Mobile Advertising and Marketing – 6th Edition

Executive summary

There are more than 6 billion active mobile subscriptions across the globe, which can be compared with about 2.5 billion Internet users. This underpins the vast potential of the mobile channel for advertising and marketing, being highly important for brands seeking to engage in communication with present and potential customers. Berg Insight estimates that the total value of the global mobile marketing and advertising market was € 3.8 billion in 2011, having experienced healthy growth throughout the recent financial crisis. Growing at a compound annual growth rate of 31.4 percent, the market is forecasted to be worth € 19.7 billion in 2017 – corresponding to 15.5 percent of the total digital ad market. Mobile advertising is at the same time predicted to account for 4.4 percent of the total global ad spend for all media. This resonates well with the continuously increasing share of time which people spend on the mobile channel at the expense of traditional media consumption. The mobile media has several especially useful characteristics from a marketing perspective. First of all most people have a mobile handset, making reach unmatched. Mobile handsets have become increasingly advanced, making it possible to deliver highly compelling advertising experiences, incorporating rich media, video and interactive content. Even more importantly, handsets are extremely personal devices which people tend to always have within reach and most often switched on. This enables unique marketing possibilities which other channels lack. Consumers can be reached at all times and in all places, which makes the channel stand out of the crowd. The personal nature of the devices makes it possible to deliver messages which are highly relevant for the recipient, taking into consideration demographics, interests, context, behaviour and other preferences. Marketing messages that have gone through such a personalisation process are bound to be much more effective in portraying a brand positively. The ROI of such initiatives can be substantially better than for intrusive campaigns where all consumers are flooded with the same non-personalised message. The mobile channel can in this way avoid the pitfall of unsolicited communication and capture an important role in next-generation marketing.

For several years, mobile media was claimed to be on the verge of entering the array of main media channels for marketing. During the last few years, advertisers have increasingly left the experimental stage and started to deliver full-scale campaigns, gradually establishing the mobile channel in the marketing media mix. Advertisers include blue chip companies and to an increasing extent also SMEs. Exposure through multiple channels, digital as well as traditional, has proven to yield better results and higher engagement than when channels are used in isolation. This is especially true for mobile media, being relatively new and therefore likely to benefit from compounding effects created by campaigns spanning several media to generate attention across the population of potential customers. Numerous actors are engaging in activities related to mobile marketing, including large players from the digital industry. Google and Apple, with the AdMob and iAd platforms, hold considerable market shares in mobile advertising. Microsoft has moreover struggled in the mobile space and has joined forces with Nokia in an attempt to create a third ecosystem to compete with Google’s Android and Apple’s iOS. A wide variety of other companies are also involved in the value chain, including specialised mobile advertising actors such as Millennial Media, InMobi, Madvertise, Amobee and Smaato. Facebook has moreover made a first inroad into the mobile ad market and may surface as an important player. There are a number of key takeaways from the latest developments in mobile marketing. Mobile marketing is gradually strengthening its position in the marketing media mix as smartphones are becoming ubiquitous and drive mobile media usage. Brands do however need to refine their marketing strategies to integrate the mobile channel. For operators, the ongoing transition to an increasingly data-driven mobile ecosystem can present attractive opportunities to generate revenues from advertising. Within the plethora of ad formats, apps have proven to provide great consumer engagement, but mobile web presence has also surfaced as a must-have among brands. HTML5 is moreover increasingly enabling native app-like experiences also through browsers. Video and rich media are the current state-ofthe- art ad formats, but the potential of less sophisticated alternatives such as permissionbased SMS programs is still substantial, not the least due to an unprecedented reach. The integration of location-sensitivity across all formats is moreover increasing, though hyperlocal advertising is yet to be used on a large scale. Finally, real-time bidding (RTB) is expected to increase rapidly in adoption also on the mobile channel.

Global Online Advertising Industry

Table of Contents

Table of Contents..... i
List of Figures. vi
Executive summary.1
1 Advertising and digital media ..3
1.1 The marketing and advertising industry..3
1.1.1 Global advertising expenditure .3
1.1.2 Advertisement expenditure by media ...5
1.1.3 Top 20 global advertisers..6
1.1.4 Marketing industry players7
1.2 The Internet media channel.8
1.2.1 Internet usage trends 8
1.2.2 Internet advertising expenditure..10
1.2.3 Internet advertising formats.13
1.3 The mobile media channel 15
1.3.1 Europe.18
1.3.2 United States ...19
1.3.3 Japan...20
1.3.4 Emerging markets ...22
2 Mobile advertising..25
2.1 The mobile handset as an advertising platform 25
2.1.1 Physical characteristics of the mobile handset...25
2.1.2 Handset software 27
2.1.3 Location capabilities28
2.1.4 Mobile networks and data transfer capabilities...29
2.1.5 Mobile Internet versus PC-based Internet...30
2.2 Advertising on the mobile handset31
2.2.1 Deploying mobile advertising..32
2.2.2 Targeting mobile campaigns ..32
2.2.3 Exploiting location technology35
2.2.4 Privacy concerns.36
2.2.5 Pricing models and cost..37
2.3 The mobile advertising ecosystem38
2.3.1 Advertisers...40
2.3.2 Ad agencies and creative designers...40
2.3.3 Digital ad networks..41
2.3.4 Technical solution providers ...43
2.3.5 Mobile operators .44
2.3.6 Online media publishers and mobile application providers ...46
2.3.7 Industry associations...46
3 Messaging and mobile marketing .49
3.1 SMS and MMS marketing..49
3.1.1 Push messaging..53
3.1.2 Pull messaging and Common Short Codes ...55
3.1.3 Location-targeted SMS campaigns.56
3.2 Idle screen advertising...58
3.3 Mobile coupons.59
3.4 Proximity-based marketing61
3.4.1 Bluetooth .61
3.4.2 NFC .62
3.4.3 Barcodes .63
3.5 Case studies ..66
3.5.1 Carling achieves 11 million entries in mobile soccer game by Brandtone.66
3.5.2 The North Face drives foot traffic with SMS program delivered by Placecast ...66
3.5.3 Coca-Cola’s hugely successful SMS campaign to save polar bears continues 67
3.5.4 Young people encouraged to vote through NFC-enabled OOH campaign...67
3.5.5 Sherlock Holmes movie marketed using Bluetooth solution from BLIP.68
4 Mobile web advertising..69
4.1 Portals71
4.2 News and information72
4.3 Mobile search 73
4.3.1 Market players and strategies .76
4.3.2 Directory services and local search 77
4.4 Communities and social networking .78
4.4.1 Market players and strategies .82
4.4.2 Social media marketing...85
4.5 Mobile music and video 86
4.6 Case studies ..88
4.6.1 Starbucks markets coffee maker on Harper’s Bazaar’s mobile website 88
4.6.2 Amazon leads the way with mobile website matching app experience .89
4.6.3 Lexus advertises car models on AccuWeather’s mobile website...89
4.6.4 Careerjet builds successful mobile optimised web presence 90
4.6.5 Audi drives brand affinity using rich media ads delivered by InMobi .90
5 Ad-funded applications..93
5.1 Mobile applications93
5.1.1 Mobile games..96
5.1.2 Mobile map and navigation applications 98
5.1.3 Mobile search applications ...103
5.1.4 Mobile music and video applications104
5.1.5 Social networking applications .110
5.1.6 Branded applications 113
5.2 In-app advertising114
5.2.1 Apple – iAd 115
5.2.2 RIM – BlackBerry Advertising Service ...116
5.2.3 Microsoft – Windows Phone/Microsoft Advertising...117
5.2.4 Nokia – Windows Phone and Nokia Ad Exchange...118
5.2.5 Android – AdMob and third-party ad networks.119
5.3 Case studies 119
5.3.1 In-app advertising promotes eco-friendly BMW car events..119
5.3.2 Coffee shops in event area promoted in The Weather Channel apps..120
5.3.3 Angry Birds campaigns mix real-world and digital components..120
5.3.4 Barclaycard’s Waterslide Extreme clocks 18 million downloads..121
5.3.5 MINI’s location-based reality game generates a PR value of € 1.2 million...122
6 Forecasts and conclusions..123
6.1 Mobile marketing industry analysis .123
6.1.1 Buyer-side: The mobile channel starts to find its place among advertisers .123
6.1.2 Supplier-side: Consolidation driven by high-profile acquisitions .125
6.1.3 Consumer-side: Mobile Internet will eventually overtake desktop access ...128
6.1.4 Channels and formats: Which will succeed? 129
6.1.5 Convergence trends..132
6.2 Potential market value analysis ...133
6.2.1 Target audience and exposure .133
6.2.2 CPMs for traditional and mobile media.134
6.2.3 CTRs for mobile campaigns..137
6.2.4 Revenue sensitivity analysis..138
6.3 Market forecasts ..139
6.4 Final conclusions.144
7 Company profiles and strategies.151
7.1 Top advertising agencies 151
7.2 Mobile operators..155
7.2.1 Orange offers mobile advertising through the Orange Advertising Network155
7.2.2 Blyk reaches 4 million opt-in subscribers globally156
7.2.3 SFR delivers mobile advertising through SFR Régie and external partners.158
7.2.4 AT&T has a broad mobile marketing portfolio including LBA solutions...160
7.3 Major digital and telecom players ...161
7.3.1 Google has reached a US$ 8 billion mobile run rate162
7.3.2 Nokia seeks to enable the next generation of ads with focus on location ...163
7.3.3 Yahoo! provides rich content for mobile and taps into ad revenues165
7.4 Mobile advertising and marketing players ..167
7.4.1 AdMob...167
7.4.2 Amobee.168
7.4.3 InMobi168
7.4.4 Jumptap 169
7.4.5 Madvertise .169
7.4.6 Millennial Media.170
7.4.7 Out There Media171
7.4.8 Smaato ..171
Glossary ..173


List of Figures

Figure 1.1: Total advertisement expenditure & top spending countries (Worldwide 2011)...4
Figure 1.2: Global advertisement expenditure by medium (Worldwide 2011)...6
Figure 1.3: Top 20 advertisers (Worldwide 2010)...7
Figure 1.4: Top 10 advertising agency companies (Worldwide 2011)...8
Figure 1.5: Most popular online activities based on time (US May 2011)..9
Figure 1.6: Top 10 websites (US October 2012) ..10
Figure 1.7: Online advertisement expenditure by region (Worldwide 2011)11
Figure 1.8: Online advertising as share of total advertising spend per market (2011) 12
Figure 1.9: Online ad spend by category (US 2010–2011) ..13
Figure 1.10: Online advertisement spending by format (US 2011) ..14
Figure 1.11: Mobile subscriptions by region (Worldwide Q2-2012).16
Figure 1.12: Top activities done by mobile handset users (December 2011)..17
Figure 1.13: Mobile Internet usage penetration among mobile subscribers (2010) 19
Figure 1.14: Mobile Internet use and smartphone adoption (US 2011–2012) .20
Figure 1.15: Mobile subscriber statistics (Japan September 2012) .21
Figure 1.16: Mobile penetration rates in major emerging markets (2011) ...23
Figure 2.1: Performance parameters for different position determining methods (2012)29
Figure 2.2: Stakeholders in the mobile marketing value chain 39
Figure 2.3: Examples of mobile ad networks (Worldwide 2012)..42
Figure 3.1: SMS ads – number of receivers and response rates (EU5 July 2011) ..51
Figure 3.2: Examples of mobile messaging advertising response types.56
Figure 3.3: Examples of barcodes63
Figure 3.4: QR code usage (EU5 July 2012) 65
Figure 4.1: Top mobile websites by visitors and time spent (UK June 2011) ..70
Figure 4.2: Top Internet search engines (Worldwide April 2012) .74
Figure 4.3: Number of smartphone users performing mobile search (US 2011–2012) ...75
Figure 4.4: Number of smartphone users searching for local information (US 2011–2012)78
Figure 4.5: Popular communities (Worldwide 2012) 79
Figure 4.6: Number of smartphone users accessing social networks (2011–2012) 81
Figure 4.7: TV, online and mobile video usage patterns – number of users (US Q1-2012) 87
Figure 5.1: Leading mobile app stores (Worldwide Q3-2012) .94
Figure 5.2: Advantages and disadvantages of handset-based navigation solutions...99
Figure 5.3: Examples of Android, BlackBerry and iPhone navigation apps...101
Figure 5.4: View from the Layar application ...103
Figure 5.5: Mobile music users (EU5 & US May 2012) ..105
Figure 5.6: Examples of music streaming services (Worldwide 2012)...107
Figure 5.7: Mobile subscribers using location-based check-in services (June 2011) ...111
Figure 6.1: Acquisitions in the mobile and digital media industry (2012) ..126
Figure 6.2: Mobile share of web traffic (Worldwide 2010–2012) 129
Figure 6.3: Comparison of CPM levels by media (2012)135
Figure 6.4: Typical CPM rates for mobile advertising (2012) .136
Figure 6.5: Typical CPM rates for Internet and mobile advertising (US 1998–2012) .137
Figure 6.6: Mobile advertising revenue sensitivity analysis139
Figure 6.7: Total and digital advertising expenditure by region (Worldwide 2011–2017)..140
Figure 6.8: Mobile advertising expenditure forecast by region (Worldwide 2011–2017)...141
Figure 6.9: Mobile advertising expenditure forecasts for selected markets (2011–2017)..143
Figure 7.1: Top advertising agencies (Worldwide 2011)152
Figure 7.2: Specialised mobile advertising agencies .154