Mobile Advertising in Emerging Marketscreateyournextcustomer.com/.../2010/03/EX_MOBILE-ADVERTISING.pdfMobile advertising strategy: Sprite builds social networking mobile portal to

MOBILE ADVERTISING IN EMERGING MARKETS REPORT EXCERPT

© 2009 Pyramid Research www.pyramidresearch.com While every effort has been taken to verify the accuracy of this information, Pyramid Research cannot accept any responsibility or liability for reliance by any person on this information.

R E S E A R C H R E P O R T E X C E R P T

Mobile Advertising in Emerging Markets

Market Trends and Strategies

for the Third Screen



Report overview

Mobile Advertising in Emerging Markets: Market Trends and Strategies for the Third Screen Global mobile subscriptions surpassed four billion at year-end 2008 and are expected to approach six billion by 2013, making mobile services an extremely relevant platform for advertising for mass audiences. Pyramid Research believes that using mobile services as an advertising medium creates a new revenue stream for telecom operators as well as for technology enablers and content developers. Furthermore, mobile advertising will play a key role in driving usage of paid mobile data services. Mobile Advertising in Emerging Markets looks at mobile advertising initiatives and the revenue potential in emerging markets, with a particular emphasis on Brazil, China, India, Indonesia, Mexico, Romania, Russia, South Africa and Turkey. In the report, we also put our findings in context by making comparisons with global trends and developed markets, such as the US and the UK. Our analysis indicates that mobile advertising will boost mobile data service revenue by up to 10% and that leading operators are pushing a variety of advertising methods, from sponsored messaging and alert services to more sophisticated content over mobile portals. Case studies:

Brazil China Indonesia Mexico Romania Russia South Africa Turkey

Key questions answered:

• How will mobile and Internet-based advertising compare in emerging and mature markets?

• Are there markets where the mobile sector’s share of overall advertising spending will surpass that of the Internet anytime soon?

• In light of the fact that even basic services such as sponsored messaging and alert systems are enabling brands to reach a wider audience, how will the progression of mobile networks to 3G affect the development of mobile advertising?

• What are the benefits to brands of including mobile advertising initiatives in their overarching marketing strategies?

• Can SMS-based approaches ever help brands reach a substantial mobile audience in emerging markets?

• What are the advantages to mobile operators of pushing m-advertising, besides adding a revenue stream?

• Can advertising play a role in boosting the use of paid connectivity products?



Audience:

Operators: Learn how different business models can be used to provide mobile financial services, in particular what the role is of the main players and the supporting ecosystem. Find out which factors — regulations, technology — make a service successful. Draw on conclusions based on the experience of successful African operators that have wide application in markets at various stages of development. The report also looks at examples of why privacy issues, mobile spam and unsolicited messages are key areas the industry must continue to address delicately.

Advertisers: Find out the size of the opportunity in emerging markets, and determine how different markets require different approaches. Learn how the mobile advertising channel can increase awareness of your offerings, improve customer satisfaction and provide information about customer behavior and preferences. This report provides insight into how different approaches using mobile media can help reach customers more effectively. It also offers the analysis you need in order to take advantage of the mobile opportunity, especially among previously unreachable income segments.

Investors: Identify the opportunities in mobile advertising by examining case studies of some of the most challenging markets in the world. This report provides a thorough grounding in the important issues facing one of the most exciting segments of the telecommunications industry, giving you the fundamental tools to develop long-range plans and winning strategies.

Mobile advertising platform vendors: Discover where your greatest opportunities lie and how deep your involvement in the business of providing mobile advertising services should be. Understand the challenges facing your customers and what role you can play in meeting those challenges. This report provides the analysis you need to win a larger share of operator spending with informed go-to-market strategies and creative solutions, particularly in a time of worldwide economic downturn.



Table of contents

Table of contents Table of exhibits Acronyms and abbreviations Companies mentioned in this report Executive summary Section 1: Definitions and methodology

1.1 Definitions Types of mobile advertising

Section 2: Global trends in mobile advertising Advertising and the economy Advertising, the Internet and mobile platforms

Section 3: Country case studies 3.1 Brazil: at the forefront of mobile advertising in Latin America

Overview of the mobile telecom market in Brazil The mobile advertising opportunity in Brazil Mobile advertising strategy: Agency F.biz launches campaigns with different operators involving gaming and mobile portals

3.2 China: M-advertising revenue to reach $2.6bn by 2013 Overview of the mobile telecom market in China The mobile advertising opportunity in China Mobile advertising strategy: Madhouse’s mobile impressions reached 4bn in 2008 Mobile advertising strategy: China Unicom experiments with the handset’s idle screen Mobile advertising strategy: Pioco and Coca-Cola partner for Bluetooth-based marketing

3.3 Indonesia: Mobile media to drive digital advertising expansion Overview of the mobile telecom market in Indonesia The mobile advertising opportunity in Indonesia Mobile advertising strategy: “As Fress” by Telkomsel Mobile advertising strategy: Utones sponsors content downloads Mobile advertising strategy: MXIT in Indonesia

3.4 Mexico: Significant potential across digital platforms Overview of the mobile telecom market in Mexico The mobile advertising opportunity in Mexico Mobile advertising strategy: KT Consulting bets on mobile advertising as core competence Mobile advertising strategy: Sprite builds social networking mobile portal to promote brand

3.5 Romania: Advertising revenue from mobile media to exceed that from online media by 2010 Overview of the mobile telecom market in Romania The mobile advertising opportunity in Romania Mobile advertising strategy: Vodafone pioneers with messaging-based services

3.6 Russia: Operators poised to exploit growth opportunities Overview of the mobile telecom market in Russia The mobile advertising opportunity in Russia Mobile advertising strategy: Mobile operators in Russia Mobile advertising strategy: MTS is exploring with messaging-based initiatives Mobile advertising strategy: Gigafone’s “get called, get rewarded” business model gains traction

3.7 South Africa: Mobile advertising revenue to exceed online by 2010 Overview of the mobile telecom market in South Africa The mobile advertising opportunity in South Africa Mobile advertising strategy: MXIT targets the youth audience via messaging Mobile advertising strategy: Vodacom’s dedicated mobile advertising division

3.8 Turkey: Leading operator Turkcell is promoting a variety of m-advertising formats Overview of the mobile telecom market in Turkey



The mobile advertising opportunity: Turkey Mobile advertising strategy: Leading mobile operator Turkcell

Related resources



Table of exhibits

Exhibit 1: Pyramid Research’s approach to estimating advertising revenue Exhibit 2: Mobile advertising as one of the elements of a mobile marketing strategy Exhibit 3: Total advertising spending as a portion of GDP and GDP per capita, 2008 Exhibit 4: Global mobile subscriptions, 2004-2013 (millions) Exhibit 5: Fixed broadband accounts, mobile browsing and SMS subscriptions as proportions of population in 10 countries, 2008 Exhibit 6: Global mobile service revenue, 2004-2013 Exhibit 7: Digital media spending as a percentage of total advertising revenue in select countries, 2008 vs. 2013 Exhibit 8: Forecast of mobile and online advertising as a percentage of digital advertising in select markets in 2013 Exhibit 9: Worldwide AdMob traffic, September 2008 vs. September 2007 Exhibit 10 : Highlights of mobile advertising services by type in emerging markets Exhibit 11: Brazil — Key telecom and demographic indicators in a global context, year-end 2008 Exhibit 12: Brazil — Mobile subscriptions by technology, 2007-2013 Exhibit 13: Brazil — Mobile data service subscription penetration, 2007-2013 Exhibit 14: Brazil — Advertising spending breakdown by category, 2008 Exhibit 15: Brazil — Mobile advertising revenue, percentage of advertising spending, 2007-2013 Exhibit 16: New Fiat Punto advertising campaign, first launched on mobile platforms Exhibit 17: Unilever Seda Teens campaign, using banner adds, a dedicated WAP portal, branded phones and content such as games Exhibit 18: China — Key telecom and demographic indicators in a global context, year-end 2008 Exhibit 19: China — Mobile subscriptions by technology, 2007-2013 Exhibit 20: China — Mobile data service subscription penetration, 2007-2013 Exhibit 21: China — Advertising spending breakdown by category, 2008 Exhibit 22: China — Mobile advertising revenue; percentage of advertising spending, 2007-2013 Exhibit 23: Indonesia — Key telecom and demographic indicators in a global context, year-end 2008 Exhibit 24: Indonesia — Mobile subscriptions by technology, 2007-2013 Exhibit 25: Indonesia — Mobile data service subscription penetration, 2007-2013 Exhibit 26: Indonesia — Advertising spending breakdown by category, 2008 Exhibit 27: Indonesia — Mobile advertising revenue, percentage of advertising spending, 2007-2013 Exhibit 28: Kartu As Fress — Telkomsel’s mobile advertising-funded tariff plan Exhibit 29: Utones — An application offering content in exchange for advertising Exhibit 30: Mexico — Key telecom and demographic indicators in a global context, year-end 2008 Exhibit 31: Mexico — Mobile subscriptions by technology, 2007-2013 Exhibit 32: Mexico — Mobile data service subscription penetration, 2007-2013 Exhibit 33: Mexico — Advertising spending breakdown by category, 2008 Exhibit 34: Mexico — Mobile advertising revenue, percentage of advertising spending 2007-2013 Exhibit 35: Zona Sprite social networking WAP portal Exhibit 36: Romania — Key telecom and demographic indicators in a global context, year-end 2008 Exhibit 37: Romania — Mobile subscriptions by technology, 2007-2013 Exhibit 38: Romania — Mobile data service subscription penetration, 2007-2013 Exhibit 39: Romania — Advertising spending breakdown by category, 2007 Exhibit 40: Romania — Mobile advertising revenue, percentage of advertising spending, 2007-2013 Exhibit 41: Russia — Key telecom and demographic indicators in a global context, year-end 2008 Exhibit 42: Russia — Mobile subscriptions by technology, 2007-2013 Exhibit 43: Russia — Mobile data service subscription penetration, 2007-2013 Exhibit 44: Russia — Advertising spending breakdown by category, 2008 Exhibit 45: Russia — Mobile advertising revenue, percentage of advertising spending, 2007-2013 Exhibit 46: MTS national SMS quiz screenshots Exhibit 47: South Africa — Key telecom and demographic indicators in a global context, year-end 2008 Exhibit 48: South Africa — Mobile subscriptions by technology, 2007-2013



Exhibit 49: South Africa — Mobile data service subscription penetration, 2007-2013 Exhibit 50: South Africa — Advertising spending breakdown by category, 2008 Exhibit 51: South Africa — Mobile advertising revenue, percentage of advertising spending, 2007-2013 Exhibit 52: MXIT application screenshot Exhibit 53: Vodacom’s reported mobile advertising revenue, 2007–2008 Exhibit 54: Screenshot of Vodacom’s Please Call Me service Exhibit 55: Turkey — Key telecom and demographic indicators in a global context, year-end 2008 Exhibit 56: Turkey — Mobile subscriptions by technology, 2007-2013 Exhibit 57: Turkey — Mobile data service subscription penetration, 2007-2013 Exhibit 58: Turkey — Advertising spending breakdown by category, 2008 Exhibit 59: Turkey — Mobile advertising revenue, percentage of advertising spending, 2007-2013 Exhibit 60: Turkcell’s Tonlakazan Service



Companies mentioned in this report

AdMob Advanced Info Service (AIS) AgênciaClick Akbank América Móvil Amobee Media Systems Arcelik Avea Axis Baidu Banco do Brasil Blyk Budget Insurance BuzzCity CASEE CCTV (China Central Television) Cell C Celltick China Central Television (CCTV) China Mobile China Telecom China Unicom Claro (Brazil) Coca-Cola Cosmote Cukurova Digiturk Dogan Dotad F.biz Facebook Fiat Focus Wireless Fractalist Garanti Bankasi Gigafone Technologies Google GroupM Intact Media Interactive Advertising Bureau Brasil Iusacell JWT Brazil Kraft KT Consulting (KTC) Libertatea Madhouse MADS Mail.ru McCann Healthcare MegaFon Merkez

Microsoft MNET MSN MTN MTS MTV MultiChoice MXIT MySpace Naspers Nestlé Nextel Mexico News24 Nokia OgilvyOne Oi Okto Opera Software Orange Orange Romania Petrobras Pioco Pontomobi Praesto Convergence Proctor & Gamble PT Pos Indonesia QQ.com Société Générale Sun, The SocialTxt.org Telcel Televisa Telefónica Telkomsel Telsim TIM Brasil (Telecom Italia) Turkcell Turk Telecom TV Azteca Unilever Utones Velti VimpelCom Vivo Vodacom Vodafone Vodafone Romania Warner Brothers Yahoo YouTube Zingmobile



About the authors

Jan ten Sythoff Manager, Mobile Content

Jan is the Manager of Pyramid Research’s Mobile Content practice, in the company’s London location. Jan’s primary role is to lead Pyramid’s research and evaluation of the mobile data opportunity on a global basis, providing clients with market analysis, insight and recommendations. He works closely with the regional managers to ensure Pyramid’s research is always relevant to the interests, needs and growth strategies of our clients.

Recently, Jan has participated in projects such as 3G vendor sourcing in Australia, mobile broadband opportunities in emerging markets, sizing the mobile enterprise opportunity in Europe and Africa, evaluating ‘broadband everywhere’ strategies in France as well as analyzing the mobile advertising and mobile financial services opportunity for operators. He regularly writes articles looking at important market developments such as mobile broadband in South Africa, and innovative mobile voice pricing strategies in Africa.

Prior to joining Pyramid, he was a senior analyst with Frost & Sullivan, where he specialized in researching and analyzing European mobile markets, focusing on a number of different technologies and services including mobile content, fixed-mobile convergence, wireless LAN and messaging. He was also involved in delivering a number of consulting projects, including competitive benchmarking in messaging, DSL partner profiling and network maintenance market entry strategy. Jan has spoken at a number of conferences including 3GSM, Barcelona, Broadband World Forum and Mobile Enterprise World and has been quoted in several industry publications including The Economist and Mobile Europe.

Jan has a Postgraduate Diploma in Business Management from the University of Barcelona and graduated from Exeter University with a degree in Economics. Jan speaks English, French and Spanish and is conversational in Dutch and German. In his spare time, Jan enjoys reading and swimming.

Luis Portela With more than years of experience in the telecommunications industry, Luis Portela has worked as an Analyst with Pyramid Research’s EMEA practice, where he was responsible for tracking developments in Portugal, Spain, Italy, Germany and the UK. In addition, Luis supported Pyramid’s consulting engagements, working on a variety of projects. Engagements included an analysis of marketing initiatives of mobile operators in Western Europe that used Web 2.0 applications, mobile Internet and mobile music products. Luis also contributed regularly to Pyramid’s publications. Prior to joining Pyramid Research, Luis worked four years in the telecom area in various countries. He worked in interconnection at Optimus, a Portuguese mobile operator, as a Procurement Manager in Angola at Visabeira, a Portuguese telecom conglomerate, and also in marketing intelligence at BT in London. Luis holds an MBA from the Rotterdam School of Management, Eramus University, and a BA in Economics from the Universidade Nova de Lisboa.



Gabriela Baez Managing Director, Global Research & Consulting Ms. Baez is Managing Director of Pyramid’s global research and consulting practice. She has more than eight years of experience leading projects and developing analytical frameworks and quantitative models for telecom, Internet services and equipment sales. Gabriela supervises different publications within Pyramid Research and is responsible for the constant enhancement of the firm’s forecasts for fixed and mobile services at the global level. Ms. Baez has directed numerous consulting engagements, assisting operators, content developers, equipment vendors and government agencies in identifying growth opportunities, staying informed of industry transitions and analyzing strategies for new product initiatives. Her recent projects include topics such as e&m-advertising, broadband bundles, Web 2.0 models and value chain analysis of digital entertainment services. She has also designed different segmentation studies covering enterprise and residential users. Prior to joining Pyramid, Gabriela was a consultant at PricewaterhouseCoopers and also worked at the Interamerican Development Bank. Gabriela holds a Masters Degree from Georgetown University.



Related resources

Recent reports and other products from Pyramid Research

Mobile Financial Services in Africa: The Business Case for Operators and Banks Research Report published January 2009 The use of mobile devices to pay for goods and services has been held back in most markets, but mobile payments are having a more penetrating impact in poorer economies than in mature ones, with market dynamics that are starkly different, especially in Africa. In this context, new business models have emerged that are transforming the financial landscape in developing countries. This report reviews and analyzes mobile financial services offerings in African markets, looks at drivers and obstacles to mobile financial services, breaks down business models to assess their true bottom-line impact, and provides market projections based on intrinsic market dynamics.

Communications Markets in Russia Country Intelligence Report published February 2009 Russia’s telecom revenue reached US$37.2bn in 2008, but the market is looking increasingly saturated. Still, we expect it to be the fastest growing in Central & Eastern Europe. Mobile voice will remain the largest revenue segment for the forecast period, but growth of mobile voice revenue will still trail that of fixed voice. Despite the economic crisis, 3G services remain the greatest mobile opportunity. This Country Intelligence Report analyzes Russia’s communications, media and technology industries, including key trends, regulatory pressures and the competitive landscape, making it an excellent complement to our Forecast products.

Latin America Mobile Data Forecasts, Q4 2008 Forecasts published December 2008 Updated on a quarterly basis, our Mobile Data Forecast products provide complete pictures of demand trends for 18 geographical markets in Latin America. The Excel output includes five years of historical data and five years of market projections for metrics such as penetration, mobile subscriptions (by type of package, by operator or MVNO and by network technology), users of specific data services (SMS, music, etc.), MOU, ARPS (by operator, by subscription type, by service, by application) and revenue (by messaging and non-messaging applications). The Forecasts are based on extensive field research and use a consistent methodology, aiming to capture the total spending on mobile data services in each market.

Asia-Pacific Mobile Demand Forecast, Q4 2008 Forecasts published December 2008 Updated on a quarterly basis, our Mobile Demand Forecast products provide complete pictures of demand trends for15 geographical markets in Asia-Pacific. The Excel output includes five years of historical data and five years of market projections for metrics such as GDP, mobile penetration, subscriptions (by operator, type of package, technology), ARPS and total mobile service revenue (data and voice). The Forecasts are based on extensive field research and use a consistent methodology across all markets, aiming to capture the total spending, from an end-user perspective, on mobile communication services in each market.

Capex in Asia-Pacific: Driven by 3G in China, Spending to Rise Despite Global Downturn Telecom Insider published February 2009 This report analyzes the drivers that make investing in infrastructure imperative for operators in Asia-Pacific, economic downturn or not. It puts the revenue generated in Asia into a global context and looks at the plans for future Capex in both developed and emerging markets in the region. The report also discusses vendors and which ones will be able to gain market share during these trying times. Three case studies, on NTT Docomo, China Mobile and Bharti Airtel, focus on the Capex plans of the main players in Japan, China and India, providing metrics such as Capex as a percentage of service revenue.

Global Mobile Subscriber Tracker, Q4 2008 Forecast published January 2009 The Global Mobile Tracker forecasts subscription numbers for the 92 most important telecom markets globally and ranks them by size, growth rate and number of net additions.

Global Fixed and Mobile Broadband Outlook: The Transformation of Networks, Business Models and Growth Opportunities Research Report published December 2008 This 79-page Report delivers Pyramid Research’s global projections of fixed and mobile broadband adoption and revenue trends, identifying the best practices, broadband technologies, services and markets that will drive future growth. It also examines the evolution of fixed and mobile broadband business models, convergence services and the role of IMS, with a focus on winning strategies for the three pillars of this new applications-focused framework — access, content and devices.

http://www.pyramidresearch.com/store/RPMOBPAYMENTSAFRICA0901.htm

http://www.pyr.com/store/CIRRUSSIA.htm

http://www.pyr.com/mdtfcst.htm

http://www.pyr.com/mdfcst.htm

http://www.pyr.com/store/ins_ap_090219.htm

http://www.pyr.com/store/fc_mobiletracker_gl.htm

http://www.pyramidresearch.com/store/RPGFMBO1108.htm

http://www.pyramidresearch.com/store/RPGFMBO1108.htm



Additional products Forecasts Updated on a quarterly basis, our Forecast products provide a complete picture of demand trends affecting each geographical market covered. The Excel output includes five years of historical data and five years of market projections, providing complete macroeconomic and market-sizing information. Available for: Fixed Communications, Fixed Market Shares, Mobile Communications, Mobile Data, Mobile KPIs, Mobile Handsets, Media.

Country Intelligence Reports Country Intelligence Reports offer insightful analysis of a country's communications, media and technology industries, including regulatory pressures and overall competitive landscapes.

These data-intensive reports are published annually for 65 countries worldwide, and illustrate key trends within given markets, making them an excellent complement to our Forecast products.

To obtain more information or to purchase a product, contact Pyramid Research at:

+1.617.871.1900 or [email protected] or www.pyramidresearch.com

mailto:[email protected]

http://www.pyramidresearch.com/

Documents

Mobile Advertising in Emerging Marketscreateyournextcustomer.com/.../2010/03/EX_MOBILE-ADVERTISING.pdfMobile advertising strategy: Sprite builds social networking mobile portal to