give them “value”. So now this model remains largely a mass reach product with low deliverables and service providers really don’t like it in comparison to VAS sms response which generates the paid pull.

Now we also have Paid to Listen launched by AirVoice. The model again is same with a difference that here you get to listen to the ad message instead of reading it. This innovation allows a user to receive an ad before he is connected to a call. The ad typically lasts for 15 seconds. Does it make it any better?

The problem still remains. The argument could be that consumers might factor in those 15 seconds while making a call and keep the receiver away from their ears till the call connects. Thus one can question the value to advertisers again.

Location based services: So I am walking pass the shopping mall looking up IPL scores on my mobile phone, and a banner ad tells me that bar inside the mall is showing the match on big screen and beer is 20% off if you show this message”. Now that’s fantastic isn’t it?

But for this to happen we are talking about application which is installed on my phone which is capable of mapping my location with the campaigns that are live and throw a banner that’s relevant. It also calls for better database mapping of the nos. beyond zip codes to address the needs or push the product. And that touches upon the privacy concerns.

I think it’s pretty obvious that no one is going to install an application that makes it easier to be marketed to unless it offers me something beyond it. How about your stock portfolio updates? You already have Gmail. That might work for me. If well mapped then the leading financial institutions can build a careful campaign around it and can generate some measurable response.

It becomes more and more interesting the moment you enable the GPRS connectivity in the device. Suddenly you have so many more interesting options like UGC and so the contextual advertising, applications like stock trackers and hence related advertising, enterprise applications, M-commerce and others all bundled together is transforming the mobile phone into a more informational and transactional device. AdverGaming is another area which is gaining lot of popularity with brands as well the service providers meeting there objectives keeping consumer in focus. 3G will give further boost to this when you will have multi-player mobile gaming.

To make all this happen what is really required is that now all the service providers promote and push the GPRS and provide fast connectivity as they pushed the basic services. Increased data connectivity will also increase the consumption of content on mobile, expanding the market for content companies to reach out to the customers situated in the remotest parts of the country.

So, will 3G be the saving grace ?

Globally operators have seen big success with successful 3G product roll outs, I India however I see we have problems which needs to be addressed first. The one which is biggest is the “Revenue Share”, currently operators take about 60% of the revenue and the content owners get 30% and 10% is left for copyright owner. Now thats not fair. We need a better revenue share model in place for sure. The cost of GPRS enabled handset is still very high as compared to a basic model which is a big factor for lower penetration. I guess fully enabled product instead of just talk-times is what players need to start selling. Currently we only have about 5% GPRS penetration in the total subscriber base. Another problem is that we have about 85% people in the pre-paid category which is low consumption pattern and so less revenue generating option. The players need to roll out better usage plans to ensure the conversions to post paid model.

My Take

The answer depends on the cost of mobile communications. That is, if the cost per bit of information communicated on that channel drops below the marginal revenues from advertising, then advertising will make mobile communications free and the users then will only have to pay with their attention, not money.

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2 thoughts on “Mobile Advertising

  1. Pingback: Mobile Advertising | kingstonvalentino

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