The future of advertising is mobile

06-01-2009

Tarik Fawzi, Aeneas Strategy Consulting & Management for DQ&A Worldwide

Coca Cola foresees they will be spending more on advertising on the mobile device than they are spending on tv. James Eadie, Marketing Manager at Coca Cola sees mobile as a more effective way to reach consumers. I couldn’t agree more. However, it will take some decades before all other advertisers and media-agencies have changed their advertising spending behaviour in that direction. Also, not all publishers, including mobile operators, are up and running yet in this respect. And let’s not forget the consumer, who needs to get used to this new advertising channel.

But it is clear the future of advertising is mobile. Today, already nearly 2 billion USD is being spent on mobile advertising globally. Analysts expect between 11 and 15 billion USD annually by 2011. Of course, we should remain sceptical about analysts and predicting the future, but the direction is clear: up!

Mobile advertising is where internet advertising was a decade ago. My expectation is that in a decade from now mobile advertising will leave internet advertising way behind.

Some vital stat’s
Some say mobile doesn’t bring reach to advertisers. Wake up and consider the following facts: Last year 1,15 billion mobile phones were sold globally, over 4 times as many as pc’s. There are over 3,3 billion mobile subscriptions, which is twice as many as internet subscriptions and 10 times as many as internet broadband subscriptions. People spend over 60 billion minutes on the phone. PER DAY! 8 billion messages are being sent over handsets. PER DAY! In developed markets subscription penetration is between 120 and 150%. Half of the Dutch population leaves it’s phone on 24 hours per day. Recent research indicated 35% of youngsters pick up the cellular if it rings while they are having sex.

What does this mean to advertisers? Mobile is potentially the medium with most reach and most personalisation potential. ‘Nobody gets so close to your face as your mobile some often, closely followed by your wife and kids. You better do it right!’

Advertiser waste
Advertisers see traditional media are increasingly ineffective. Media buyers often state they are wasting 50% of their tv advertising budget, but they don’t know which 50%.....People zap to other tv channels, get coffee or take a toilet-break. And the poor advertiser pays……Several traditional media lack the potential to accurately target and to interact with the consumer. Modern advertising is about two-way communication, not one-way sending. However, still over 80% of advertising budget goes to tv, radio, print, outdoor and other last centuries’ media. Over the last ten years, we have seen media-buyers are increasingly spending more budget on interactive media. Internet advertising has grown tremendously and will continue to do so. But not as much as mobile.

Looking for the ideal consumer? He/she exists!
Advertisers are looking for less waste of advertising budget, are eager to target to consumers who fit the desired profile. Better is even to advertise to consumers who have explicitly expressed they are open to receive offers. Even more, advertise to consumers who have indicated they are willing to receive offers regarding a specific category, at a specific time and linked to where they are. Science fiction? No, actually quite close to you.

Consumer perspective
Use the word ‘advertising’ in consumer research, and you will automatically meet scepticism and can expect negative replies. But consumers are in for bargains. And if consumers are asked: are you willing to receive offers, that fit your profile, that are based on preferences you have indicated yourself, offers that you only receive through the channels you desire, in the amount you choose, at the time you choose, and you receive an incentive as well, without doubt the replies are far more positive. The mobile industry is working hard in making that vision reality.

Mobile channels and characteristics
With mobile channels, advertisers can interact with consumers. Customers can immediately reply to offers by sending by sms; mobile tickets or coupons can be sent over the phone, through which offers can be received in store. Few consumers will not open up messages being sent to them over the phone, leading to a close to 100% awareness for the advertiser.

Various market players, including mobile operators, have started opt-in programs to their customer base, or will be doing so over the coming periods. In return for an incentive (free minutes, free texting, loyalty points, free applications, etc), consumers can sign up to a program. They will receive tailored ads over their phone.

The mobile internet is growing significantly now operators are offering flat-fee data tariff plans, 3G networks are coming into place, devices are able to support rapid data traffic downloads, and companies are developing specific mobile websites which are more than just a copy of the online versions. However, still only (on average) about 5% of consumers use the mobile internet. Even though it’s growing rapidly worldwide, for some advertisers it is not mass reach yet. But mobile advertising is more than just advertising in the mobile internet arena. Ads can be sent through direct sms, in person-to-person sms (using unused characters), ads can be heard while waiting when voice calls are made, through mms, ads can be added in games, videos and music being downloaded (sponsored, and thereby stimulating usage). And, as mentioned above, these services do have the volume. For most of these services, legally, opt-in is required.

What now?
The message to advertisers, media-agencies and media-buyers is a simple one: consider mobile as a medium in your media-mix. If done well, it has reach, frequency, leads to interaction, reduced waste and therefore a more efficient spending of your spent advertiser dollar. The proof of the pudding is in the eating, and therefore trialling is key in order to find out what works for you. However, don’t underestimate the complexity of setting up mobile advertising campaigns. You will need the entire value chain: advertiser, media-agency, trafficking partner, mobile channel provider, publisher or mobile service provider, and technology enabler(s). And most of all: be creative!