The arrival of ad-funded content

By Jay Seaton, Chief Marketing Officer at Airwide Solutions.

It is nearly six years since the first major on-pack promotion that started the emerging craze for text messaging. Cadbury gave away more than £1 million in prizes to people who texted a unique code to a telephone number featured on 65 million packs. Although SMS was already being used in marketing, it proved that mobile phones were another weapon in the marketing arsenal. Since then marketing agencies and big brands have explored the different opportunities created by text and WAP and the mobile phone has quietly emerged as the newest and hottest frontier for brands to interact with their customers.

Six years on and the markets for mobile entertainment and marketing are on the verge of their next big breakthrough….the arrival of advertising-funded mobile content. However, as the world’s major operators keenly assess how to make their forays into advertising a success, consumers remain concerned that it will just open them up to more spam.

So, what can be done to help operators make the most of the opportunity while at the same time ensuring mobile advertising does not join direct mail in the list of consumers’ top three pet hates?

Marketing going mobile…..

The future for mobile marketing certainly looks very promising with many leading brands expecting to use text and multimedia messaging to reach their audience in the near future -- and it is not hard to see why. For marketers, mobile offers brands the ability to put the consumer at the heart of the communications process. Unlike PCs (which tend to be used by multiple users) mobile phones are much more personal devices. They are the nearest thing to a direct connection into the consumer’s mind anyone is likely to attain in the near future and this makes them a powerful channel to deliver highly targeted and relevant information. 

The arrival of ad funded content is almost certain to fuel further interest and given the popularity of mobile entertainment such as games, ringtones, TV clips and music, ad funded mobile content looks to be popular with consumers too.

However, there are certain obstacles that must be overcome to ensure that the customer does not feel exploited by being inundated with irrelevant messages. When it comes to marketing through text messages, companies need to build a level of trust with the consumer before they start to build a campaign. In the period from 2003 to 2006, the revenue made by advertising agencies per message for targeted campaigns fell from over €5.00 per message in 2003 to typically €0.30 in 2006. This decline has been due to a number of different factors but two important ones have been the growth in mobile spamming and phishing (ie SMS spams that encourage the subscriber to phone a premium number to, for example claim a “guaranteed prize”) and the exploitation of low quality subscriber databases.

Mobile operators are now looking to re-engage with advertising agencies and consumer brands to revitalize mobile advertising but to be successful they must only do so with the customer’s explicit permission. Consumers must only be sent what they have signed up for and they must be given the opportunity to opt out immediately by texting ‘stop’. Organizations need to look at the customer journey to understand what is the most logical way to communicate and what can be achieved with the technology available. By collecting and filtering based on the user’s explicit content preferences and observed behavior, operators will be able to maximize the advertising revenue, drive response rates and maintain the reputation of their brands. Consumers have a right to privacy, and operators can implement the subscriber protection necessary to separate out unsolicited advertising, while offering reputable advertisers the insight into individual user behavior, preferences, and propensity to purchase.

However, a well researched and targeted campaign is not the only key element to a successful campaign; measurement must also play a key role.  Operators need to provide advertisers with the tools to measure, evaluate and justify their mobile marketing campaigns. As the mobile marketing industry advances, and campaigns are run on a larger scale, the pressure on operators to provide these capabilities will become more intense. Brands will want operators to deliver quantitative data on how many subscribers received the message and how many responded to them via their handset. Additionally, operators will be expected to provide reports on how many of the subscribers forwarded the message to other potential customers to drive viral communications and generate additional “buzz” for the advertiser. Without this essential information, advertisers will be unable to evaluate the efficiency of their campaigns and may look elsewhere for future marketing activity.

Looking ahead, as bigger brands choose to implement mobile marketing as part of their overall marketing strategy the opportunities for development in this area are exciting. “Camera code capture” technology is one that will become increasingly popular in the future. Users take a picture of a specific poster or image with a camera enabled phone, triggering downloads of content such as offers and competitions.  The camera phone is able to read and decipher data-matrix prints, called tags which have been inserted into text either on a print advertisement or at a point of sale. This technology has the potential to truly place mobile marketing on the map as an innovative form of communication with tangible value to a subscriber.

The bottom line…..

As operators look towards offering more data services on their networks, they are quickly realizing the benefits of mobile marketing and advertising. Not only do they present a new revenue stream that could offset the heavy losses they are experiencing from voice but operators are also seeing advertising as a way to support new creative content and entertainment. According to market researcher Informa Telecoms and Media advertisers will spend more than $11 billion by 2011 on mobile marketing. Operators could stand to take up to 50 per cent of this advertising revenue as they negotiate deals with content owners.

The crucial message is that the customer is key. If mobile marketing and advertising is going to succeed it can only be done so with the customer’s explicit permission. Inboxes will become cluttered and consumers will “turn off” and “optout” if marketers are irresponsible with this most personal of media channels.

Mobile Payments:  Macro Hype & Micro Trends

By Paul Ruppert, www.mobilemessaging2.com

There’s currently a lot of noise in the mobile payments segment.
Companies such as Firethorn, mFoundry, even Google recently have garnered considerable attention and coverage. Admittedly I’ve looked at the segment at my personal blog, www.mobilepointview.com, recently with “Google Sends SMS Mobile Payments: GPay” as well as “Mobile Payments: The Tipping Point.”

I think we need to differentiate and identify what can be labeled as macro forces where much of the hype resides, and micro forces where much of the real trends are developing.

Raising $100 million in funds (Obopay), announcing carrier trials (Verizon with Obopay, Sprint with mFoundry) or financial institutions announcing studies (Wells Fargo, Citibank, Visa) are certainly getting a lot of ink to drive the hype curve. They serve as big, macro attention-getters. Given the time frame which mobile payments have been lingering, some argue that we are currently in the “trough of disillusionment” regarding mobile payments.

I think the phase has shifted back to just moving up the slope of “inflated expectations.” The problem is that the financial industry and the mobile payment enabling companies are too focused on the big and the big, meaning what carriers and financial institutions are doing in the space. Can you suggest any two more risk averse players than a mobile operator and a bank?
I think the micro trends are being overlooked. Consider–most of the traction in the space will be with those consumers that find mobile transactions more convenient than direct banking via ATMs or bricks and mortar branches. Since most of the attention in the space is emerging from western developed economies such as the US and UK, how much more convenient can banking be? Banking industry numbers indicate that both countries have 20 ATMs or branches for every 100,000 in population.

The overlooked link here is between mobile pre-pay customers and the unbanked. These are going to be the real trend lines as mobile payments move to the “plateau of productivity.” Look at the emerging markets such as India, Brazil, rural China and even Africa, where many countries have less than 2 branches per 100,000 in population.

These areas of the world where the great unbanked exist, yet have high penetration of mobile phones plus a proclivity to pre-paid mobile use, is where the real trends are going to emerge. These are countries where consumers are already accustomed to SMS messaging top offs, micro payments and sachets, trusting mobile operators with daily increments and decrements as small as 6 US cents. These countries are where new customers are going to emerge, not just adding a feature to current banking services as mobile banking is being positioned in the developed economies. Consider that in some parts of Africa over 80% of the population do not have bank accounts. Yet 60% of the population have mobile phones.

These “Bottom of the Pyramid” plays are going to be the real trend setters in mobile payments.

Regional Profile:  The Middle East

Interview with Martin Williams, Airwide Solutions

1. How would you describe the telecoms market in the Middle East at the moment?

It is a region of great contrast, with the mobile device literally being a life saver in some countries, while in others it is primarily used as a source of entertainment. A recent survey from MTC has revealed that the mobile has had a much broader socio-economic impact on Arab development and general business than in more developed markets. Zawaya, publishers of the report, describe the mobile as a “companion of daily life” in the region.

New licenses in previously monopolistic markets are transforming the Middle Eastern mobile business by increasing the availability of the mobile device. The market is dominated by prepaid subscribers who are highly selective of where they spend their money. Penetration varies from in-excess of 100% in some countries to just over 30% in others.

New operators are trying to get ahead of the incumbent by building themselves as a group and trying to take over other operators across the region or by starting up their own licenses and companies – similar to Vodafone or Orange. Here we are seeing the birth of a new generation of “Global Mobile Brands.” Defensive tactics are being employed by incumbent operators – they are expanding within the region and beyond by acquiring the new licenses on sale.

In countries where new operators have launched we see price pressures on core services such as voice and SMS. However, we are also seeing the launch of many new services as operators strive to offer differentiation. At the forefront of service differentiation are those which utilise the value-added data services of SMS, MMS and WAP spurred on by the launch of 2.5 and more recently 3G services. SMS continues to expand at a significant rate driven not only by increased penetration but also new generation of interactive chat, content and information services. With relatively limited penetration of computing and broadband in the region many enterprise services such as banking, transportation and health are using SMS to notify their customers of financial transactions and alerts of events affecting their accounts.

This enterprise interactivity is spreading across the data service offerings through MMS and WAP and is especially visible in the media and internet with the interest in user-generated content and networking community sites on the internet.

2. What are the key trends affecting this sector in the Middle East at present?

New applications and content are driving service differentiation. Specifically:

• Operators are taking the role of content aggregator to stimulate the content and information download market. Ring-back tones and voice SMS are two popular new services. Also, the use of voicemail is not popular in the region, so using a popular service, voicemail can be transferred into a SMS and alerts the user they have a new message via a short code.
• Mobile email and instant messaging (IM) platforms are being introduced currently. Service providers in the region will all be looking at IM and how presence information can enable it to be incorporated into existing messaging services.
• Mobile advertising is of significant interest in the region. The mobile internet is growing, and the media is interacting directly with their customers via SMS and MMS, providing a huge opportunity for the “Out of Home” advertising industry to use the mobile. Mobile TV is being trialled and may bring new revenue streams to advertisers if successful.
• The use of MMS is still low in the region but it is increasing. As content providers increase their capabilities for the mobile market in this region and mobile devices increase in sophistication, MMS is likely to grow. A key driver of MMS growth is the world’s demand for User Generated Content (UGC), where MMS clips are uploaded to news and community web sites. The TRA in the UAE has declared Facebook safe and with the ability to upload and download content from these community web sites via SMS and MMS the mobile companion will be a key facilitator. The region has an Arabic equivalent of Facebook in www.maktoob.com.
• Mobile commerce – both in terms of banking and payments – is likely to be more successful than e-commerce due to the ubiquity of the mobile phone and lack of personal PCs or broadband in the region. A lack of banking and cash facilities will drive this technology and we have already seen examples where credit can be passed from a user’s mobile phone to top up friends and families’ mobiles with credit.

3. How is Airwide addressing these trends in this region?

Airwide is addressing the trends in the region in three ways:

• Applications: We are providing a new generation of open SMS and MMS architectures, allowing greater connectivity to enterprise applications while at the same time ensuring security of those services and the operator’s customers. We offer a converged SMS and MMS gateway – enabling application providers to determine a user’s handset capabilities and target messaging delivery type to each customer individually. 
• Security: We are securing the SMS and MMS environments through virus screening and firewalling for operators. We are also protecting the subscribers of the region from handset fraud and mobile theft through the deployment of the Equipment Identity Register (EIR) across the region.
• Business Development: We are working with both the operator and regional enterprise companies to develop new business models and launch services which vastly increase the value of the messaging resources to the operator, the enterprise and the enterprise’s consumers.

4. Are there significant differences between countries in the region in terms of what is driving telecoms growth at present?

There are significant differences in what is driving telecoms growth around the Middle East. In several countries, the mobile is a critical safety device where its operation and reliability is literally a matter of life and death. According to MTC’s report, 80% of Iraqis continually feel worried about the safety of their loved ones, driving the demand for dependable mobile communications.

Across the region there are the very mature, highly sophisticated operations with the very latest devices operating on the newly upgraded 3G networks, such as those seen in UAE. However, the beauty of the region is in the contrast. In Yemen and Egypt, mobile penetration still has a long way to go.

New licenses are extending the reach of mobile networks but also driving competition, leading to new services.

5. What do you think we will see developing in the future?

As mobile phones in the Middle East get smarter, devices that can offer the more commonplace converged services such as conducting payments and incorporating satellite navigation will enable the market to grow in areas not yet dreamed of.

It is likely that everyone in the region will want to carry a mobile phone for security reason.

With fixed line and broadband penetration still relatively low, operators have the opportunity to extend the value of the data channel between a brand and their customers by offering triple-play packages and, in doing so, contribute to the expansion and business aspirations of the region.

Product Spotlight: Device Intelligence Enables Targeted Mobile Marketing Campaigns

Airwide’s device intelligence solution enables operators to deliver device-appropriate content optimized for the handset, and improves the performance of MMS and other mobile marketing campaigns via the pre-transcoding of messages.  In addition to increasing MMS service revenues by encouraging widespread service uptake, this enables mobile marketers and content providers to easily tailor content specifically for their target audience, thus improving campaign effectiveness.

Since a large percentage of handsets are sold in retail stores, historically operators have lacked visibility into the devices on their network, making it difficult to plan mobile marketing campaigns and predict whether the introduction of new applications and services would be successful.  Airwide’s device intelligence lets operators learn exactly which devices are currently in use on the network and by whom, and whether a subscriber’s device has MMS capabilities so they can better target optimized content to the appropriate audience.  The solution also offers valuable demographic trend information including the top 10 device “make and models” used on an operator’s network, the fastest growing device make and models on the network, rate of penetration of new devices and the rate of device turnover. 

Uncover new revenue and encourage brand loyalty

Advanced content and functionality like MMS, email, music and video distribution are already generating billions of dollars in revenue for operators and offer vast potential for further growth. Airwide’s real-time device intelligence gives operators the information they need to decide what particular services are right for their network and subscribers, how to implement those services, whom to target, and the advance information required to optimize the quality and user experience of those services.  This enables more accurate revenue estimates, minimizes risk and can help uncover previously-hidden revenue opportunities within the subscriber base.

By leveraging demographic trend information in mobile marketing campaigns and the rollout of new products and services (like mobile social networking and mobile video), operators can gauge subscriber readiness to accurately predict which applications the market will adopt, avoiding unnecessary costs of introducing new services on speculation.  In addition, by knowing in advance the specific devices used by each person, operators and content providers can properly adapt content to increase the viability of marketing campaigns and improve user experience for MMS and other feature-rich applications.   Ultimately, by better targeting content to the right subscribers and by ensuring that all demographics on their network are adequately served, operators have a powerful solution for maximizing data service revenue and encouraging brand loyalty.