The Future of Advertising is Happening Now

Comviva White Paper

June 2009
Contents
1 Executive Summary ........................................................................................................ 1

2 The End of Mass Advertising ........................................................................................ 2

3 Era of Engagement ......................................................................................................... 7

3.1. Interactivity.................................................................................................................... 7
3.2. Personalization ............................................................................................................. 9
3.3. Cost Effectiveness ...................................................................................................... 10

4 Mobile Advertising Opportunity .................................................................................. 12

5 Building the Ad Network .............................................................................................. 15

5.1. Multi-Channel Capability............................................................................................. 16
5.2. Customer Intelligence ................................................................................................. 17
5.3. Response Measurement ............................................................................................ 17
5.4. Managed Services Model ........................................................................................... 18

6 Conclusion .................................................................................................................... 20

7 Appendix 1: Mobile Ad Inventory ................................................................................ 21

i
Future of Advertising

1 Executive Summary
Globally, media consumption patterns are rapidly evolving in favor of the digital medium, with
consumers increasingly spending many hours a day communicating, collaborating and chatting online.
Nielsen AC in Global Faces and Networked Places claims the total amount spent online by users
globally increased by 18% between December 2007 and December 2008. Given the growing
engagement quotient with the medium, blue chip brands are steadily rebalancing the overall media
marketing mix - directing more money and more attention to digital media. Specifically, they are scaling
up once-tentative experiments in consumer-created content, social networking, and interactive media to
1
engender effective consumer connections. ZenithOptimedia predicts the Internet‘s share of total
advertising spend will maintain a steady upward trend, growing from 10% in 2008 to over 15% in 2011,
equating to USD84.15 million in revenues globally.

With 4 billion mobile users globally, rapid advances in wireless technology have made mobile devices
the next frontier in digital advertising. The always on, personal, portable and actionable qualities of
mobile as a marketing platform enable brands to construct meaningful, interactive exchanges between
the consumer and the brand. A large majority of customers use their phone for at least one data service,
including text messaging, games, email, mobile Internet, instant messaging, ringback tones and video
downloads, indicative of a broad range of advertising inventory and a scalable market for mobile
advertising. For operators, advertisement-driven business models complement the subscription model,
offering an incremental revenue stream, as well as an opportunity to promote services uptake. In its
report, Mobile Content and Services 7th Edition Informa forecasts mobile advertising revenues will
register 47.7% compounded annual growth between 2008 and 2013, generating USD 12.1 billion in
revenues.

Advertiser investment in the medium, however, has failed to keep pace with the rapid growth of mobile
media. The digital revolution, with its global access and user empowerment, comes with tremendous
strategic uncertainty. Operators, as well as advertisers, need to overcome several consumer and
business related impediments to realize the opportunity. The personalized nature of the mobile
environment means operators need to resolve issues around consumer privacy and usage of customer
personal data for targeted advertising. Further, the unfolding opportunity has attracted a range of
players including established brands such as Yahoo and Google, as well as a number of start-ups,
resulting in a complex mobile ecosystem and a range of evolving business models. For operators
already contending with growing consumer interest in off-deck content and services, players offering
marketers a viable direct path to end-users is a distinct reality. While it is too early to predict the players
and the business models, which are likely to survive in the long-term, it is crucial for operators to act
quickly to consolidate their position in the value chain and capture a share of advertising dollars. To
adapt and succeed – operators must build a new set of capabilities now - incorporating cross-platform
innovation, greater insights, open collaboration and digital processes. This paper focuses on specific
strategies that operators must adopt to develop a successful ad network.

1
ZenithOptimedia is a media services market data provider focussed on advertising expenditure forecasts

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Future of Advertising

2 The End of Mass Advertising

Globally, the media landscape has evolved into a complex and dynamic conglomeration of both
traditional and interactive media that seek to serve the needs of today's fast-paced consumer lifestyles.
The proliferation in channels, brands and screens signals a rapid evolution in media consumption
patterns and an end to absolute domination by a single medium. Patterns of media consumption are
also rapidly evolving. There has been an explosive increase in the amount of multitasking amongst
consumers – which has generated the term 'perpetual partial attention‘. People who watch television
are also instant messaging with a friend or they‘re going online to understand various points of view
about the story and maybe to view alternative photographs from a citizen journalist. 'We are reaching a
critical threshold where new digital channels have equal or greater impact than conventional linear
media such as TV. Studies from several countries show that consumers spend a significant amount of
time on digital mediums to source information and entertainment as well as to communicate,
collaborate, and engage in a variety of social interactions. Nielsen AC in Global Faces and Networked
Places March 2009 claims the total amount spent online by users increased by 18% between December
2007 and December 2008. Likewise, Synovate Research‘s 2008 Young Asians Survey indicates Asian
youth spend 4.8 hours a day on the Internet, the maximum time dedicated to any media.

Share of Weekly Time Spent on Media

Share of Weekly Time Spent on Media Share of Daily Time Spent on Media
- Europe - Asia

5% 5% 11%
7% 33% 9% 37%
7%
9%

17%

26%
34%

Internet Television Radio

Internet Television Newspapers
Cinema Video games Newspapers
Magazines Magazines Radio

Source: Synovate Research2

The proliferation of media (from yesterday‘s print, radio, and TV to today‘s Web, cell phones, podcasts,
GPS systems, video games, PDAs, and more) and the concurrent fragmentation of audiences is
transforming the dynamics of the advertising industry. Old structures and ways of working persist but
are fundamentally challenged by newer, more dynamic, more innovative alternatives. Traditionally,
advertising is defined as "a form of controlled communication that attempts to persuade consumers and
shapes purchase behavior, through use of a variety of strategies and appeals, to buy or use a particular
product or service‖. However, it is becoming abundantly clear that although the central goal of
advertising is still the same - to persuade consumers to purchase a product or service - the media
environment in which advertising is placed is changing, and, as a result, the nature of advertising is
changing as well. Primarily, advertisers will have to reengineer core approaches and adopt new

2
―Synovate Young Asians Survey 2007‖. Sample size - 11,886 8-14 year-old respondents across 10 Asian markets.

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Future of Advertising

mediums and formats which offer more intrinsic value to consumers to capture a meaningful share of
audience attention.

Why Companies Advertise

A marketer‘s-eye-view of a successful ad campaign as it moves from awareness, through increased

interest, all the way to regular and consistent purchase. At each step, the marketer seeks a way to move
the product deeper into the funnel.

Source: Booz Allen Hamilton 3

The power of a
medium in Evolving Media Environment

reaching out to
customers and
strengthening

the relationship
between the
brand and the
consumer is of
central
importance to
marketers.
Previously,
advertisers could
construct a
consumer
archetype and
push information
about their brand
via a 30-second
commercial with Source: IBM
reasonable
certainty that it would reach 80% of adults. This traditional one-to-many advertising model loses its
effectiveness when choices are infinite and audiences diffuse.

3
―Synovate Young Asians Survey 2007‖. Sample size - 11,886 8-14 year-old respondents across 10 Asian markets.

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Future of Advertising

As users migrate to new screens for content and information, advertising and marketing need to shift as
well. It is more important than ever to reach consumers where they want, when they want and how they
want. Accordingly, brands are rebalancing the marketing channel mix. Specifically, they are optimizing
the brand‘s digital footprint and directing attention, as well as budgets, to digital media. Toyota, for
instance, recently spent USD4 million on a dedicated YouTube channel for its 2009 Corolla sedan
campaign. To drive consumption, brands such as Coca-Cola and Burger King have launched interactive
branded online applications for consumers, including games and virtual chat rooms. These are not
standalone cases; the impact is becoming evident in every consumer sector, from apparel to household
goods to food to automobiles to appliances — and in business-to-business marketing as well. Digital
channels now constitute a sizeable share of the media mix for several brands, which is reflected in the
4
narrowing gap in advertising spends between broadcast and digital media. Zenith Optimedia estimates
that the Internet‘s share of global advertising spend will grow from 10% in 2008 to over 15% in 2011,
translating into USD84.15 million in global revenues.

Share of Global Advertising Spend by Medium

Share of Worldwide Ad Spend by Medium

50
% Share of Global Ad-

40
30
Spend

20
10
0

2007 2008 2009 2010 2011

Source: Zenith Optimedia

However, connecting with digital

consumers is not simply a matter of Digital Content Interaction
altering the channel mix and bolting on
banner advertisements against a few
likely web sites to see what sticks.
New age marketing requires a
completely new set of formats to
connect with customers.

For decades, users have lived in a

world of professionally produced
content delivered on closed
distribution platforms to dedicated
devices. Broadcast television is the
classic example. Historically,
advertising shares the same
qualitative characteristic as the media
that carries it, a one-way street, which Source: IBM

4
ZenithOptimedia is a media services market data provider focussed on advertising expenditure forecasts.

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Future of Advertising

consumers lean-back and view passively, allowing the media experience to wash over them.

Media proliferation and fragmentation in consumption patterns, however, dampen the effectiveness of
traditional linear advertising formats that rely on centrally scheduled programs to deliver undifferentiated
advertising to a mass audience. In responding to this challenge much advertising has become more
colorful, more vibrant, bigger, faster-paced, louder, and more "in your face‖. In fact, the ―quiet‖ ad stands
out from the others because it is so rare. While the aggressive, ―more is better" approach may succeed
in the short run, it is likely to fail in the long term as consumers habituate to the new style and learn to
ignore even the most aggressive messages. Where advertising was once a desirable form of
information — there is now such an enormous amount of information available ―on demand‖ that
traditional advertising can prove an annoyance, given that it is one-sided, questionable, and provided at
the wrong time. The Daniel Yankelovich Group estimates an average citizen, who lives in a city,
encounters 5,000 advertising messages a day. That translates to an exposure rate of more than 3
adverts per minute and represents a significant increase from the estimated 2,000 advertisements the
same person would have seen during a day in the mid-1970s, when advertising focused on network TV,
magazines, newspapers, and radio. Consequently, it is much harder for on-brand executions to break
out of the clutter and create an impact.

The act of consuming media

online has become Worldwide Top 10 Social Media Sites

synonymous with the act of

producing media. Content and
formats once controlled by
media broadcasters and
distributors are moving toward
an open market for delivery
systems. Digital channels are
lean forward mediums,
allowing users to prosume
(simultaneously consume and
produce) content. In a multi-
screen, media-rich world,
consumers can no longer be
considered ‗the audience‖ —
they increasingly control the
media experience and are
simultaneously readers,
editors, marketers, media
producers, programmers, and
distributors. Taking advantage Source: Comscore Source: Always
of rising customer
individualism, firms are offering customers online tools allowing modification, customization or even the
design of company products. Pepsi recently invited fans to design their soft drink cans in the ―Design
Our Pepsi Can‖ contest (www.designourpepsican.com), with the best idea adopted as the new look of
the product in regular intervals.

Interactivity and electronic publishing have democratized information, transforming the advert into one
input to a conversation that consumers conduct 24/7 in digital forums or blogs or on social networking
media. As a result, marketing is less about pushing messages to customers and more about listening,
facilitating and co-creating messages. Brands need to recognize there is a conversation going on in the
marketplace that they should join, not dominate. (View How Companies are Changing the AdPlaybook).
By participating, companies become actively involved in the relationship, creating new opportunities,
correcting misinformation, offering insights, developing a reputation, and potentially building a long-term
relationship with the most influential people in a given market.

5
―Synovate Young Asians Survey 2007‖. Sample size - 11,886 8-14 year-old respondents across 10 Asian markets.

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Future of Advertising

How Companies Changed the AD Playbook

SINCE THE LATE 1980S, three little words and an iconic logo defined one of the world‘s most successful brands.
The words were: ―Just Do It.‖ The logo was the famous Nike swoosh. Together they conveyed a competitive spirit
and gritty brand image that gave consumers a memorable point of differentiation in a marketplace cluttered with
seemingly similar products.
Gone are the days of ‗one shoe, one advertising campaign. Over the last few years, Nike has been steadily
increasing the role of digital media in its marketing mix. For example, in advance of the 2006 World Cup
tournament, Nike teamed up with Google to launch an online social community targeting soccer fans and athletes.
It was precisely the kind of interactive and viral media environment that spoke directly to the consumers with whom
Nike most wanted to build relationships, with a precision and intimacy not available in television or print ads.
Christened joga.com, the site recorded more than 110 million downloads of soccer-related information and media
clips.
Joga.com was just one of several innovative initiatives that transformed Nike‘s marketing and advertising prowess.
Another was developed around Nike+, a joint venture between Nike and Apple that allows iPod users to monitor
their workouts using a sensor in their Nike footwear, tracking their calorie-burning and heart rates in real time and
online. In partnership with R/GA, a division of the Interpublic Group, Nike and Apple created nikeplus.com, an
experiential, Web-based service that offers much more than just eye-catching advertising. On nikeplus.com,
consumers could post their workout results, share favourite running routes, compare their efforts to those of
professional athletes, such as Lance Armstrong and LeBron James, and even download music mixed specifically
to inspire and motivate.
Nike+ effectively hit all of Nike‘s objectives: it was high on relevance; it was engineered for interactivity and
community; and it was scalable, appealing to both serious runners and novices.

PFIZER, the pharmaceutical giant, announced in September 2007 that it had partnered with Sermo.com, the
fastest-growing social networking site for doctors. Sermo.com, endorsed by the American Medical
Association, offers doctors the ability to network with colleagues to discuss medical cases and/or
problems. At the time of the announcement, 30,000 doctors in the U.S. frequented Sermo.com and an
additional 2,000 doctors were joining each week. (Sermo.com expects to open its site to non-U.S. doctors
this year.)

Sermo.com prohibits any advertisements on its site, but Pfizer management sees collaboration with
Sermo.com as a way of lowering costs and reducing inefficiencies in its relationships with doctors.
Everyone benefits: Members of the site get to partake in an interactive online social community, within
which they have the opportunity to publish and receive feedback on numerous medical issues. For Pfizer,
the site serves as an efficient way of letting doctors obtain information on its drugs, improving relations
with the medical community, and getting assessments from physicians on its clinical trials. Furthermore,
Pfizer sees Sermo.com as a way to reignite growth within the company and prepare itself for changes in
the drug market.
Other major pharmaceutical companies have taken note of Sermo.com's success and many are expected
to create their own physician social networking sites.
Source: Always on Media 6

The need for advertising forms to continue to evolve with new commercial media channels and
platforms is clear. However, the future of advertising does not revolve around a divorce from traditional
mediums to live in a digital world. We believe the advertising industry will have to address a bifurcated
market of avant-garde, fashion-forward consumers as well as the large traditional segment. These vastly
different markets mean companies need to adopt a dual strategy, focusing on traditional and emerging
digital business to reach audiences effectively. However, participation in the future of marketing and
advertising is not optional; it is mandatory. This paper focuses on the ways in which players in the
advertising ecosystem can leverage mobile as a medium, which will enable marketers to fashion new
kinds of advertising and marketing for a new ―always-on‖ era—anchored firmly in interactivity, relevance
and measurability.

6
―Synovate Young Asians Survey 2007‖. Sample size - 11,886 8-14 year-old respondents across 10 Asian markets.

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Future of Advertising

3 Era of Engagement
Consumer interaction is of central importance to the culture and economies of new pervasive media and
defines the future of marketing. To succeed, agencies must rethink content, move away from "show and
tell" advertising and adapt new interactivity models, enabling consumers to participate in the persuasion
process by allowing them to select the content, timing and communication act as well as respond to the
advertising message.

Until now, the online medium has dominated interactive advertising. In most emerging countries,
however, consumer adoption of digital mobile telecommunications outpaces the Internet. With 4 billion
users globally, rapid advances in wireless technology have made mobile devices the next frontier in
mobile advertising. The always on, personal, portable and actionable qualities of mobile as a marketing
platform enable brands to construct meaningful, interactive exchanges between the consumer and the
brand. A large majority of customers use their phone for at least one data service, including text
messaging, games, email, mobile Internet, instant messaging, ringback tones and video downloads -
indicative of a broad range of advertising inventory and a scalable market for mobile advertising.
Compared to other channels, the mobile medium offers advertisers the following distinct benefits to
reach consumers.

Changing Consumer Behaviour and its Impact on the Advertising Value Chain

Source: IBM

3.1. Interactivity
Interactivity is a complex and multi-dimensional concept and there is little industry agreement on its
associate conceptual and operational definitions. McMillan (2002) proposed concepts of interactivity
could be subdivided into three primary research traditions: user- to-user, user-to-message and user-to-
system interactions. McMillan emphasizes multiple forms of interactivity and suggests researchers in
this area should locate their work within one or more of these three traditions and draw upon the
literature specific to that tradition.

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Future of Advertising

User-Message Interactivity
From an advertising perspective, user-message interactivity refers to the degree to which a person
actively engages in the advertising process by interacting with the advertising message. Interactive
creativity recognizes that people are inherently social and look to create and maintain relations not only
with other people but also with brands. All advertising is interactive to the extent it generally seeks to
affect human behavior, attitudes, or dispositions. Conventional media environments generally do not
have embedded return paths but that does not mean they are devoid of interactivity. It means that
conversational interaction is generated through other feedback systems, for example, consumer,
market, and audience research.

The interactivity offered by mobile phones embedded with real time response mechanism is potentially
greater than any other advertising medium. In an interactive advertisement campaign, the user
responds to an advertisement via an SMS or a WARP click. For example, when presented with an
interactive advert, users can respond (i.e., request more information, enter a contest, add comments)
using text, voice, or instant messaging, social networking, or a WARP click. Embedded interactive
mechanisms trigger one-to-one conversation between the user and the brands, enable advertisers to cut
out the noise, successfully capture consumer attention for the duration of the interaction and result in a
marked improvement in the marketer‘s ability to promote brand awareness and purchase consideration.

User-User Interactivity
User-to -User interactivity recognizes the increasing centrality of the producer and the consumer in the
business of new media. Vast new opportunities for enhancing conversational engagement with
consumers, and between consumers, open up as marketers augment and adapt their activities in line
with the medium‘s capabilities. We look at two models of use-to-user interactivity

 User-Generated Content: The availability of low

cost tools allowing new creative input from consumers,
semi-professionals, amateurs and nontraditional players
is adding a new dimension to interactive advertising.
Inexpensive video and photo-editing tools create
opportunities for hobby tribes and individual users to
self-produce and repurpose advertising – a form of
creative populism. Brands are increasingly collaborating
directly with advertisers to create a participatory culture
and develop products as well as innovative and
strategic marketing campaigns that go beyond the
traditional advertising formats.
 Electronic Word of Mouth: This digital
phenomenon relates to how customers use social
networking platforms to share with peers their
preferences, experiences and recommendations about
brands, products and recent purchases in a manner
that is more authentic and compelling than traditional
marketing and messaging vehicles. Electronic word of
mouth (eWOM) refers to "oral, person to person
communication between a receiver and a communicator
whom the receiver perceives as non-commercial,
concerning a brand, a product or a service.‖ Although
UGC is closely aligned and often confused with eWOM,
the two differ depending on whether the content is
generated by users or the content is conveyed by
users. For example, video blogs produced and posted
by users is UGC. However, a mobile user who sends
ROI on Mobile Advertising Campaigns
Knorr Foods, a subsidiary of Ajinomoto Inc., has
tried to involve younger female consumers in the
development of a new Soup Pasta. In 2007,
Knorr was in the midst of developing a new Soup
Pasta to target the primary gourmets of noodle
cuisine: younger, female consumers. Bringing a
new product to market is not an easy task, but in
this case, the hardest question was how to
develop a Soup Pasta that fit the target
segment's taste preferences. To generate and
commercialize the product successfully, the
company needed frank and honest opinions from
young, female consumers during the idea
generation, idea screening, concept
development, product design, and detail
engineering phases. To this end, Knorr decided
to tie its new product development project to the
Tokyo Girls Collection.
Knorr created a mobile campaign site, on which
star model members maintain their blogs and
report their participation in the product
development process. The discussion threads
serve as input for the idea generation and
screening. Through this project, Knorr developed
a new Soup Pasta that embodies the key
attributes identified in the mobile blogs. The new
product was introduced at the following year's
TGC venue, during which sampling took place
through catering trailers.
Source: Interactive Advertising Journal; Mobile
Finds Girls' Taste: Knorr's New Product
Development

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Future of Advertising

her friends a link to a moblog is engaging in eWOM. If the content conveyed has been generated by the
users, it can be both UGC and eWOM. Thus, though UGC and eWOM are distinct concepts, they are
related; to be successful, eWOM depends on the dissemination of content, and UGC has less influence
without eWOM.

 Properly managed eWOM has a significant influence on consumers' decision-making processes,

especially when they look for inform action about products, brands, or services. Research shows that
word-of-mouth (WOM) communication plays a more important role than market-generated information,
such as advertising or personal selling, in influencing consumer behaviors as consumers perceive
WOM as more trustworthy, which may lead to greater.

 The mobile medium offering constant connectivity allows innovative advertising formats, which
enable users to share brand experiences. Further advertisers can draft influencers to advocate the
brand message. Participation, remediation, collective intelligence, allow many more stories to be told,
and enable users to become much more involved with brands than ever before.

3.2. Personalization
Mobile phones are a most powerful symbol of individuality in the modern world. From appearance to
color, from ringtone to MMS, everything about a mobile phone speaks to the character and tastes of its
user. Consumption patterns indicate mobile users are an active force in the mobile ecosystem, which
provides content, applications and ―habitats‖ for creativity and expression. When subscribers turn on
their mobile devices, they want to get the services and applications they want, when they want them,
where they want them, and how they want. Advertising formats, therefore,evolve to contextual,
interactive, and permission-based messaging to retain consumers‘ attention and to help minimize both
irritation and ―tuning out".

Creative intelligence about customers and not creative content alone is critical to deliver relevant
advertisements which resonate with the customer. As an advertisement medium, the mobile offers
tremendous insight into who each individual consumer
is, where that consumer may be present at any given Search-based Advertising
point in time, and what are the user‘s preferences based
on previously "learned" behavior patterns, enabling British carrier group Vodafone will soon launch
location-based advertising. The service will allow
brands to implement subscriber-intimate marketing and
advertisers, such as restaurants or shops, to
take advantage of cross-selling opportunities: overlay their logos on maps. The carrier is also
building a range of opt-in location-based
Context-based Targeting advertising services around Wayfinder, including
one ―Power Search,‖ a location-aware, mobile
The mobile phone is a highly personal device. Within a version of Google‘s AdWords. The service
typical household, a number of individuals respectively allows users to enter a search term and it returns
read, watch and browse the newspaper, television and results based on where you are, such as finding
the desktop PC On the mobile phone, the use of calling, the nearest restaurant. Advertisers would pay to
texting and browsing services is overwhelmingly get to the top of the list very much like they do
on Google. The new services will roll out in
confined to the customer. The mobile is the only
western European markets first, most likely in
personal medium, with a unique personal identifier i.e.
the UK, Germany and Scandinavia, three of the
the MINDS. When the user initiates a transaction over 19 territories where Wayfinder is currently
the mobile, the marketer can be confident of the available.
customer‘s identity, which is not the case when an online
connection is used. For instance, in event of a customer Source: MocoNews
using the mobile to regularly visit a Fomula One racing
site, download James Bond movie trailers and pay a toll charge using the mobile, the advertiser can
conclude with reasonable certainty the consumer is a James Bond fan, watches Formula One racing
and drives a car to work. This information is extremely valuable to business-to-consumer marketers. In
an age of ongoing customer fragmentation, it enables lifestyle micro marketing, which is missing in
today's mass-market advertising models.

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Future of Advertising

In an era where pervasive media improvement and development of new business models requires
advertisers to accurately understand subscribers‘ usage patterns, aggregating information on user
behavior and services usage and correlating it with insights including time, location, demography, and
users‘ search preferences , can help advertisers efficiently adapt messages to user preferences and
maximize call-to-action response rates. This micro-marketing capability translates into an improved cost-
per-thousand (CPM) response performance perspective, a better cost-per-acquisition metric and, finally,
a better brand experience metric. The following features contribute in building a contextual framework
for ad-delivery.

 Location-based Targeting: Location is a prime form of context information and adds a compelling
new dimension to advertising. Integrating GPS-based location-based systems can allow advertisers to
track the approximate position of target customers to deliver localized advertisements and/or
information relevant to a certain area related to his position. Examples include location-specific
advertising, which provides information and advertising in the form of city guides, places to visit and
dine.

 Search: Advertisers are increasingly exploring search to deliver contextual, relevant advertisements.
A combination of query characteristics including specific keywords and location is used to deliver the
advertisement. For example, if a subscriber queries a particular car brand, the marketer can display
related information on car deals within in the user‘s geographic proximity. Advertising based on
intention presents itself in the context of the user and has a much better chance of converting a lead
into a customer.

 Geo-targeting: Most serving technologies available today allow a wide spectrum of region-specific
advertising - one can target as narrowly as a certain postal code. Geo-targeted advertising is becoming
more and more important within the industry, particularly as countries with a low level of Internet
penetration get on the web. Mobile phones enable brands to geo-target advertisements, i.e. display
regional WAP adverts. For instance, a global company with regional brands can ensure WAP banner-
ads are displayed when the site is
accessed from India.
Context-based Advertising

 Computing Context: Ownership of a

User Identity,
specific device is indicative of the Context
Usage Profile
customer‘s net worth. Device targeting
enables advertisers to target subscriber Demographic Profile
demographics based on device Location (not only geographic location but also
capability. For example, luxury brands localized i.e., on which street )
may want to deliver advertisements to Computing Network Connectivity and Bandwidth
high-end devices. Likewise, brands that Context
Type of Wireless Device
launch video campaigns will target users
Screen Size
who posses high-end devices with video
playback capabilities. Type of Operating System

History When the above context are recorded over a

However, the operator‘s success in period of time
service personalization depends on the
Source: Comviva
responsible use of technology.
Operators will need to carefully manage trade-offs between personalized services and security and
privacy concerns.

3.3. Cost Effectiveness

Advertisement spots on prime-time television and popular national dailies are expensive. As the
sources of media content have proliferated — first through cable, then satellite, and more recently the
Internet — the audience for each individual source has shrunk, dispersed among the various options.
Nevertheless, the cost to produce and distribute a television show has remained relatively stable.

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Future of Advertising

Therefore, if the audience for that show is smaller, then advertisers are in effect paying a higher per-
person advertising rate.

The mobile phone offers brands a cost-efficient medium

to target users, ensuring better ROI. In addition, mobile ROI on Mobile Advertising Campaigns

advertising has a much greater chance of cutting

through the clutter and reaching the eyeballs of its
target audience than advertising through traditional
media. According to Kevin Clancy, an advertising
industry expert, the average ROI of television
7
advertising campaigns ranges between 1% and 4%,
while ROI from targeted mobile advertising campaigns
is as high as 300-400%. Compared to Internet
advertising, the absolute cost of mobile advertising
campaigns is higher. However, the average click-
through rate (CTR) for mobile is superior, increasing the
overall cost-effectiveness for brands. According to
Informa‘s estimates, the average CTR for online
8
adverts is below 0.5% , whereas the CTR averages 4%
on the mobile web with several targeted campaigns
9
yielding results as high as 7% to 12% .
BMW launched am MMS to promote the use of
winter tires among German consumers. The
advert was targeted at 117,000 mobile
consumers, and generated USD 45 million in
sales – an approximate return of USD 750 for
every dollar spent
Luxury brand Dolce & Gabbana launched a
mobile advertising campaign targeted at teen
and young adult customers. When users
clicked on the WAP banner ad, they were
lead to a downloadable game, branded
wallpaper and a product catalog. The click-
through rate was an approximate 10%,
significantly higher than the average CTR for
Internet banner ads
Source: Comviva

Comparative Matrix

Cost-
Medium Context Targeting Personalization Interactivity
Effectiveness

Television M M L M L

Radio M L L M L
Cinema M L L L L
Outdoor L L L L L
Print M M L L L
Internet H M M H H
Mobile H H H H H
Source: Comviva

Based on this research, it is apparent that telecom service providers can position the mobile as an
optimal channel through which to reach individual consumers with very targeted and relevant messages
- resulting in a higher degree of purchase response. Until now, advertisement investment in the medium
has failed to keep pace with its rapid growth and potential. To address this gap, Comviva believes
service providers must begin now to design and implement a long-term plan that integrates business
strategy and operational management. The next section focuses on the emergent opportunity from an
operator perspective and the fundamental building blocks of the mobile advertising ecosystem.

7
―How to Improve Marketing ROI: Free Kevin Clancy Web Seminar Offers Five Ways to Improve Marketing Performance‖
8
Mobile Content and Services, 7th Edition, Informa Telecoms & Media
9
Mobile Marketing Association

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Future of Advertising

4 Mobile Advertising Opportunity

Service providers who intend to capture the mobile advertising opportunity need to reorient business
models. Until now, the strategic focus of this industry has traditionally been on initiatives that maximize
the share of a consumer's "wallet". However, high-speed Internet access, mobile services and
traditional telephony offerings to the home and office have saturated that compartment of the
consumer's wallet, compelling operators to look to non-subscriber sources of revenue - advertising. As
a result, Comviva believes the time is right to introduce advertisement-driven service models that allow
operators to not only tap into new revenue streams without the limitation of available end-user wallet
share but also, most importantly, to differentiate themselves from competitors.

Across markets, mobile data services contribute a sizeable segment of operator revenues. For
instance, in Q3 2008 South African operator Vodacom generated 27.91% of total revenues from data
services, whilst Filipino operators Smart and Globe Telecom reported revenue contributions of 45% from
data services. Globally, Informa Telecoms & Media estimates mobile data revenues climbed to USD 200
billion, registering a 35% growth in 2008.

Regional Data Revenues

Source:
Informa Telecoms & Media

Notwithstanding the growth, a limited set of offerings, primarily SMS and music-based services,
10
contribute the bulk of data services revenues . Several studies among UK-based customers in the age
groups 18-35 reveal the high cost of premium value-added services is a significant barrier to mass
adoption. Further, over 50% of the respondent base reported a willingness to receive targeted
11
advertisements in exchange for free access to mobile TV and video content.

10
SMS contributes 50%
11
The survey was commissioned by QuickPlay Media and conducted by online survey services provider Zoomerang

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Price Barrier to Premium Services Uptake

If you have not tried mobile TV or video service, Would you be willing to watch a short targeted
what is the biggest reason why? advertisement on your mobile device to have free
access to mobile TV and video content?

Think it will be too

expensive
50 60% 53%
Others 20 50%

% of respondents
Mobile phone does not 40% 34%
support it 12
Friends tried it but didn't 30%
like it
8
Not enough quality 20% 13%
content
6
Don't know if service is 10%
available to me 4
0%
0 20 40 60 Yes No I don't know
% of respondents

Source: Zoomerang

Over the Internet, ad-discounted service models have become the norm. Google and Yahoo have been
successful at monetizing ―tens of millions of expressions of interest and intent‖ via their search engines
by converting them into ―highly targeted advertising‖ opportunities for the ―long tail‖ of products that
appeal to a wide range of tastes. With growth in off-deck content, this poses a significant threat to the
operator. Ad-funded business models enabling operators to underwrite ―freemium‖ services – free of
charge premium services – can maximize usage by existing customers as well as promote services to
new users.

Examples of Non-Intrusive Freemium Ad Formats

Advertisement Users subscribe for the type of content they wish to receive, such as sports information, weather
as Content updates, astrology alerts, etc. with the operators. Turkcell is a major proponent of this model and
has forged partnerships with several brands including Akbank, Coca-Cola, Kraft, Nestlé, Unilever
and Proctor & Gamble to deliver sponsored messages to subscribers. The operator claims 6
million users have subscribed to its European football goal service, sponsored by Coca-Cola.
Likewise, Turkcell‘s ad-sponsored weather service has attracted 2 million subscribers. Besides
sponsoring text content, leading consumer brands such as Pepsi have joined forces with content
providers to offer customers free music in the form of ringtones in return for viewing their brand
adverts. Content sponsorships are becoming increasingly popular as a way to ascertain that
viewers actually spend time watching the advertisement. For example in Indonesia, Utones has
launched a mobile application that enables users to receive mobile content in exchange for
accepting mobile ads. Consumers receive points for each ad viewed —which can be redeemed
for ringtones, wallpapers, games or even cash awards.
Downloadable Integrating advertising within mobile applications opens a new revenue stream for service
Applications providers which may be used to partially or completely subsidize the price of a mobile application
or the service provided by the application. For example, Mxit, a leading independent IM service
provider integrates advertisements with its IM client. Branding, customer relationship
management, or driving users to a mobile website are the primary objectives for in-application
advertising.

Banners Static or animated image, text, or a combination of these is placed in defined areas within the
application, for example, on the application main-menu page or sub-pages. Users can navigate
or click on dynamic banners to access more information from the advertiser.

Full Screen Full-screen adverts comprise one or more static or animated images, text, audio, and/or video,
Advertising which may be placed as the opening screen for the launch (pre-roll), or exit (post-roll) of an
application, or as a splash or jump page within the application. The user is able to navigate and

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Examples of Non-Intrusive Freemium Ad Formats

click the full-screen to access more information from the advertiser

Embedded Embedded advertisements are formatted to be compatible with the main content type used in the
Adverts application context. They can be resized, reshaped, and freely positioned as part of the core
application content. Adverts are frequently embedded within games. Examples include flags on a
race track or soccer field billboards. Broadly, there are two approaches currently followed to
embed ad-content within applications. Some companies, such as Amobee, obtain source code
from developers in order to ad-enable their products. Others, such as GreyStripe and Actionality,
automate the process so that adverts are injected at the network level.

Source: ComvivaTM

Informa believes mobile advertising revenues

will register a compound annual growth rate Figure 5: Mobile Advertising Revenues
of 47.7% and touch USD12.1 billion in
revenue by 2013. The mobile advertising Mobile Advertising Revenues
opportunity has attracted several players,
15 80
including established players such as Yahoo, 57.69 12.1
Google, and Nokia, as well as a number of 52.94 48.78 42.62 60
start-ups to the mobile advertising 10
marketplace, resulting in a highly complex 39.08
6.1 40
and fragmented ecosystem. 4.1 8.7
5
Growing interest in off-deck content has 2.6 20
1.7
weakened the operator‘s hitherto dominant
position in the value chain. Brands today 0 0
have a real option to buy advertising 2008 2009 2010 2011 2012 2013
inventory directly from Google, Yahoo or
Revenues (USD Billion) Revenue Growth (%)
MSN or stand-alone hosted application
providers, such as games and IM. For
example, Mxit, one of the largest operator- Source: Informa Telecoms & Media
independent IM communities has
successfully inserted adverts with its MIxit
client. Likewise, Greystripe, the world‘s Figure 5: Mobile Advertising Revenues
first ad-funded mobile gaming network,
includes 800 free mobile games from 70
publishers accessible across networks.
With more than 14 million games
downloaded in a 12-month period
between 2006 and 2007, the Greystripe
ad-funded model is a huge success.
Screen Digest predicts globally users will
download over 60 million plus ad-funded
mobile games. To win the battle of shifting
value chains and capture a sizeable share
of the market, operators need to invest in
a new set of competencies to negotiate
rapid shifts and maximize perceived value
to advertisers. Comviva research
concludes that to adapt and succeed –
especially in the current economic
environment – operators need to build a Source: Heavy Reading
new set of capabilities based on open
collaboration, multi-channel innovation, greater consumer insights, and accurate measurement
processes.

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5 Building the Ad Network

With 4 billion customers, the reach of many telecom operators collectively exceeds that of Internet
players. Telecom operators are typically better placed to build and develop relationships with local
advertisers than global organizations like Google, precisely because they are local or national
themselves. Moreover, many operators have already developed solid relationships with local advertisers
through their directory businesses. They also collect vast quantities of consumer data, which they can
use to develop profiles of their subscribers, including the demographic characteristics, personal
attributes and preferences of those subscribers – and even, perhaps, their viewing patterns, in the case
of those operators that have the relevant analytical tools and capabilities. They can combine these
insights with their ability to identify where individual users are based and offer highly targeted, localized
promotions. The opportunities for telecom operators in the mobile advertising space translate into four
broad imperatives:

 Service Delivery Network: In the first scenario, operators leverage their gateway role to deliver third
party advertisements. Mobile users access external sites directly. Content is provided by third parties
and advertisers forge direct alliances with content providers. The operator gains a share of click
revenue stream. Here the operator has a relatively weaker position and the threat of disintermediation
is real.

 Smart Add Delivery Network: In the second scenario operators benefit from functioning as a
connectivity pipe as well as monetizing the ability to track user behavioral patterns across the network.
In this model, the network operator not only provides connection to the end user, but drives accurate
targeting by combining opt-in, permission-based information, click-stream analysis and data on
consumption patterns. As the advertising budget spent off portal could be substantial in the future,
operators should consider this opportunity. Operators have a distinct advantage due to the information
they already have about their customers. Fostering the exchange of information between customers
and operators is a critical foundation for the model.

 Closed Advertisement Network: The third scenario involves selling advertising space, for
example, in the form of banners within their own content and application inventories. Whilst a great deal
of attention has been paid to mobile web, operators own unique service delivery bearers and
application assets including SMS, USSD and RingBack Tones, which can be used effectively to deliver
innovative advertisement campaigns. Operators own a large number of applications. With this scenario,
already launched by Vodafone and O2 in Germany, operators have full content ownership and
responsibility for the advertising space.

 Open Advertisement Exchange: The fourth scenario involves managing, buying and selling
inventories in-house services and application as well as third party sites. In effect, operators become
large-scale advertisement aggregators. Operators embrace an open collaboration model, provide
advertisers access to the marketplace, as well as the toolsets to support multiple advertisement
channels, formats, models, and advanced targeting strategies. Mobile service providers need to
strengthen cross-industry partnerships by bringing together agencies, aggregators and platform
vendors as well as enabling business processes, cultures and key technologies. The open ad
exchange model can help operators capture a significant share of the multi-billion dollar industry.
According to Informa Telecoms & Media, advertisers will spend more than USD 11 billion by 2011 on
mobile marketing – operators could stand to garner 50% of the share as they negotiate deals with
partners.

The specific path and business model is dependent on the scale and the size, of the operator. Most
service providers will adopt a gradual evolutionary path and multiple business models may coexist in the
mid- term. Over time, Comviva believes that operators with multi-country networks will assume the role
of an open ad exchange – managing the ecosystem, buying, and selling advertisement inventory.

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5.1. Multi-Channel Capability

An impediment to mobile advertising‘s growth has been the choice and the complexity that exists in the
ecosystem. Mobile operators have several channels with different capabilities in terms of reach,
effectiveness and sophistication which can be used for mobile advertising (View Global Mobile
Advertising Spend and Appendix 1). The possibilities for mobile ad placements are just as vast in the
mobile space as in the TV arena. If a company wants to advertise a blender, perhaps a recipe
application is the perfect place to place such a promotion or the ad could pop up when users hunt for a
café, or users receive a coupon for use at a café that uses the blender, or they could receive an SMS to
enter a recipe contest. Depending on the operator‘s existing business model (example quad play service
provider) and the chosen mobile advertisement model, multi-channel capabilities could extend to
multiple networks.

As a composite of media channels, a marketer looks at the mobile, sees dozens of choices to make,
partners to consider, and formats to construct.

For effective monetization, operators need to aggregate inventories and build integrated multi-channel
campaign strategies. Further, the advertiser must have the ease to cherry pick channels, ad formats, as
well as timing frequency and reach of the advertisement. Some campaigns may require direct marketing
push capabilities such as SMS, MMS delivery, while others may be more suited to on-portal advertising,
unobtrusive offline ODP advertising or opt-in message advertising. Implementing an end-to-end mobile
advertising strategy with multi-channel delivery capabilities will enable mobile operators to build a strong
position in the mobile advertising ecosystem and monetize their strategic assets. Different approaches
across ad units and ad inventory may have to be tried, involving a trial and error mindset.

Global Mobile Advertising Spend, by Type

Mobile Advertising
2008 2009 2010 2011 2012 2013
Spend (USD Million)

Messaging 1,151.3 1,524.8 1,907.3 2,151.9 2,384.1 2,695.1

Banner 346.1 602.1 1,038.4 1,647.8 2,378.5 3,260.2

Links 79.3 147.4 253.5 410 590.9 860.9
In-game 21.3 78.3 180.8 321.1 451.3 690.6
Interstitial 20.9 44.2 128.9 290.5 528.7 797.3
TV and Video 34.3 69.7 187.6 385 637.7 987.3
Content 52.4 94 187.6 349.8 554.8 798.4
Misc. 14 71.3 199 552.9 1,185.2 1,998.1
Total 1,719.7 2,631.8 4,083.1 6,109 8,711.2 12,087.8
Source: Informa Telecoms & Media

An integrated multi-channel strategy assumes that the operator has the capability to aggregate
inventories, that the key VAS applications on the network are ad-capable and that the underlying
advertisement platform, is equipped to manage backend workflows. These workflows will span
campaign management, inventory management, business intelligence, revenue management and ad
analytics.

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5.2. Customer Intelligence

Marketing message distribution, in terms of timing, context and relevance, rivals creative execution in
importance in the mobile advertising space. Across media, the more relevant an advertisement is to a
consumer's interests, the more engaging and effective an advertisement will be. The same is true of
mobile advertising, only it is further pronounced due to the uniquely personal nature of the medium and
the relatively pristine, uncluttered media environment that it provides

Operators possess significant unique capabilities and assets in the mobile advertising space. These
include exclusive access to detailed end-user profiles, usage patterns for voice and data services,
mobile web click-streams and the type of content they download, billing data, and location information.
Subscriber network usage patterns combined with real-time, dynamic information about subscribers,
such as location, enable operators to deliver the right advertisement to the right customer. (Please View
Section 3.2 for detailed information)

Notwithstanding the fact that operators have a unique personal identifier (the MSISDN), they
nevertheless lack a unified 360 degree view of the customer. Customer data available on the network is
dispersed across numerous networks and applications and locked in siloed databases. Operators need
to deploy standard-based interfaces to federate subscriber data from multiple legacy systems and
integrate with third-party applications to construct the user‘s consumption profile on the network.

Network service usage patterns are extremely significant but do not provide a complete view of the
customer. Typically, marketers want the consumption profile of the customer across various spend
categories to create meaningful segments, form insights and deliver contextually relevant ads. For
instance, a fashion clothing brand needs information on a customer‘s annual spend on clothing as well
as on that customer‘s fashion preferences. Operators have no exposure to such data and are unable to
effectively use inventory to deliver targeted ads.

Operators need to invest in creating a strong cross-industry partner network comprising leading retail
houses, credit card companies, and banks to succeed in the mobile advertising space. Data feeds
supplied by these partners can transform operators into a subscriber information powerhouse and result
in better inventory utilization.

5.3. Response Measurement

Brands need to target and then track the advertising process. Marketing requires new strategies and
tools to connect effectively with consumers. Instead of being satisfied with knowing how many people
are exposed to their messages, operators are working hard to determine how well their messages are
received, whether they are powerful enough to generate a customer response, and exactly what those
responses are. Some of the currently widely deployed performance metrics to measure the
delivery/response of mobile advertising include:

 Cost per Thousand Impressions (CPM): CPM is the price paid by advertisers per thousand ad-
impressions exposed to users. The CPM metric is used for static banners on mobile web or delivery of
text messages to a large number of subscribers Since CPM is a measure to simply deliver messages
and does not track effectiveness and impact, advertisers are increasingly looking to performance-based
models such as CPC and CPA to track ROI.

 Cost per Click (CPC): The Cost per click model effectively tracks and measures consumer
participation in a campaign. Advertisers pay for each user click

 Cost per Acquisition (CPA): CPA is a measure of the end-to-end cost an advertiser incurs to
acquire a customer.

Although the performance measurement models mentioned above broadly quantify mobile advertising
effectiveness, the inability to deploy granular measurement techniques is hampering the mobile
advertising space. Some of the challenges include:

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 The inability to measure

unique users against polluting Performance Measurement Techniques for Mobile Advertising
traffic (bots, spiders, etc.)

 Measure advertising
impressions in intermittently-
connected content like games or
downloaded video/audio

 The inability to track the

effectiveness of cross-network
campaigns

Accurate and effective

measurement metrics are critical
to the success of mobile
advertising. Marketers should be
Source: Yankee Group
able to plan, define and monitor
their advertising campaigns and view real-time feedback reports. Operators need to work towards
devising a standardized measurement system to enable informed decision-making. Standard, accurate
and audited metrics delivered to the media and advertising communities will accelerate the development
of mobile advertising, and build trust and confidence in the mobile as an effective advertising medium.

5.4. Managed Services Model

New digital interactive advertising mediums have radically altered the advertising ecosystem. The
marketer–agency–media company value chain used to be simple and straightforward. Roles were
clearly defined. Marketers defined a brand essence, agencies developed the idea and creative
execution, and media companies put it through the pipeline. A marketer worked with a select few
advertising agencies of record that handled most of the creative marketing business. Today, that linear
relationship has morphed into a spider web of overlapping connections. Marketers are collaborating
directly with media companies, specialty agencies are multiplying, and media companies are building in-
house marketing services capabilities.

Operators do not possess the competencies to negotiate the complex ecosystem involving disparate
players nor are they familiar with media planning, buying and selling. To reduce business risks and
scale operations, Comviva suggests operators ally with a managed services partner to deliver an end-
to-end solution, spanning consulting and systems integration, partner management as well as software
technology features and advert delivery.

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Hosted Applications Solution Value Chain

Source: Instat

Adopting a hosted application model does not mean that the service provider abdicates control or that
they cede technical leadership and responsibility to the solution provider. The hosted delivery model
simply allows the service provider to shift its focus to other segments of its value chain, such as
managing their core network, developing compelling services bundles, and executing successful
marketing and sales campaigns. By utilizing the capabilities of a hosted application solution partner, a
service provider can achieve tremendous advantage from a small number of technology- and
operations-savvy employees who work closely with the hosted applications solution provider. The
service provider no longer has to devote significant resources to scaling up or down, according to a
particular technology or focus on managing the skills and the people and the training. The solution
provider addresses the issues of scaling and lifecycle management. In this manner, the service provider
is able to delegate many of the day-to-day operational activities to the partner, whilst managing
performance through SLAs and reviews. Nevertheless, the operator can still provide technical
leadership and oversight on architecture. The service provider can focus on managing a few highly
leveraged people as opposed to an army.

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6 Conclusion
The future of advertising is happening now. The methods by which consumers absorb information and
entertainment — and the ways they perceive, retain, and engage with brands and brand messages —
have changed irrevocably. Empowered consumers are compelling advertisers to migrate to interactive
mobile mediums which allow them to build a two-way conversation with customers. Successful mobile
advertising is a mix of reach, collaboration, and analytics. Mobile operators have a unique advantage in
all these three, but have to monetize these assets. By consolidating subscriber data and responses and
measurement metrics, operators can demonstrate the value of their network and justify mobile
advertising spends to the advertising community. This is critical for building confidence in the mobile
medium as an effective advertising channel.

This study has identified some of the major opportunities presented by the new marketing environment.
Yet realizing the full promise of these opportunities will require focused change in four critical areas: (1)
consumer insight; (2) media mix and channel management; (3) marketing organization, culture, and
talent; and (4) ecosystem interconnectivity and partnerships. Some leading operators have already
begun to demonstrate the kind of change required. However, there is no uniform model or template for
all organizations. Experimentation, innovation, and discovery are challenges, but also necessities for all.
This principle has not changed, and will never change, in the advertising rulebook.

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Future of Advertising

7 Appendix 1: Mobile Ad Inventory

Text Messaging
Considering the ubiquity of text messaging, SMS is one of the popular advertising mediums. The use of
text messaging in mobile advertising ranges from push-based marketing, coupon/voucher campaigns
to highly targeted opt-in advertising. According to the Yankee Group, click-through rates on SMS (either
clicking on a link embedded within a text message or calling a service number range from between 3%
and 5% as compared to a 1% response rate for email campaigns.

Table 3: SMS-based Advertising Campaigns

Campaign Type Description

Push SMS advertising (A2P
messaging)
Coupon/Voucher campaigns
Opt-in SMS advertising
SMS Insert (P2P messaging)
Short Code Advertising
Bulk text messages loosely targeted around demographics or geography, for
example, a promotional message sent by a fast-food joint to an operator‘s
subscribers in a particular city
Text messages with an electronic coupon/voucher or unique code that can be
redeemed at a participating store
Messages from selected brands where users consent to receive based on their
preferences
Promotional messages inserted within P2P SMS. Requires subscribers to opt-in
and is usually meant to discount the price of SMS
SMS Short Codes can be used in a variety of innovate ways by brands. Coca-
Cola in the US has engaged in some of the most prominent short code marketing
in the past year. Through My Coke Rewards, Coca-Cola customers collect
unique codes found on various Coca-Cola products and enter them into an
account they‘ve registered at mycokerewards.com. When they reach a certain
level of points, they are able to redeem points for rewards. The mobile
component of the program allows consumers to enter the codes over their mobile
phone on the go. Coca-Cola‘s mobile users typically send and receive about 32
messages a month to Coca-Cola

Source: Mobile Marketing Association and Nielsen

Mobile Internet
An increasing number of brands are using the mobile Internet to reach and engage consumers. Mobile
internet advertising predominantly comprises static or dynamic banner adverts on WAP sites, either on
the operator‘s portal or off-deck sites.

Mobile WAP Interactivity

Click to call
Click to locate
Click to order brochure
Click to enter competition
Click to receive email
Click to receive mobile coupon
Click to buy
Click to download content
Users place an outgoing call to the content provider or advertiser
Users find, for example, the closest car dealer or movie theatre, enabled by
location-based services
Users receive marketing material by providing their postal address
Users enter text or a sweepstake to win prizes
Users receive an email and a link to an online site by providing their email
address
Users receive an electronic coupon on their mobile phone to be redeemed at a
participating merchant
Users make a purchase paid for with a credit card, added to their monthly
mobile bill or using some other form of mobile payment
Users download content, including logos, wallpapers or ringtones onto their
mobile phones

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Future of Advertising

Click to enter Mobile Web site Users click a banner to get connected to a mobile website
Click to forward content Users forward relevant content to friends, creating a viral campaign effect
Click to video Users click a banner to view an advertiser‘s commercial for a product or service

Click to vote Users reply through a message ballot or poll from their mobile phone and
provide marketers and brands with valuable research insights
Source: Mobile Marketing Association

Mobile Search
Juniper Research predicts global mobile search revenues will exceed USD 2 billion by 2013, unfolding
enormous opportunities for search advertising. Combining location with search enables users to
discover services in their proximity. For instance, when consumers search for ―Ford‖ on a mobile search
engine they receive adverts from local Ford dealers. Currently, an approximate 85% of search queries
on mobile phones are confined to the mobile storefront – i.e., search for ringtones, wallpapers, or other
content specifically for use on the mobile phone.

Location-based Advertising
Brands can deliver ads based on the user‘s geographic coordinates. For instance, if the customer has
entered a shopping mall, the customer can receive ads on discounts and offers from restaurants and
retail establishments in the vicinity.

Communities and Social Networking

The mobile social networking space, which includes dating, chatting and content sharing experiences, is
where we live our lives. Informa predicts the rise in number of services matched by an increase in their
membership will reach 12.5% of the global mobile population in the most conservative scenario and
account for 23% of the total in a high growth scenario. Targeting communities and social networks to
create and sustain excitement in the brand is increasingly becoming an essential marketing strategy.
Social communities require members to provide details on preferences, a powerful source of information
for markets if used effectively. Social networks also provide a powerful tool to create communities
around brands whereby consumers can interact with a wider brand community. For example,
Facebook‘s ―Addicted to Starbucks‖ group has almost 124,000 members, over 670 discussion topics
and almost 10,000 wall posts. The cohesiveness and viral power of mobile ―member communities‖ have
led global consumer brands including Toyota, Coca-Cola, Nike, and Burger King to leverage social
networks to reach, engage and interact with their target customers. With growing advertiser interest in
mobile social media, the ad-funding model is set to gain traction in the coming years. Juniper Research
forecasts by 2013, ad-funded social networks will provide the bulk of revenues in the mobile user-
generated content (UGC) space.

Brands can tap the social networking phenomenon by:

 Purchasing advertisements (banner or text) to appear on a WAP page on a per-impression basis. A

branded logo or message presented to the user may or may not call for user action. A call-to-action will
require building appropriate landing pages which will be directed to users when they click on the
advertisement.

 Sponsoring social networking communities

Downloadable Content
Mobile Games
Gaming applications provide advertisers with a conducive environment for placing advertisements as
banners visible during game play or as interstitials shown in between levels or rounds. In addition,
games also present a unique advertising opportunity in the form of in-application advertising, where

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Future of Advertising

adverts are embedded within the game content. An example is the availability of an in-game energy
drink at different levels of the game meant to regain the energy of the player‘s character. The most
obvious benefit brands derive out of in-game advertising is their ability to reach targeted consumers
without disrupting attention and user-experience, primarily because embedded adverts do not compete
for screen space from the actual content.

Several success stories have been reported by brands using mobile games as a channel to reach and
engage consumers. A case in point is the advertising campaign for the New Line Cinema film ―The
Golden Compass‖, which played full-screen adverts to consumers downloading mobile games. The
campaign increased awareness of the movie by 19%, raising interest in watching the movie by 10%.

Mobile Music
RingBack Tones are an extremely popular service among emerging market users. Operators can
leverage the ringback tone platform to deliver product related jungles and catchy music tones to users.
Considering callers are unlikely to divert attention whilst waiting for the recipient to answer the call, RBT
assures customers of high conversion rates.

Mobile Video/TV
Operators can leverage broadcast mobile TV and unicast video to deliver advertisements

 Broadcast Mobile TV: Mobile TV is essentially broadcast video content transmitted via an overlay
network (e.g., digital video broadcast-handheld [DVB-H], MediaFLO, digital multimedia broadcasting
[DMB]). Similar to conventional television, advertising falls into slots within the programming stream.

 Unicast Mobile Video (Streaming and Downloads): Typically, users access video content from a
store, similar to YouTube. Advertising in this format would be pre-, mid- or post-roll.

 Pre-roll: Advert played before the actual video requested by the user starts playing.

 Post-roll: Advertisement played at the end of the video clip.

 Interstitials: Advertisements displayed when the requested video is downloading.

 Sponsorships: Several brands sponsor video clips in lieu of users watching advertisements
over other channels, for example, over the mobile Web.

On-Device Portals
On-device portals (ODP) enable consumers to browse and view content while offline, and refresh the
interface when they are on the network. Odds are emerging as a significant form of inventory on the
mobile device attracting third-party brand advertisements. As an advertising channel, on-device portals
provide:

A client-server foundation upon which vendors can effectively build advertising insertion, rotation and
measurement engines

 A service category focus that also appeals to advertisers and merchandisers

Banners, videos, and multi-layer advertising combining images, video and games are suitable for ODP
advertising. Native control over the end-device enables advertisers to insert an interactive ―call to action‖
such as ‗browse to enter mobile website‘, ‗initiate call‘, and ‗send message‘ with each advert. By non-
intrusively updating the displayed ODP adverts without any user interaction and at no cost to the
subscriber, ODP advertising overcomes many of the user experience problems associated with on-
portal advertising where advertisements compete for space with other content.

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Future of Advertising

Idle Screen
Due to its always-on presence, the mobile screen is the most sought-after inventory in the mobile
handset and ideally suited for non-intrusive mobile advertising. Until now, mobile operators and handset
manufacturers have used the idle handset screen to display links/access codes to their own branded
services. With larger and more color-rich mobile screens, advertisers are willing to exploit the channel.
The advertising can take the form of a ticker running across the top or the bottom of the screen, a pop-
up ad or a welcome message.

Figure 9: Operators’ Control over Mobile Advertising Channels

Source: Yankee Group

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Future of Advertising

References
A Mobile Advertising Overview. July 2008. Interactive Advertising Bureau.

Berman Saul, Battino Bill and Feldman Karen. Beyond Advertising: Choosing a Strategic Path to the
Digital Consumer. 2009. IBM Business Value.

Bughin, Henryson, et al. Mobile Search: The On-Ramp to Mobile Advertising. 2007. McKinsey.

Implementing a Multi-Channel Mobile Advertising Platform. February 2008. Mobile Marketing

Association.

McMillan, Sally J. Exploring Models of Interactivity from Multiple Research Traditions: Users,
Documents, and Systems Handbook of New Media: Social Shaping and Consequences of ICTs. 2002.
Sage .

Moss, Pandey, and Clark-Dickson. Mobile Content & Services 7th Edition. Informa Telecoms & Media.

Vollmer Christopher, Precourt Geoffrey. Always On: Advertising, Marketing, and Media in an Era of
Consumer Control. 2007. Strategy + Business

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 Future of Advertising

About Comviva
About Comviva

Comviva adds value to the mobile service provider‘s business and operational environment, creating
subscriber stickiness via innovative products, applications and service offerings that cater to every aspect
of the subscriber wish list, whilst addressing critical operational issues confronting the mobile service
provider today.

With an extensive portfolio of solutions that drives content, commerce and community-focused services
and revenues for operators, Comviva enables mobile users to interact and access infotainment easily.

Operator goals of improving performance and enhancing the user service experience are supported with
solutions that enable rapid and profitable service extension to new and existing subscriber segments,
whilst enabling end-to-end service and customer lifecycle management.

A global leader, Comviva‘s solutions power value added services for operator customers in over 80
countries worldwide.

Comviva's registered office is in New Delhi and primary development centre is in Gurgaon. Its other
R&D centers are located in Bangalore and Mumbai. Comviva has representative offices in UAE, UK,
South Africa and Singapore.

Comviva Regd. Singapore Office UK Office

Office No. 10 Jalan Besar Level- 1, Cyberhouse
#11-05 Sim Lim Tower Molly Millars Lane, Wokingham
Aravali Crescent
Singapore 208787 RG41 2PX, United Kingdom.
1, Nelson Mandela Road
Tel: +6392 0021 Tel: +44-118-9890144
Vasant Kunj, Phase-II
Fax: +6392 0923 Fax: +44-118-9793800
New Delhi- 110070, India.

Bangalore Office Gurgaon Office Bangalore Office

A-26, Info City, Sector 34 Maruthi Towers, 138 Airport Road
#4, 12th Km, Bellary Road
Gurgaon-122001, Haryana. India. Bangalore- 560008, India.
Jakkur, Bangalore- 560064
Tel: +91-124-4819000 Tel: +91-80-40301500
India.
Fax: +91-124-4819777 Fax: +91-80-41150552
Tel: +91-80-43401600
Fax: +91-80-28565854

Bangalore Office Mumbai Office

UAE Office 2/20A, 35/36, Bellary Road Unit No. 1-4, 1st Floor, Paradigm
Allalasandra Rly Gate, Yelahanka, Tower, Tower B, Mindspace
Comviva Technologies Limited
Hobli Malad-West, Mumbai- 400064, India.
Executive Suite . Y-43
Bangalore- 560065, India. Tel: +91-22-40774300
P.O. Box 9242
Tel: +91-80-43401800 Fax: +91-22-40774333
Sharjah, UAE.
Fax: +91-80-28562517

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Future of Advertising

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The information in this document is subject to change without notice and describes only the product defined in the introduction of
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Copyright © 2009 Comviva Technologies Limited. All rights reserved.

© Comviva Technologies Ltd 27