Mobile ads buzz to stay muted

Goh Thean Eu
New Straits Times
01-10-2011
Mobile ads buzz to stay muted
Byline: Goh Thean Eu
Edition: Main/Lifestyle
Section: Business Times
Type: News

MOBILE advertising still draws lukewarm response but industry players including mobile operators and mobile advertising companies remain optimistic that it will turn huge eventually. Unfortunately, it won't be in 2011.

Currently, mobile advertisements do not contribute significantly to mobile operators' overall revenue, but experts believe it may be significant within the next five years.
"We know it will be big, but it's hard to predict when it will be big. For sure, within the next two to three years it will be very small, very negligible. Question is whether it is going to happen in the fourth or fifth year, or beyond, that's the part we are not sure," said Axiata Group Bhd president and group chief executive officer Datuk Seri Jamaludin Ibrahim in a Business Times interview recently.

Industry players believe it will take a while before it hits the critical mass in Malaysia, when consumers spend more time viewing advertisements on their mobile phones, and when advertisers willing to put the money in.

In the UK, Internet has surpassed TV as the most important media for advertising spend, taking more than 20 per cent of ad dollars spent in the market.

Lai Kok Fung, chief executive officer of BuzzCity Sdn Bhd, a company specialising in mobile advertising, said it will take at least five years before the market in Malaysia reaches the levels of the UK.

"Digital marketing growth in Malaysia will likely be driven by both online and mobile advertising, and this may take anywhere from 5-10 years to reach the UK level," added Lai, who also expects mobile advertising in Malaysia will grow at least 50 per cent annually over the next few years.

Jamaludin believes one of the key drivers for mobile advertising to be huge is the mobile operators' capability to truly understand its customers.

"Can you imagine which device people bring everywhere they go? There're not many devices, besides watches, this (mobile devices) is it. That's one aspect. Secondly, how many companies have the data that we have? We know where our customers are, whether they are awake at night, whether they use more data than voice, whether they actively use social networking sites, we know their characteristics.

"For example, if you have just arrived in Singapore, and we know that you are a high-end user, you can receive a 'Welcome to Singapore, by the way, there's a sale in ...' message from us.

"Of course, legally speaking, we can only use the data within the legal bounds. That is something we have to be very careful about," Jamaludin explained.

Mobile advertisements come in various forms. These include the conventional text messages, multimedia text messages and advertisements that are specially designed for viewing on mobile phones. In fact, some advertisers are offering free minutes, and text messages, as long as the users listen to advertisers' messages, send some short codes and key words imprinted on the advertiser's products or take part in some form of mobile phone-based contests.

Lai believes the next wave of growth for mobile advertising will come from "small screen" users, i.e. users who surf the Internet via their smart phones.

"In recent years, with mobile Internet tariff dropping and the emergence of affordable and browsing-friendly smartphones and feature phones, mobile advertising is moving towards pull-based display advertising.

"As more consumers surf the mobile web and use mobile applications, many ad-supported sites and applications are embedding relevant advertising in suitable places on mobile web sites or applications. Advertisers tend to follow the eye-balls and allocate their budget accordingly. This is especially true for the 'unwired' groups - consumers that spend almost all the Internet surfing time through mobile phones rather than PCs," Lai explained.

With all the optimism on mobile advertising, what is stopping the trend from skyrocketing?

Lai said: "At first, unscrupulous SMS marketing raised issues of intrusiveness and privacy. Then there were other issues like a lack of standards or high data rates.

"While these are better regulated now, these early issues also brought with them the fear of failure, the lack of relevant case studies and subsequently thin budgets. The only way for agencies to inspire a client into mobile advertising is to lead with a strategy that makes sense. And one simple way to start is to pay for clicks as an effective investment in mobile advertising."

Although analysts believe that mobile advertising has the potential to grow, it takes a lot of work that the operators may not want to invest in.

"The operators have the technology to do this right. But it's not happening. Maybe it's pure laziness, maybe it's too time consuming to look into these data, as the time can be used to grow the mobile data businesses. Otherwise, why am I constantly receiving text messages on clubs and nightspots when I'm not interested at all? It's getting annoying. I don't mind advertisements, but it has to have some re-levance to me.

"All the industry needs is one player, usually the market challenger, to get this right, and it will then pressure the bigger players to do a better job," said an analyst who declined to be named.

(Copyright 2011)