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- 2008 /
- January-March 08 /
Operators move into mobile advertising
Until recently, mobile advertising has been the domain of content suppliers, but falling subscriber income and a revenue explosion in mobile marketing are prompting operators to get in on the action.
January 2, 2008
According to eMarketer, which carries out market research on e-business and analysis of internet market trends, dollars spent on advertising on mobile phones will grow tenfold to USD 16 billion by 2011.
Despite these forecasts, Reinhold van Ackeren, head of multimedia consulting at Ericsson Business Consulting IAP, says operators have moved ahead cautiously even though they are uniquely positioned to succeed in this market. "Operators fear a backlash from consumers who view advertisements on their mobile phones as a violation," van Ackeren says.
But these concerns may be unfounded as studies show most people would rather have free services with advertising than pay for subscriptions.
Operators have an edge because they have customer-profiling capabilities that can provide a wealth of demographic and behavioral information on subscribers. This enables advertisers to develop tightly targeted and relevant campaigns, van Ackeren says.
According to van Ackeren, operators can generate additional revenues in four ways. "The first scenario involves selling advertising space for example in the form of banners within their own content inventories." With this scenario, already launched by Vodafone and O2 in Germany, operators have full content ownership and responsibility for the advertising space.
Scenario two is the typical mobile-TV advertising case with in-stream, pre-roll or post-roll advertising. Content is provided by a third party with its own interest in selling advertising space. Here the operator has a weaker position.
In scenarios three and four, third-party players have even more power. Scenario three links mobile customers from an operator portal to an external site, such as a mobile newspaper, willing to sell advertising space on their own portals. The operator can enable this 3rd party advertising and provide targeting information.
In scenario four, mobile users bypass the operator portal and access external sites directly. But because an operator can track URLs, improved advertising functions are the same as in scenario three. Also for off-portal advertising, operators have a good opportunity to monetize their specific assets.
Revenue-sharing opportunities are lower with scenario four, van Ackeren says. "But the operator is still poised to manage targeted advertisements in the network, and because the advertising budget spent off-portal could be substantial in the future, operators should consider this opportunity."
