Mobile Advertising Needs to Be Unobtrusive and Measurable to Really Take-off

SINGAPORE – The shift in the choice of new media makes the mobile an appealing advertising platform and arguably, the most direct channel to reach consumers. For mobile advertising to take-off however, it needs to overcome the annoyance factor and the perception of unsolicited content, where SMS-marketing has previously failed.

Even as advertisers recognize the reach and effectiveness of the mobile in delivering interactive, customizable, flexible and cost-effective ad campaigns, measuring the effectiveness of such campaigns and finding the right fit for mobile amongst a mix of other media has been less than promising.

New analysis from Frost & Sullivan (, Sizing-up the Mobile Advertising Opportunity in Asia-Pacific, finds that mobile advertising across 13 Asia-Pac countries raked-in revenues of US$807.8 million in 2007 and expects this to reach a market size of over US$4.0 billion by end-2012, at a CAGR (compound annual growth rate) of 37.8 percent (2007-2012).

If you are interested in a virtual brochure, which provides service providers, vendors/manufacturers, end users, and other industry participants with an overview of the Asia-Pacific mobile advertising market, then send an e-mail to Sarah Lourdes at [email protected], with your full name, company name, title, telephone number, fax number, and e-mail address. Upon receipt of the above information, an overview will be sent to you by e-mail.

Frost & Sullivan industry analyst Jeff Teh believes that the mobile has huge potential as a highly targeted and engaging advertising medium. “Unlike traditional media which mainly delivers content, mobile advertising has the ability to also deliver services and personalized content to consumers,” he says.

Although mobile advertising is expected to account for only 5.8 percent of the total Asia-Pac mobile data revenues by 2012, it will account for nearly 3 percent of the total advertising expenditure in the region which is significant for a new medium.

“One of the key drivers of mobile advertising is the evolution of the mobile phone into something virtually inseparable from the owners; many even working on their devices beyond simple communication,” Teh says, adding that mobile operators are banking on this trend to leverage on mobile advertising for added revenues, but have yet to find the right business model.

The struggle, he suggests, is proper monetization and establishing a profitable value chain for all players within the mobile ecosystem including operators, ad agencies, content providers, technology or solutions vendors, and even subscribers.

A further challenge also is that mobile advertisements need to deliver value and be presented in an unobtrusive manner to subscribers. “As mobile users pay for services, they are unlikely to be receptive to ads and promotions unless there is a perceived value from receiving such ads,” notes Teh. “Currently however, there remains very little free content available over mobile unlike over the Internet or in broadcast.

“Moreover, consumers’ willingness to receive and participate in ad campaigns depends on whether the campaigns are permission-based, and that subscribers retain control over the extent of their involvement with the campaigns and their personal information is protected,” he adds.

Due to differences in consumer behavior, also, the sell-through rates for mobile advertising, even for available inventory such as news feeds, weather and sports content, are relatively low in Asia-Pacific at under 15 percent, compared to between 20 and 30 percent in regions such as the US.

Hence, for the most part, advertisers and media agencies are still evaluating how the new digital and interactive channels that online Internet offers, given the proliferation of mobile Internet, can fit into their ad campaigns and media mix, beyond just simple SMS-based campaigns.

Teh believes that the ad-funded model – where subscribers are able to download or access content for free (for a limited period) in exchange for receiving selected ads – is likely to prove effective. Incentive-based ads such as offering cash, free minutes and downloads, and discount coupons are also an attractive way of pushing content.

He adds that mobile search, simple displays, banners, interstitials and interactive ads on WAP sites driven by mobile Internet are also expected to drive growth in mobile advertising. Off-deck advertising is expected to see greater adoption along with the growth of off-deck content as Internet usage over mobile increases for search, social networking and ubiquitous information access.

According to Teh, “Mobile operators’ portals remain a significant part of the first point of entry to the mobile Internet and a source of content for most subscribers in Asia-Pac. Operators are in a unique position to exploit subscriber data to ensure that only relevant content reaches subscribers, as well as enable easy single-access for advertisers, publishers and content providers.”

Teh believes that mobile advertising is likely to see wider adoption as the mobile advertising value chain evolves into a more collaborative eco-system and the mobile data industry matures.

He cites Japan, which is one of the early adopters of mobile advertising as an example, “Japan has one of the world’s most advanced data services with high data usage, and a highly mature mobile ecosystem,” he says, adding that Japan alone accounted for 71.2 percent (US$574.9 million) of the total mobile advertising revenues in Asia-Pac last year.

The Sizing-up the Mobile Advertising Opportunity in Asia-Pacific study is part of the Mobile & Wireless Growth Partnership Service program, which also includes research in the following markets: WiMAX, emerging mobile markets, location-based services, mobile broadband and mobile content. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants. Analyst interviews are available to the press.

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