Mobile Advertising: Slow but promising start

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Stealing a march over its rivals, Bharti Airtel made its debut in the mobile advertising (m-advertising) space in

May 2012. The operator has launched a platform to enable advertisers to provide personalised services to customers on their mobile handsets. The platform will lever­age multiple communication tools such as mobile internet, messaging services and Airtel Digital TV.

“Personalisation, sharp segmentation and contextualisation are increasingly making this platform an exciting proposi­tion for brands. Airtel’s m-advertising plat­form will enable advertisers to put across their message in a simple, effective manner in an increasingly complex media environ­ment,” said K. Srinivas, president, con­sumer business, Bharti Airtel.

Industry analysts believe that Bharti’s initiative could revive interest in the m­-advertising space.

M-advertising has already taken centre stage in several countries. For example, China and the US witnessed a year-on-year growth of 139 per cent in this segment between 2010 (52 billion ads served on handsets) and 2011 (126 billion).

With a mobile user base of 850 million, of which 30 per cent are active data users, India has significant growth potential for m-advertising. According to industry esti­mates, this segment is poised to grow by more than 40 per cent over the next few years. However, several issues and concerns need to be addressed to achieve this.

M-advertising in India

M-advertising includes the messaging, dis­play, search and video ad platforms. In India, SMS continues to be the most popular form of m-advertising, followed by display ads.

According to Ernst & Young, until 2009, m-advertising generated significant interest, driven by the availability of vast subscriber databases and emerging tech­nology platforms such as the unstructured service supplementary data code, which was commonly used to check account bal­ances on handsets via short codes. However, the concept soon became synonymous with spam text messages, with companies sending out SMS ads indis­criminately. Consequently, such un­solicited advertising dissuaded consumers due to its intrusiveness. Also, advertisers were unable to reach their target audience and operators could not monetise the inventory effectively.

Today, according to Ernst & Young, advertisers and operators have revamped their strategies, recognising the need to target the correct audience, mainly data­ driven users. New mediums such as ban­ner advertising and ad networks were adopted, which, as per Ernst & Young, have largely addressed the issues related to privacy and measurability.

Consequently, the segment is expected to gain momentum in the next few years. Analysts say that the increased relevance of ads will translate into higher returns on investments for advertisers, and new rev­enue sources and improved inventory monetisation for operators.

The Indian m-advertising segment was estimated to be worth Rs. 250 million Rs. 300 million in 2011 and is expected to reach Rs. 2 billion in the medium term.

The top m-advertising players in India include Affle, Celltick Netcore, InMobi,, Komli, Blyk, Web Chutney, Vdopia, MAD, Jivox, Ringa, Fly txt, BuzzCity, the 2ergo Group, AdMob Google and Gingersoft Media.

According to Affle, the m-advertising space in India has evolved from the stage of mobile internet being used to access email to its utilisation for social network­ing and accessing content such as news, sports and games.

The company states that the key industries using this medium are automo­bile, fast-moving consumer goods and telecom. Over the past year, brands such as Nokia, Karbonn and Micromax have gained visibility through this medium. For instance, Micromax launched a series of mobile-based ads to promote its Psych handset. These highlighted the key fea­tures of the device.

In terms of mobile ad spends, the top five companies in India are Maruti Suzuki, Nokia, PepsiCo, Coca-Cola and Hind­ustan Unilever. According to market esti­mates, these companies spend 7-10 per cent of their advertising budgets on digital ads, of which one-third is earmarked for m-advertising. Interestingly, while handset vendors have leveraged this tool for some time, operators are only first entering the segment – Bharti Airtel is the first service provider to do so.

According to Harish Bijoor, brand expert and chief executive officer, Harish Bijoor Consults, Inc., other operators will keep an eye on Bharti Airtel’s performance in the m-advertising segment. “The groundwork has been done by Bharti Airtel. Others are waiting to see the results. Companies following Bharti will be more successful in this space, especially because marketers are sitting on the fence on this matter for now,” he said.

According to InMobi, globally, the con­sumer packaged goods, retail, automobile and telecom industries spend a sizeable amount of their budgets on m-advertising.

With global players entering the Indian m-advertising space, competition is expect­ed to increase in the future. For example, Chinese mobile marketing and advertising company Madhouse announced the launch of its Indian subsidiary, Madhouse India, in February 2012. The company is expected to offer end-to-end mobile marketing solu­tions through paid, owned and earned media on smartphones and tablets for brand owners, advertising agencies and marketing partners.

Growth drivers

The fast growing mobile user base and the increasing availability of affordable 3G devices would be the two key drivers for m-advertising growth in India.

Today, companies like Micromax, Lava, Karbonn, Spice, Gfive and HCL are providing mobile devices that offer all the features of a smartphone at affordable prices. This factor and the launch of mass market tablets like Aakash are expected to strengthen the m-advertising market.

The proliferation of smartphones is also expected to drive uptake. The Indian smartphone market is expected to witness a compound annual growth rate of 250 per cent from 2009 to 2012. These devices support the use of mobile web applications and mobile internet, which increases access to online ads.

Other drivers include the introduction of advanced mobile network technologies and innovations in mobile ads.

According to Ernst & Young, 3G and 4G-based mobile networks would drive mobile broadband usage, thereby facilitating the use of the m-advertising platform. This is because increased data usage will provide bigger scope for display advertis­ing on the handset, coupled with in-appli­cation ads. Moreover, companies are focusing on innovative mobile ads – 3D, interactive voice response, and video and audio based.

Issues and challenges

According to Ernst & Young, the Indian m-advertising segment accounts for less than 1 per cent of the global advertising sector. The key factors hindering the uptake of m-advertising in the country are inadequate mobile infrastructure and the lack of relevant content.

The limited number of base stations and the low uptake of broadband services in rural areas are major roadblocks. Lack of relevant, local language content is another issue.

The way forward

Industry analysts expect the m-advertis­ing segment to witness significant growth in 2012, driven by 3G and 4G technolo­gies. In terms of applications, mobile television and interactive ads will increase m-advertising uptake.

Therefore, despite a slow start, ana­lysts are optimistic about m-advertising’s future in the country.