Mobile Advertising and Marketing – 5th Edition

• Publication date: December 2011

Executive summary There are close to 6 billion active mobile subscriptions across the globe, which can be compared with about 2 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 advertisin...

Executive summary

There are close to 6 billion active mobile subscriptions across the globe, which can be compared with about 2 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 € 2.61 billion in 2010, having experienced healthy growth throughout the financial crisis and the following recuperation. Growing at a compound annual growth rate of 36.9 percent, the market is forecasted to be worth € 17.2 billion in 2016 – corresponding to 15.2 percent of the total digital advertising market. Mobile advertising is at the same time predicted to account for 3.8 percent of the total global ad spend for all media.

The mobile media has several especially interesting attributes from a marketing perspective. First of all most people have a mobile handset, making reach unmatched. Mobile handsets and networks are also getting 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 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, habits and other preferences. Communication having undergone such screening is 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 the future of marketing.

For several years, mobile media has been claimed to be on the verge of entering the array of main media channels for marketing. During the last years, companies have started to leave the experimental stage and deliver full-scale campaigns, gradually including mobile in the marketing media mix. Advertisers include blue chip companies as well as SMEs. Exposure through multiple channels, digital as well as traditional, has proven to generate better outcomes than when channels are used in isolation. This is especially true for the mobile media, being relatively new and therefore bound to benefit from the viral effects created by campaigns spanning several media and generating 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 advertising platforms, hold major market shares in mobile advertising. Microsoft has struggled in the mobile space and has joined forces with Nokia in an attempt to create a third mobile 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 actors such as Millennial Media, Amobee and Smaato.

Facebook is furthermore on the verge of establishing its presence in the mobile advertising space, and may very well become an important player if leveraging user data for targeted mobile campaigns. There are a number of key takeaways from the latest developments in mobile marketing. The channel is getting established as an integral part of the media mix, a progress which is eased by the booming smartphone adoption and increasing mobile media consumption. Brands do however need to refine their marketing strategies to integrate the mobile channel, in order to spend wisely and capitalise on the potential the mobile channel brings. Operators need to pay attention to the possible changes in the mobile ecosystem, where advertising can be an important future source of revenue. Within the plethora of advertising formats, applications are currently extremely popular, though also the mobile web is seeing increased uptake spurred by HTML5. While advanced formats offer impressive user experiences, the potential in more simple alternatives such as SMS and coupons is however still substantial, not the least due to an unprecedented reach. Finally, the integration of location-sensitivity in advertising efforts is increasing, an area which releases the full potential of the mobile channel.

Advertising Industry in the United States

Table of Contents

1 Advertising and digital media ....3
1.1 The marketing and advertising industry3
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 players....7
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 Japan20
1.3.4 Emerging markets 22

2 Mobile advertising25

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 capabilities..28
2.1.4 Mobile networks and data transfer capabilities.30
2.1.5 Mobile Internet versus PC-based Internet....31
2.2 Advertising on the mobile handset.32
2.2.1 Deploying mobile advertising...32
2.2.2 Targeting mobile campaigns ...33
2.2.3 Exploiting location technology.35
2.2.4 Privacy concerns..36
2.2.5 Pricing models and cost.38
2.3 The mobile advertising ecosystem.39
2.3.1 Advertisers..41
2.3.2 Ad agencies and creative designers..41
2.3.3 Digital ad networks....42
2.3.4 Technical solution providers ....44
2.3.5 Mobile operators ..45
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 marketing49
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 and cell broadcast ..58
3.3 Mobile coupons59
3.4 Proximity-based marketing...61
3.4.1 Bluetooth ....61
3.4.2 NFC ..62
3.4.3 Barcodes ....63
3.5 Case studies 65
3.5.1 Placecast’s ShopAlerts platform generates major ROI for Fitness First ...66
3.5.2 McDonald’s in Japan integrates mobile coupons and contactless wallet66
3.5.3 Blockbuster achieves impressive redemption rates from mobile coupons...67
3.5.4 Bluetooth coupons available at major hotel chains ....67
3.5.5 Coca-Cola seeks to save the polar bears through SMS donation campaign ....68

4 Mobile web advertisement..69

4.1 Portals72
4.2 News and information.73
4.3 Mobile search ...74
4.3.1 Market players and strategies ..77
4.3.2 Directory services and local search ...78
4.4 Communities and social networking ...79
4.4.1 Market players and strategies ..83
4.4.2 Social media marketing..86
4.5 Mobile music and video ..86
4.6 Case studies 89
4.6.1 Expedia creates award winning location-based mobile website using HTML5 .89
4.6.2 McDonald’s engages customers in billboard games via mobile web.89
4.6.3 Dictionary.com’s tiered approach optimises user experience across platforms 90
4.6.4 Intel campaign shows mobile web ads outperform in-app ads.90
4.6.5 Fandango delivers app-like experience to moviegoers on the mobile web..91

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 applications....104
5.1.5 Social networking applications ...109
5.1.6 Pure advertising apps ..112
5.2 In-app advertising113
5.2.1 Apple – iAd ....114
5.2.2 RIM – BlackBerry Advertising Service ...115
5.2.3 Microsoft – Windows Phone 7/Microsoft Advertising116
5.2.4 Nokia – Windows Phone 7 and legacy systems ..116
5.2.5 Android – AdMob and third party ad networks....117
5.3 Case studies ...117
5.3.1 Angry Birds Magic Places and Live generates substantial attention.118
5.3.2 MINI’s location-based reality game attracts thousands of players ....118
5.3.3 McDonald’s promotes breakfast items with in-app game ad in Pandora....119
5.3.4 Poynt’s local business search application reaches 11 million users.119
5.3.5 Heineken’s StarPlayer application offers dual screen football experience..120

6 Forecasts and conclusions....123

6.1 Mobile marketing industry analysis ...123
6.1.1 Buyer-side: Adoption of mobile ads moves beyond the experimental stage...123
6.1.2 Supplier-side: Continued consolidation and emergence of mobile players ....125
6.1.3 Consumer-side: Mobile Internet will eventually overtake desktop access ..128
6.1.4 Channels and formats: Which will succeed? ..130
6.1.5 Convergence trends133
6.2 Potential market value analysis ....134
6.2.1 Target audience and exposure ...134
6.2.2 CPM levels135
6.2.3 CTRs for mobile campaigns...138
6.2.4 Revenue sensitivity analysis...139
6.3 Market forecasts ..141
6.4 Final conclusions.145

7 Company profiles and strategies151

7.1 Top advertising agencies ...151
7.2 Telecom industry players ...155
7.2.1 Turkcell at the forefront of mobile advertising with huge opt-in database...155
7.2.2 Blyk’s opt-in advertising solution for operators successful in India...156
7.2.3 O2 Germany relaunches ad-funded Netzclub price plan with new tariffs ...158
7.2.4 Ericsson aims to remove complexity by launching AdMarket.159
7.3 Digital industry players ..160
7.3.1 Google’s US$ 2.5 billion mobile business with Mobile First and SoLoMo ..160
7.3.2 Microsoft and Nokia team up to build a new global mobile ecosystem.161
7.3.3 Yahoo! provides rich content for mobile and taps into ad revenues.162
7.4 Mobile advertising players..163
7.4.1 AdMob.163
7.4.2 Amobee....164
7.4.3 Jumptap ...164
7.4.4 Millennial Media..165
7.4.5 Out There Media.165
7.4.6 Smaato 166
7.4.7 Velti.166
Glossary 167

List of Figures

Figure 1.1: Total advertisement expenditure & top spending countries (Worldwide 2010)..4
Figure 1.2: Global advertisement expenditure by medium (Worldwide 2010)..6
Figure 1.3: Top 20 advertisers Worldwide (2010).7
Figure 1.4: Top 10 advertising agency companies (2010) ..8
Figure 1.5: Most popular online activities in the US based on time (May 2011)....9
Figure 1.6: Top 10 US websites (October 2011) 10
Figure 1.7: Online advertisement expenditure by region (Worldwide 2010)...11
Figure 1.8: Online advertising as share of total advertising spend per market (2010) ..12
Figure 1.9: Online ad spend by category in the US (2009–2010) ....13
Figure 1.10: Online advertisement spending by format in the US (2010) ..14
Figure 1.11: Mobile subscriptions by region (Worldwide Q4-2010).16
Figure 1.12: Top activities done by mobile handset users (December 2010).17
Figure 1.13: Mobile Internet usage penetration among mobile subscribers (2010) .18
Figure 1.14: Mobile Internet use, smartphone adoption and data plans (US 2010–2011) .19
Figure 1.15: Japanese mobile subscriber statistics (September 2011) 21
Figure 1.16: Mobile penetration rates on major emerging markets (2010)23
Figure 2.1: User behaviour by phone category (US Q1-2011)....27
Figure 2.2: Performance parameters for different position determining methods (2011)...29
Figure 2.3: Stakeholders in the mobile marketing value chain ...40
Figure 2.4. Examples of mobile ad networks 43
Figure 3.1: SMS ads – number of receivers and response rates (EU5 September 2010) ..51
Figure 3.2: Examples of mobile messaging advertising response types...56
Figure 3.3: Examples of barcodes..63
Figure 3.4: QR code usage in the US and EU5 (June 2011)..65
Figure 4.1: Activities done by mobile Internet Users (December 2010)70
Figure 4.2: Top UK mobile sites – visitors, page views and time (January 2010) 71
Figure 4.3: Top Internet search engines (September 2011) ..75
Figure 4.4: Number of subscribers performing mobile search (US 2011) .76
Figure 4.5: Subscribers accessing local mobile content (US January 2011) .79
Figure 4.6: Popular communities (Worldwide 2011) ....80
Figure 4.7: Mobile social networking usage in EU5 (July 2011) .82
Figure 4.8: TV, online and mobile video usage patterns – number of users (US Q2-2011) ....88
Figure 5.1: Leading mobile app stores (Q3-2011)...94
Figure 5.2: Advantages and disadvantages of handset-based navigation solutions99
Figure 5.3: Android, BlackBerry and iPhone turn-by-turn navigation apps...101
Figure 5.4: View from the Layar application 102
Figure 5.5: Mobile music behaviour in EU5 and the US (March 2010) ....105
Figure 5.6: Major music streaming services in Europe (June 2011) ...107
Figure 5.7: Mobile subscribers using location-based check-in services (June 2011) .110
Figure 6.1: Acquisitions in the digital media industry (2010–2011)126
Figure 6.2: Mobile Internet as share of total Internet traffic (UK 2009–2011) 129
Figure 6.3: Internet statistics on mobile platforms (UK July 2011).130
Figure 6.4: Comparison of CPM levels by media (2011).136
Figure 6.5: Typical CPM rates for mobile advertising (2011) ....137
Figure 6.6: Typical CPM rates for Internet and mobile advertising (US 1998–2011) ...138
Figure 6.7: Mobile advertising sensitivity analysis......140
Figure 6.8: Total and digital advertising revenues by region (Worldwide 2010–2016) 141
Figure 6.9: Mobile advertising revenues and forecast by region (Worldwide 2010–2016) ....142
Figure 6.10: Mobile advertising revenue forecasts for selected markets (2010–2016)144
Figure 7.1: Top advertising agencies (2010) ....152
Figure 7.2: Examples of specialised mobile advertising agencies.154