mobile advertisement - prospects in india
TRANSCRIPT
Table of Contents
Preface ............................................................................................................................. 1
Mobile Industry In India – salient traits .............................................................................. 2
Mobile Marketing – why the buzz??? ................................................................................. 9
Evolution Of Mobile Marketing - the global scenario ........................................................ 14
Mobile Marketing Ecosystem .......................................................................................... 19
Mobile Advertising Channels .......................................................................................... 22
Strategic Approach to Mobile Marketing .......................................................................... 29
Mobile Strategy in Action................................................................................................ 34
Mobile Advertising Business Models ............................................................................... 37
Brand and Mobile Network Operator - Opportunities in Mobile Advertising ...................... 42
Primary Research Report ................................................................................................. 44
Case Study...................................................................................................................... 51
Mobile Advertising | Preface 1
Preface
Business today has taken a sharp U-turn. From a product-focused mindset it has moved to marketing
oriented one, where the primary activity became crafting and communication of the right marketing
triggers to the target audience. With Customer centric principles
taking center stage, interactive dialogues to build relationships
with preferred customers on an individual basis became key.
There are two forces at work that are shaping the world of
marketing communication:
Reach is widening: Marketers are addressing ever-
increasing (global) audiences.
The Focus is sharpening: Within the widening
audience, one is tailoring communication to smaller and
smaller segments, down to the individual level.
The approaches being followed are primarily these:
Marketers that are already addressing global audiences
are now looking up to their focus from mass messages to
personalized ones.
Marketers already communicating individually to small
audiences are looking to expand their audience without
losing out on the individual touch.
Research Objectives:
Understanding the trends, opportunities and prospects of
the Indian Mobile Market from a marketer‟s standpoint.
Study consumer responsiveness to mobile marketing, in
terms of its impact on purchase decision making.
Gain an insight into the perception of mobile users
towards mobile marketing/advertising and their utility
value in terms of impact on purchase decision.
Gauge the effectiveness of SMS advertising compared to
traditional marketing communication for different aspects since the effectiveness of SMS
marketing highly depends on this.
Points to ponder…
How responsive is
Indian Customers to
Mobile Advertising?
What’s their
perception about
Mobile Ads?
How effective is
Mobile Ads in
reaching the target
audience?
Where will mobile
advertising stand 5
years hence?
Mobile Advertising | Mobile Industry In India – salient traits 2
Highlights: The Million Count
Mobile Subscribers: 391 Million
Landlines: 40 Million
Dec 2009 added Subscriber: 15.64 Million
Annual net addition to subscriber: 113.26 Million
Monthly Average Mobile Subscriber: 15.41 Million
Projected Cellular Subscriber: 500 Million
BroadBand Connection: 6.22 Million
Penetration: 37%
Mobile Industry In India – salient traits
The Indian mobile services market is highly competitive with six to eight players operating in each of
the 23 telecom circles that the country is divided into. The intensity of competition has increased in
recent months following the launch of GSM services by Reliance Communications (RCom) and Tata
DoCoMo, CDMA services by Sistema Shyam; and the continuing pan-Indian GSM rollout by Aircel,
Idea Cellular (Idea), and Vodafone Essar (Vodafone).
The competitive intensity is expected to increase even further as new licensees launch their services
and Mobile Number Portability (MNP) is introduced in India. The recent increase in competition in
the Indian mobile services market is evident from the aggressive tariff plans being introduced by
players, a move that has led to a decline in the average revenue per user (ARPU), revenue growth, and
profitability of the industry.
Besides, profitability of the mobile service
providers is also being impacted by the
increasing share of low ARPU
subscribers in incremental
additions, the bulk of which
is happening in the semi-
urban and rural areas where
the mobile penetration rates
are still low. The financials
of the telecom companies for
the second quarter (Q2) of 2009-
10 show the impact of the ongoing
tariff war and increase in competitive
intensity in the Indian mobile services market.
Although some of the incumbent operators with strong financials, extensive networks, and larger
share of high paying customers would be better positioned to withstand the kind of competitive
pressures anticipated, high capital expenditure on 3G may well lead to continued negative free cash
flows and push up funding requirements.
Intensified competition and the aggressive pricing strategies adopted by the existing operators could
challenge the sustainability of the new entrants as breaking even at lower tariffs would take longer.
This would also imply delay in the generation of positive cash flows for the new entrants. Given this
Mobile Advertising | Mobile Industry In India – salient traits 3
scenario, it is likely that the Indian mobile services market would see some consolidation over the
medium to long term.
India is among the fastest growing mobile markets in the world:
India, the second largest mobile market in the world, is also among the fastest growing mobile
markets globally.
The total number
of mobile
subscribers in
India (i.e., the
subscriber base)
has increased
from 6.4 million
in March 2002 to
around 350
million in
December 2008,
at a compounded annual growth rate (CAGR) of 81%, aided by a significant increase in network
coverage and a continual decline in tariffs and handset prices.
India, a relatively late entrant into mobile services, has benefited from a significant decline in mobile
network costs during the last three to four years. As compared with a capital cost of US$50-
90/subscriber to
provide mobile
service, it costs as
much as US$200-
350/subscriber to
provide fixed-line
services. This and
the added benefit of
mobility have led to
stagnation in the
total fixed line
subscriber base, which along with the significant growth in the mobile base has translated into India
having one of the highest ratios globally of mobile subscribers to total telecom subscribers.
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Growth in Mobile Subscriber Base
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Africa Americas Asia Europe Ocenia India
48.9
20.727.1
16.811.7
78.2
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GR
%
Global Growth in Mobile Base CAGR
Mobile Advertising | Mobile Industry In India – salient traits 4
Despite the growth, mobile penetration remains moderate:
As on end September 2008, India had a mobile penetration of around 27%, which is relatively lower
as compared to other countries as
depicted.
Given the moderate penetration
levels at present, mobile growth
in India is expected to continue in
the short to medium term albeit at
a lower level because of the larger
base effect.
Growth expected to be led by
B and C Class circles:
The growth in the domestic telecom industry has largely been concentrated in the Metros and Class A
circles in the past decade, with coverage reaching around 90% and 35%, respectively. However,
coverage in the Class B and Class
C cities is still low at 15-25%.
Moreover, within these circles
growth has largely been
concentrated in the urban areas
while penetration in the rural areas
remains lower. Thus future growth
is likely to come largely from Class
B and C circles and rural areas.
Keeping this in view, larger players like Bharti Airtel Limited, Reliance Communications Limited,
and Bharat Sanchar Nigam Limited (BSNL) are largely focusing on increasing their geographical
coverage in Class B and C circles.
Addition of low usage subscribers and competitive pressures lead to fall in ARPUs:
With growth coming from the lower economic strata and on account of strong competition in the
mobile industry, average revenues per user (ARPUs) have moved south over the years. The
movements in the ARPUs and minutes of usage (MoUs) for global system for mobile
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109.993.9 91.3 85.6 84
55.9
27.32
Mo
bil
e P
enet
rati
on
(%
)
Global Mobile Penetration Rate
Metros44%
Tier A Circles35%
Tier B& C Circles
21%
Subscriber Base
Metros Tier A Circles Tier B& C Circles
Mobile Advertising | Mobile Industry In India – salient traits 5
communications (GSM) and code division multiple access (CDMA) operators are presented as
follows:
In the past, with costs being amortized over a larger base and steps being taken to rationalize costs,
most telecom
operators were able
to improve their
earnings before
interest, taxes,
depreciation &
amortization
(EBITDA) margins.
However, in the
current market
conditions, the
margins and return indicators may come under pressure as ARPUs continue to fall.
Competition set to intensify further with market liberalization
The Indian mobile sector is an intensely competitive industry, featuring 10 mobile operators, of which
four, namely Bharti
Airtel Limited, Reliance
Communications
Limited, Vodafone Essar
Limited and BSNL,
together account for
almost three-fourths of
the entire mobile market
share. This is also partly
on account of the fact
that these four operators
have their presence in a larger number of circles as compared with other players. With licences being
granted to some of the existing operators for new circles and also to new entrants, competition is
expected to intensify further.
0
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Dec '05
Mar '06
Jun '06
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Dec '06
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Jun '07
Sep '07
Dec '07
Mar '08
Jun '08
Sep '08 M
oU
(p
er
Su
bsc
rib
er
pe
r m
on
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AR
PU
(R
s.
pe
r m
on
th)
Usage Vs Revenue per User
ARPU MoU
BSNL/MTNL, 14.50%
Reliance Communicatio
ns, 17.70%
Bharti Airtel, 24.70%
Others, 0.80%
Aircel, 4.60%
Idea, 11%
Vodafone, 17.60%
Tata Teleservices, 9
.20%
Mobile Advertising | Mobile Industry In India – salient traits 6
Paradigm shift from ARPU to revenue per min
Indian carriers stopped looking at the ARPU as one of the performance measures. They started
considering themselves as the producers and sellers of minutes. Hence the new metrics emerged like
the revenue per min and the cost per min. This meant that they needed 40% margin on every minute
they sold to achieve the objective of 40% EBIDTA margin. Once they defined the tariff per minute
that they could realize from subscribers, they got the target for cost per minute. I would rate this
single change in the mindset as the biggest game changer
Outsourcing non-core activities like IT, network
The Indian carriers created many firsts on their journey of cost
reduction. Network was considered as a core function of any
operator but in the quest of reducing the cost, the Indian
carriers outsourced their networks in the year 2003 to the
companies that best know how to manage the networks. They
roped in companies like Ericsson, Nokia Siemens to manage
their networks. Multi-year managed network deals were struck
that guaranteed continued business to the network companies
at a low cost. It was a win-win situation for both the entities.
The carriers managed to change the cost type from fixed cost
to usage based costing (based on erlangs per min) and more
importantly, they managed to scale up their networks faster on
consumer demands. The managed service companies charge
on the basis of peak capacity (in erlangs) and the carriers are
free to utilize it as they wish. This has resulted in creative
tariff plans like night calling to make the traffic pattern more
uniform and reduce the peak load.
Focus on Prepaid
The carriers in India have focused on the prepaid market
(currently over 99% of new additions are prepaid and over
93% of base is prepaid). Prepaid has a lower cost structure and
lower channel commissions which means lower cost to the
carriers. Currently, the prepaid card is much more attractive in
terms of value than postpaid. Postpaid is currently being subscribed only by corporate connections as
a bill is required by corporate. Higher prepaid proportion means lower billing costs, lower bad debt
Market Facts
In terms of market share,
92% of the subscriber base
in India is on pre-paid
connection, with the remaining
8% on post-paid
subscriptions.
This has also given rise to
opportunities for generating
increased revenue, through
exploring potential Value
Added Services
(MVAS) like
subscription packs of news,
alerts etc and more exclusive
roaming services tailored to
pre-paid subscribers
Mobile Advertising | Mobile Industry In India – salient traits 7
and even lower customer service delivery cost as prepaid customers are much less demanding when it
comes to service. The flip side to this is that the churn (3% of base every month) is very high as the
loyalty is low amongst prepaid subscribers. The acquisition cost being low, this is not yet pinching the
carriers but I believe soon the focus would shift to
consumer loyalty.
Economies of scale
With falling tariffs, the subscriber net additions started
to jump (a mind boggling 15 million subscriber net
additions in Jan‟09 in India). This ensured that the
operators reap the benefit of economies of scale. They
started to reduce the tariffs even further filling up the
network with minutes. Since the cost increase was in
steps due to outsourcing deals, the cost per minute
started to fall faster than the revenue per minute and
hence the EBIDTA margins stared to increase
Infrastructure sharing
Virgin Mobile may have introduced the concept of
site/infrastructure sharing but it is the Indian carriers
that followed it with whole heart. Currently, over 40%
of the total sites in the country are shared with an
average tenancy of over 1.5 per site. This has resulted
in huge savings in network running expenses. The
operators are now willing to share active infrastructure
if the Government so allows. There is strong co-petition
in the Indian market
Low cost distribution, e-Charge
Carriers developed the low cost distribution model
keeping the channel margins low and compensating the
channel by way of volumes. They also focused on
reducing the transaction costs and India was one of the first few countries in the world to introduce
electronic recharge. The electronic recharging eliminated the need of the paper coupons thus reducing
the need for multiple stock keeping units at the retail level. This resulted in lower cost to the carrier
Market Facts
The regulatory
framework has been very
strong in India and has
continuously ensured lower tariffs
and consumer
interest safeguard.
Regulators also ensured
sufficient
competition in the
market and are in fact planning to
introduce mobile number
portability soon.
They recently awarded licenses to
4-5 new players in
each circle taking up the number of
players in each circle to
12. This would mean that India
would be by far the most
competitive market in the world.
Mobile Advertising | Mobile Industry In India – salient traits 8
and low working capital requirement for the channel and on top of this, there were no stock out
situations as well. In 2005 itself, electronic recharge was over 85% of the total recharge in the market.
The electronic recharge facility helped carriers introduce micro-charge which exploded the market.
The recharge could be done with a value as low as 20 cents. This resulted in higher usage leading to
further reduction in cost on account of spreading of costs over a larger number of minutes.
Low Acquisition cost (no handset subsidy)
In India, the handset is not sold along with the SIM card. The handsets are distributed and sold
separately by the handset vendors. This significantly reduces the requirement of working capital and
other inventory carrying costs. The carriers can have a much leaner organization with no handset
subsidy burden. In a country like India, where there is no social security number and enforcement
agencies are weak, the bad debt should be significant for carriers. Carriers did a smart thing by staying
away from the handset subsidy game.
.
Mobile Advertising | Mobile Marketing – why the buzz??? 9
Mobile Marketing – why the buzz???
The advertising and marketing messages in our mobile phone inbox outnumbers the personal
messages. Right from mobile service providers‟ commercial offers through contests, downloads,
quizzes etc, fresh arrivals and recent launches in the major lifestyle retail chains you frequent to, e-
tutorials, insurance, credit card or other financial services, to spiritual courses such as Art of Living
deluge your mobile phone inbox throughout the day or even in the wee hours of night sometimes. No
wonder companies are vigorously trying to wire you to their products and services through this
wireless device.
More people in the world have access to an Internet ready mobile device than a PC with Internet
access. And by 2008, researchers expect 1.3 billion people to be connected to the Internet through
mobile devices. (GSM Association)
• Growth in mobile Internet phone sales is expected to rise from 450 million to 850
million by 2009. (T-Mobile, Credit Suisse First Boston and Pyramid Research)
• EJL Wireless predicts that the global mobile ad market will reach $9.5B by 2011.
• The Shosteck Group forecasts the global mobile ad market at $10B by 2010.
• Informa sizes the global mobile ad market at $11B by 2011.
• Strategy Analytics sizes the global mobile ad market at $14B by 2011.
• ABI Research sizes the global mobile ad market at $19B by 2011.
• eMarketer sizes the USA mobile ad market at $5B by 2011.
• FirstPartner sizes the UK mobile ad market at $1.1B by 2010.
The truth and logic behind all that is in the post-industrial era, with the emergence of high speed
wireless network technologies and the increasing market penetration of mobile phones, the marketing
paradigms have been gradually changing from mass marketing to relationship marketing, market
share to customer share.
Mobile Advertising | Mobile Marketing – why the buzz??? 10
Communicating and / or sharing commercial content, message or information has also been shifting
from analogue or broadcast medium to dialogue-oriented or interactive medium and many-to-many,
social networking based communication modes termed as smart-mobbing. Technologies enabling
such way of communication include the internet, computer-mediated communication such as internet
relay chat, and wireless devices like mobile phones and personal digital assistants.
Mobile has a wider base of audience compared to Internet, with large number of subscribers owning
personal handsets. Mobile is a very interactive medium and can engage with the audience effectively.
Marketing over mobile phone is profitable for companies offering niche products or giving discounts
on their products. It offers the advantage of targeted advertising. The consumers are segmented and
accordingly specific advertisements can be aimed at them. This specific targeting will give rise to
better response from the consumer‟s side. Mobile is growing more than any other digital media today
and with it the number of consumers and the applications used by them also increasing.
New experiments are being done to innovate and improve the delivery mode of advertisements.
Specific advertisements for handsets are being made by advertisement agencies. Globally the industry
was valued at Rs 3 billion in 2007. The main advantage of the medium is the personalization of a
message from the company to their consumer. Mobile marketing is about personal marketing. It can
be tailor made to suit the requirements of the target. Being new, there is some amount of novelty
attached with it.
FACT: SMS adoption has a higher penetration rate in Europe and Asia than in the U.S.
FACT: SMS text messaging is the most widely used data application on the planet, with 2.4 billion active users.
FACT: According to the GSM Association, four mobile phones are sold for every PC that is sold.
FACT: It’s not unusual to see a nomadic Maasai warrior in Kenya with a cell phone on his belt.
Mobile Advertising | Mobile Marketing – why the buzz??? 11
Mobile marketing is still in the experimental stage in our country. This will succeed only if the
handsets and the applications are well designed and can be easily used by the consumers. Mobile does
not just operate in the virtual space like internet. It is a combination of both physical and virtual space.
Say for instance, someone goes to mobile store and likes a particular handset. S/he can immediately
check on their mobile for shops nearby for cheaper rates. This way it merges both the physical and
virtual space. However, all this can happen only if mobile marketers are able to successfully
personalize the messages, localize it according to the consumer‟s location and provide information
immediately when asked for.
Positioning Map of users of various media
Mobile Advertising | Mobile Marketing – why the buzz??? 12
The advantages of marketing through mobile phones:
Besides the global penetration of mobile phones, other specific characteristics of the mobile phone
technology facilitate marketing measures pertaining to
Personalization,
Ubiquity,
Interactivity and
Localization - beyond the capacity of other media.
Personalization:
Mobile phones are mainly used by a single person and are often considered an intimate accessory and
a status symbol expressing individuality, especially by the teenage group and the youth. The various
ways they use to personalize their mobile phones include choosing a particular brand, size, colour,
and display logo and ring tone. It is continuously carried
by them within reach and is an important part of their
daily lives.
For business users, as well, the mobile phone has similarly
become a highly personal instrument. They also
individualize their mobile phones by saving contacts,
messages and important dates. Furthermore, the user of
each mobile phone and each user‟s personal instrument
are identifiable through the SIM (subscriber identity
module) card. The mobile phone therefore appears to be
the ideal medium for direct and personalized customer
communication.
Interactivity:
Being a highly interactive medium, mobile phones enable
the recipient of a message to respond immediately,
affecting the communication actively. It allows bi-directional mode of communication and direct
dialogue between the advertiser and the potential customer.
The industry that has benefitted
most from mobile marketing is
the entertainment
industry.
Shivaji, the Tamil movie
starring Rajnikanth had
a record of highest ever
monotone ringtone
downloads (50,000) in
one day. In a week, around
2,000,000 ringtones were
downloaded.
Mobile Advertising | Mobile Marketing – why the buzz??? 13
Localization:
Mobile marketing has a major advantage of “localization”. Location-based mobile phone services on
the Global Positioning System (GPS) or Cell of Origin (COO) platform to enable triggering impulse
purchasing or point of sale marketing by adapting and aiming the marketing effort to the place
wherever the user might be.
Ubiquity:
Through mobile phone communication, companies can reach out to the potential customers anytime
and anywhere, round the clock. Usually mobile phone users carry their handsets with them at all times
and may leave it on, on ‟standby‟ mode for an average of 14 hours a day.
Entertainment value: Customers are generally more receptive towards commercial communication
through mobile phones due to its high information, storage and often entertainment values.
Viral marketing:
Marketing campaigns through mobile phones also have the potential of being driven by „viral effects‟.
A commercial content when received as a forwarded message from a friend or acquaintance who is
supposedly a „neutral sender‟ and not a ‟self-interested sender‟, has more chance of being received
positively and re-forwarded to others for information dissemination. It helps the campaign by
enlarging its reach and credibility.
Mobile Advertising | Evolution Of Mobile Marketing - the global scenario 14
Evolution Of Mobile Marketing - the global scenario
Little known fact: In his farewell address, President George Washington predicted that 1797 would be
“the year of mobile.” Every year since, pundits have been telling us that mobile‟s big-time debutante
cotillion is definitely next year. For about the last 5-7 years, people have been promising that the year
of mobile is only months away. And every year they have been wrong. Mobile marketing is just
getting rolling.
For marketers, mobile marketing and advertising has great promise - it combines the wide reach of
television with the precision of direct marketing and the tracking potential of the Internet. Mobile
marketing campaigns using SMS, and more recently MMS, have already helped to open up the eyes
of the media world to the power of the mobile channel. Interactive TV and radio, product promotions
using coupons and competitions, even charitable giving, have exploited this medium. But things are
set to change as Internet style advertising, in the shape of display advertising (banner ads) and search,
and even TV-style advertising, come to mobile.
Analysis on the emerging market acr6ss the globe concludes that there is potential for this market to
grow rapidly over the next five years. Under the most optimistic scenario, the global market could
grow to US$9.6 billion by 2010 although, the market may not generate huge revenues directly for
mobile operators - less than US$2 billion by 2010 - but could facilitate the development of a much
healthier mobile Internet, from which mobile operators can benefit.
Consequently, the opportunities for marketers to reach and engage with consumers through this
medium will expand even further. Now, more than ever, marketers are looking for alternative ways to
reach customers. Traditional channels for advertising, like TV, radio and print, are becoming less
$-
$1,000.00
$2,000.00
$3,000.00
$4,000.00
$5,000.00
$6,000.00
$7,000.00
2007 2008 2009 2010 2011 2012
$878.00
$1,663.00
$2,808.00
$3,917.00
$5,194.00
$6,525.00
Estimated Total Mobile Advertising Spend
Mobile Advertising | Evolution Of Mobile Marketing - the global scenario 15
effective because consumers now consume information and entertainment very differently than in the
past, due largely to the digitization of content and the increasing ease of access to the Internet. This is
especially true of the highly coveted "youth" demographic - the 18 to 34 year olds with high
disposable income, high brand awareness, and short attention spans.
Studies conducted by different research organizations constantly ponder upon the fact that mobile
marketing and advertising could be an important driver of growth for mobile operators too. This
would be due to its strong influence on the future development of the mobile Internet and the
subsequent growth in demand for mobile content.
But, the point that demands sufficient stress is that mobile operators must act now to ensure that the
mobile marketing and advertising market prospers, and that they can fully exploit the opportunities it
affords them. It warns that the robust and profitable development of this market will only be possible
if the major players - operators, handset vendors, content providers, advertisers and Internet portals -
collaborate effectively. It also predicts that the extent of this collaboration may be limited, as the
motivations and objectives of some of the key players will inevitably conflict.
Courtesy: iMedia Connection
Given the immaturity of this market, the fickleness and impatience of consumers, and the
complexities and politics of the telecoms industry, we believe the next two years will be critical as
other technology and market trends could prove to be barriers to the anticipated growth of this market,
For example, a damaging consumer backlash against intrusive and unsolicited mobile marketing could
Already investing heavily
4%
Planning to invest4%
Thinking of investing
35%
Not recently33%
Depnds on Products
24%
Marketer Investment Plans
Mobile Advertising | Evolution Of Mobile Marketing - the global scenario 16
occur if overzealous marketers fail to respect consumers' right to privacy and inundate them with
unwanted and irrelevant mobile marketing messages.
Experts believe that mobile advertising will be a necessary driver for the development and
commercialization of the mobile Internet, just as online
advertising has been for the 'fixed' Internet to-date. In
tandem with this mobile advertising and mobile content -
are inextricably linked. The success of one will enable the
success of the other and vice versa.
For sure, the hype is building but the mobile advertising
market is still in its very early stages. There is little
consensus on how long it might take for the market to reach
the 'tipping point,' i.e. when, and indeed if, it reaches critical
mass to become a mainstream mobile market in its own
right. The rewards are there but the question remains as to
who benefits from them."
According to a report published by Nielsen Mobile on the
state of mobile advertising in the United States, although
76.8 million US mobile users recall viewing advertisements
on their mobile phones in Q2, 2008, mobile advertising has
not kept pace with the rapid growth of mobile media
consumption and ad response rates are flat. In the past
several years, mobile media services have developed
audiences that present scalable advertising opportunities.
63 percent of mobile ad viewers see mobile
advertisements just once a month or less frequently.
In addition, mobile advertising is present on less
than two-thirds of website homepage page views
across leading mobile websites, and roughly half of
that is unpaid house advertising.
Overall response rates to mobile advertising also
appear flat. In Q2, 13 percent of mobile data users
(45 percent of those who saw a mobile ad) report responding to it in some way. This
Nielsen Mobile
Survey highlights
-------------
As of Q2 2008, there were
258.9 million
wireless lines in the U.S. Of
these, some 69 percent
(178.6 million) used their
phone for at least one data
service.
76.8 million U.S.
mobile subscribers recall
seeing some form of mobile
advertising while using
their mobile phone. That’s
up 81 percent year-
over-year.
Despite this growth, the
majority of these mobile ad
viewers, 63 percent,
see mobile advertisements
just once a month or less
frequently.
Mobile Advertising| Evolution Of Mobile Marketing - the global scenario 17
compares with 12 percent of all data users (52 percent of those who saw an ad) who
responded in Q2 2007.
Although the US has witnessed a 23 percent year-on-year growth in mobile data services;
phones have become more capable and robust (the proportion of 3G and smart phone
handsets in the marketplace has doubled in the past year, to 28 percent and 10 percent,
respectively) and media companies have made substantial developments in the sheer quantity
and promotion of mobile content, there is still a stagnation in the market so far as mobile
advertising is concerned.
With the increased subscriptions of data service subscriptions, actual usage of these services have also
increased. SMS text message is the most popular. In the U.S. today; half of all wireless subscribers
use text messaging on a regular basis (53 percent, or 137.8 million). Meanwhile, audience size for
MMS, ringtones, mobile Internet, text alerts, instant messaging, mobile applications, location-based
services and even mobile video has surpassed the 10 million mark.
Current State of Mobile Advertising
As a percentage of mobile data users, mobile advertising exposure has also risen in the states. In Q2
2007, 23 percent of mobile data users recalled seeing some form of advertisement, and by Q2 2008,
that number rose to 30 percent.
Looking at users across different types of media:
57 percent of mobile ad viewers recall seeing mobile ads while
browsing the mobile Internet, up slightly from Q4 2007 (53 percent).
54 percent of viewers remember seeing text ads via SMS.
34 percent of ad viewers saw an ad during Q2 2008 while watching
mobile video, compared with 29 percent two quarters prior.
However, 63 percent of mobile ad viewers see mobile advertisements just once a month or less
frequently. In addition, mobile advertising is present on less than two-thirds of website homepage
page views across leading mobile websites, and roughly half of that is unpaid house advertising.
Mobile Advertising| Evolution Of Mobile Marketing - the global scenario 18
Overall response rates to mobile advertising also appear flat. In Q2, 13 percent of mobile data users
(45 percent of those who saw a mobile ad) report responding to it in some way. This compares with
12 percent of all data users (52 percent of those who saw an ad) who responded in Q2 2007.
Although the US has witnessed a 23 percent year-on-year growth in mobile data services; phones
have become more capable and robust (the proportion of 3G and smart phone handsets in the
marketplace has doubled in the past year, to 28 percent and 10 percent, respectively) and media
companies have made substantial developments in the sheer quantity and promotion of mobile
content, there is still a stagnation in the market so far as mobile advertising is concerned.
Mobile Advertising| Mobile Marketing Ecosystem 19
Mobile Marketing Ecosystem
The Mobile Advertising industry is a market still in its advent; with several players all trying to
establish and differentiate their own identity. However, in this hybrid Mobile Advertising value-chain
three distinct industries are coming to the fore: (i) the advertising industry, (ii) the content industry
and (iii) the telecommunications industry.
The Mobile Advertising value-chain, or ecosystem, needs to be further defined; but allowed the scope
to grow and change. This can be achieved through the establishment of best practises, standards and
guidelines. Going forward, the general acceptance and compliance throughout the Mobile Advertising
industry of these procedures is vital. Several different depictions of the ecosystem have been
presented by various researchers in this market. Essentially, all are in agreement with the key entities
within this ecosystem, noting that; the value-chain always commences with the Advertiser.
Following figure illustrates this Mobile Advertising Ecosystem as a value chain and the dynamic and
interchangeable relationships within this ecosystem.
Mobile Marketing Ecosystem is a strategic network encompassing all industries, marketing
disciplines, and economic and technical models. It is comprised of 4 interconnecting spheres–
Advertisers (Product & Services providers, brands, content owners and marketing agencies),
Mobile Advertising| Mobile Marketing Ecosystem 20
Ad Networks (discrete application providers and mobile ASPs),
Content Providers (media properties, “brick „n‟ mortar” and virtual retail stores), and
Mobile Service Providers (aggregators and wireless operators).
Various enablers provide the foundation for each particular sphere. Players within these spheres work
in concert to deliver a rich experience to consumers. This ecosystem is driven by a number of
technical, regulatory, commercial, social and legal components. It is a complex network of different
industries and companies, and to be successful in leveraging the mobile channel it is important for
brands, content owners, marketing agencies, and other industry participants to be aware of how value
is generated through this channel and within the system.
In the mobile industry, the value system is not limited to a simple linear two-dimensional view; rather
it is made up of a constellation, or a strategic network, of companies that do not necessarily work in a
serial fashion as in the traditional value chain models. A better way to understand the
interrelationships between each network is through the lens of the dynamic multidimensional strategic
network model, where each network within the Mobile Marketing Ecosystem described below is
labeled a sphere.
As the Internet and wireless networks
emerged, standards solidified,
globalization sped up, new processes,
technology, economic models, and
business practices formed, and the
landscape of doing business altogether
changed. This change does not mean that
fundamental economics no longer apply.
Everyone throughout the strategic
network must receive at least marginal
returns, otherwise they will not survive
in the network, or the network will be
unstable and lasting value will not be created. These changes are pervasive, dynamic, and encouraged
by participants in the mobile ecosystem, including mobile operators, marketers, aggregators,
application providers and other participants.
At their conception, mobile services with their unique capabilities and opportunities were exclusively
“bundled” within the mobile operators‟ technology network, a “walled garden” controlled by the
Mobile Advertising| Mobile Marketing Ecosystem 21
mobile operators with limited access provided to others. The mobile operator‟s value chain system is
going through a phase of unbundling that has opened mobile marketing to brands and content owners,
and created the fertile ground for existing and new industry players like mobile application providers,
aggregators, and enablers.
The discrete application providers and application solution providers are offering exciting and novel
technology for a wide array of mobile initiatives and mobile management systems. The aggregators
are providing single-point connectivity with all the different mobile operator networks.
The enablers are providing foundation technology, processes, regulations and related support to the
value activities within each sphere. With the controlled and managed opening of the mobile operator‟s
walled garden, traditional brands, content owners, and marketing agencies are now able to use mobile
networks for direct customer engagement. Brands are not only distributing services and content
through the channel, but are using it for brand awareness, prospecting, customer acquisition and
customer retention purposes.
It is imperative that companies from the different spheres learn to coordinate their efforts and develop
strategic relationships with players in the other spheres of the ecosystem. While it is tempting for a
company to try to be everything to everyone and attempt to horizontally integrate multiple functions
across multiple spheres, they should take heed before doing so since each sphere comes with its own
unique business models, regulations, technologies, relationships, norms and practices. It is vital that
companies focus on their core competencies and work collaboratively with other players within the
strategic network to best service the market. If major players attempt to control areas that are outside
of their core competencies, the most likely result would be an inefficient industry plagued by high
cost, slow reaction to market needs, consumer dissatisfaction, and the stunting of new technologies
and creative ideas.
Mobile Advertising| Mobile Advertising Channels 22
Mobile Advertising Channels
Mobile is not like TV, where you have basically three options: 30s, 15s, and product integration. The
breadth of data services is remarkable and growing almost daily. Here are the biggies, and a few
example ways one can use them.
Faced with declining voice revenues and having under-exploited the first SMS based mobile
marketing wave, Mobile Operators view mobile advertising as a key new revenue stream. However,
the size of these revenues will depend on how much of the Mobile Advertising value chain the
Operators manage to control and the extent to which they leverage their customer base through
effective use of their CRM data.
Implementing an end-to-end Mobile Advertising platform with multi-channel delivery capabilities on
their own network will enable Mobile Operators to build a strong position in the Mobile Advertising
ecosystem and to monetise their strategic assets. To overcome the problems of current mobile
advertising solutions, this platform must focus on the user experience and enable flexible ad-funded
business models. Most importantly, it must allow Operators to demonstrate the intrinsic value of their
network and successfully wholesale this value to the advertising ecosystem.
Mobile Advertising holds the potential to eliminate the cost barriers for the widespread adoption of
wireless data services. Just like Internet advertising helped drive Internet adoption by consumers in
the 90‟s, so too can mobile advertising drive mainstream mobile internet adoption through various ad-
0
10
20
30
40
50
60
POPULER MOBILE APPLICATION USAGE
Mobile Advertising| Mobile Advertising Channels 23
funded business models. Operators can offer a wide portfolio of ad-funded services to subscribers that
subsidise access costs and deliver real value to the subscriber. Key to achieving this goal is support
for flexible business models and a personalised user experience.
The success of the Internet advertising model has proven that advertising business models can achieve
huge revenue growth. Yet despite the hype surrounding mobile advertising, there is much Operator
scepticism and mobile advertising is largely unproven. This is mainly due to the fact that current
mobile advertising solutions do not adequately address the business model and user experience
requirements.
Positioning Map of various user activities
Content and Media Brands have successfully extended their advertising strategies from TV to the
Internet. Subscribers are now used to paying for the data pipe (cable, satellite, broadband) provided it
comes bundled with a range of valuable ad funded services. Content and Media Brands are now
turning their attention to the mobile device. The mobile phone presents some unique characteristics,
most importantly the fact that it is a personal device, nearly always specific to one subscriber, but also
that it provides access to real time context (e.g. location, presence, device capabilities) and that it
combines multiple communication capabilities (voice, SMS, email, browsing) which can be
effectively used to deliver a more interactive advertising campaign.
Mobile Advertising| Mobile Advertising Channels 24
From a mobile advertising perspective, the Operator has a unique advantage in all three areas, and it is
essential that a mobile advertising platform exploits these advantages.
However, most important to successfully extend advertising strategies to the mobile device is that
mobile advertising platforms must support ad-funded services in a manner familiar to both the
consumer and the Content and Media Brands.
Successful advertising is often described as requiring a combination of:
Analysis – a comprehensive and extensive analysis of the Target Market;
Reach - the number of people exposed to a specific media vehicle or schedule at
least once. Usually measured over a specific period of time. – i.e. the total number
of people who will see a given ad;
Purity - in marketing terms, the quality of information on the target market.
The popular channels used by marketers/content providers and operators to reach the target
audience are as follows:
Mobile Search
Mobile search works much the same way as web
search, placing prominent paid search results in
results. Mobile search is an ideal option for retailers
because mobile searchers are more likely to be ready
to buy than someone using a PC. They are out and
ready to walk in your door.
One key consideration before you do this is that you need a mobile friendly site to send people to. It
will likely be a “dumbed down” version of your regular site. Fewer graphic and more succinct texts.
Making a site mobile friendly means that the marketer needs to consider several differences between
mobile and PC browsing:
Mobile Advertising| Mobile Advertising Channels 25
1. Screen size = That screen is a lot smaller and browsing a wide, long, and complex page
becomes rather difficult
2. Browser compatibility = there are more major browsers for mobile than PCs
3. Page Weight: The networks that support mobile phones distribute web content more slowly
than a high speed PC connection. Heavy graphics are generally a no-no for mobile.
One really important thing to consider is that unlike in web search, there are vastly fewer sponsored
search positions in Mobile. You‟re either a top bidder or you are invisible. Mobile search is purchased
on a pay per click basis just like web search. Pay for performance.
SMS
Texting is by far the most popular non-voice usage of cell phones, and for this reason many
companies have started their mobile efforts there. The first “S” in the acronym SMS stands for short,
and that‟s because a text message must be 160 characters or less in length.
So succinctness is critical in SMS. SMS can be used in a
variety of ways:
1. Develop a text CRM program that stays in touch with
consumers in short SMS bursts.
2. Sponsor text messages delivered by publishers, for
example Wall Street daily recaps.
3. Offer a promotional message stream through SMS.
4. SMS summary of new headlines available on your
site.
5. Offer SMS as a way of capturing email addresses and
phone numbers for later marketing.
6. Use SMS as a way of gathering feedback, votes, or other perspective from users and
prospects.
SMS can also be a revenue stream for certain types of businesses. “Premium SMS” charges
consumers an extra fee in addition to “normal” monthly SMS charges for certain services. Dating
services, horoscopes, psychic readings, stock tips, and other banal or profound bits of information are
delivered via premium SMS. The money can be staggering.
Mobile Advertising| Mobile Advertising Channels 26
Ringtones, Wallpaper, and Other Bling
Ringtones and wallpapers and games are also enormous
businesses. Perhaps not relevant to most marketers, though offering
free ringtones and wallpapers might be a very compelling
promotion. The financial math in these businesses is nothing short
of fantastic.
Ringtone companies generally have a bad reputation. Part of this is
due to marketing practices that entice young (<18) people with free ringtones, with tiny print that
indicates that by accepting the ringtone you are enrolling in a pricey monthly subscription. Not all
companies have engaged in these practices by any stretch, but those that do have soured some media
outlets to their buys and have piqued regulator scrutiny of the market.
Also, a prime target of ringtone and game makers and sellers is teens, so the content tends to be…non
politically correct. Games can also be very profitable, though a key challenge here is developing a
game that works on a broad swath of handsets. Companies like Thumbplay and Flycell are leaders
here. One senses however, that the nav buttons on this kind of content are pressed so often that the
text is about to wear off, so it can be said that they‟re just giving people what they want.
Mobile Banners
Mobile banners are graphical ads, just like web banners.
They are usually purchased by CPM. One difference,
though, is that banners are not sold by size – instead, the
size of banners is optimized to the screen of the
recipient‟s phone. And that‟s only logical. If I have a tiny screen on a tiny phone, it makes sense that
the banner deployed would be smaller than on a phone with a big screen.
Targeting options are broadening rapidly. All of the major types of targeting are available including:
1. Contextual, meaning the matching of an ad to related content.
2. Demographic, enabling you to target by gender, age, income, and the like
3. Behavioral, indicating that you focus ads on people who have demonstrated certain browsing
behaviors on their phones. So, for example, a car company might buy ads on phones of people
who have visited car research sites.
4. Geographic, meaning internationally, nationally, by region, state, DMA, or even cell tower
area.
Mobile Advertising| Mobile Advertising Channels 27
Full Screen Graphical Ads
Phones now offer the user the option to download applications like
games, tools, or other utilities. As part of a download, advertisers can
be sponsors. Sponsoring some applications like, for example, a game
or a mapping function, may entitle an advertiser to a full screen ad.
This will run as a pre- or post-application welcome screen or bumper.
These within applications can drive users to other sponsored pages in
the application, click to email capture, click to call, or click to send
MMS or SMS.
Because phone sets have different screen sizes, such full page
sponsorships will likely require you to make more than one creative size for your message. Consumer
receptivity to ads in downloadable applications is going to vary depending upon the cost of the app,
the level of intrusiveness of the marketing message, and the relevance of an ad to the application.
For example, if an advertiser offered consumers a good game for free instead of say $9.99 without
ads, a large proportion of mobile users will prefer the sponsored game version.
Own Applications
A variety of developers will help you create
applications specifically for your brand.
Consumer receptivity to such an app will
depend upon its utility. In many cases this is
going to be more relevant to a publisher
(like ESPN) rather than a brand. But there
are surely brands that can benefit from
mobile apps. One of the key marketing
strengths of building an app is the
opportunity to create a persistent consumer
relationship versus fielding impressions. A good app will stay there on a user‟s phone and get used
again and again. That offers hundreds – even thousands of brand interactions you can leverage to
build your consumer connection.
Mobile Advertising| 28
Mobile Widgets
Widgets have grown tremendously in popularity, and a subgroup of mobile widgets is growing
strongly as well. While widgets are applications, they deserve a separate discussion because they tend
to be easier to develop and because new standards are making it still easier to create compelling
mobile widget experiences. Yahoo, which is the leader of widgets, offers mobile widgets in the
following categories, many of which take existing Yahoo PC functions and port them to phones:
1. Local Search 2. Email 3. Photos 4. News
5. Sports 6. Finance 7. Entertainment 8. Weather
Mobile Advertising| Strategic Approach to Mobile Marketing 29
Strategic Approach to Mobile Marketing
Thus far we have demonstrated that the opportunity for brands to reach and influence consumers via
mobile is significant. We concede that the mobile advertising industry is in its infancy and we agree
that there are obstacles that must be overcome before it can become a mainstream advertising
medium, but brands such as Adidas, Microsoft and News Corp are increasing brand equity through
mobile media now; they are learning fast and potentially leapfrogging their competitors. This
opportunity must however be shaped through the development of a coherent mobile marketing
strategy that is fully integrated with your brands primary marketing strategy and clearly supports your
businesses objectives by demonstrating unquestionable ROI.
When developing any marketing strategy we need, in the simplest of terms, to define where we are
and where we want to be. This applies no less to our mobile marketing strategy. When we define
where we are we must look at our current market share, sales, profit, customer base, product
awareness and brand position. We can also look at our historical and current use of mobile media and
the use of mobile media by our competitors.
Then we can determine where we want to be using the same variables. At this point this will include
goals that mobile cannot exclusively achieve, or even influence, but brands in most sectors should be
able to identify one or more marketing objectives that mobile would be ideally suited to help meet.
Examples include lead generation to improve our customer base, brands awareness of a new line
Mobile
Marketing
Strategy
Customers
What Attitude?
What
Message?When &
How Often?
What
Action?
Measure -
How/What?
Mobile Advertising| Strategic Approach to Mobile Marketing 30
extension or CRM with busy, highly mobile twenty something office workers who only use their
homes to sleep.
We then come to the description of the process for making the transition. This will largely be
dependent on the sector you operate in, the demographics and media consumption habits of your
target audience and the resources you can allocate to mobile strategy development. Whatever your
position it is essential to be steered by some broad guidelines before we attempt to leverage mobile
media.
Much research exists to explain why advertising works across TV, Radio, Press and the Internet. Very
little exists for mobile as it is such a nascent medium. We can however draw analogies and inferences
based on generally accepted theories of how advertising works. If we accept this assumption we then
need to define clear reasons why mobile will be used and what it is supposed to achieve before
constructing the Big Idea. The steps involved in this process are summarized in Fig 3.0 and we
consider these to be the fundamental principles for the development of any mobile marketing strategy.
Where are our Customers?
Advertising is directed at a target market to enhance or change its behaviour. They may be heavy
users of a competitor, or infrequent users of our brand. They may have low awareness or negative
perception of our brand so we may wish to shift the pendulum of consumer perception back in our
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
send/receive calls
send/receive text message
send/receive photo/images
access music & videos
access internet
others
Evolution of Mobile Phone Usage
2007 2009
Mobile Advertising| Strategic Approach to Mobile Marketing 31
favour. To reach these consumers we need to track their media behaviour, understand their
demographics and gain insight into their values, personalities and attitudes
When targeting consumers on mobile we need to be mindful of media context effects. The same
source delivering the same message to the same audience on separate occasions might produce
different effects depending on the differing programming or editorial contexts in which the message
appears. This is particularly true of mobile as the context may also be environmental not just editorial.
Innovative firms such as Ad-Mob have launched
contextual text based advertising networks in the
US and Europe that mimic the paid-for contextual
advertising on Google or Yahoo! Inventory
currently is focused around mobile content
providers but these media owners command
significant volumes of youth mobile „thumbshare‟
and leading brands such as Adidas are beginning
to trial.
What should they feel?
Brand owners generally believe that to be
effective, their advertising has to affect what
people believe about their brand before they can
expect a change in their purchasing behaviour. So
when developing our mobile marketing &
advertising strategy we must decide where our
brand sits in its lifecycle to determine if we seek
brand awareness or brand salience. Whichever
route we choose, mobile advertising production
costs are very low compared to traditional media
so developing and testing your advertising can be
very efficient.
Mobile therefore allows us to develop highly
targeted campaigns with minimum wastage. This improves the chance that we are influencing the
right target with the right message to elicit the desired attitude toward our brand.
Customer Segmentation
Generation Mobile - single style
conscious 18 to 24-year-old students
or young adults in their first job
Phonatics - single 18 to 34-year-olds
who see a mobile as their most
important electronic possession.
Practical Parents - cost-conscious
young families under the age of 34
who choose their mobiles on price
grounds
Fingers and Thumbs - married,
middle-aged or retired people with
children or grandchildren
Smart Connected - affluent families
and professionals aged 25 to 44 who
use mobiles to organise their work and
social lives
Silver Cynics - affluent, married
parents who are approaching
retirement
Mobile Advertising| Strategic Approach to Mobile Marketing 32
We must also take into consideration the way that our consumers use their mobiles, and understand
the attitudes they have towards them, before creating a mobile communications plan that influences
how they should fee about our brand.
What’s our Message to them?
The message will largely be determined by the overall marketing strategy and whether our product is
„high consumer involvement‟ or „low involvement.‟ This will determine whether the message will be
informational or emotional. Whatever the message, unique skills will be required to translate it, and
the accompanying advertising metaphors, to the small screen whilst ensuring that the message stays
true to brand personality.
The mobile context means they have short
attention spans so communication must be
compact and high impact to be remembered.
Short message lengths however can actually be an
advantage to the advertiser - they stretch media
funds as they build frequency with less
expenditure. The message must also be relevant
(as mobile is considered to be the most personal
of digital devices) and it can be made even more
relevant if we can deduce, either technically or
intuitively, the context that the message will be
received in.
For example,
Is the consumer at the shopping
centre, at school or in their bedroom
when they receive our message?
Will they be talking, texting or
watching TV?
Some of these behaviours are more likely to occur at particular times of the day and technology exists
that allows us to track the approximate location of a consumer (with permission) so the relevance of
our communication to time and context can be very precise.
Mobile Ad Creative Considerations
Mobile content have short attention spans
so communication must be compact and
high impact to be remembered.
The message must also be relevant as
mobile is considered to be the most personal
of digital devices.
Strictly Customized ‘made-for-mobile’
communications need to be developed
rather than the wholesale repurposing of TV
or online advertising.
The message will also be determined by the
capability of the target consumers’ mobile
handset.
Mobile Advertising| Strategic Approach to Mobile Marketing 33
When should we deliver our Message?
Timing of our mobile campaigns will be determined by the purchasing habits of the consumer, but the
message should have greatest impact when the consumer is deciding to buy. A housewife may create
her shopping list and decide what she will buy on a Friday but she may make the purchase on a
Saturday. A decision to buy a car might take place during the Christmas holidays but the purchase
will take place in January. Our strategy therefore should specifically state what weight of message
will be allocated to mobile per time period.
How often should we deliver our Message?
There are two schools of thought on how consumer exposure to advertising works. The 3+/80 model
preaches a frequency of 3+ and reach of 80 using pulsing or fighting media schedules. A more
advanced method is Recency Planning. This method aims to expose the consumer right before the
purchase decision. This call for a continuous media schedule with low frequency (1+ exposure) and
high reach (85).
Which model is appropriate for mobile? This will depend on the media employed. If we are delivering
direct text or photo message communications to consumers then the Recency model is more
appropriate as the ad, taking up the entire screen real estate, has a higher chance of irritating the
consumer if the frequency is too high. If ads are embedded in WAP sites or we are „top and tailing‟
mobile video downloads for example then the advertiser benefits from media context effects and this
improves receptivity of message (whether consciously or subconsciously.) In this case the more
traditional method of media planning involving a 3+ frequency can be implemented.
Mobile Advertising| Mobile Strategy in Action 34
Mobile Strategy in Action
Strategy can be an ethereal thing and leave us asking how we practically address marketing problems
with mobile. Let‟s look at a number of popular sectors and assess how mobile might be used to tackle
typical communication problems in these industries:
Consumer Goods
FMCG manufacturers‟ today face a number of unique challenges; competition from private labels,
food lobbyists impacting media placement and dwindling control of the contact point where
consumers are most likely to make a brand choice – the aisle. Consumer goods manufacturers have
countered this with increased below-the-line spend to improve sales volumes and market share.
However, it is generally thought that this dilutes the hard fought for brand equity that manufactures
have built up over decades and topping up this „brand bank‟ is becoming increasingly expensive as
broadcast media costs rise against a back drop of audience fragmentation. In response to this a number
of high profile brands, including Heineken, have moved the majority of their budgets from TV to
below-the-line and online. So how can mobile help?
Retail
Retailers can benefit from using one of mobiles most powerful and unique aspects – it is with their
customers when they are on the high street. Retailers would benefit by extending their loyalty
programs to mobile to reduce the cost of customer contact and improve the reach and impact of their
CRM campaigns.
We also believe that retailers should leverage advances in mobile technology, such Bluetooth, to
encourage customers to interact with their stores and further encourage footfall. Interactive shop
displays that incentivise consumers to visit can create real cut through in the high street.
Automotive
Car customers of today are decreasingly loyal and increasingly discerning. This is escalating the cost
of retaining owners and acquiring new ones. And Car communications have to holler through ever-
increasing noise to be heard by audiences whose willingness to listen is waning. Consequently, the
quality of car marketing and advertising communications has improved greatly in recent years.
The car industry has begun to tentatively use mobile, and the sharp increase in mobile short-codes on
TV and print commercials that encourage us to text in for a brochure is evidence of this. But few have
integrated mobile with their CRM strategy. We are seeing however bold and innovative moves from
Mobile Advertising| Mobile Strategy in Action 35
firms like Peugeot who are beginning to use rich viral mobile to extend the engagement of their 30-
sec spots and to increase the impact and reach of their TV media spend.
As phones become smarter we would recommend that auto manufacturers follow Peugeot‟s lead and
integrate and extend the TV, radio and print brand experience with rich mobile engagement. This
engagement may begin with a consumer experience that visually demonstrates the car and conclude
by providing value added mobile services (e.g. free mobile mapping) or brand relevant entertainment
that will be appreciated by the prospect. The auto industry‟s reliance on direct marketing is significant
and mobile can help reduce the cost of customer contact substantially whilst cutting through the
deluge of direct mail „clustered‟ noise. The author believes therefore that mobile will have a huge
impact on automotive CRM programs.
Travel
The big airlines have had it tough over the last few years with rising oil prices, passenger numbers
down and aggressive competition from low-cost carriers forcing price wars.
Leisure travellers now seek the lowest prices and are less concerned with service. Business travellers
however want more frequent schedules, a broad range of destinations and service quality, but large
corporations using their purchasing power to negotiate big discounts are placing pressure on the
business market. So airlines today need to meet the budget needs of leisure travellers and the premium
demands of business travellers. The reality up in the skies however is that the short-haul market shows
the most vigorous growth prospects.
All airlines now drive sales online to reduce costs and automate the booking process. This helps them
sell out their cheapest seats on any given flight as early as possible in order to best manage their
yields.
Airlines could encourage consumers to interact with their above-the-line advertising to sign up to alert
services that provide short haul price offers and promotions. The immediacy and impact of mobile is
such that it has the power to drive consumers online to book.
Finance
The financial services business accounts for a significant proportion of annual advertiser expenditure
on advertising and marketing but the ability of the industry to engage and be trusted by consumers is
limited. Very few consumers are either interested in, or know about, financial brands and far less care
Mobile Advertising| Mobile Strategy in Action 36
about long term financial planning. This is particularly true of young adults who, burdened by debt,
are struggling to get on the first rung of the housing ladder.
Low interest rates make things more difficult for the financial marketer as it becomes harder to sell
products to savers that offer low returns. And all of this is compounded by strict regulation that is
tightening its grip in the consumers favour.
With the exception of predictable annual renewals such as insurance, many financial decisions are
made erratically and are difficult for marketers to track. Branding has become key to help firms stand
out in a crowded market. To perpetuate brand difference effectively, financial services businesses
need to engage their customers through touch points that best suit the customer. And increasingly this
touch point is mobile. Using mobile to cross or up sell products to consumers helps avoid a common
problem associated with „statement direct marketing‟. Bank CRM systems are not sophisticated
enough to know if the statement is bringing good or bad news to the customer and how the news may
impact the reception that the communication will get. Using mobile it is possible to cost effectively
disassociate the direct marketing message from the statement and time the delivery of the message to
better fit with a point in the consumers monthly financial cycle when they are more likely to be
receptive to the message - on the day their salary is transferred for example.
Telecoms
As mobile phone penetration rises, phones are increasingly being sold to replace users' existing
handsets rather than to first-time buyers. One of the most significant features of this market is the
increasing importance of the younger consumer and it is here that the future lies for the mobile
industry.
Most young consumers don‟t buy their handset by brand - the purchase decision is usually driven by
the features and the tariffs available with the handset. These young consumers have a voracious
appetite for mobile content and operators that are bold enough to freely distribute licensed content for
branding purposes will connect with their target market. A lack of brand development amongst
telecommunication operators has seen distribution and price competition favoured over brand
investment.
Mobile operator‟s use of mobile marketing to date has been driven largely by their CRM divisions,
and text and photo messaging promotion of new tariffs and products feature heavily. Mobile operator
sponsorship of TV programming, festivals and other content should be leveraged to extend the brand
to the youth market that they desperately want to attract.
Mobile Advertising| Mobile Advertising Business Models 37
Mobile Advertising Business Models
Mobile Advertising in its early stage is producing several new business models and brings new
lucrative revenue streams into the Average Revenue per User (ARPU) driven mobile network
operator economy.
“About 42% of mobile customers are open to Mobile
Advertising, if it is relevant, if they asked for it or if they get
coupons for free services.”
Yankee Group research finding
Clearly, mobile network operators should work more aggressively with Mobile Advertising value-
chain partners to create new business models and innovative On-Portal and Off-Portal service
offerings to better serve their customers‟ mobile web needs.
BUSINESS MODELS
There are several business participants in the Mobile Advertising value-chain and therefore also
several market segments to be considered in looking at Mobile Advertising business models. A recent
Frost & Sullivan research paper describes these mobile market segments, with the noted „WAP-based‟
services representing mobile web browsing.
Mobile Advertising Market Segments
Mobile Advertising
On Deck Ads
WAP Based
Video Ads - On Deck
On Deck Performance Based
In-Application Ads
Off Deck Ads
Messaging Based
WAP Based
Video Ads - Off Deck
Off Deck Performance Based
In Application Ads
Mobile Advertising| Mobile Advertising Business Models 38
On-Portal – Proprietary mobile network operator portals
Operators‟ On-Portal mobile web content offerings so far have been “Walled Gardens” by controlling
access to pre-selected information and content partners. Mobile consumers are mostly treated to
content where the revenue through data charges or access fees are collected by the mobile network
operator.
Mobile web based portals, such as Vodafone Live! in Europe or Sprint‟s Mobile Media Network in
the U.S., are starting to incorporate Mobile Advertising as text links or display ads (banners). Revenue
is mainly based on delivered advertisement impressions, and Cost per Thousand (CPM) rates vary by
country and carrier.
Europe has seen high CPM rates for example in Germany for Vodafone Live! around €50+ ($65) and
for O2 even up to €80 ($104), whereas France sees average CPM at $20 and the U.S. average at $15 -
$30 but increasing to $50 for targeted multimedia ads. The main advantage here for advertisers is the
high reach provided through the standard launch page of the mobile web browser, mostly mandatory,
which is fixed by the mobile network operator – the same as in the early days of the Internet (e.g. with
AOL).
The next generation of Mobile Advertising includes full
rich-media content. An interesting sector to follow is
emerging video-based Mobile Advertising which is part
of existing download (Mobile TV) or streaming
broadcast (DVB-H, MediaFlo, DMB) models.
Operator trials are well under way, but to date we are only seeing live services and promising usage
numbers in Asia. Video advertising will appear pre-roll and post-roll as part of the video stream. As
with the Internet, another big new revenue stream for Mobile Advertising comes through On-Portal
and Off-Portal mobile search, which will be a major portion of future advertising supported business
segments – active players include dotMobi, JumpTap, Google, MCN and Yahoo.
Mobile Advertising| Mobile Advertising Business Models 39
Off-Portal - Open mobile web experience
The open mobile web (or Off-Portal) offerings are gaining momentum and they might be the main
driver to push Mobile Advertising into the projected $11 billion industry by 2011, according to
Informa Telecoms & Media Analyst firm GP Bullhound states that Mobile Advertising is starting to
gain significant traction with some vendors within a 200+ mobile start-up universe, having established
an early leader / mover advantage.
Independent start-ups broadly expect increasing consolidation in the years to come as leaders extend
their product portfolio and geographical reach. Additionally, Internet and mobile companies are
acquiring startup Mobile Advertising ventures as witnessed by the recent acquisitions of Third Screen
Media by AOL, ScreenTonic by Microsoft and EnPocket by Nokia. The major differences between
Internet advertising and Mobile Advertising should allow both domains to grow in parallel.
As we have seen Off-Portal entertainment offerings flourish (e.g. ringtones and wallpapers) you can
expect independent major players emerge in the Mobile Advertising space. Since Off-Portal offerings
are more flexible and experience faster time to market there is already significant traction in the
market.
Millennial Media‟s Decktrade ad network has built a large number of text-based and graphical ad
impressions delivered through its self-provisioned mobile advertisement service. Decktrade is open to
Search & Display27%
Text, Picture & Messaging
24%
Mobile TV39%
Other10%
Global Mobile Advertinsing Forecast, Source: Informa Telecom
Mobile Advertising| Mobile Advertising Business Models 40
mobile publishers and small budget mobile advertisers. This offering is modelled after Google
AdSense, and Google recently announced AdSense for mobile.
Hybrid models
While mobile advertisements are delivered on mobile web sites, there are also hybrid models
emerging including in-application or in-game advertising models where advertisements point to
mobile web landing pages provided by brand advertisers. Hybrid models may also use On-Portal
advertising placement as a discovery vehicle and then point to Off-Portal mobile web content and
services.
In-Application Advertising with Click-to-Call Example
In a recent study Frost & Sullivan concluded: “In-application advertising is increasingly becoming a
popular ad mechanism. Consequently, ad enablers (like Smaato) can choose to serve the ads
themselves or partner with third-party providers such as Third Screen Media.”
A very exciting and promising market segment is the free ad-funded Mobile Virtual Network
Operator (MVNO) such as Blyk in the UK. Blyk, which is led by a management team formerly with
NOKIA, launched its teenage targeted mobile services in September 2007. Other players in Europe
are bound to follow, such as easyMobile (UK) and offerings from established mobile network
operators as well. These MVNO models could easily translate into ad-funded business models to
subsidize mobile data services from Operators for Off-Portal offerings.
Although most Mobile Advertising business models are based upon impressions delivered to an
audience at a negotiated CPM rate, performance based models are becoming increasingly popular due
Mobile Advertising| Mobile Advertising Business Models 41
to promising consumer response. According to GP Bullhound, one of the key metrics is the display
advertisement Click-Through Rate (CTR). According to the MMA, mobile has been delivering CTRs
that are orders of magnitude higher than the traditional web, averaging around 4% on the mobile web.
But the MMA is seeing some campaigns yield much higher results, as high as 7-12% for certain
campaigns. Ad-enablers, like Ingenio for click-to-call technology, are at the forefront of exploring
new ways how to combine the effectiveness of performance based billing with the calling capabilities
of the mobile handset.
With increased activity and creativity in the Mobile Advertising space, a greater share of budgets will
be dedicated to enhance the mobile user experience. Again, GP Bullhound research shows that
advertisers are now spending $75k to $300k on typical mobile web campaigns, vs. $25k to $50k in
2005. In 2006, advertisers were exploring the market, and campaigns of $75k to $100k were
uncommon. This year there are several campaigns with budgets greater than $1 million, leveraging
multiple options listed earlier.
“Google's CEO, Eric Schmidt, promised that the web and mobile network alliance would
enable phones that will give consumers a much fuller Web browsing experience. That
means Internet advertising could be a bigger part of revenue for the mobile industry than it
is today. As a result, carriers could have more options. They could give away phones for
free in exchange for a share of the ad revenue, which Google has already said it would do.
Or they could lower monthly subscription fees. In this environment, the phone companies
would still be better off because they would benefit from an explosion in consumer demand
for phones and services.”
News Excerpt from: Dean Takahashi of The Mercury News
However, even though more and more Mobile Advertising is emerging, only 8% of the Fortune 1000
Companies have mobile web pages or a mobile strategy. There is a lot of work to be done by
independent Mobile Advertising agencies and integrated global advertising conglomerates, such as
Carlson Mobile which is an active player and acquirer in the mobile market space today.
Mobile Advertising| Brand and Mobile Network Operator - Opportunities in Mobile Advertising 42
Brand and Mobile Network Operator - Opportunities in Mobile Advertising
The potential opportunity to make the mobile web "free or partially subsidized" via advertising
support is tremendous. As the world's best-known brands begin to realize the global reach of the
mobile web and engage within the Mobile Advertising Ecosystem, the mobile web „subsidized‟
opportunity will evolve and emerge in many forms if
fully supported by all the Mobile Advertising
Ecosystem participants.
The Mobile Advertising Ecosystem and its key players
have already been detailed in this paper; what has not
been conveyed is why brands, and mobile operators, are
only now beginning to realize the opportunity that is
Mobile Advertising.
Brands have yet to experience the true reach of
the mobile web
Globally, more than four mobile phones are sold for
every PC. Brands have been told that the PC-based
Internet is all-pervasive, when in fact, even though the
mobile web is only in its infancy; its reach is multitudes
greater than any existing PC-based website can offer.
Brands perceive their existing channels as key, and
engaging in a new channel like the mobile web is seen as complex and expensive. Of course there is
also a concern that, after investing in the development of mobile campaigns and mobile websites,
consumers will not access them.
However in reality, a lucrative Mobile Advertising market already exists and billions of Mobile
Advertising page impressions have been reported by mobile ad networks worldwide. The Mobile
Advertising industry is in fact a booming marketing medium, yet to reach its zenith.
Brands have yet to acquire the necessary skills
Successful advertising requires an ability to exploit the medium in which it is presented. For
television, advertisers are generally assuming a viewer is in a home context. For Internet-based
advertising, the assumption is a sit-down location that will, most likely, lead to a "click-through"
scenario.
Market View
Until now, mobile operators
have not actively encouraged brand
advertisers to get involved …
…they are afraid that consumers may
leave their service due to poorly
developed mobile web offerings
and experiences that could arise with
the improper use of Mobile
Advertising.
Mobile Advertising| Brand and Mobile Network Operator - Opportunities in Mobile Advertising 43
For mobile, advertisers have to rethink context completely:
Where is my user?
What do I want that user to do?
What will be a successful metric beyond a click-through rate?
How do I determine a realistic ROI?
How do I make my static brand meaningful in a mobile world?
Brands need to take an innovative approach
All brands are pioneers when it comes to advertising on the mobile web. Although many
organizations such as the MMA are providing guidelines for Mobile Advertising, there are no
textbook case studies on how to make it work. Some companies are taking steps to broaden the
possibilities of Mobile Advertising leveraging the .mobi domain trust mark, for example, Zagat
Survey, who is opening their service to the mobile world via zagat.mobi with subtle banner
advertising support from VISA Signature.
The Mobile Advertising world needs more services like this, so that existing barriers can be broken
down by engaging the brands with mobile operators to assume strategic Mobile Advertising
Ecosystem partnerships for On-Portal service offerings or when moving to an open, trust marked Off-
Portal platform like .mobi.
Brands, and Mobile Operators, have yet to experience real incentives
By acting as consumer‟s first access point to the mobile web, mobile operators have the capacity to
influence and control what content reaches the consumer in order to satisfy their Quality of Service
(QoS) and ARPU requirements. Mobile operators have exerted a level of control that many brands
find prohibitive; both in rules about what these brands can and can not do as part of their advertising
strategies on the mobile web and undefined delivery expectations to reach these consumers. Together,
the brands and mobile operators have been constrained by the lack of clear Mobile Advertising
service delivery models, defined business incentives and campaign measurement analytics when
delivering to the mobile web opportunity.
Mobile Advertising| Primary Research Report 44
Primary Research Report
Research Objective:
The primary objective of this research study is to gain an insight into the perception of mobile users,
towards mobile advertising and their utility value in terms of impact on the purchase decision. Hence
it was attempted to explore consumers‟ responsiveness to mobile marketing, taking into cognizance
the impact of demographic factors like age, gender, occupation, etc.
Research Methodology:
A sample of size 150 was chosen which comprised of both male and female respondents from the
following age groups: 18 - 29 years, 30 - 49 years, 50 - 64 years and 65+ years. Each of the
individuals was provided with a common questionnaire which they were asked to fill and submit.
Usually the responses were collected the next day. These responses were then analyzed to find out the
trends and behaviors. Among the 150 questionnaires circulated, about 85 questionnaires were found
complete in all respects.
An attempt has been made to keep the sample fairly representative across the demographic variables
by constructing quotas according to these factors e.g. age, gender, occupation, and level and purpose
of mobile usage. Almost 30% of the respondents were students, 27% were in service, 14% were
housewives and 29% were in business. 59.7% were males and 40.3% were females. Almost 85% of
the respondents rated their usage of mobile in the range of medium to high. 75% of the respondents
used their mobiles primarily for personal communication.
The area of sampling was the city of Bangalore (mobile density in Bangalore is estimated to be
around 80% which is justifiably at par with the major cities in India). The time frame of the study was
March 2009 to April 2007.
In the following pages there is an analysis of the findings of the survey that was conducted within the
scope of this research work.
Mobile Advertising| Primary Research Report 45
Chart 8- Overall Mobile Service Usage Pattern
One objective of the research was to find out the usage pattern of mobile among the samples. The
above is the representation of the overall mobile usage pattern among the respondents. Typically this
does not take the demographic parameter of the respondents into considerations.
Some striking observations from this are as follows:
Message services (SMS/MMS) are the most prominent utility among the different VAS that
mobile users predominantly use today. But the future trend shows a complete reverse picture.
Use of mobile for GPS and Personal Communication in the form of E-mail and similar such
applications are having a great potential in the days to come. This should ideally be the focus
for the marketers and the advertisement agencies.
Search engine companies also have a major take away in the days to come, thanks to the
boom of mobile based internet services.
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Overall Mobile Service Usage Pattern
Presently Use
Mobile Advertising| Primary Research Report 46
CHART 9- OVERALL MOBILE SERVICE USAGE PATTERN
This data set tries to capture the impact of age on the mobile usage pattern. As is quiet obvious that
more a person grows in age the less he/she becomes inclined to towards the flashy technologies and
the geeky applications. This data is pulled from the previous set of data and filtering the same as per
the age of the respondent.
Some striking observations from this analysis are as follows:
The primary target segment for mobile advertisement should ideally be people within the age
group of 18 to 50 years. Although as time progress this span can increase both ways.
Also, while advertising, the marketers must take into consideration the target audience for the
content advertised and accordingly set their advertisement channel. For example, if the target
audience is the student segment, then obviously SMS/MMS should be the preferred way of
communication, while for the corporate class search engines and emails can be considered as
the preferred channel.
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Age-wise usage pattern
18 - 29 Years 30 - 49 Years 50 - 64 Years 65+ Years
Mobile Advertising| Primary Research Report 47
Chart 10 - Can SMS ads convey the right message
The primary requisite for any advertisement to be successful is that the content of the advertisement
should be clear and understandable. To add to this, in case of a mobile advertisement the content
should also be short in size due to certain inherent imitation of the media itself. The success factors
for mobile advertisement are discussed elaborately in the previous section.
When it comes to the Indian scenario, the overall perception of mobile advertisement is not too much
on the positive lines. The primary reason for this is obviously the fact that the concept is itself in a
very nascent stage here and as a result the perception cannot be expected to be very positive.
However, one thing that can be easily worked on is the suitability of the content to the target
customer. In India, very often the mobile advertises use a bulk sending option, where in the particular
information is sent in a bulk to the mobile numbers registered in their database. As a result, it so
happens that most of the time the right noise does not reach the right ear. This issue can be easily
sorted out by filtering the database and segmenting the database based on the advertisement content.
0%
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90%
less informative Not suiting personal needs
relayed at the wrong time
clutter as a result of too many ads
Can SMS ads convey the right message
Strongly Agree Somewhat agree Donot agree
Mobile Advertising| Primary Research Report 48
Chart 11 - Perceptions about SMS ads
In line with the findings in the previous chart, here also we see that very prevalent perception is that
mobile advertisements are mostly junk ads. The reason for this can be attributed to the bulk approach
that marketers often take in India. The crux of success lies in sending the right information to the right
person and to do this, there is no alternate to proper market segmentation and targeting the right
segment.
One striking advantage of segmentation will be a huge reduction in cost, as the advertisers are often
supposed to pay the network provider on a per capita basis. That means, the advertiser pay depending
on the number of users to whom they send their promotion or advertising message. Also a proper
segmentation will lead to an increase in revenue as the success quotient will increase many fold due to
this.
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cause disturbance at work
junk ads without going through it
I find it time consuming to go
through ads
loss of privacy
Perceptions about SMS ads
Strongly Agree Somewhat agree Donot agree
Mobile Advertising| Primary Research Report 49
Chart 12 - Brand Recall of Advertisements through Mobile
Coming to Brand recall factor, mobile advertising shows a positive response, with 24% of
respondents claiming that they bear a high brand recall and almost a sheer majority of them admitting
the fact that the recall is quiet prominent.
The primary reason for this is the fact that as the market is nascent, naturally those marketers who opt
for this channel of marketing stand apart from others. With more and more competitors coming in,
this factor may come down to a great extent as the distinguishing phenomenon will slowly fade and
consumers will start becoming used to mobile advertising.
For instance, when India‟s leading private sector bank came up with the concept of mobile banking
for the first time, it gained a huge success. But today almost a couple of years after, the concept of
mobile banking and receiving mobile updates of banking transaction done by a particular individual,
has become so common that it is now no more an USP.
Even with this kind of a future prospect, the brand recall of mobile will still be higher than other
advertisement channel is because of the reach of mobile devices and there by the advertisement
broadcasted through it.
High 24%
Medium 62%
Low 14%
Brand Recall of Advertisemnts through Mobile
Mobile Advertising| Primary Research Report 50
Chart 13 - Positioning of Mobile Advertisement
Coming to positioning of mobile advertisement, the success factor is strikingly high, with just 8% of
the respondents showing negative response. This shows that consumers today are really inclined
towards mobile advertising and they do understand the need of the same.
This should be an inspiring factor for mobile advertisers. Those companies who have already forayed
into mobile advertising are scoring high on brand recall and positioning. Hence if they add the correct
segmentation factor to this, then their revenues from the ad spend can increase quiet satisfactorily
thereby giving them a significant return on investment.
As a conclusion from the primary survey and coupling it with the secondary data gathered in this
report, the following points can be drawn:
The mobile advertising market is having a huge potential of growth.
The success of the same lies in how efficiently can marketers change the perception of the
consumers.
A judicious segmenting and targeting strategy can really increase the revenues from mobile
advertisement significantly.
Market skimming will be a better option that market penetration for the initial couple of years.
92%
8%
Positioning of Mobile Advertisement
High Medium
Mobile Advertising| Case Study 51
Case Study
Universal Pictures Offers Compelling Mobile Ad Campaign with 4INFO
Background
To support the April 2008 launch of the comedy film Forgetting Sarah Marshall, Universal Pictures
launched a cross-media marketing campaign, including text message advertising on the 4INFO ad
network.
Forgetting Sarah Marshall, directed by first-time feature filmmaker Nicholas Stoller and written by
the film‟s star, Jason Segel, tells the story of Peter Bretter (Jason Segel), who has been dating the
ridiculously hot celebrity Sarah Marshall (Kristen Bell) and is about to ask to marry her when she
unexpectedly breaks up with him. In an attempt to rid himself of the media swarm surrounding their
celebrity break-up, Peter travels to Hawaii and finds out that she is there at the same hotel on vacation
with a new boyfriend.
Universal‟s agency, Ignited, selected the 4INFO ad network for their mobile campaign because of the
broad mobile reach possible with over 5 million opted-in consumers, and 4INFO‟s ability to target the
relevant audience with cross-platform mobile tie-in promotions, including mobile video trailers and
branded online widgets. 4INFO commissioned Insight Express to measure the impact of Universal‟s
mobile branding efforts for the film. Ignited hoped to engage users through targeted online and SMS
content, to drive both trailer views and theater visits.
Campaign Objectives
Engage male users ages 18-34
Increase awareness of the upcoming film release
Drive trailer views
Drive theater visits
Campaign
The campaign included SMS advertising on the 4INFO text message network, branded on-line mobile
registration widgets and mobile video trailers. Text message ads ran on the 4INFO network across
multiple channels, including sports and entertainment interests. Ad copy asked a question, such as
“Been dumped?” or “Looking for romantic disaster?” with an option to reply for more information.
Long ads included movie information and a link to a mobile-ready video trailer.
Mobile Advertising| Case Study 52
Interactive SMS Advertising Campaign & Trailer Link.
In addition to SMS advertising, 4INFO provided Forgetting Sarah Marshall branded mobile widgets.
These widgets, offered on Facebook and other social networking sites, allowed consumers to sign up
for free sports content delivered to their cell phones, providing the optimum access to the desired
target audience of men ages 18-34. These branded widgets included a link to the online movie trailer.
Key Results
The movie opened as the #2 movie in the United States, with a box office take exceeding 17.7 million
dollars in the opening weekend. The mobile campaign was a huge success in driving increases in
awareness and persuasion metrics for the movie.
Brand awareness increased 19.7%
Recommendation intent increased 21.6%
Viewing mobile trailer increased 14%
Intent to see movie increased 21%
This campaign outperformed both mobile and online norms by 7-20%. The campaign made those
exposed more aware of the movie, persuaded them to plan to see the movie, and more likely to
recommend the movie to their friends. These metrics held true for all respondents, regardless of age,
gender and overall interest in viewing movies.