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"21st Century Mobile Marketing" White Paper


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6-page white paper outlining the key findings from an in-depth Infinita research report on Mobile Advertising and Marketing in Japan.
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"21st Century Mobile Marketing" White Paper

  1. 1. 21st Century Mobile Marketing campaigns and actually sign up for promotions or make purchases as a result. Close to Global Insights into the Worldʼs Most another third click on ads, but do not Advanced Mobile Society: Japan participate in promotional offers. Christopher Billich, Infinita Inc. Thus, there is no question that mobile April 11, 2008 advertising will continue to gain in significance According to industry data released by Japanʼs in Japan - a market where more than 4 in 5 of largest advertising agency Dentsu in late a total 100 million mobile subscribers use February, mobile advertising expenditures in mobile data services. the Japanese market in 2007 increased by almost 60% compared to the previous year, 1,500 reaching ¥62.1 billion (ca. USD 621 million). This result tops even Dentsuʼs own optimistic 1,125 prognosis, published 12 months earlier, by 12%. An impressive performance in an 750 advertising market close to saturation - total advertising expenditures in Japan only grew by 375 1.1% from 2006 to 2007, and by 1.7% between 2005 and 2006. 0 2000 2002 2004 2006 2008 2010 Mobile advertising up 60% in 2007 For the first time ever, online advertising Japan mobile advertising spendings, USD million expenditures (¥ 443.6 billion, ca. USD 4.4 billion) exceeded combined radio and So there clearly is a lot of room for growth in magazine advertising expenditures, which mobile advertising here, even though Japan is each were down around 4% on a YoY basis. one of the most mature mobile markets Newspaper advertising suffered even more worldwide: Mobile advertising revenues are heavily at -5%, and TV advertising expected to more than double between now expenditures are down for the third year in a and 2011. Which factors have contributed to row. where we stand today, what are the forces While the importance of mobile advertising is driving the industry at the moment, and which growing, it still accounts for a relatively small challenges and opportunities does the market share of online advertising revenues (10.3%) face in the coming years? and for a minor piece of the whole advertising What makes the mobile web fly in pie, which is still dominated by TV, print and Japan? sales promotion. Several factors combined have led to the Disconnect between mobile media massive adoption of mobile internet usage in usage and advertising spendings Japan: First and foremost, the fast and early Considering how media usage is developing in roll-out of third-generation network technology Japan, there is still clearly a disconnect (used by more than 75% of all subcribers) and between advertising spendings on traditional resulting ease-of-use for the user. The media and mobile. Between 2000 and 2006, widespread promotion and adoption of flat-rate the share of time that consumers spend on data plans since 2004, used by about a third of mobile (relative to all forms of media) has all subscribers already is the second major increased four-fold to 4%, but mobile-related driver. Additionally, a revenue share model expenditures still only account for 1% of all favoring content providers 9:1 over the advertising spendings. 25% of Japanese operator has led to an abundance of attractive mobile data users today respond to mobile on-deck content. QR codes and mobile 21st Century Mobile Marketing Page 1 of 6
  2. 2. search, both pushed by the operators, make major advertising agencies. These joint off-deck sites easily accessible as well. subsidiaries serve three main purposes: A factor that is particular to Japan is the power (1) to develop and implement standards in balance between operators and handset formats, targeting and metrics, manufacturers. All handsets are SIM-locked (2) to act as sales representatives for operator- and exclusive to the operator, who controls owned services and content providersʼ on- development and handles distribution. This deck sites, gives carriers an elsewhere unheard-of level of control over the rollout of handset features and (3) to work with the operator in developing new results in a homogeneous distribution of products and services that spawn new features across the device base. Thus, Japan mobile advertising opportunities. hardly has the problems of device It should be emphasized here that the operator fragmentation causing the rest of the world subsidiaries work together closely with each headaches. other, as well as with the mobile content and Operators work together to create common media industries. So well-oiled a machine is standards and have steadily introduced one the system that advertisers are able to book technological feature after another, enabling campaigns across all three operators through innovative content and services, many of them any one of their joint subsidiaries, keeping crucial to making mobile advertising a transaction costs for marketers to a minimum. success. Examples include: Mobile email with In addition to this construct, non-operator full HTML support since the very early days of media sales reps market some of the official the medium (as opposed to creatively sites as well, this is specifically the case for restrictive SMS), robust mobile browsers, and some of the larger content providers. a cross-carrier emoticon library - not to forget Independent agents cater to the plethora of phone cameras, QR Code readers, Mobile off-deck sites, often in the form of Google Flash, GPS, 1seg digital terrestrial AdSense-type affiliate ad networks. Off-deck broadcasting technology and FeliCa (RFID) sites operate on the same basic format, chips for contactless transactions. targeting and metrics standards as on-deck While the particular nature of the operator- ones, with slight variations. handset manufacturer relationship in Japan The early days: banners and email has historical roots and cannot be replicated in other markets, other factors driving mobile Until about two years ago, mobile marketers internet usage, and in turn mobile advertising, relied mostly on banner ads, text ads and apply everywhere. mobile email advertising. One of the more prominent operator initiatives from this era is How did mobile advertising develop in the Tokusuru Menu, which lists campaigns and Japan? promotions on the deck. No structured approach to mobile marketing Another one are carrier-driven, opt-in mobile existed during the first few years after the newsletters that aggregate promotions and emergence of the medium with NTT campaigns from different advertisers. DoCoMoʼs 1999 launch of i-Mode. The market Needless to say, many off-deck sites use opt- was fragmented with an abundance of players in newsletters as promotional tools for their and formats, as a consequence, marketers own and third-party advertising as well. hesitated to pursue the mobile opportunity. However, in light of operatorsʼ strict anti-spam Standardization and cross-industry measures and consumersʼ increasing wariness efforts of message overload, mobile email advertising has been decreasing in popularity. To solve this problem, each of the operators established a joint subsidiary with one of the 21st Century Mobile Marketing Page 2 of 6
  3. 3. With regard to compensation models for impressions per month from a good 9 million mobile media, the traditional setup relied registered users (for comparison: the top page heavily on CPM and fixed-time pricing. More of Yahoo! Mobile clocks in just under 4 billion recently, marketers are beginning to favor page impressions, NTT DoCoMoʼs i-Mode performance-based models (CPA and CPC), menu itself at an estimated 5 billion). although traditional pricing approaches are still warranted for branding-oriented campaigns. About a third of the brands currently using the mobile to advertise are actually content providers promoting their own sites, so to some degree, one segment of the industry is driving another. About 30% of Japanese companies have a mobile site in addition to a PC web presence, but only about a quarter of them use mobile advertising as a marketing tool today, showing that there is still much untapped potential. The advertisersʼ reluctance can mainly be attributed to the time factor. For a new medium to find strong acceptance in advertising, it first takes consumers to adopt it on a large scale, and then traditionally-oriented agencies to understand the benefits, challenges and rules of the medium. Lastly, this thinking still needs to trickle down to marketers. While many Coca Cola x mobagetown tie-up advertisers active on mobile today praise the medium for cost-effectiveness, targetability In Coca Colaʼs case, a fully branded version of and transparency, some cite creative mobagetown was created. This was only restrictions and lack of emotionality as accessible to mobagetown members who also problems. had an Coca Cola Mobile member account or signed up for one. Once in, users were able to Today: Large-scale tie-ups and branded play Coca Cola-branded games, use content promotional Decomail elements (graphic- But looking at some large-scale campaigns heavy mobile HTML mail with animations) and from 2007, it becomes clear that the third obtain exclusive Coca Cola avatar items. The screen is quickly developing into a first-rate campaign was a massive success, with more marketing channel. than 1 million users signing up to Coca Cola Mobile over the course of the four-week Both Coca Cola and NIKE ran major campaign run. It generated 185 million page campaigns on a a site called mobagetown, views, 350,000 users became “friends” with which since about late 2006 has been, hands- the Coke avatar, and 190,000 comments were down, the most popular mobile site in Japan. left on the Coke characterʼs blog. And the The site operates on a model of free browser- campaign clearly lives on - almost one year based flash games, social networking and later, users still sport the brandʼs virtual avatars that users can dress up from a choice clothing online. of more than 10,000 digital items. These can be purchased with a virtual currency obtained Similarly, NIKE promoted one of its collections by clicking on ads, and registering with or via mobagetown, giving users virtual versions shopping on affiliate sites. Mobagetown of the clothes to be found in NIKE stores, to currently generates about 17 billion page dress up their avatars. Additional “limited 21st Century Mobile Marketing Page 3 of 6
  4. 4. edition” content could be obtained by users matched ads on R25 Mobile, a highly popular who went to an actual NIKE retail store and news site aimed at young professionals. Since accessed URLs hidden in QR codes on July, Overture has been partnering with stickers, driving traffic to the point of sale. mobagetown to provide content-matched ads. Google started AdSense mobile services in Banner and mobile email ads used to be the October. And au KDDIʼs plans to offer main route consumers took to find their way to behavioral targeting on mobile show where the promotions like these. More recently, search- things are heading. based and content-matched ads are starting to increase in importance. Contactless transactions and digital All three operators in Japan have chosen to mobile broadcasting: Key technologies partner with Internet search brands and make for next-generation mobile marketing access to the off-deck world just as easy as There are two finding on-deck content. This is a strategy key mobile clearly aiming to drive data access and open technologies that up a new revenue stream in mobile search were launched in advertising. Operator au KDDI plugged Google 2004 and 2006, Search into its EZweb menu as early as respectively, summer 2006. Softbank Mobile followed suit which are being shortly after its takeover of Vodafone Japan heavily pushed with a drastic move, replacing the entire by operators and Vodafone live! portal with Yahoo! Mobile. And create new NTT DoCoMo recently announced a far- mobile marketing reaching cooperation with Google, opportunities: encompassing not only mobile search, but joint Contactless development of future mobile services as well. transactions via Search and content-matched ads RFID (on the gaining importance Sony-developed FeliCa standard) To illustrate just how important mobile search and digital is becoming: Up strongly from only one year terrestrial ago, more than 30% of mobile internet users in broadcasting to Japan today already use mobile search on a mobile (called daily basis. Only less than a quarter say they 1seg in Japan). do not at all. While today an estimated 25% of The implications all mobile advertising revenues come from of these reach far search ads, over the next 4 years this ratio is beyond the expected to shift to about 60%. Initially, concept of operators were worried that users would shy “advertising on away from official on-deck content as a result the mobile web”. of search being prominently positioned on the deck. But au KDDI quickly proved that search McDonaldʼs trial campaign on digital mobile TV can drive on-deck usage as well - and greatly increase off-deck access and mobile search ad revenues in the process. Both technologies can be found on almost every handset shipping today. While search ads are certainly one of the strongest-growing areas of mobile advertising, Almost one third of all devices in the hands of content-matched mobile ads are seeing fast Japanʼs mobile subscribers already feature a adoption, too. Overture teamed up with NTT Mobile FeliCa chip. This enables users to Data in February 2007 to provide content- contactlessly make payments at participating 21st Century Mobile Marketing Page 4 of 6
  5. 5. retailers and vending machines, as well as Specifically with regard to mobile search online on mobile shopping sites. Other advertising, algorithms are not as powerful as applications include passing through train on the PC web, since mobile sites tend to have gates, using the handset for credit cards less interlinkage with each other than their PC transactions, checking into airplanes and counterparts. redeeming electronic coupons - all of it with Other challenges are structural: Even though just a touch. More than 70 major partners have the industry is relatively mature, the media- signed up with FeliCa so far. With revenues buying process is fragmented, forcing from mobile commerce having surpassed advertisers to coordinate a range of partners mobile content revenues three years ago for campaigns that reach across all operatorsʼ already, the mobile phone is fast turning into a portals, on-deck and off-deck sites. full-fledged shopping and payment device. However, even with obstacles like these to An estimated 25 million handsets out of the overcome, the outlook for mobile marketing in 100 million in use in Japan today are already Japan is bright: Mainstream adoption of mobile capable of receiving digital broadcasts. For internet usage driven by affordable flat-rate now, due to (soon-to-change) regulation the data pricing, evolution of network speeds actual programming that users see is what is beyond 3G and ever-increasing handsets being broadcast on TV. A data feed below the capabilities provide the framework. Cross- TV content window provides links to industry efforts in standardization of formats, programming-related websites and targeting and metrics lead to transparency for promotional offers, offering a compelling advertisers. Close cooperation between all advertising platform to marketers without players of the value chain constantly creates interrupting the userʼs media experience. new marketing opportunities. NTT DoCoMo has been running trials that The mobile phone is a highly personal device combine both 1seg and FeliCa technologies: that users carry anywhere and anytime. It is during a baseball game, consumers could starting to integrate communications, content participate in a mobile game, betting on the consumption and production features with outcome of innings. For this, they received contactless transactions and locational promotional coupons, which they could positioning. This spells unprecedented redeem at McDonaldʼs. A similar concept possibilities for marketers indeed. involved coupons which could be used by simply touching the handset to Coke vending While Japanʼs mobile advertising market has machines. its particularities, it is certainly a place anyone in the business - whether operator, marketer, While these examples are still early-stage agency, media and technical enabler - should proofs of concept, the opportunities for mobile be looking towards for inspiration and best marketing look promising. practices in mobile marketing. Barriers and drivers So which barriers does mobile marketing face in Japan? Some of them are technical: Until very recently, it was not possible for off-deck sites to discern the unique device ID of NTT DoCoMo handsets. Less than half of Softbank devices are enabled for use of cookies. This makes it difficult to measure campaign effectiveness, and in turn lowers attractivity of the medium to advertisers. There are similar issues with session IDs. 21st Century Mobile Marketing Page 5 of 6
  6. 6. 21st Century Mobile Marketing * How will mobile marketing develop in years to come? Global Insights into the Worldʼs Most Advanced Mobile Society: Japan Who should read this report Author: Christopher Billich, Infinita Inc. Operators, advertisers, media, agencies and This strategic research report provides technical enablers anywhere that are looking detailed insights into the inner workings of for mobile marketing insights and best mobile marketing and advertising in a country practices from the worldʼs most advanced where the vast majority of the population uses mobile society to leverage in their local mobile Internet services - and where mobile markets. marketing is fast evolving into a standard part Publishing date: April 11, 2008, Version 1.0 of the marketing mix, a scenario soon to become reality in many other parts of the world Pages: 188 as well. Format: PDF With the rapid and widespread introduction of Company-wide License: USD 1,500 new technologies into the mobile ecosystem, highly personalized and effective forms of marketing are becoming possible, Get your copy now at encompassing interaction both on- and offline. “21st Century Mobile Marketing” provides in- depth business intelligence and expert analysis relevant to markets everywhere, including: * Current and future developments in mobile marketing * Key enabling technologies and services * Detailed data on mobile consumer behavior * Marketer perspective * Campaign best practice case studies MMA (Mobile Marketing Association) * Drivers and barriers for mobile marketing Member Discount * Interviews with key industry players and “21st Century Mobile Marketing - Global mobile consumers Insights into the Worldʼs Most Advanced Mobile Society: Japan”, published by Infinita Key questions addressed in this report Inc., is available at a 10% discount to Mobile * How has mobile marketing evolved into a Marketing Association (MMA) Members. USD 620 million market in Japan (and again For further information, please contact is set to double by 2011), and what lessons Christopher Billich at does this hold for other markets? * How are the players in the value chain working together to scale the mobile marketing opportunity? * How are the traditional players in the advertising industry approaching the mobile channel? * Which advertising formats have proven successful in the mobile environment? * Which mobile marketing campaigns are successful, which arenʼt, and why? 21st Century Mobile Marketing Page 6 of 6