The Mobile Advertising and Marketing Revolution

• Where does mobile advertising fit within the larger context of advertising and marketing?
• What forms can mobile advertising take and which forms are most effective?
• How big a share of mobile advertising revenue can mobile operators expect to take?
• What are the timescales for implementing mobile advertising?
• How do the mobile and Internet advertising industries differ?
• Who benefits from a mobile advertising strategy?
• How can consumer privacy issues be addressed?
• How will the industry look five years from now?

0 Summary

1 Well-executed advertising could boost plateauing mobile revenue

1.1 Mobile advertising presents a unique new-media marketing opportunity

1.2 In mature markets mobile voice ARPU is stabilising and alternative revenue streams are needed

1.3 There are five broad categories of mobile advertising

1.4 Mobile offers excellent penetration into many different demographics

1.5 It is important that advertisers recognise the opportunity that mobile advertising presents

2 Barriers to implementation are finally beginning to fall

2.1 Increasing network bandwidth will facilitate enhanced advertisements

2.2 Increasing screen size and resolution will make advertisements less obtrusive

2.3 Geographical positioning technology will facilitate location-based advertisements

2.4 Operators’ mobile advertising processes are likely to be harmonised

2.5 Data pricing will become more affordable

2.6 Whether consumers will use handsets in a manner conducive to advertising remains to be seen

3 Mobile operators can occupy a secure position in the value chain

3.1 Mobile operators that follow the Internet model risk being sidelined in the value chain

3.2 Both handset vendors and operators want to control which features are preloaded on handsets

3.3 Operators are uniquely placed to add value by identifying the ‘segment of one’

4 Providing valuable advertisements is the best way to overcome consumers’ distrust

4.1 Maintaining perceived consumer privacy is vital to mass acceptance

4.2 Subsidies are an effective means of encouraging users to accept mobile advertising

4.3 An opt-in advertising strategy will yield the greatest returns

5 Innovators will shape the mobile advertising market

5.1 The outcome for mobile advertising depends on maintaining value, permission and quality

5.2 Key market factors will become more conducive to mobile advertising in the medium term

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Figures and tables

Figure 1.1: Position of advertising and one-to-one marketing within marketing as a whole

Figure 1.2: Mobile voice and data ARPU in Western Europe, 2002-12

Figure 1.3: Mobile and Internet advertising spend in Japan, 2004-6

Figure 2.1: Penetration of advanced-generation handsets in China, Europe and the USA, 2006-11

Figure 3.1: The Internet search value chain

Figure 3.2: The mobile search value chain

Figure 3.3: Mobile as a response channel

Figure 4.1: Receptivity of survey respondents to receiving mobile advertisements in exchange for various rewards

Figure 4.2: The ‘virtuous cycle’ of mobile advertising

Figure 4.3: Free voice minutes awarded by Virgin Mobile USA as part of its Sugar Mama campaign

Figure 5.1: Potential outcomes for the mobile advertising industry

Table 3.1: Relative merits of different forms of mobile advertising

Table 5.1: Degree to which key market factors will be conducive to mobile advertising in the short, medium and long term