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The Mobile Web: Unleashing Use in a Nascent Market
FDIH, Search Marketing Strategies, Scandinavia 2008February 8th, 2008
Thomas Husson, Senior Analyst, European Mobile
2 © 2008 JupiterResearch, LLC
Jupiter Research: An International Research And Advisory Company Focusing On The Digital Economy
• Est. 1986. Telecoms / Media / Internet Focus
• Headquarters in New York. 60+ analysts in San Francisco, London, Paris, Berlin, Madrid and Scandinavia
• Field regular Consumer surveys / Canvass market leading executives - Build sophisticated market forecasts
• Client unlimited access to reports and analysts
• Consulting and exclusive custom projects
3 © 2008 JupiterResearch, LLC
Personal Technology & Access• Broadband
• PC & Console Games
• Personal Technology
• Wi-Fi Mobility
• Wireless
• Mobile Devices *New for 2008
• Digital Home *New for 2008
Marketing & Advertising• Advertising & Branding
• E-Mail Marketing
• Online Behavior & Demographics
• Mobile Media & Marketing *New for 2007
• Search Marketing
• Social Marketing *New for 2007
Media Focus• Music
• News & Information
• Online Media & Programming
• Television & Filmed Entertainment
Industry Focus• Automotive
• Financial Services
• Health
• Retail
• Travel
Web Technologies & Operations• Customer Service & Support
• Payments & Transactions
• Site Technologies & Operations
• Web Globalization *New for 2007
European Focus• Broadband and VoIP
• Commerce
• Content & Programming
• Country Focus
• Digital Home
• Marketing & Advertising
• Market Forecasts
• Mobile
2008 Research Offering
4 © 2008 JupiterResearch, LLC
Reports – European Mobile
• European Mobile Forecast (2007-2012) – to be published• Mobile Data Pricing – to be published• Mobile Advertising in Europe• Mobile Social Networking• Impact of the iPhone in Europe• Mobile Search: Finding Opportunities in a Nascent Market• Mobile Youth Consumer Survey: Targeting digital natives and
keeping them loyal
• The future of mobile browsing: leveraging the Internet model
• Consumer-Created Content: Defining opportunities for mobile operators
• Ad-funded mobile services: emergence of a new business model
5 © 2008 JupiterResearch, LLC
AGENDA
• What's the current reality of the mobile service market?
• How are mobile Internet / search, mobile advertising and mobile social networks developing?
• What are the drivers and inhibitors for the uptake of this nascent market? How quickly will it grow ?
6 © 2008 JupiterResearch, LLC
Except 3G Early Adopters & Youth, Majority of Mobile Phone Owners Do Not Use Mobile Multimedia Services
0% 20% 40% 60% 80% 100%
None
Watched Live TV
Used mobile IM
Received and sent e-mails
Listened to full music tracks
Accessed the Internet from my mobile
Shared mobile content with friends
Sent more than 10 SMS / day
Watched a short video
With 3G phones15-24 with mobile phonesWith mobile phones
Question: During the past three months, which of the following activities have you done at least once on your mobile phone?Source: JupiterResearch/Ipsos Consumer Survey (9/06), n = 3,680 (consumers with mobile phones, UK, France, Germany, Spain, Italy, and Sweden only)
Percentage of Consumers by Phone Type
7 © 2008 JupiterResearch, LLC
Mobile Broadband Will Not Be Mass-Market Before The End of The Decade
Source:Source: JupiterResearch Mobile Forecast 10/06 (Western Europe only)
*categories are not mutually exclusive. 3.5g is a subset of 3G, which is a subset of 2.5G, explaining why total is over 100%. 3G excludes EDGE
0%
20%
40%
60%
80%
100%
2.5G 71% 87% 94% 98% 100% 100% 100%
3G 6% 13% 22% 33% 45% 54% 62%
3.5G 0% 0% 1% 3% 7% 15% 26%
2005 2006 2007 2008 2009 2010 2011
2.5G
3.5G
Perc
en
tag
e o
f S
IM C
ard
s b
y
Netw
ork
Gen
era
tio
n
3G
8 © 2008 JupiterResearch, LLC
Mobile Social Networking: From Online Players to Pure Mobile Players
9 © 2008 JupiterResearch, LLC
Social Networkers Most Likely to Share and Upload Mobile Media
0% 20% 40% 60% 80% 100%
UploadedMobile Photos
or Video
Shared MobilePhotos or Video
Average User All Networkers Frequent Networkers
Source: JupiterResearch Consumer Survey 4/07 n = 4,446 (UK, FR, DE, NL, DK only)
Question: Considering the following statements, which describe you? (Select all that apply)
Percentage of European Segment
10 © 2008 JupiterResearch, LLC
Mobile Operators Are Slowly Moving Away from their Walled-Garden Approach
Source: JupiterResearch (12/06), Western Europe
White-label approach
Branded / Open strategy
• Increased revenues for carriers• More relevant answers• Consumers’distrust
• Drive audience and traffic• Risk of dissatisfaction in the early days• Position of carriers in the value chain
11 © 2008 JupiterResearch, LLC
0% 10% 20% 30% 40% 50%
Average
Germany
UK
France
Netherlands
Denmark
Percentage of Segment
Consumers who have searched local informationonline and would be interested in mobile searchConsumers interested in using an Internet searchengine on their mobile phone
Interest in Mobile Search Still Limited, but Higher Among Online Local Search Users
Source: JupiterResearch/Ipsos Consumer Survey (4/07), n = 4,446 (Denmark, France, Germany, Netherlands, and UK)
Question: Considering the following statements, which ones describe you? Please select all that apply. (Answers are shown for wanting to use an Internet search engine such as Google on a mobile phone.)
12 © 2008 JupiterResearch, LLC
Forty Percent of European Mobile Population Will Regularly Access Mobile Internet by 2012
29%33%
37% 40%
24%19%
0
50
100
150
2007 2008 2009 2010 2011 2012
0%
20%
40%
60%
80%
100%
Number of monthly mobile Internet usersPercentage of users accessing the mobile Internet
Nu
mb
er
of
Mo
nth
ly
Mo
bil
e In
tern
et
Users
Perc
en
tag
e o
f th
e M
ob
ile P
op
ula
tio
n
(in millions)
Source: JupiterResearch Mobile Model, 11/07 (Western Europe)
13 © 2008 JupiterResearch, LLC
UK: Interesting Testbed for Innovative Consumer Internet Pricing in Europe
October 2007
June 2007
May 2007
October 2006
2005
Launch Date
Pay monthly: £7.5 (!11) per month (1GB fair use); prepay: £1 (!1.5) per day (40 MB fair use)
T-Mobile
£7.5 (!11) capped at 200 MB per month; available to prepay and post-pay users; dedicated offering for iPhone users launched on November 9, 2007
£7.5 (!11) capped at 150 MB per month; £1 (!1.5) per day for up to 15 MB and £2 (!3) per MB beyond that
£8 (!12) capped at 30 MB per month; available to prepay and post-pay users
X-Series Silver at £5 (!7.5) per month (1GB fair use); unlimited Skype calls for Skype PC users, unlimited IM to or from Windows Live Messenger or Yahoo! Messenger, Internet browsing; X-Series Gold at £10 (!15) per month (Silver package plus 50 hours of access to home TV with Slingbox and to home PC with Orb)
Description of Pricing
O2
Vodafone
Orange
3
Operator
Source: JupiterResearch (2/08); mobile operators’ reports
14 © 2008 JupiterResearch, LLC
Limited Willingness to Pay Will Force Operators and Content Owners to Turn to Ad-Funded Business Models
0% 50% 100%
Nothing - only interested in voice/SMS
Watching live TV or short videos
Using Instant Messaging
Willing to pay for new services
Playing a game
Accessing maps and local information
Receiving personal emails
Accessing Internet
Listening to music
Sharing pictures or videos with friends
Not willing to pay for services, but would accept ads
Interested in services but would not pay
Question: Which of the following services would you be interested in using on your mobile phone in the next 12 months?
Percentage of Mobile Phone OwnersInterested and Willing to Pay for New
Mobile Services
Source: JupiterResearch/Ipsos Consumer Survey (9/07), n = 4,202 (consumers with mobile phones in France, Germany, Italy, Spain, Sweden, and UK only)
15 © 2008 JupiterResearch, LLC
Several Business Models Are Likely To Co-Exist in an Evolving Ecosystem
Ad-fundedPay-per Access /
DownloadSubscriptions
New Entrants’impact
New Paymentmethods
Handset Manufacturers
dilemma
Non-cellularnetworks
Free
Internet Convergence
Operators’ role
16 © 2008 JupiterResearch, LLC
Create a Sticky Audience First. Monetize Second.
Source: Jupiter Research (10/2007)
HANDSETS&
NETWORKS
CLIENTEXPERIENCEPRICE
BUSINESSMODELS
A Holistic Approach to Build Market Foundations
17 © 2008 JupiterResearch, LLC
Typical Consolidation Phase in a New Market
! Fragmented market
! Lack of internal human competencies and technology
! Strategic long term vision that mobile may well be the next advertising battleground
! Blurring of boundaries in the online advertising channel
18 © 2008 JupiterResearch, LLC
10 Mobile Advertising Myths
1. Penetration rate>100%2. ~3,000,000 mobile users3. Mobile Internet > PC Internet Users4. Multimedia messaging is dead5. Triple digit growth6. Mobile TV is about to be mass-market 7. Mobile advertising ~ > 20,000,000,000 $8. Operators’ inventory ~x00,000,000 impressions9. Click Through Rates on mobile >>> Internet10.Mobile 2.0
19 © 2008 JupiterResearch, LLC
Advertising on Personal Phones Is A Double-Edged Sword
3%
2%
14% 14%
22%
4%
5%
47%
35% 17%
18%
19%
0% 20% 40% 60% 80% 100%
Overall mobilephone owners
Mobile phoneowners, ages 15
to 24
Don't know Strongly disagreeSomewhat disagree NeutralSomewhat agree Strongly agree
Percentage of Segment
Source: JupiterResearch/Ipsos Consumer Survey (9/06), n = 3,680 (consumers with mobile phones, UK, France, Germany, Italy, Spain, and Sweden only)
Question: Do you agree with the following statement: I would like to receive promotions and advertising on my phone if they are relevant to me and will help me save money?
20 © 2008 JupiterResearch, LLCSource: JupiterResearch Mobile Model, 10/06 (Western Europe); JupiterResearch Mobile Marketing and Advertising Model, 11/07 (Western Europe)
SMS Marketing Is Only Mass-Reach Mobile Marketing Option
SMS active users: 74% (234 million)
Mobile Internet active users:
19% (60 million)
MMS active users: 29% (92 million)
Mobile search active users: less than 4% (14 million)
Simple messaging: 160-character black-and-white text-based SMS messaging
Enhanced messaging (plus content and services): dynamic/interactive/audiovisual content/services/applications, short video clips, sponsored links and keywords
Mobile video/TV active users:
7% (22 million)
Marketing Capabilities
Monthly Audienceat End of 2007
21 © 2008 JupiterResearch, LLC
Lack of Strategic Integration and Implementation Complexities Will Stifle Mobile Marketing’s Potential in Short Term
Lack of strategic integration in the
marketing mix
Lack of interoperable
measurement and performance tools
Growing interest of advertisers
Growing inventory and choice of ad
formats
Consumers’uptake of data
services
MobileAdvertisingSpending
Source: JupiterResearch (12/07)
Campaign execution
complexities
Individual, contextual
(location-based), and behavioral
targeting capabilities
Limitedaudience
22 © 2008 JupiterResearch, LLC
Advertisers Plan to Use Many Different Tactics Including Banner Ads, Sponsored Links
0% 20% 40% 60% 80% 100%
Other
Ads on mobile location-based services
In-stream video ads
Content sponsorships or advertorials
Mobile coupons or bar codes
Ad-supported content or services
Sponsored links within mobile search
Branded mobile applications
Banner ads on off-portal mobile Internetpages
Banner ads on mobile portals
Branded mobile content (e.g., logos, games)
MMS video
MMS images
WAP-push marketing
SMS marketing messages
Having used tacticduring past 12 monthsPlanning to use tacticduring next 12 months
Percentage of Mobile Marketing Decision Makers Having Used or Planning to Use Mobile Marketing
Question: Which mobile marketing and advertising tactics have you used during the past 12 months, and which do you plan to use during the next 12 months? Select all that apply.
Source: JupiterResearch Mobile Marketing and Advertising Executive Survey (7/07), n = 50 (mobile marketing decision makers having used or planning to use mobile marketing, Western Europe)
Messaging
23 © 2008 JupiterResearch, LLC
2006 Mobile Advertising Revenues ~240M !in the Advanced Japanese Market*
Source: * Dentsu, ** Japanese Ministry of Internal Affairs and Communications
• 3G =64% penetration rate*• Mobile Internet =87% penetration rate**
24 © 2008 JupiterResearch, LLC
Stakeholders Must Implement Measurement and ROI Standards to Boost Market Uptake
0% 20% 40% 60% 80% 100%
Poor performance
Mobile creative development
Data protection and privacy
Measurement and reporting strategies
Trafficking processes
Mobile landing page production
Trafficking technology
Selection of best inventory
Lack of audience
Coordination with other media
Selection of best tactics
Lack of inventory
High cost of inventory
Measurement technology
Allocation of budget
Percentage of Mobile Marketing Decision Makers Having Used Mobile Marketing
Question: Which of the following problems have you experienced in relation to your mobile marketing efforts? Select all that apply.
Source: JupiterResearch Mobile Marketing and Advertising Executive Survey (7/07), n = 34 (mobile marketing decision makers having used mobile marketing, Western Europe)
Measurement issuesCost/reach issuesOther
25 © 2008 JupiterResearch, LLC
Key Takeaways
! Online Trends in the maturing web market are expanding in the nascent mobile space
! Barriers will be removed or lessened in the next few years: more affordable data plans, good enough mobile broadband experience, compelling handsets
!However, today mobile multimedia services are only on their way to reach critical mass
! Mobile Advertising is still in its infancy and will remain in an educational / standardization phase in the next 2/3 years