Frost and Sullivan on mobile advertising
I came across an updated Frost and Sullivan report on mobile advertising titled “Ad-based Content and Communications: A Lucrative Avenue for the Mobile Industry”. The report contains a forecast figure for what they believe mobile advertising will be worth in 2012.
I’m deliberately not going to quote the figure (because these mobile advertising forecasts keep changing so none of them are accurate) but instead dissect the findings in the report.
Frost and Sullivan are well known for their deep analysis on the subjects they cover, so what is more interesting to me is what they have identified at the critical success factors for mobile advertising.
The report says that mobile advertising could become a strong source of revenues for the mobile industry. The European mobile industry has extensively explored the use of advertising recently as a sustainable business model for mobile content, mobile messaging and other services. Despite being in the initial stage, these models have galvanised the industry.
The level of confidence of the mobile communications and advertising industries in the potential of mobile advertising is very high. Quoting from the report “To achieve high revenues, the mobile advertising industry will need to successfully confront three main challenges,” says Frost & Sullivan Research Analyst. Saverio Romeo.
Saverio goes on to say “What should be concentrated on is: continuously enhance the mobile user experience through high-speed connectivity and high-quality user interfaces; use ads as a transparent value to consumers’ mobile experience without being intrusive; and educate the advertising industry on how to exploit the advertising power of mobile devices.
If these challenges are not adequately faced, the advertising market will not grow strongly as the mobile industry expects.”
From the mobile industry point of view, advertising is a potential revenue stream that can counterbalance the continuous decrease of revenues from voice and SMS services. However, advertisers and agencies, the sources of the advertising revenue stream, are, only now, gradually learning about the use of the mobile device as an advertising medium.
“Agencies’ budgets rarely include a specific allocation for mobile communications,” says Romeo. “An intense synergy between the mobile and the advertising industries is crucial to transform today’s enthusiasm into strong revenues in the future.”
So looking at the key points from the report:
- continuously enhance the mobile user experience through high-speed connectivity and high-quality user interfaces
use ads as a transparent value to consumers’ mobile experience without being intrusive
educate the advertising industry on how to exploit the advertising power of mobile devices
I could not agree more!
On the first point, mobile operators are coming to the party with 3G+ networks (HSDPA) – most of the UK mobile networks offer at least 2.8MB/s download speed in the majority of places, with Vodafone enabling 7.2MB/s HSDPA in a large part of their network.
Flat rate data plans are also becoming the norm (in the UK at least) meaning that “bill shock” Is a thing of the past with generous (500MB on Vodafone) fair-use limits in place. This is key to encourage consumers to use the mobile internet more, and expose them to relevant, targeted and fun mobile advertising.
On the second point, consumers are becoming more savvy, and along with ad avoidance techniques such as personal video recorders, they are demanding something in return for receiving advertising. As the mobile phone is one of the most personal communications channels, letting the user up front know “what’s in it for me” will be key. The balance must also be struck between displaying an ad, and not being intrusive.
If you look at what one of my clients, Gigafone are doing in this space, you will see that they are striking this balance. Mobile operators in Russia and Asia are providing a benefit (free content, minutes etc) in exchange for receiving targeted mobile advertising.
Importantly, the advertising is based on their individual profile (selected on the device by the user), and the ad is delivered during a phone call or SMS (not intrusive as you were going to look at the screen anyway when the phone rings – see example screenshots below).
On point 3, this is something I am spending a lot of time doing – evangelising and educating not just advertising agencies, but also brands, and the occasional end user about how to create the best possible user experience for everyone with mobile advertising.
Mobile is not the only way to connect brands with consumers, but if we follow the suggestions outlined in the Frost and Sullivan report above, mobile will become more important in the mix. Provided consumers can link the benefit to the ads they are receiving, and control what ads they see, the mobile opportunity will grow.
If you are an agency or a brand and would like to know more about how mobile advertising could work for you, please contact me. I’ve been providing some sound advice to a number of big names over the last few months, and I’d be delighted to help more companies realise the full potential of mobile.