Key driversIntroduction Consumers: •Advancement of network technologies •Lower mobile data costObjectives •Adoption of SmartphoneDeveloping a model to mobile advertising which is: •Increase in application and mobile Web usability•Attractive for the advertisers•Appealing to the customers Advertisers:•Scalable and sustainable •Need for highly targeted segment •Need for personalization •Differentiation of message delivery ACTIONABLE PLAN •Wider addressable market and better ROI Build on your own Strength Explain the market opportunity • Robust analytics • Flexible platform with customizations How does a customer spend his/her day Explain how M-Show them the metrics advertisement will help• How can a campaign be brands tracked • The various advantages of• Measured m-ads• benefits • How Airtel can help them
Market Opportunity 1200 1000 M-advertising is currently at nascent stage but has huge growth potential. 800 1134 The current market size is 56.5 million USD and is expected to grow to 600 900 125 million USD in 2013 huge rise Every customer spends more than 2.5 hours per day with their handset 400 630 900 mobile users in India in 2012 estimated to grow by 26% in 2013. 200 70% of the mobile users metros and tier I cities 0 20119.7 billion mobile ads reached out 80 million people 0.4% ad impression for mobile ads huge opportunity Mobile Users in millions Improving networks, coverage increased to 90% for operators 2012 Growing Indian smartphone market – predicted CAGR of 39.2% from Expected in 2013 2010-16 Metros and Tier I citiesMOBILE ADVERTISING STRATEGY FOR AIRTEL Strong relationship with subscribers airtel can allowExtend services to include Mobile payments subscribers to purchase items through their mobile devices Integrate mobile advertising with other channels, such as fixedCombine multichannel advertising platforms Internet and TV (e.g., IPTV) Develop ad sales experience Sales of the ad inventory - Airtel must remain engaged in the process Technology capabilities in 3 areas: targeting, ad serving, and Technology and Mobile analytics campaign analytics. Opting in is required for “push” advertising formats like Develop an opt -in customer base messaging; others don’t require it Implement data-mining capabilities to provide marketers with Make the most of subscriber data predictive information on customer behavior
The M- TargetingAdvertisement • Airtel possesses an unrivalled amount of knowledge about subscribers that canADVANTAGE be used to target ads with a high degree of precision What it means to a • Possible to target not only segments but also individuals to deliver relevant and brand? timely information, giving the advertisers the maximum possible value Use of Incentives to Motivate User Multiple Channels• Multiple channels to reach out • Adding value to ads motivates users mobile web and fosters strong one-to-one browsing, messaging, audio/video relationships streaming, voice, etc. • Operators can offer free or discounted• Each method unique, bringing them services: voice airtime and all together synergistically can messaging, marketers may offer other optimize effectiveness of the motivators such as coupons or campaign discounts that can be used at stores and restaurants Interactive Response Capabilities Real-Time Triggering• Click through rates for mobile web ads are estimated to be 5-10 times higher than those for other forms of online advertising • Billing triggers: Voice application triggers• Advertisers can take advantage of the • Location service triggers: The mobile ad spontaneous impulse instinct – interactive platform can receive location-based triggers responses can be more effective if combined with when the user enters a location registered user preferences and purchasing habits for a specific campaign
Leverage on Strength:The Airtel Advantage: Metrics REACH + ANALYTICS User locality Information • the subscriber’s postal code can be correlated with commercial databases to create geo-demographic profiles based on local income levels, household size, voter data, and other population data User Device and Access Information • access network bandwidth, users roaming status, type of subscriber device, etc. Other third-party data • refinement can be gained with additional data such as local weather, “store locator” information for restaurants, hotels, or retailers who wish to advertise promotions or offers to targeted demographics Also Provide the following configurable capabilities: 1. Mobile device and capabilities detection 2. Mobile device redirect 3. Mobile device response customization 4. Mobile geo-location 5. Mobile and location based-ad optimization 6. Rich media (live and VOD) for mobileA Techcrunch reprt revealed that Facebook desktop ads, achieved a 0.083 percent click- 7. Mobile pre- and post-roll ad insertionthrough rate (CTR) at a $0.88 cost per conversion (CPC). Facebook mobile in 8. Pixel tracking for mobile devicescomparison, earned a 1.14 percent CTR at a $0.86 CPC. That equates to Facebook mobile 9. Mobile advertising delivery verificationSponsored Stories achieving 13.7 times the CTR desktop ads didat a cheaper price.
BUILD ON NEW TECHNOLOGY Using a high-speed, low-latency application blade on the Cisco 7600 Series Router, the operator inserts an “identifier”into the HTTP headers of selected IP data streams, and shares these encrypted identifiers with trusted online advertisingpartners. These operator-controlled identifiers are correlated with demographic databases which can only be accessed byadvertising partners registered to the operator’s advertising ecosystem perfectly safe and protects privacyOperators could further leverage their customer relationships to include additional voluntary opt-in information fromsubscribers – perhaps in return for free, ad-funded services – that could be used by advertisers to uniquely personalizeonline advertising and marketing campaigns A snapshot of the OPT-IN Service is shown below Give advertisers the opportunity to place ads in all the Airtel offerings bundle advertisement opportunity DTH, APPs, Broadband etc. Chance to reach out not only to airtel mobile subscribers but also other users
Advantage to Airtel Advantage To Advertisers Leverages from increased service usage; increasing profit 100% segmented campaigns Conquers other operators’ consumers; decreasing customer Detailed demographic and contextual targeting acquisition costs Users consent – permission based Collects revenue from advertisement through their platform; Real-time reporting increasing profit Real-time marketing adjustment available Extends LTV by adding value to their users; increasing Wide reach to mobile users - all operators consumers profits base First mover into emerging trends – mobile couponing Different marketing approaches in hand Branding, Direct Response, Discounts, Mobile couponsFINANCIALS 2012 2013 2014 2015 2016 Incr revenues 107.64 171.01 255.04 385.93 558.83 Operational exp 25 40 55 70 85 Acquisition and marketing cost 30 60 50 45 45 Content acquisition 100 120 150 170 180 EBITDA -47.36 -48.99 0.04 100.93 248.83 Depreciation 125 25 25 25 25 EBIT -172.36 -73.99 -24.96 75.93 223.83 Responsive and EBIT (1-tax rate) -122.376 -52.5329 -17.7216 53.9103 158.919 emotive ads Capex 150 50 50 50 50 Depreciation 125 150 50 50 50 Excel sheet contains further calculations to further support the FCFF -147.376 47.4671 -17.7216 53.9103 158.919 NPV calculation PV (FCFF) -129.504 41.7109 -15.5726 47.3728 139.647 NPV 83.6551 2. The operational expenses and other marketing and IRR 17% content costs have been calculated from comparable standards: server for analytics, maintenance etc Assumptions 3. The capital expenditure is estimated to be 150 cr. for 1. The revenues have been calculated using the projections of the initial year and 50 cr. subsequently. the growth-rates of each sector, and allocating a conservative 4. Tax rate has been assumed to be 29%. estimate of the nominal share of the revenues to mobile 5. WACC has been assumed to be 13.8%. advertising.