Proliferation of smartphones, tablets and 3G technologies have made India the fastestgrowing nation in terms of mobile advertising in the APAC region. After the digital revolution, is mobile advertising set to be the biggest turnaround of the decade, asks Rahul Dubey.
If there was one prominent trend last year that intrigued most in the digital industry, it was the unprecedented growth of e-commerce and advertising on mobile devices. While mobile advertising is not a new proposition in the Indian context, it is perhaps for the first time that the medium has received muchneeded attention, though many believe that it is yet to garner its dues in terms of attracting a large chunk of marketing spends. The digital industry, growing at a rate of over 40% until the last quarter of 2011, gets a very small share of the Rs 266 billion advertising industry in India, allowing more space for growth and experiments. Mobile, which is largely considered to be a part of the digital industry, gets an even smaller share of the pie. There is little doubt among the marketers when it comes to usage and potential of the medium, but the numbers and optimism placed on the wireless devices in the fastest-growing mobile market of the world has not translated into tangible, successful precedents for growth. However, over 850 million mobile users coupled with 30% active data users largely located in metro cities and B-towns have given advertisers many reasons to bank upon the medium. Overall, mobile advertising in India, though at a nascent stage, has transformed over the last one year. Video, rich media advertising and augmented reality have successfully entered the Indian advertising space, breaking the traditional boundaries of text and banner ads. As the industry entered 2012, a clear makeover of advertising format was also visible, with an aggressive entry of two global digital giants Google and Yahoo! into the most modern form of rich media advertising, offering a wider range of opportunities to marketers to experiment with the medium. RoI of mobile advertising has been four times higher than that on other digital platforms with an added advantage of higher interactivity. Heavy investment in the medium through video advertisements (or Media Ads, as propounded by Google) largely remains a wait and watch situation for the industry.
“In terms of search advertisement, 30% of the traffic comes from Google,” says Lutz Kothe, Head of Marketing and PR of Volkswagen Passenger Cars. Globally, in developed markets, advertisers spend less than 30% of their total advertising budget on mobile devices. Experts believe that it is difficult to see the percentage growth exponentially going up in near future. In the Indian scenario, this figure is more skewered due to two reasons- less than 25% of handset users are active Internet users and lack of broadband Internet penetration has resulted in sluggish increase in rich media-led interactivity of advertisers with potential consumers. As few as 0.1 % of the total number of Internet connections in India use the broadband service. So, while most of these stumbling blocks are creations of infrastructural shortcomings and user-generated hurdles, the source of consistent vigour and confidence in the medium has strong foundations. Leading global advertisers like Coca-Cola, General Motors and McDonalds, through their recent campaigns, have set a successful benchmark of high-quality rich media userexperience of advertising on mobile devices, be it handsets or tablets. Though their campaigns were able to reach only a few million in India during cricket tournaments and festival seasons, their aim to reach the soon-to-be 100 million smartphone users of India utilizing the 3G services (growing at a rate of close to 9%) is a reflection of their long-term vision for the medium.
BANKING ON FUTURE
India is an emerging destination for brands which were banking heavily on all media platforms in developed markets and on traditional media in developing markets. In terms of number of users and consumption pattern, the mobile medium ceases to remain a new age medium. Total time spent on Internet is also growing at a steady rate. Total number of mobile handset users has already surpassed the number of cable and satellite homes in India (over 850 million mobile users and 104 million C&S homes). While a comparison between the two mediums may be inappropriate, in terms of penetration of the medium, reach of mobile phones scores over TV, giving advertisers of products of mass consumption a strong reason to ponder. Recent data on mobile advertising released by InMobi states that India has emerged as the largest mobile advertising destination in the Asia Pacific region in 2011. As per the report, India is the single largest mobile ad impression market which witnessed 22% increase in advertising. However, on a global scale, this growth is small. Globally, mobile advertising has witnessed growth at a rate of 100 %. In terms of revenue growth, China continues to remain ahead of India as majority of its mobile users are active mobile Internet users too, thanks to penetration of broadband connectivity. Nevertheless, numbers alone do not speak in favour of the medium. Looking at the diversity of markets and nascent nature of the medium, the vote continues to be in favour of traditional practices. Industry experts believe that linguistic barriers coupled with diversity of the markets and varying consumption patterns will take a few years for marketers to understand the importance of mobile devices in their media mix. Many believe that the next wave of growth for Internet in India is going to be driven by the semi-urban and rural parts of the country where creative bundling of voice and data services along with the devices would create a compelling value proposition. “Language could be a potential barrier for mobile advertising adoption in rural towns due to non-availability of content in vernacular,” explains Sanjay Behl, Group Head - Brand & Marketing, Reliance Communications Limited. Global publishers like Google and Yahoo! Also echo this sentiment.
ARE ADVERTISERS CONVINCED?
Mobile struggles to find its space in the mainstream media mix of campaigns. Mobile and tablets are used only on some occasions to target TGs. “Mobiles offer an interesting opportunity to use a new medium in marketing. It is yet to become an integral part of the media channel mix but is attracting significant attention and additional investments,” says Rahul Welde, Vice President- Media, Unilever-Asia, Africa, Middle East, Turkey and Russia. The medium has garnered a larger share of the media mix in the last two years. “In the last 18 months, close to 100 brands have gone on mobile platforms to advertise. This shows how important the medium is becoming for marketers,” explains Dippak Khurana, CEO& MD, Vserv.mobi. What has also come as an addition to this excitement is convergence of other media forms on mobile devices. Leading television and print players like STAR India, ESPN, NDTV, The Times of India and Hindustan Times have augmented their mobile and digital presence, creating new avenues for marketers to reach their consumers. Global reports indicate that in 2014, mobile Internet usage will overtake desktop Internet usage. Already in 2011, more than 50% of all “local” searches are done from a mobile device. Soon, mobile will be the first medium of discovery of the Internet for many and will be the key source to drive Internet penetration. “One challenge is related to expertise and capabilities in this space. This is an omnipresent device and hence the opportunity for marketers is large,” adds Welde. In the short run, WAP as an advertising platform is gaining more prominence. Intelligent ad targeting is now the key to the development of the mobile as a reach medium. The likes of Reebok, Airtel, Yamaha and Samsung were the early adopters of the medium, and most of their efforts have translated into success. “Both consumers and marketers are taking more and more notice of mobile advertising. This is a worldwide phenomenon. It’s now a matter of converting the medium for consistent growth in the near future,” says Atul Satija, MD of InMobi. The mobile platform will soon become the platform for manufacturers in the advertising space. A recent study by research firm Insight Express suggests that mobile advertising is 4.5 to 5 times better in delivering RoI than online advertising. Mobile penetration is higher than the mass media advertising including radio and TV. With demand going up in terms of mobile inventory, publishers too have come up with new and better formats. The most innovative and recent example of utilization of all platforms of mobile advertising was initiated by Volkswagen Passenger Cars, which spends about 8-10 % of its total advertising budget on mobile platforms in India. “The smartphone medium will see an upward trend in terms of advertisement. This is the simple reason why Volkswagen is very active in this media,” explains Kothe. The brand advertised heavily on search and banner platforms.
The communication strategy of marketers is becoming more innovative and user-friendly as the space and time of usage on the mobile medium is shrinking. Innovation will prove to be the key in advertising as the span of content consumption on mobile devices is less as compared to print or electronic media. Moreover, mobile and tablet devices are more of individual devices, unlike TV and print, which were traditionally a group experience until the last decade. So, what is the brand strategy adopted by marketers to make the maximum of their reach through wireless devices? With mobile penetration today and access to data, brands are seeking out the mobile medium to place ODPs (On Device Portals), viral videos, topical and thematic contests and the like to build awareness and adoption of their brands. “We are seeing numerous organizations seek out mobiles as a medium to build awareness on their brands or on specific activities that they conduct,” adds GurinderSingh Sandhu, Head, Marketing of Tata Teleservices.
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 Kothe of Volkswagen. 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.
CHALLENGES AHEAD
Monetization 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 Unilever’s Welde. 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
Feedback: rahul.dubey@exchange4media.com
