Sunday, October 24, 2010

Thanks for the confidence - Now, Let's go mobile

Eric Schmidt said it last month at the IFA show in Berlin. Apple has made a bold move in this direction. My meetings with global top brands confirm that up to 10% of advertising budgets are allocated for Mobile Advertising for 2011, and this year it is just about 2% when it is good. "Mobile First", by the way, is the mantra that Google keeps repeating nowadays, and Apple is investing heavily in getting Mobile Advertising right.

Therefore I am very happy for the confidence that you showed by electing me to the board of the Mobile Marketing Association (MMA) in Latin America.

There is a lot to do. Media owners, such as mobile operators are eager to get a part of the revenue, but also see Google and Apple moving in fast. They also see that there are no metrics by which they can prove the efficiency of this media, which has been around for some time, but only now is bound for main stream, judging by the allocated budgets for 2011. Not because it could not have happened before. Mobile operators in Europe and Asia have for more than 10 years operated SMS and MMS premium content deliveries, which could have been developed into the Mobile Advertising, as mobile had a well-working charging model way before the Web. Most efforts has been put into the Web, and the brands and agencies seem to have had little time left to look after the mobile business models. Mobile operators also spend way to much time looking for a "Killer Application" that never turned up. This is a petty for mobile operators, as SMS and MMS are much easier for them to monetize on. Nowadays, Smartphones and http traffic with advertising banners are easier to run as "over-the-top" (OTT) business models where operators have more competition with for example Google and Apple. Now that the Web advertising budgets are crossing 20% of total spending, it is time for mobile, or "Mobile First" as mentioned above.

The market is moving on with high speed, and the meetings with Jeffrey Cole from the Center for the Digital Future in California, and operators, agencies and brands, which I arranged last week, show that the interest is really growing. One topic form the talks is that there are basically only three ways to get content: Advertising, Paying, and stealing. Stealing is still the option for many, but as buying is getting much more convenient than stealing and perceived to have more fair conditions than before, more people are accepting to buy, even if it will never bring the music industry back to the revenue it enjoyed before. Research show that people are reluctant to pay if there is another way to get to the content. And there is. Free-to-air TV which stands for around 90% of the viewing in Brazil is financed by advertising, and this is also a great option for mobile. You could even give end-users the choice that if they do not accept advertising, then they could pay. Some will argue that user-generated content is another business model, but well-known sites for where this type of content like YouTube or Facebook, are already investing heavily in financing their sites with Advertising. Another curious fact is that the wast majority of the visits to YouTube is to get free or time-shifted access to the professionally generated content from TV.

All of this is accelerating our entrance in business models for Mobile Advertising but we need to remember that this is not Web advertising on a mobile phone. The same way that TV was not radio with images, and the mobile Internet is not the same at the Web, like many argued in early days, and it took some 10 years to get that right from the first GPRS phones. Now we entering the LTE era, and we already have over 5 billion mobile screens out there that people are looking at every day. But Mobile Advertising is different, and has to do with relevance. Research show that the mobile screens are seen as a more personal sphere than both TV and the computer screen. This means less but more targeted advertising, and the value of the viewer or click (expressed by the CPM price) is likely to grow significantly as we learn to understand the underlying behaviour, and agree on commonly accepted metrics among all players in this business.

This is just one area where the MMA has to a lot to do, and I am very happy for the trust that so many has showed by electing me to the board. Once again, thanks.

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