“Don’t Bank on Advertising Revenues Until 2006”
June 19, 2001: Advertising on wireless devices is not going to help the mobile industry get rid of its short term woes, according to new research by Ovum, the analyst and consulting company.
Ovum predicts that global revenues from advertising on wireless devices will stay below $1 billion until early 2004 and will only take off from 2006 onwards.
“Advertising is never going to be the cornerstone of the wireless internet business model in the same way as it was for the internet”, says Rosalie Nelson, Research Director, Ovum.
But wireless advertising, done the right way, will build brand affinity and reduce customer churn, especially among the highly sought after youth sector, the mobile 16 to 24 year olds who spend most of their disposable income on entertainment.
Advertising will also generate additional airtime, drive mobile commerce and create user loyalty.
Rosalie Nelson, who has analyzed the early approaches to wireless advertising around the world, explains:
“Carefully constructed, early trials have given us a strong pointer to what will work, but this good work is at risk from early examples of uncontrolled spam which risk tainting the market for everybody.”
“Users consider their wireless device to be part of their personal space and will show a low level of tolerance to abuse or over-eager misuse.”
“They will only accept advertising approaches for which they have opted in and which make the adverts relevant, valuable and fun.”
Experience from trials in Japan show that each and every advert must offer a strong incentive for its recipient, either in the form of discounts and promotions, or in the form of non-monetary benefits precious to the recipient.
“The first wave of the companies that are driving this market are mostly start-ups that think like ‘New Yorkers’ - they believe that they are at the center of the universe and that they alone have the most compelling solution.”
“The reality is that, without strong brand partnerships and operator support, many of these niche providers will struggle, no matter how good their technology.”
Mobile operators will have a strong but not a controlling position in this market. They need to partner with all the big brand retailers, especially those that have brand appeal among the young.
Operators should not sit back until 3G networks and devices have been rolled out. Ovum’s research shows that existing technologies can be used quite effectively to reach the youth market.
Nelson says: “There is a fantastic existing mass market opportunity in SMS and cell broadcast which doesn’t rely on new [3G] technologies and devices. Don’t rely on technology to build this market, instead, take the time to understand what works and remember to make it interactive and fun.”
About the report
A detailed report on this topic, “Wireless Marketing: Rhetoric, Reality and Revenues” by Rosalie Nelson is available now. The report provides insights into the positioning, strategies and challenges of every player in the wireless marketing space. For further sales information, please contact Ovum at http://www.OVUM.COM or call +44 (0) 20 7551 9021
A white paper with detailed information about this topic is available by accessing the Press Packs at WWW.OVUM.COM. If you do not have password access to the Press Room please register online. Your request will be processed and access will be granted to all accredited journalists.
Ovum, the analyst and consulting company, is a global leader in the rapidly changing world of converging technologies and markets. Genuinely original thinking coupled with exceptional knowledge and experience allows the company to provide its customers with a definitive map of this complex environment and to guide them through it.
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