Mobile operators need to plan their moves so they can make mobile advertising a significant revenue booster
Given the declining voice ARPUS, it is imperative that the effective use of mobile advertising as a new business idea for revenue enhancements is carried out by the Indian mobile operators as they can play a key role to act like a medium for advertisements. As is the case for a TV channel and newspaper, a mobile can be thought of as a prospective medium for the advertisers to reach and sell their products. A TV channel or a newspaper can be shared by many people whereas, at a time, one mobile is shared by only one person. This personalization characteristic makes mobile advertising the most promising advertisement medium. With the 3G technology being introduced in the country, a proper ecosystem would come into place thereby making mobile advertising more engaging, more interactive, and more intelligent. Mobile campaigns continue to be a powerful ad channel for marketers outperforming online advertising by roughly 3 times across a variety of metrics including ad awareness, message association, and purchase intent. The mobile is a reflection of the person’s individuality and users tend to click on targeted ads more on their phones leading to generation of enhanced revenue streams. The increased user awareness in the recent times has made India the single largest mobile ad impression market in the AsiaPacific region. Several challenges need to be overcome through well planned mobile ad strategy keeping in view the
In India, mobile advertising will be primarily driven by enhanced user experience, new services, and service bundling. Therefore some of the factors which are going to play a vital role in making the overall business viable are—
#1 Pricing: Tariff plans customized for different target user segments. Competitive pricing of mobile advertisement services
#2 Device-service Integration: Affordable handset/dongle with monthly usage plans. Device-service bundling for inducing trial
#3 Network Optimization: With only 5 MHZ slots for 3G spectrum, the operators need to optimize networks to handle increasing mobile advertisement traffic
#4 Billing: Introduce innovative and transparent billing mechanisms to address wide user base
#5 Content: Enable service discovery and user awareness. Introducing innovative regional mobile advertisement content
SMS/MMS based ads, ringtone based ads, caller tune based ads, video sharing socio-economic nature of the different types of market segments in India. The well drafted mobile ad strategy coupled with innovative business models has to give a helping hand to the mobile operators to become cash positive after having invested heavily in the spectrum purchase and 3G infrastructure rollout for various circles across the country.
Critical Success Factors
ads like Youtube, gaming ads—single and multi-layer— social networking ads, idle screen based ads, content based ads, pay viewer based ads, localized based ads, navigation based ads, etc, would play a major role in the revenue stream enhancements for mobile operators.
The other key business growth enablers are going to be—huge reach, audience categorization based on advertising relevance, evolved devices, advanced wireless technologies, augmented reality, and innovative business models for sectors like FMCG, retail, real estate, consumer durables; detecting the exact advertiser market size; contact and building relations with the advertisers; planning the event calendar for the year so that targeted advertisers can be located; building a standard operating procedure; and creating effective price package for the advertisers.
To make the business model a success, the operators also need to add value by helping advertisers throug—targeting advertisements more effectively as customers roam the web, tracking advertisement performance, providing response channel for customers (including payments), and providing post-purchase support to the customers.
Presently, the mobile operators retain the largest portion of MVAS revenue (60-65%) and the rest is shared among the content aggregators and content developers. This division of revenue share is not arousing enough interest among
the content developers to invest heavily in the development of innovative mobile advertising related applications for the mobile advertisers and the end-users. The revenue share arrangement has to be reworked so as to create a proper revenue share balance in the 3G MVAS ecosystem. Without the right kind of balance of revenue share between the various stakeholders, the killer/sticky mobile advertisement based applications will not be able to see the light of the day.
Keeping in mind the fragmented nature of recent 3G bidding process, new telecom entrants will also be tagging the high-end subscribers (postpaid) to influence churn with compelling 3G MVAS. This will be interesting as with the launch of mobile number portability, there has been a significant competition among carriers for high-end and midlevel subscribers. Keeping these factors in mind, the mobile operators have bid for 3G spectrum in those circles in which they had leadership positions in terms of revenue and/or subscriber market share.
Huge Revenue Growth Opportunities
Currently, the mobile advertising market globally is expected to be around $1.3-1.6 bn and will grow to become $11-13 bn by 2015. In a recent survey, it is witnessed that around 70% of the respondents in India realize value of mobile advertising and perceive the benefits it can bring to them. Display advertising is a new concept in India and the adoption has gone up considerably over the last one year. India reached its highest traffic level with 2.6 bn ads being broadcasted to 59.4 mn users in the month of May 2011. There was an increase of 44% banner ads served to the Indian audiences on their mobile phones. India has the significant number of mobile game downloads with more than 14 mn downloads in Q1 and a growth rate of 24% Q-on-q. This shows that the consumers are ready and the mobile operators need to grab this opportunity with the right kind of business models.
In an intensive competitive landscape, the operators are facing challenges on 3 key fronts—driving cost efficiencies, building customer engagement with their brand, and ensuring revenue growth. In this scenario, the ability to cost effectively and rapidly retail a wide catalog of services tailored to specific consumer segments is critical competitive differentiator for operators to sustain and grow their business. The recent TRAI consultation paper on VAS is definitely going to create a favorable mobile advertisement ecosystem whereby the mobile operators in the MVAS value chain would get an ample opportunity to enhance their revenue streams. The author is group telecom
expert, CPA Global firstname.lastname@example.org