Advertisers Turning Towards Mobile Phones

The next 12 months will mark the start of a sharp upturn in mobile advertising spend as the proliferation of cheap, high-quality multimedia handsets and the widespread availability of high-speed mobile networks reaches a critical point, according to a report released by Informa Telecoms & Media. The study predicts that worldwide spend on mobile advertising will rise to US$11.35 billion within five years.

The potential economies of scale that the mobile channel offers advertisers will prove a powerful draw - Informa Telecoms & Media forecasts that there will be over 2.1 billion mobile subscribers worldwide by the end of 2006, rising to nearly 4 billion in 2011. Issues that need addressing to enable advertisers to realise this reach however, include consumer acceptance, technology (screen size, available bandwidth, interoperability between operators and handsets) and industry regulation.

"Mobile advertising is not new; it's been around in some form since 2001," comments Nicky Walton, principal author of the report and Senior Research Analyst with Informa Telecoms & Media. "In the last 18 months there have been a number of developments that are encouraging interest in the medium. There are now more users with advanced multimedia handsets and the number of subscribers who connect to mobile broadband via 3G and HSDPA is growing significantly. Consumer interest in multimedia mobile content is also growing and areas like mobile TV, and 'off-portal' search are becoming more popular." Major advertisers such as Coca-Cola, and car manufacturer Peugeot have been experimenting with SMS and WAP based advertising since 2002/3 and 2004 respectively. In 2007, mobile advertising spend will more than double from 2006 levels to over US$1.5bn.

Brands are clearly eager to take advantage of the intimacy of contact that mobile advertising promises; with information available to operators it is theoretically possible to create very targeted campaigns. The mobile is also a useful tool to track and measure the success of campaigns, with users texting, calling in or clicking on links all giving direct feedback on the effectiveness of a campaign. Gaining access to customer information from operator customer service records could prove complex however, both from a technical perspective and due to regulation governing the use of customer data.

Consumer acceptance

Findings from an industry survey conducted as part of research for the report highlight that the only areas in which consumers are currently "not at all willing" to receive mobile advertising was via SMS/MMS. Other modes of delivery for mobile advertising will include via mobile music delivery, mobile game delivery, mobile TV & video, idle-screen advert delivery and via user generated content and community sites. It seems that consumers generally accept mobile advertising in return for 'free' media and applications on their handsets.

Operator push

Operators are also pushing for the uptake of mobile advertising on their portals. With stiff competition on voice and data services and pressure from consumers to move to flat-fee tariffs, mobile operators are urgently looking for new ways to increase average revenue per user (ARPU).

New mechanisms for mobile advertising enable advanced models for selling value-added services to consumers as well as providing revenue from the advertisers directly. This provides a strong incentive for operators to address compatibility and interoperability issues.

"2006 marks a change in attitude to the mobile channel as a viable and competitive advertising channel. As operators push for new revenue streams and advertisers search for more immediate, intimate access to consumers, and the technology becomes more effective for advert delivery, we'll see dramatic growth in this space," comments Walton.

"With advertising spend on the Internet increasing, while more traditional means such as TV and radio are on the decline, advertising agencies are looking for more creative and innovative ways of pushing their clients' brand," comments Nick Lane, Head of the Mobile Content and Applications research division for Informa Telecoms & Media. "The mobile phone represents a direct channel to the consumer, surpassing that of the Internet, but will only achieve significant levels of success if it can be seamlessly integrated with existing advertising strategies using traditional media."

Posted to the site on 11th September 2006