Part 2 of the report on mobile marketing analyses how smartphones, tablets and 3G adoption are influencing the market, as well as the challenges ahead…
All Eyes On Smartphones
One of the main barriers to mobile advertising in India is slow adoption of smartphones. A new range of feature phone offerings from Nokia and Samsung in the last decade prepared the ground for technological advancement of mobile handsets. India continues to lead advertising on feature phones through display and text formats in the APAC region. But low-end feature phones have failed to offer the superior experience that smartphones can provide. As per the latest report of the Cyber Media Research, 2011, only 10 million handset users are smartphone users. This accounts only for 6% of overall mobile phone sales and only 0.4% ad impressions in 2011. Globally, data-enabled handset usage has contributed heavily to advertising (56% usage in China and 50% in the UK). While smartphone price rarely remains an obstruction, the infrastructure required to support applications on smartphones is unprepared. However, marketers are optimistic.
“With phones like android and tablets, the smartphone medium will see an upward trend in terms of advertisement,” explains Lutz Kothe, Head of Marketing and PR of Volkswagen Passenger Cars. Three factors have signalled strongly in favour of usage of smartphones - fast adoption of android technology, increasing competition between smartphone manufacturers leading to availability of cost-efficient devices to consumers and slump in price of smartphones with entry of local players in the market.
A hypercompetitive telecom market and rush to provide more and more value added services (VAS) to consumers is also expected to add to the existing optimism. In what could be called as a preparedness plan by telecom operators, offerings on smartphones such as more and more apps witnessed steady growth in 2011. In just two years, the number of apps globally has crossed the 1 million-mark. The growth of apps indicates that mobile advertising could be the second largest platform after banner and searchdriven advertising.
3G Connections - Key To Convergence
Most developed markets have witnessed a slump in advertising revenues after the advent of 3G services and its widespread reach. India lacks behind those markets in terms of penetration and even though the service is active in many parts of the country, affordability and awareness are the major obstacles. Total 3G phone shipments touched 15.5 million in the first eleven months of 2011, with close to 224 models launched by 26 vendors. In November 2011, 3G phone shipments contributed 8.9% of the total mobile device shipments in the country. This reflects that with the increasing share of 3G phones in the market, the stage is set for customers to experience the benefits of 3G services.
Currently, the user experience on 3G networks has been constrained due to network quality issues faced by subscribers. Telecom operators have been reducing ARPU and MPU on voice services which have brought call charges to as low as half a paisa per second and even lower than that for certain operators. VAS has been the major service which drives profitability of this sector. 3G will further add to telecom operators’ data carrying capacity. In most of the developed markets such as the US, 3G penetration has led to three time faster growth of mobile advertising as against Internet advertising growth by PCs.
Rapid video transmission, ad-gaming, live campaigns and improved interactivity are a few forms of advertising that will see the light of day after widespread 3G penetration. The biggest boon for marketers could be a sharp decline in the average cost per click rate which they pay to Internet publishers. The challenge for marketers would be to devise a clear content plan for mobile phones, better strategy for interactive messages and direct, personalized communication methods.
Will tablets make a difference?
Growth of the tablet market is in its nascent stage and is yet to show promising growth and usage to attract a large share of advertiser spends. Tablets are positioned between personal computers, laptops and mobile handsets, but perhaps are the most promising medium of convergence. While tablets may not serve the purpose of a computer due to more personalized nature of its consumption, its multimedia offerings such as gaming, e-reading and m-commerce make it an ideal destination of convergence. Advent of affordable tablets has increased consumer affinity, coupled with their attractive multimedia format. As per the data available with Computer Market Research (CMR), by 2017, the number of tablets sold in India is expected to reach approximately 23.38 million. The sale is expected to double every year from 2014.
The tablet is reshaping content consumption behaviour on the Internet. One can have a magazine-like experience on a tablet, which opens up a lot of opportunities for publishers as well as advertisers. 3G services penetration is expected to clear major hurdles in its usage. A recent study shows that in case of tablet users who browse Internet using 3G connections, 51% rated their experience as high. The recent slash in tablet prices has also built up unprecedented excitement. As the market matures and experiments with content on indigenous and global tablet devices, new means of marketing and advertising practices are likely to emerge. Recent revision in price of Datawind’s Aakash and RIM’s PlayBook has reaffirmed the belief that tablets could be a layman’s device soon. If RIL’s proposition of world’s cheapest 4G enterprise tablets becomes a reality, then the market is expected to grow significantly across stores and e-commerce platforms.
Monetisation will be the biggest challenge for the medium. Media planners believe that despite the hype about success of the medium, it will attract significantly lesser share of spending in the media mix for at least five years. While overall spending on the medium will significantly go up, undermonetization will continue to pay less to each player. This challenge will mostly worry the digital arms of media agencies, publishers and social media managers.
“The challenge is in how opportunities can be leveraged at scale and at reasonable costs. Being a new medium, the benchmarks, measures and metrics are yet to be set,” says Rahul Welde, Vice President- Media, Unilever-Asia, Africa, Middle East, Turkey and Russia. However, it will give some space for experimentation and innovation to advertisers. The challenge for marketers would be to generate more innovative content and advertisements keeping its TG in mind. To attract maximum attention, they will have to devise clearer content strategy for mobile devices, and direct personalized, interactive messages.
Despite the advantage of penetration, infrastructural hurdles can also spell trouble for the medium in the years to come. Penetration and affordability of 3G services can take more than a year for mobile content to reach a tipping point. A significant rise in advertising on tablets and smartphones may remain a daydream if affordable broadband connectivity led by 3G services fails to take off. A rather small concern could be the constant entry of more and more players into the mobile space; be it the entry of marketing solution providers or publishers. On the awareness side, the responsibility will jointly be on marketers, planners and publishers to educate the consumers of the omnipotent nature of the mobile devices.
Source: Mobile Marketing Association APAC; comScore Media Matrix; eMarketer, April 2011; Gartner Research, 2011; CyberMedia Research, 2011; IAMAI-IMRB- Internet in India (iCube); TRAI; 2011; KPMG-FICCI 2011 report; ASSOCHAM Financial Pulse Study and industry sources