Mobile advertising and marketing

Market analysis and forecasts 2006-2011

Publication Date	March 2006
Publisher	Visiongain
Product Type	Report
Pages	173
ISBN Number	not applicable
Product Code	VIS00020

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Mobile advertising is coming to a phone near you - but simply translating existing models won't work

The increasing availability of multimedia content is opening a large opportunity for sophisticated forms of mobile advertising. As content that already incorporates advertising - like live TV programming - makes its way to mobile handsets, brands and entertainment content providers are beginning to see the value of presenting full multimedia ads with programs.

Operators in the U.S. and Western Europe are currently either testing various forms of advertising with 3G services or are allowing ads to be served on their portals. A number of multimedia companies will launch advertising in H1 2006 within their multimedia offering. Furthermore, the entry of large online search engines into the mobile world opens up new advertising opportunities in the shape of context-based mobile search. What are the best strategies for success? This report will tell you.

From 2005 when the nascent market garnered $255 million in Europe and the United States, mobile marketing and advertising in these two geographical areas will grow to exceed $1 billion in 2009, provided certain elements fall into place. Issues to be resolved include business models and revenue share, the type, length and frequency of ads, consumer attitudes and many others. Operators will have to walk a fine line between maximising the revenue potential of advertising, while at the same time not risk alienating subscribers and increasing churn by doing so.

Based on interviews with key participants across the value chain, including operators, media agencies, software application providers, access providers, marketing specialists and trade association representatives, this 170+ page report analyses the market drivers and barriers affecting mobile advertising and marketing. It discusses the main market trends and charts the market evolution in the US and Europe. The report examines mobile advertising opportunities presented by MMS, video, TV, LBS, contextual advertising, as well as other niche possibilities.

Questions answered in this report include:

What % of brand advertising and marketing budgets will go on the mobile channel by 2011 and what will be the associated revenues?
Where are the biggest market opportunities?
How does mobile advertising compare to online and traditional media?
What advertising models exist and which ones will account for the biggest market?
What types of mobile advertising are most likely to succeed?
How can operators and other companies in the value chain best position themselves?

Why you should buy this report:

Mobile operators: Gain insight into the issues affecting mobile advertising and where revenues can be derived from this new opportunity. Discover regional adoption and usage of new technology and services, as well as market size data. Obtain analysis of the key market participants and their products and services.

Brands/Advertisers/Marketers: Discover what opportunities exist in the mobile advertising channel and what the best strategies are in this space. Learn about market issues specifically related to mobile content and mobile marketing and advertising including technology, media types, demographics, psychographics, subscriber receptivity and trends.

Vendors: Learn what mobile operators' plans are with mobile advertising and marketing. Find out how the market will evolve and how you can benefit from this growth.

Content

1 Executive Summary
- 1.1 New Content and Technologies are Enabling Mobile Multimedia Advertising
- 1.2 Who Controls the Channel?
- 1.3 Market Trends
- 1.4 Multiple Advertising Opportunities Exist
- 1.5 Challenges and Issues to Consider
- 1.6 Market Forecasts
- 1.7 Conclusions
2 Introduction
- 2.1 The Emergence of Mobile Marketing and Advertising
  - 2.2.1 Technology to the Rescue
  - 2.2.2 New Opportunities for Brands and Entertainment
- 2.3 Will Consumers Accept Advertising on Their Mobile Phones?
  - 2.3.1 Opt-in and opt-out
- 2.4 The Bottom Line
- 2.5 Research Methodology
- 2.6 Focus and Objectives of the Report
3 Strategic Overview
- 3.1 Mobile Phone Usage
- 3.2 Handset Revenues
- 3.4 Impetus for Mobile Phone Upgrades
- 3.5 Adoption of New Technologies
- 3.6 The Battle Over Content
  - 3.6.1 Who Controls the Customer?
  - 3.6.2 Off-portal vs on-portal content
- 3.7 Mobile Network Operators Need a Revenue Boost
  - 3.7.1 Which Operators are Most Likely to Embrace Mobile Advertising?
  - 3.8.2 Achieving Synergies Between Advertising and Content
4 Market Analysis and Forecasts
- 4.1 From Voice to Rich Media
- 4.2 Japan: The Mobile Advertising Pioneers
  - 4.2.1 Japan's Early Entrance into Mobile Advertising
  - 4.2.2 Video formatted advertisements
  - 4.2.2 Mobile Advertising in Korea
- 4.3 Terminology
- 4.4 The Mobile Channel
  - 4.4.1 A New Channel with Unique Characteristics
  - 4.4.2 What Can Mobile Marketing and Advertising Accomplish?
    - 4.4.2.1 Mobile Advertising Market Drivers
  - 4.4.3 Barriers to Successful Mobile Marketing and Advertising
    - 4.4.3.1 Technological Barriers
    - 4.4.3.2 Attitudinal Barriers
    - 4.4.3.3 Mobile advertising will not work for all products and services
- 4.5 Advantages of Mobile Advertising and Marketing
- 4.6 Typical Marketing Campaigns
- 4.7 Mobile Advertising and Marketing Techniques
  - 4.7.1 SMS
  - 4.7.2 Premium SMS
  - 4.7.3 Voice SMS
  - 4.7.4 MMS
    - 4.7.4.1 Premium MMS Campaigns
  - 4.7.5 LBS
    - 4.7.5.1 Push- vs Pull-Based Mobile Advertising
  - 4.7.6 Mobile Banner Ads
  - 4.7.7 Games
    - 4.7.7.1 Advertising is being embedded in many games in multiple ways
    - 4.7.7.2 In-game advertising spending
  - 4.7.8 Multimedia - Music, Video, TV
    - 4.7.8.1 Mobile Music and Advertising
    - 4.7.8.2 Mobile Video Advertising
    - 4.7.8.3 Advertising Through Mobile TV
    - 4.7.8.3.1 Determining the Mobile TV Ad Model
    - 4.7.8.3.2 Advertisers will find the mobile channel an increasingly attractive alternative to TV
    - 4.7.8.3.3 Differences Between Advertising on Mobile and Regular TV
    - 4.7.8.3.4 Mobile TV Advertising is Seeing Early Traction in the US
    - 4.7.8.3.5 Mobile TV Presents a Significant Opportunity for Advertising
  - 4.7.9 Adult Content
    - 4.7.9.1 Adult Content Provides a Good Opportunity for Multimedia Ads
  - 4.7.10 The Future of Messaging and Rich Media
    - 4.7.10.1 Which Technology is Most promising for Mobile Advertising?
  - 4.7.11 Differences Between Europe and the United States
  - 4.8.1 Fixed-Line and Mobile Phones
  - 4.8.2 Pre-paid vs. Contract
  - 4.8.3 Attitudinal Differences
  - 4.8.4 Structural Differences
- 4.9 Characteristics of the European Market
  - 4.9.1 UK market
    - 4.9.1.1 Mobile Advertising Activity is on the Increase
- 4.10 Characteristics of the U.S. market
  - 4.10.1 SMS in the U.S.-The American Idol Effect
  - 4.10.2 MMS
  - 4.10.3 Multimedia
  - 4.10.4 TV Broadcasters and Other Entertainment Providers
    - 4.10.4.1 Hollywood Takes Control of its Content
    - 4.10.4.2 NBC Mobile
    - 4.10.4.3 CBS Mobile Content
    - 4.10.4.3 ABC
    - 4.10.4.4 ESPN
    - 4.10.4.4.1 ESPN's Mobile Advertising Strategy
    - 4.10.4.5 MTV Looks to Mobile Advertising-Based Business Model
    - 4.10.4.6 Warner Bros
    - 4.10.4.6.1 Warner Bros' Revenue Share Concerns
  - 4.10.5 Advertising Opportunities with Mobisodes
  - 4.10.6 Magazines Embrace the Mobile Channel with Mobizines
    - 4.10.6.1 Advertising on Mobizines
- 4.11 Privacy and Spam Considerations
  - 4.11.1 Regulations
  - 4.11.2 Attitudes Towards Spam
    - 4.11.2.1 Perceptions of Spam in the US and Europe Among Operators and Consumers
- 4.12 Demographics
  - 4.12.1 Targeting the Right Product Advertising Towards the Right Age Group
  - 4.12.2 Advanced Mobile Service Users
  - 4.12.3 The Sweet Spot Ages
- 4.13 Key Players in Providing Content to the End-User
  - 4.13.1 Agencies
  - 4.13.2 Mobile Marketing Specialists
  - 4.13.3 Aggregators/Gateway Providers
- 4.14 The Role of Wireless Network Operators
  - 4.14.1 Operator Positioning in the Mobile Advertising Value Chain
  - 4.14.2 Operator Attitudes to Full-Scale Advertising
- 4.15 Revenue Sharing and Billing
  - 4.15.1 Display Advertising Cause Revenue Sharing Splits to be More Evenly Distributed
  - 4.15.2 Technology Services Billing
  - 4.15.3 Premium SMS
- 4.18 Cost of mobile campaigns
- 4.19 How will mobile advertising evolve?
- 4.20 Alternative Advertising Models
  - 4.20.1 Sponsorship of Mobile Services
  - 4.20.2 Advertising funded content
- 4.21 Mobile Search
  - 4.21.1 Internet Search vs. Mobile Search
  - 4.21.2 Mobile Search Takes Off
  - 4.21.3 Proliferation of Major Search Engines into Mobile is Stimulating the Market
  - 4.21.3 Contextual Advertising will Become a Lucrative Market
- 4.22 Market Forecasts
- 4.23 Market Trends
  - 4.23.1 Emergence of more one-stop shops
  - 4.23.2 Emergence of mobile advertising specialists
  - 4.23.3 Outsourcing of Mobile Advertising and Marketing
  - 4.23.4 Demographic Changes will Shift Types of Mobile Advertising and Marketing
  - 4.23.5 Mobile Search Growth
  - 4.23.6 The Fall of the Walled Garden
  - 4.23.7 Falling Costs of Mobile Advertising and Marketing
  - 4.23.8 Increasing Importance of CRM to Mobile Brands and Advertisers
  - 4.23.9 Evolution of a Sustainable Mobile Advertising Business Model
  - 4.23.10 Ad-subsidised MVNOs
- 4.24 Chapter Conclusions
5 Competitive Landscape
- 5.1 North American Marketing, Media, Access, and Platform Companies
  - 5.1.1 Air2Web
  - 5.1.2 AdMob
  - 5.1.3 Captive Interactive
  - 5.1.4 Enpocket
  - 5.1.5 Mobile 365
  - 5.1.6 g8wave
  - 5.1.7 ipsh!
  - 5.1.8 mBlox
  - 5.1.9 mia
  - 5.1.10 MobiTV
    - 5.1.10.1 MobiTV's Advertising Strategy
    - 5.1.10.2 Advertising for live mobile TV and on-demand mobile TV
    - 5.1.10.3 Future Opportunities
  - 5.1.11 Mobliss
  - 5.1.12 Modeo
  - 5.1.13 m-Qube
  - 5.1.14 Neven Vision
  - 5.1.15 Nextcode
  - 5.1.16 PaperClick/NeoMedia
  - 5.1.17 QUALCOMM/MediaFLO
    - 5.1.17.1 MediaFLO's Advertising Strategy
  - 5.1.18 Soapbox Mobile
  - 5.1.19 SquareLoop
  - 5.1.20 Telescope
  - 5.1.21 Third Screen Media
  - 5.1.22 Twelve Horses
  - 5.1.23 Versaly Entertainment
  - 5.1.24 Vibes
  - 5.1.25 Vidiator
- 5.2 European Marketing, Media, Access, and Platform Companies
  - 5.2.1 12snap
  - 5.2.2 Active Media
  - 5.2.3 Ad2Hand
  - 5.2.4 Buongiorno
  - 5.2.5 Dynetics
  - 5.2.6 Emexus
  - 5.2.7 Flytxt
  - 5.2.8 MindMatics
  - 5.2.9 mkodo
  - 5.2.10 Netsize
  - 5.2.11 Opera Telecom
  - 5.2.12 Phonevalley
  - 5.2.13 Que Pasa
  - 5.2.14 Screen Tonic
  - 5.2.15 Streamezzo
  - 5.2.16 Upstream
  - 5.2.17 Watisit
  - 5.2.18 Zamano
- 5.3 Mobile Search Firms
  - 5.3.1 Google
    - 5.3.1.1 Looking to the Third Screen
    - 5.3.1.2 Click-to-call advertising service
    - 5.3.1.3 Call-on-select
    - 5.3.1.4 Towards mobile location-based advertising?
  - 5.3.2 Yahoo!
    - 5.3.2.1 Yahoo!'s Mobile Advertising Strategy
  - 5.3.3 Microsoft
    - 5.3.3.1 Integrating mobile search capability
  - 5.3.4 Action Engine
  - 5.3.5 4INFO
  - 5.3.6 iCrossing
  - 5.3.7 Ingenio
  - 5.3.8 m-Spatial
- 5.4 Mobile Operators' Advertising Strategies
  - 5.4.1 North American Operators
    - 5.4.1.1 Cingular Wireless
    - 5.4.1.2 Sprint Nextel
    - 5.4.1.4 T-Mobile USA
    - 5.4.1.5 Verizon Wireless
  - 5.4.2 European Operators
    - 5.4.2.1 Orange
    - 5.4.2.3 O2
    - 5.4.2.4 SFR
    - 5.4.2.5 Hutchison
    - 5.4.2.5.1 3 UK
    - 5.4.2.5.1 3 Italy
    - 5.4.2.6 T-Mobile International
    - 5.4.2.7 Telefnica Mviles
    - 5.4.2.8 Vodafone
- 5.5 Handset Manufacturers
  - 5.5.1 Nokia
  - 5.5.2 Samsung
  - 5.5.3 Sanyo
- 5.6 Trade Associations
  - 5.6.1 Mobile Marketing Association (MMA)
  - 5.6.2 Mobile Entertainment Forum
  - 5.6.3 Mobile Data Association
  - 5.6.4 ICSTIS
6 Case Studies
- 6.1 Flytxt and Orange UK
  - 6.1.1 Objectives
  - 6.1.2 Solution
  - 6.1.3 Results
- 6.2 m-Qube and NBC/Endemol Entertainment
  - 6.2.1 Objective
  - 6.2.2 Solution
  - 6.2.3 Results
- 6.3 12snap and Coca Cola
  - 6.3.1 Objective
  - 6.3.2 Solution
  - 6.3.3 Results
- 6.4 Mobile 365 and Volvo
  - 6.4.1 Objective
  - 6.4.2 Solution
  - 6.4.3 Results
7 Strategies for Success and Recommendations
- 7.1 Strategies
  - 7.1.1 Mobile Advertising/Marketing Doesn't Stand Alone
  - 7.1.2 Recognise the Channel's Unique Features
  - 7.1.3 Timeliness and Context Awareness
  - 7.1.4 Relevance
  - 7.1.5 Value
  - 7.1.6 Opt-in Only
- 7.2 Recommendations
List of Tables
- Table 3.1: Mobile subscribers, 2004-2010
- Table 3.2: Number of Handsets in Use and Penetration Rates in Selected Countries
- Table 4.3: Penetration of 3G Phones per Country in Western Europe, 2005-2010
- Table 4.1: Comparison of Media Campaign Response Rates
- Table 4.7: U.S. Consumers Who Watch TV Programs on Mobile Phones
- Table 4.6: Mobile Content and Applications Used by U.S. Mobile Subscribers
- Table 4.8: Mobile Marketing/Advertising Participants
- Table 4.10: Mobile advertising cost comparison by bearer technology
- Table 4.4: Relative Monthly Consumption of Mobile Data Services By Type Over 2G and 3G Networks, Quarter Ended December 2005
- Table 4.9: Premium SMS Revenue Sharing Splits - U.S.
- Table 4.2: Advantages of Mobile Marketing vs. Traditional Marketing
- Table 4.5: U.K. Mobile Subscriber Monthly Consumption of Content and Applications
- Table 5.3: ipsh! clients
- Table 5.1: Major Mobile Players by Category in the Mobile and Advertising Space
List of Figures
- Figure 4.1: Mobile Advertising and Marketing Market Evolution
List of Charts
- Chart 3.1: US subscribers purchasing mobile video content, 2005 & 2010 (millions)
- Chart 3.2: Mobile Operators' Data Revenues, as % of total Wireless Revenue (by Region)
- Chart 4.1: Penetration of multimedia-enabled handsets by region
- Chart 4.2: Mobile marketing and advertising expenditures in Japan, 2006 & 2009
- Chart 4.3: LBS subscribers by region, 2005
- Chart 4.4: Total Global Revenues from Mobile Gaming, 2005-2010 ($ billions)
- Chart 4.5: Global mobile TV subscribers, 2005-2010
- Chart 4.6: % of searches relating to adult material on PCs and mobile handsets
- Chart 4.7: European wireless users are willing to receive SMS- promotions on their phones
- Chart 4.8: Mobile Advertising Spending in the UK, 2005 & 2006
- Chart 4.9: Percent of U.S. Mobile Phone Subscribers Who Have Used SMS, by Age Grouping
- Chart 4.10: US 3G subs vs. total subs growth, 2005-2010
- Chart 4.11: Unique users visiting Yahoo!'s and Google's mobile search interface
- Chart 4.12: Global Mobile Search Advertising and Marketing Spend, 2005-2011
- Chart 4.13: Mobile Advertising Investment by Region, 2005-2011
- Chart 4.14: Mobile Marketing Investment by Region, 2005-2011
- Chart 4.15: Mobile Advertising Revenues, 2006-2011
- Chart 5.1: AdMob Revenue Split with Publishers
- Chart 5.2: AdMob Revenue Split with Ad Source Partners
Appendices
- Appendix A Lead author's biography
- Appendix B About visiongain
- Appendix C Report evaluation form 12snap
Companies Listed
- 3GPP
- 4INFO
- 3 Italy
- 3 UK
- ABC
- ABN-Amro
- Absolut Vodka
- Action Engine
- ActiveMedia
- ActiveSky
- Adidas
- AdMob
- Aicent
- Air2Web
- AirCROSS
- Airwide Solutions
- Alltel Wireless
- American Express
- Anheuser Busch
- AOL
- Apple
- Arqiva
- BBC
- Bell Mobility
- Bertelsmann
- Blockbuster
- Boost Mobile
- Boulanger
- Bouygues Telecom
- BT
- Buongiorno Vitaminic
- Cadbury
- Calvin Klein
- Canalsat
- Captive Interactive
- CBS
- Channel 4
- Cherrysauce
- Chrysler
- Cingular Wireless
- Citibank
- Citroen
- Coca-Cola
- Conde Nast
- Crown Castle International
- Cuervo
- D2 Communications
- Dentsu
- Dimension 5
- Dunkin' Donuts
- Dynetic
- Emexus
- Empower Interactive
- Endemol
- Enpocket
- ESPN
- ESPN Mobile
- Experian
- Fandango
- Flytxt
- Ford
- Fox Broadcasting Company
- g8wave
- Gavitec AG
- General Motors
- Gizmondo
- go2
- Google
- Graphico
- Harvest Media Group.
- HBO Mobile
- Hilton Hotels
- HipCricket
- HP
- Hutchinson Whampoa
- ICSTIS
- Index Group
- InfoGin
- InfoSpace,
- ING-Barings
- Ingenio
- Intel
- Internet Broadcasting
- ipsh!
- ITV
- Jamba
- KDDI
- Kelloggs
- Leap Wireless
- LG
- LogicaCMG
- Master Card
- MauiGames
- mBlox
- McDonalds
- Microsoft
- Midwest Wireless
- MindMatics
- mkodo
- Mobile 365
- Mobile Data Association (MDA)
- Mobile DTV Alliance
- Mobile Information Access (mia)
- Mobile Marketing Association
- Mobile Media Sales
- MobiTV
- Mobliss
- Mobot
- Modeo
- MotionBridge
- Motorola
- m-Qube
- m-spatial
- Telia
- Telefnica Mviles
- Third Screen Media
- Texas Instruments
- T-Mobile UK
- T-Mobile Austria
- Twentieth Television
- Turner Broadcasting
- T-Mobile USA
- Twelve Horses
- Time Warner Cable
- T-Mobile Germany
- Telus Mobility
- The Chrysalis Group
- Telescope
- MTV,
- NBC Mobile
- NBC Universal Digital Media
- Neo One
- NeoMedia
- NeoMedia Technologies
- Netsize
- Neven Vision
- Nextcode
- Nike
- Nokia
- NTT DoCoMo
- O2 UK
- O2 Ireland
- O2 Nederland
- Omnicom Group
- Opera Telecom
- Orange France
- Orange UK
- Palm
- PaperClick
- Pepsi
- Phonevalley
- Pot Noodle
- Proctor and Gamble
- Qualcomm
- Que Pasa
- Refresh Mobile
- Rogers Wireless
- Samsung
- Sanyo
- Screen Tonic
- SFR
- Sharp
- SK Telecom
- Sky
- SmartVideo Technologies
- Soapbox Mobile
- Sony
- Sony Ericsson
- Sony Pictures
- Sprint Nextel
- Sponge
- SquareLoop
- Unilever
- Universal Music Group
- Upstream
- USA Today
- Verizon Wireless
- Versaly Entertainment
- Vibes
- Vidiator
- Vindigo
- Virgin Mobile
- VISA
- Vivendi Universal
- Vivid Entertainment
- Vodafone Ireland
- Vodafone Japan
- Vodafone UK
- Walt Disney Co
- Warner Bros
- WATISIT
- Weather Channel
- Weather Channel Interactive
- Western Wireless
- Xero Mobile
- Yahoo!
- Zamano