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Opportunities of mobile advertising

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© Ericsson AB 2008 Mobile Advertising Opportunity 2008-10-092

Agenda

The Market

The Opportunities and challenges

Relevance and reach

What is Ericsson doing?


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The mobile advertising landscape

Some operators estimate 1-5% of tot. revenues may come from ‘mobile advertising’ in 5 years time

MA represents a little more than 0.1% of operator revenues

Mobile advertising accounts for under 1% of total advertising spend

Jim Stengel, CMO, Procter & Gamble

50% of brands say they will spend 5-25% of their ad spend on mobile in 5 years time


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The mobile - a new media channel with some unique capabilities Would you lend it to me?

– The mobile is Personal!

What would you do when the cinema is over– The mobile is Always on!

What would you do when your company have left the table?

– The mobile is Always there!

The characteristics of the mobile is changing our daily behaviorThe characteristics of the mobile is changing our daily behavior


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Mobile advertising opportunities

Operators– New revenue stream– Speed up initial consumer adoption for new services

Consumers– Subsidized content and services

Advertisers– Targeted - messages must be more engaging and

relevant to be of interest– Interactive - orientate their values around connection and

sociability

Agencies– New area of expertise and improved campaigns


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Industry challenges and barriers

Operators– Lack of knowledge and inventory to monetize

Consumers– Fear of intrusiveness

Advertisers– Uncertainty of Return on Investment

Agencies– Expensive and difficult to buy mobile

advertising


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Revenues

It is all about Relevance and Reach

Delivering the right content in the right context to the right person

Targeted and personal, but not intrusive

Reach as many people as possible

Across media, platforms, devices and territories

Relevance Reach


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Relevance is keyRelevant targeting is one of the major factors differentiatingmobile media from other advertising windows

AnonymousAdvertising

Ads are not basedon any targetingCriteria.

$5

CPM rate

Level of targeting

Contextual advertising

Ad based on contextual criteria, e.g. type of content, location.

$25

Personalised advertising

Ad based on specific, personal criteria, e.g. preferences, location, usage, time.

$50

Source: Eden Zoller, Ovum, May 2007

But we should not overplay the mobile’s USP’s…

Are operators the only ones able to offer targeted mobile inventory?

Few advertisers want micro-segmentation and targeting at this point

Users may not be ready for such tight targeting either


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Relevant for who?Who would be the target for mobile advertising in CZ?

0% 10% 20% 30% 40% 50% 60%

15-24

25-35

35-44

45-59

Ads via SMS/ MMS Special promotions based on location

Base: Main mobile phone userSource: Ericsson ConsumerLab Czech country study 2008

Consumer interest in mobile advertising in CZ


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Relevant for who?Who would be the target for mobile advertising in CZ

7

11

34

15

34

26

24

43

24

8

15

40

16

42

42

38

53

31

0 10 20 30 40 50 60

Basic Phoners

Family Phoners

In touch Organisers

Mainstream Materialists

Experiencers

Careerists

Mainstream Youth

Pioneer Youth

Total

Advertisement Via Sms / Mms Special Promotions Based On Location

Base: Main mobile phone userSource: Ericsson ConsumerLab Czech country study 2008

These 5 segments accounts for about 50% of the population

These 5 segments accounts for about 50% of the population


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Relevance of brands Favorite brands = friends

Interest related brands = accepted to certain degree

Any brand = not in my mobile

SOCIAL SPHERE

PUBLIC SPHERE

Ads are accepted

Ads are a part of the environment

Favourite brands

Interest related brands

Any brands

PRIVATE SPHERE

Ads are intrusive

Source: Ericsson ConsumerLab

0

5

10

15

20

25

30

35

40

45

Vodaf

one

TO2

Aukro

Bwin

T-Mob

ile

Allianz

Dire

ct

kom

ernc

ni Bank

aFor

d

Unileve

r

Peuge

ot

Largest online advertisers in CZ Jan-July 2008

Source: CIA Czech Republic, August 2008


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WAP

RBT

UGC

Mobile TV

Mobilesearch

Idle screen

Voicemail

Portals

Video

Music

Games

MMSSMS

How can we reach them? Potential advertising bearers

What operators do today

Messaging wholesale

Targeted Banners

Pushed messages

Mobile search

Idle screen ticker `

Ad funded/ free content

Prepaid budget notifications

Ad sponsored MVNO

Mobile TV advertising

Location based advertising

Ad funded email services


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Operator View Mobile Ad inventory changing from Messaging today to Display, Search and Mobile TV in the future

Messaging is currently the key Mobile Advertising vehicle

• The majority of mobile advertising revenue is and has been off-portal – through internet websites and wholesale SMS

• Mobile operators have not been active players within the mobile advertising value chain.

• Display and search would indicate existing internet mobile advertising mechanisms and new social networking sites extending into mobile arena.

Display, Search and Mobile TV are seen as the key Mobile Advertising vehicles of the

future

Messaging Display Search Others

Re

ve

nu

e

Messaging Display Search Mobile TV Others

Re

ve

nu

e

Source: TeliaSonera 2007, Ericsson Business Consulting Analysis


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Reach the audience thru various channels Relevant advertising formats today and tomorrow…

Source: Ericsson Consumer Lab survey Czech Republic 2008

100% have a mobile phone

Over 90% use SMS on a weekly basis

Over 25% send/receive pictures on a weekly basis

45% of professional users send/ receive emails

Around 20-30% browse the mobile internet regularly

Over 40% of Young early adopters play games on their mobile

Around 10-15% use Ringbacktones

15% is downloading full length songs monthly

Around 5-10% is downloading video clips to their mobile

They all have a very high interest in new services such as mobile TV, location, community services


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Managing ReachOperators working together….

4 major operators in Sweden have launched a cooperation

Standard for formats, measurement and reporting (GSMA)

One point of contact for the advertisers

Ability to offer campaigns across the operators networks

Reach. 2 Million (22% of Pop.)

60% of mobile internet traffic to one of the operators portal

Major age group: 26–34 years Pricing: Depending on the place on

the site

Revenue share between operators depending on number of views per site

“We realized that not even with our large market shares we can create enough interest among advertisers for the mobile channel so we asked ourselves the

question: How can we grow the market and make it more interesting?The answer was that we need to work together” (Johan Lindgren CEO of Telenor Sweden)

“We realized that not even with our large market shares we can create enough interest among advertisers for the mobile channel so we asked ourselves the

question: How can we grow the market and make it more interesting?The answer was that we need to work together” (Johan Lindgren CEO of Telenor Sweden)

Source: Svenska Dagbladet


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Overview of value chain and expected percentages

Advertiser Advertiser Ad agency

Ad agency

Media sales

agency

Media sales

agency

Service enablerService enabler

Publisher/ Operator

Publisher/ Operator Consumer Consumer

Pays 100%Gross ad rate (CPM)

Pays 100%Gross ad rate (CPM)

Retain 25%of Gross ad rateRetain 25%

of Gross ad rate

Retains 15-20%of Gross ad rate

Retains 15-20%of Gross ad rate

Receives 55-60%of Gross ad rate

Receives 55-60%of Gross ad rate

Shares 25-30% with content

provider

Shares 25-30% with content

provider


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NRK – Mobile TV Interactive Advertising

CNN Mobile – Ad revenue supported news portal

Mobile TV Vodafone Spain / UK

Daimler Chrysler – Promo Application

Strategic Advice

Ericsson experiences


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Summary Great interest for mobile advertising

The key is relevance…for all players involved

Awareness and education– Innovate and develop credible trials/ proof of concept

demonstrating the effectiveness of this channel– Educate the advertising community about the opportunities,

capabilities and performance of the mobile channel

Making it easier to do business should be a high priority– Standard formats, metrics and measurements – Cross-network connectivity needs to be addressed – More clarity around business models


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