The Mobile Marketing Association (MMA) and leading mobile advertising vendor Vserv.mobi predict that the Indian mobile advertising (m-advertising) industry will grow from Rs 3 billion in 2013 to Rs 4.3 billion in 2014. Over the next few years, the m-advertising market is set to witness double-digit growth, with leading brands across industries using this platform to launch their marketing campaigns. As per a survey carried out by MMA and Vserv.mobi, the increasing uptake of smartphones and tablets, and the growing popularity of mobility services in the small and medium enterprise segment have been the key drivers for the m-advertising segment.
The survey results show that 9 out of 10 mobile internet users in India are men and 60 per cent of the total users are under 24 years of age. Further, 70 per cent of the mobile internet users in the country belong to affluent sections of society. Also, of the total mobile internet users, 29 per cent are students. Based on these survey results, several marketers are making significant investments in m-advertising to reach out to consumers.
M-advertising is still at a nascent stage in India. However, it has created a niche for itself in developed economies and is set to become the preferred medium of advertising amongst marketers. The global m-advertising market is expected to grow seven times faster than desktop advertising. According to ZenithOptimedia, global m-advertising revenues are estimated to increase from $8.3 billion in 2012 to $33.1 billion by 2015. Meanwhile, expenditure on m-advertising is likely to escalate by 77 per cent in 2013, 56 per cent in 2014 and 48 per cent in 2015.
Current status
Over the past few years, the m-advertising market has evolved along with mobile internet. Earlier, mobile internet was used mainly for accessing email and engaging in social networking, while now it is increasingly being utilised for accessing varying content such as news, sports and games. M-advertising includes banner displays on search engines, through messaging, within applications, and on WAP sites. In India, SMS continues to be the most popular form of m-advertising, followed by display advertisements. Other popular forms of m-advertising include MMS, advertising within mobile games, videos and mobile TV; and full-screen interstitials. MMS includes audio advertisements in the form of a song, jingle or a message used in place of a standard ringback tone.
Currently, leading telecom, FMCG and automobile brands in India are extensively using rich media in their m-advertising campaigns. FMCG players such as Unilever, PepsiCo and Coca-Cola, as well as automobile manufacturers like Maruti, Honda and Yamaha are using media-rich banner advertisements to engage with consumers. The telecom industry is also investing heavily in m-advertising. Device manufacturers such as Nokia, Karbonn and Micromax are promoting their new launches through m-advertising. The integration of rich media allows marketers to integrate promotional videos with mobile web pages or mobile applications. Companies are increasingly using rich media within banners, which can expand and thereby offer advertisers a larger space to convey their message. Games can also be placed within a banner ad to make the user experience more engaging and interactive.
Recognising the business opportunities offered by m-advertising, India’s leading telecom service provider Bharti Airtel forayed into the space in May 2012. The operator launched a platform that enables advertisers to provide personalised offers to customers on their mobile handsets. The platform leverages multiple communication tools such as mobile internet, messaging services and Airtel Digital TV. Airtel’s endeavour is likely to prompt other service providers to launch platforms to help brands monetise the opportunities offered by m-advertising.
Growth drivers
The exponential increase in mobile and wireless connectivity has played a key role in the growth of m-advertising in the country. With a mobile user base of 903.09 million, of which 30 per cent are data users, India has significant potential for m-advertising. In addition, the availability of a wide range of smartphones, particularly Android-based devices, at affordable prices is also going to drive growth in m-advertising. According to financial advisory firm Avendus, over 50 per cent of mobile internet traffic and paid content revenue is contributed by smartphones. However, at present, the application market is dominated by Google and Apple app stores; home-grown companies are yet to make an impact in the segment.
Another key factor contributing to the growth of this segment is the decline in tariffs for high speed 2G/3G data services. Over the past one year, operators such as Airtel and Reliance Communications have reduced data tariffs significantly, thereby encouraging users to adopt various data services, which has, in turn, given a boost to m-advertising. Besides, the increasing use of media-rich content customised for smaller screens and mobile platforms ensures that users have access to diverse services such as music, movies, radio, live content streaming, games, and business and entertainment applications.
Avendus believes that the increasing willingness of enterprises to advertise on mobiles and users to pay for content will be another growth driver for the segment. Further, start-ups that offer local deals, messaging in regional languages and games on mobile internet platforms are likely to grow quickly, which in turn will provide a fillip to the m-advertising market. For instance, the success of Y2CF Digital Media’s rewards service “hoppr” reflects how attractive deals can drive people to use mobile-based platforms for day-to-day activities. With hoppr, a user can “check in” to a location (like a mall) by sending an SMS to a number and, in return, receive coupons and deals from merchants and brands. The service is supported by Bharti Softbank, a joint venture between Bharti Enterprises and Japan’s Softbank Corporation.
The enterprise segment is another avenue of growth for m-advertising, which is opening up with a growing number of applications being targeted at enterprises. The number of businesses that want to be connected with their consumers 24x7 has been increasing steadily. This has opened up new sales channels for brands.
Issues and challenges
Limited access to user profiles and usage patterns, and lack of regional content are two of the biggest challenges for m-advertising. With the ever-growing mobile user base, it is difficult for advertisers to track individual behavioural patterns and preferences. This limits the ability of brands and media planners to effectively utilise the mobile platform for advertising. In addition, lack of relevant content as well as poor telecom infrastructure and internet penetration in villages and remote areas also hinder the widespread uptake of m-advertising amongst marketers. Other concerns include issues related to privacy and service impact. However, with evolving mobile technology and the use of an appropriate measurement matrix, marketers have mostly been able to address these issues.
Benchmarking performance
Most of the players in the m-advertising segment offer brands end-to-end holistic mobile advertising solutions – from the message to be delivered to support for the placement of the advertisement.
With an increasing number of brands adopting m-advertising, measuring the effectiveness of mobile-based campaigns is becoming a priority. Currently, m-advertising companies offer marketers various options to measure the effectiveness and reach of their campaigns. The key performance indicators for analysing the impact of m-advertising include impressions (views) and click-through rates. Other parameters include conversion rates such as click-to-call rates.
In the m-advertising segment, players offer marketers advertising space based on attributes like 1,000 views (cost per mile), click-through (cost per click), or action (cost per action). Some of the leading players in the m-advertising segment are InMobi, Komli, Blyk, Web Chutney, Vdopia, MAD, Jivox, Ringa, Flytxt, BuzzCity, the 2ergo Group, AdMob Google and Gingersoft Media, Affle and Celltick Netcore.
The way forward
With the increasing adoption of smartphones, m-advertising will witness the emergence of location-based advertising solutions (LBSs). LBSs personalise advertisements based on the location of mobile phone users. For instance, the Cafe Coffee Day (CCD) retail chain uses LBS to drive traffic to its outlets. CCD is one the first players to have mapped its outlets on Four Square, a location-based social networking website for mobile phones. These solutions have helped CCD in increasing its sales by targeting the last mile customer.
The m-advertising segment is likely to witness the emergence of more engaging mobile multimedia platforms as it evolves. With mobiles overtaking PC usage, content and application developers will focus on developing engaging applications for devices such as smartphones, tablets, PDA phones and other hand-held devices.
Going forward, m-advertising will move away from traditional channels such as SMS and interactive voice response, and the segment is likely to witness the uptake of 3D advertisements, mobile TV and interactive advertisements.