Crippled

In spite of the huge potential of mobile advertising, especially with the
upcoming 3G and MVNO, there are various issues crippling the growth of the
segment.

"Mobile advertising is at a very nascent stage in the country and is yet to
catch up. The main issue is of customer acquisition," says Debasis Chatterji,
CEO of NetXcel.

The basic premise behind mobile marketing is that the reach of mobile is much
more as compared to other media like TV or Internet. A handset is the only
device in the country which reaches 500 mn people. Mobile marketing is not only
cost-effective, but advertisers can be sure their ad has been seen by the
consumer, which is not the case with TV or print. Besides, mobile is probably
the best medium which ensures a two-way communication. A basic form of
advertising like SMS can be extremely effective if used in a more targeted and
contextual manner.

The biggest challenge facing the segment today is that despite its immense
potential, there is a complete devaluation of the medium. "Consumers just don't
read the messages. Operators need to install some customer relationship
management (CRM) tools to have some amount of targeting to maximize the benefits
of this," says Dr Vinod Vasudevan, group COO, Flytxt.

This is seconded by Rajiv Madhok, director, One97 Communications, who
believes that unless there is thorough segmentation, mobile advertising is not
likely to happen in the country.

Some believe that though the reach is there, the main issue is whether
enterprises are reaching the right audience. "The issue is no longer whether I
am able to reach people or not; the issue is whether I am able to reach the
target audience. Segmentation has become extremely critical. It has to be
targeted," says Satish Kejriwal, chief operating officer, Buongiorno, India.

One of the major issues which enterprises face while using mobile as an
advertising medium is that it often intrudes into consumer's private space.
National Do Not Disturb (NDND) registry of Trai seeks to curb unsolicited
commercial communications. The NDNC registry is a database of telephone numbers
of subscribers who do not want to receive Unsolicited Consumer Communications (UCC).

The mobile advertising firms have to overcome spamming. They have created
various platforms designed to satisfy the needs of both advertisers and
consumers. What typically happens is that once a consumer purchases something
from a retail store and wants to be updated on its product or services, one can
opt for the store to send alerts or advertisements. This concept is known as
'invertising' or invited advertising, which basically addresses the issue of
spamming. The other way around for the enterprises is that of scrubbing the
messages with the NDNC list.

It is still perceived to be a low-cost advertising tool. However, the
industry players believe that mobile advertising is not standalone. It has to be
complimentary with another media. According to some sources, as of now it
constitutes just 3-4% on an average of an enterprise advertising spend. The
return on investment for enterprises is very low as of now.

However, one basic issue remains and that is how do you measure the RoI. This
is one of the basic questions which VAS companies have to answer to enterprises
before convincing them about the viability of mobile advertising.

Many believe that it is difficult to demonstrate the RoI for an enterprise
which seeks to advertise. "Financial institutions are the biggest advertisers as
far as mobile advertising is concerned. Most of the time they use the database
of operator instead of using the database of banks. So, mostly customers would
be receiving information which is not relevant to them," says Vasudevan of
Flytxt.

The second challenge is the interconnect charges, which have been recently
started by operators. Industry players allege that it has the potential to kill
the burgeoning industry.

"Basically interconnect issue started with leading operators feeling that
they were losing potential revenue even though the bulk messages were
terminating on their network. Earlier, operators were offering free SMS packs
with mutual understanding. Since most customers were residing on the network of
old telcos, they were not comfortable with new entrants using similar strategy.
This is what led to Airtel charging 10 paise termination fee," explains an
industry source.

Growth Drivers

Though 3G was launched in the country early this year, it is yet to see much
traction. However, once the private operators also launch 3G, it is likely to
give the much needed push to mobile advertising. Many players in the industry
believe that the segment will definitely move to the next level once that
happens.

"With the coming of 3G, there will be an upsurge in marketing capabilities of
an operator. Product promotional activity will also increase. Video
communicating marketing and advertising will also record an increase. There will
definitely be a quantum leap," says Vasudevan. However, this is likely to take
some time, as 3G launch of BSNL and MTNL hasn't seen much traction yet.

As of now, mobile has attracted low advertising spends because of its
format-simple text SMS or basic pictures. However, once 3G happens, it will open
new avenue for advertisers, such as rich media content and video over mobile
phones.

Industry players believe that with 3G, advertisers might be able to subsidize
the cost of downloading rich media content by subscribers. For instance, a song
from a Hindi film can be put up for download with an ad of a soft drink company
as a pre-roll or a mid-roll. Consumers can download this song for free while the
soft drink company pays for the download.

"3G has limitations as well, since subscriber base has to be strong for
mobile advertising to happen," says Madhok. As of now, SMS and voice remain the
most used segments for advertising. While voice is used mostly by the operator
itself to advertise its products or for cross-promotion of its services, the
enterprise segment has been mostly engaging with the SMS part.

BFSI, followed by the retail segment, are the biggest users of the mobile
medium for advertising in the country today.

MVNOs are believed to be another growth area for this segment. They can help
grow the mobile marketing industry as well as the subscriber base in the
country.

Many cite the Blyk mobile model, which offers the entire mobile service for
free if subscriber opts to receive a certain number of advertisements per week.
The UK based operator, Blyk, sells mobile network for free. Basically, it gives
consumers free airtime in exchange for accepting up to six advertising messages
per day. Thus, Blyk generates all its revenue from advertisers. The company's
priority is to ensure it has a user base that advertisers will pay a premium to
reach.

Thus, MVNOs will be dependent on VAS and advertising to create a
differentiator, it will be an important contributor to the growth of mobile
advertising.

The industry players believe that mobile marketing will work best when it is
integrated with other media as well. Going forward, with the impending launch of
3G by private operators, this segment is likely to evolve and hopefully will
emerge as a standalone advertising medium.

Gagandeep Kaur

gagandeepk@cybermedia.co.in