Advertising on the small screen. - Deloitte Africa Blog

As a result of the mobile device phenomenon, advertising via phones and tablets has emerged as an ... email enabled device user base, this type of mobile.
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Advertising on the small screen.

As a result of the mobile device phenomenon, advertising via phones and tablets has emerged as an attractive proposition for global brands to promote their products and services. The mobile device with its high daily use, large audience-reach and media capabilities is now top of mind for many brand managers, agencies organisations looking to influence the digitally connected generation. Revenues from mobile media are expected to reach $150 billion1 by the end of 2012. Advertisers are starting to utilise the possibilities of mobile advertising with spend expected to jump 85.4% to $11.6 billion by the end of 2012. With the more intelligent mobile advertising platforms finding their way into market, advertisers are now profiling users with the goal of providing more contextual adverts and increasing the likelihood of consumer engagement with the advert.

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A. Developed world mobile advertising Across the developed world, rich media mobile advertising is growing from strength to strength. The growth in mobile advertising opportunities works hand-in-hand with the growth of smartphone devices. Globally smartphones in use have recently exceeded 1 billion devices2 and is expected to double by 2015 with the concentration of smart devices in developed markets. The good news for advertisers is many of those devices have the ability to execute rich media mobile advertising opportunities. Leading the mobile advertising charge is mobile internet banner advertising. Commonly known as display or mobile web banners, this type of advertising has evolved in particular with the growth of connected devices globally. The majority of mobile web banners that are displayed through publisher portals are served by third party mobile advertising networks. The ad networks are continually developing and enhancing customer engagement and with the growth of HTML5 compatible devices are allowing advertisers to engage with customers on the mobile phone like never before.

HTML5 is the next evolution of the HTML web development language and is focused on mobile devices. HTML5 allows for rich elements to be displayed through a compatible browser including audio, video, and other visually enriching experiences like enhanced navigation and menus on mobile internet sites. Through technologies like HTML5, mobile advertising networks are enabling advertisers to provide richer and more meaningful mobile advertising campaigns3. One of the new exciting opportunities is mobile video advertising. In the developed world, mobile video ads are becoming an increasingly important channel as customers move audiovisual viewing from the TV and PC over to the mobile device.

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B. Developing world mobile advertising With rich media mobile advertising growing in the developed world, more traditional forms of mobile advertising are still relevant in emerging markets. This is driven by generally low smartphone penetration and proliferation of unconnected mobile devices4 and mobile internet enabled feature phones5. Across the African continent, low cost devices form the largest cross section of the handset landscape. Many of these mobile phones are legacy devices which are still in use. Generally these $10-$20+ devices that have basic functionality like voice calling and SMS. They however don’t have mobile internet connectivity. But as technology evolves, more price competitive mobile internet connected devices are getting into the hands of the subscribers, who are utilising the features that are available on the device. When it comes to device connectivity, feature phones6 dominate the connected device5 footprint of most developing markets, especially evident across Africa. Smartphones are finding their way into markets with the shipments of devices into the hundreds of thousands on a quarterly basis. However as advertising is a numbers game, where does that leave advertisers who are looking to take advantage of mobile advertising opportunities?

Q. Thinking about the adverts that you have see when using the internet on your handset, how do you typically respond to any of the advertising you see?

In the recently conducted Deloitte TMT Global mobile consumer survey, in counties like Brazil, Turkey and South Africa, consumers indicated that SMS are still the most popular form of mobile advertising received. An interesting observation from the consumers surveyed in Brazil and Turkey indicated that adverts received via emails to their phones were the second most popular mobile advertising channel. In South Africa with a large email enabled device user base, this type of mobile advertising was the third most popular. In South Africa, basic banner advertising was indicated as the second most popular form of mobile advertising. This is representative of the current state of the market, a large feature mobile segment and over 10 million active smartphones7. This is indicative of the growth of mobile advertising networks continuing to serve millions of banners to mobile internet hungry South African consumer SMS still proves to be extremely popular in South Africa and other developing markets due to the ubiquity of the service across all handset types. Mobile web banners are growing, but as we see in the developing world basic banners lead the way but text message advertising is still relevant in these markets.

Text messages Basic banners Emails received on phone containing ads Sponsored applications / games Coupons for special offers Recommendations linked to my research or to the app Video ad A short message before or after a podcast Other None of these 0%

20%

40%

Source: Deloitte Global Mobile Consumer Survey South Africa, May - June 2012. Base: Respondents who have seen Internet advertising 1168 4 Advertising on the small screen

60%

80%

Figure 5: Types of mobile advertising received by South African respondents Building on the relevance of text based advertising is an opportunity for mobile operators, especially across Africa, to take advantage of the various advertising opportunities available on their networks. One of the successful examples of this is the “Please Call Me” advertising model. A Please Call Me (also known as PCM) is a free service offered by mobile operators in South Africa which allows a subscriber (Party A) to send a free message to another subscriber (party B) asking that person to “please call them back”. On the reply message screens, a text strong of mobile advertising is placed at the end of the PCM message.

FROM: 0827654321 Please Call +27827654321. (AD) R200,000 Life Cover for around R79pm. SMS Life to 31823 for a 1LifeDirect quote. Risk dependent SMS R1. FSP24769

DIAL

Party A sends the Please Call Me command with Party B’s mobile number for free.

Party B receives an SMS with the “please call me message” along with the advert.

Please Call Me advertising has proven to be a very popular advertising channel for advertisers in South Africa. In South Africa alone, the Vodacom network has over 38 million8 advertising messages that are received daily via the please call me service. That’s a lot of mobile advertising real estate that is now available.

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C. Attitudes towards mobile advertising The challenge with mobile advertising is the successful engagement of a consumer with the mobile advert received. Often with display advertising, the approach is a shot gun approach, let’s fire and see how many targets we can hit. As indicated below, rich media mobile advertising is starting to grow. Increasing the richness and interactivity of advertising is allowing mobile advertisers to provide ever increasing contextual and meaningful advertising.

the Wireless Application Service Provider Association (WASPA10) was formed. In order to be interconnected to a mobile network operator in South Africa, a WASP (wireless application service provider) is required to be a member of WASPA. Through its code of conduct, WASPA prohibits its members from dispatching unsolicited SMS spam to mobile subscribers in South Africa. WASPA has the mandate to penalize members who contravene11 the code of conduct.

Looking at South African respondents, a large portion of the respondents surveyed, indicated that they either ignored the advert or simply deleted the message. Reasons attributed to this observation include the increase of unsolicited commercial SMS messaging (SPAM). As what happened with email, unsolicited marketing material makes up a large portion of mobile messaging. Governments and regulatory bodies from around the world have put measures in place to protect consumers. In South Africa, the consumer protection act (CPA) has been introduced to mandate marketing organisations amongst other things to provide an option for a customer to “opt-out” or remove their details from future marketing activities. Working in conjunction with the CPA is the Protection of Personal Information legislation9 (PPI), ensuring that South Africans’ constitutional right to privacy of their personal information is protected.

Increasing SMS spammers use alternative delivery channels or “routes” to terminate marketing messages outside of the normal messaging interconnections provided by mobile operators to WASP’s, increasing SPAM and creating challenges for monitoring and penalization if required. In order to mitigate this risk, mobile operators are installing anti-spam messaging equipment12 to minimize and stop SMS Spam messaging. SMS Spam will continue to plague mobile operators. In part it remains the responsibility of advertisers utilising outbound SMS messaging to ensure that consumers receiving the marketing messages have “opted-in” to receive the message. In conjunction, it is the responsibility of messaging partners to provide an “opt-out” mechanism for consumers to remove themselves from receiving future messages.

In order to provide a framework and code of conduct for value added service providers in South Africa, Q. Thinking about the adverts that you have see when using the internet on your handset, how do you typically respond to any of the advertising you see?

Text messages Basic banners Emails received on phone containing ads Sponsored applications / games Coupons for special offers Recommendations linked to my research or to the app Video ad A short message before or after a podcast Other None of these 0%

20%

40%

Source: Deloitte Global Mobile Consumer Survey South Africa, May - June 2012. Base: Respondents who have seen Internet advertising 1168 6 Advertising on the small screen

60%

80%

Figure 6: Attitudes towards mobile advertising Engagement and interactivity are the pillars that drive mobile advertising. As indicated by the survey, consumers are willing to click on links provided in the advertising message. The successful action of “clicking on the link” provided links to the structure of the advert, call to action and incentive provided by the advertiser. Linked to this action is what is called a CPC or cost per click. A CPC is one of the charging models levied by the mobile advertising network to the advertiser to displaying the banner advert. The advertiser is charged a fee for each click by a subscriber on their banner. Once the consumer is directed to the advertisers marketing portal, it is up to the advertiser to ensure that their marketing message is attractive enough for the consumer to continue the engagement. One challenge facing mobile advertising, especially in terms of mobile internet display, is the presence of (as one study13 indicated) fraudulent and accidental click

through actions. The study indicated at approximately 40% of click through conversions are linked to amongst other things the presence of “bots”. The bots impersonate real users in order to drive up click through rates on certain publisher’s portals. Consumers accidentally clicking on a banner that might not necessary be directed at them also form part of the challenge which advertisers need to overcome. For an advertiser, the key is placement of your display banner with reputable mobile advertising network whose network of publishers is of a high quality. Many mobile adverts work with some of the world’s largest publisher portals whose own brands are well recognised. In many cases trust and positive past engagements with the brand (both publisher and advertiser) are key ingredients to a successful mobile advertising engagement.

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What does the future hold for mobile advertising in the developing world? It is an exciting time to be a brand, especially with the proliferation of mobile devices. Brands and marketers, more so than any other time, have the ability to engage with customers on a one-on-one basis via the mobile phone. In emerging markets, the mobile phone is many consumers only internet channel. Africa in particular is very much a “mobile first society”. As more smartphones and mobile internet enabled devices come online, opportunities around mobile advertising will prosper. The developed world has seen the growth of rich media engagements and these channels will find their way into emerging markets. As indicated in the survey, South African consumers are already exposed to rich media advertising formats like videos adverts. Moving forward, rich media advertising using HTML5 technologies will become more and more popular with advertisers. Moving advertising into the mobile commerce spectrum, mobile couponing and location based incentives will drive further rich engagements for brands. According to one industry estimate, more than 300 million consumers14 around the world will have used mobile coupons by 2014 and this usage will generate a redemption value close to $6 billion globally. In South Africa, there are service providers already leveraging this opportunity15, providing reward via mobile phone that can be redeemed at various location based partners around the country.

Proximity and location based services provides another facilitating opportunity to advertisers to explore. In South Africa, one mobile operator provides call discounts based on a subscribers proximity to certain mobile towers of their mobile network16. Building on such initiatives, the possibilities for mobile advertising based on location and proximity is powerful. One innovative location based initiative saw brands being placed in the form of a short cut widget on a navigation app. This allowed users to look up products and services based on their location linked to their navigation device17. With all the advancements in technologies and user engagements, the key to mobile advertisings success will be the providing contextually relevant advertising. With contextual and relevant advertising, consumer through-rates will lead to improved click-through rates. Premium mobile advertising networks are now starting to make this a reality.

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1. Global Mobile Media - http://www.strategyanalytics.com/default.aspx?mod=pressreleaseviewer&a0=5206 2. 1 billion smartphones in use - http://www.bloomberg.com/news/2012-10-17/smartphones-in-use-surpass-1-billion-willdouble-by-2015.html 3. Rich media advertising - http://www.inmobi.com/press-releases/2012/09/12/rich-media-mobile-ad-impressions-grow-437-fromjanuary-to-august-2012/ 4. Dumb phone - mobile handsets that typically do not have the functionality to connect to the mobile internet. Basic features include peer to peer voice calling and SMS. 5. Feature phone devices - mobile handsets typically categorized as devices that supports WAP (GPRS/Edge) connectivity, have a colour screen, can send an MMS message, has low-resolution camera and lastly supports J2ME native applications. 6. Connected device - Any mobile phone that can connect to the mobile internet 7. 10 Million Smartphones in South Africa - http://www.worldwideworx.com/nokia-blackberry/ 8. Vodacom Mobile Media - http://www.vodacommobileadvertising.com/pcm2/ 9. The Protection of Personal information Bill (PPI) - http://www.deloitte.com/view/en_ZA/za/marketsolutions/popi-act/index.htm 10. Wireless Application Service Provider Association - http://www.waspa.org.za/ 11. SMS spammers named and fined - http://mybroadband.co.za/news/cellular/52451-sms-spammers-named-and-fined.html 12. SMS spam filtered on MTN - http://mybroadband.co.za/news/telecoms/36342-sms-spam-filtered-on-mtn.html 13. Report - 40 percent of mobile ad clicks - http://gigaom.com/2012/08/31/report-40-percent-of-mobile-clicks-are-fraud-or-accidents/ 14. Mobile Coupon Use to Triple to 300M by 2014 - http://www.mobilitrix.com/article/59-mobile-coupon-use-to-triple-to-300m-by-2014 15. Use Mobilicoupon to reward your consumers with easy-to-redeem discounts off specific products - http://www.mobilitrix.com/ page/62-mobilicoupon 16. MTN Topup - http://www.mtn.co.za/FindaPlan/ContractAndTopUpPackages/Pages/ZoneonTopUp.aspx 17. Telmap Navigator launches in SA, goes to no 1 app. KFC, BP and Nando’s see huge benefit - http://www.bizcommunity.com/ PressOffice/PressRelease.aspx?i=135017&ai=81750

Contact TMT Leader, Southern Africa, Deloitte Email: [email protected] Tel: +27 (0)11 806 5205

Mark Casey Manager, Deloitte Digital Email: [email protected] Tel: +27 (0)11 517 4048

Jon Hoehler

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