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1. Mobile Advertising and SDPs
The Revenue Stream of Future?
Martin Prošek, Telefónica O2 Czech Republic
15.9.2010
2. Contents
1.Mobile Advertising Overview
2.Potential Revenue Stream
• Business Models
• Simple Business Case
3.Important Considerations
4.Architectures with SDP
5.Experience with Mobile Advertising in O2 CZ
6.Assessment of Future Development
3. Introduction
•
What is Service Delivery Platform...?
• ...
•
What could be SDP used for...?
• Services, of course!
•
What services...?
• Communication, information,
entertainment, security, payment,
wholesale...
• And Mobile Advertising!
•
Could be Mobile Advertising the Revenue
Stream of Future?
4. Traditional Revenue Stream
•
•
Mobile subscriber pays to Mobile Network Operator
Calling, texting, e-mailing, browsing...
Mobile Network
Operator
Payment
•
These revenues are declining
Service
Provider
Revenue
Share
5. Partnered Revenue Stream (wholesale etc.)
•
•
Business Partner pays to Mobile Network Operator
Mobile subscriber just receives service (e.g. bank balance daily notification)
Business
Partner
Mobile Network
Operator
Payment
•
Mobile Advertising uses the same model – Advertiser pays
•
So the Mobile Advertising is a promising source of revenue
6. Mobile Advertising
•
Similar to web advertising
•
Reach far greater than related web advertising
•
Mobile phone is personal – allows targeting
•
Interactivity increases advertising effect
•
Operators started to utilize their opportunities
•
Operators had best start position
7. Types of Mobile Advertising – examples
•
Traditional Mobile Advertising
• SMS and MMS campaigns
•
Advertising types originated in Internet
• Banner advertising at mobile web pages
• Text and links
• Sponsored search
•
In-application Advertising
• Sponsored games
•
Video – sponsored video or TV
•
Download – sponsored application downloads
•
Calling – sponsored calling
8. Role of Mobile Network Operator
•
Dumb pipe – no involvement (no revenue)
•
Smart pipe with support of Advertising Partners
•
Smart pipe and own advertising sales department
•
SDP is important tool to defend operator place in the value chain
9. Mobile Advertising Business Models
Assuming that dumb pipe role is omitted – otherwise the operator is out of the chain
Business model examples:
• Add ads to existing services and sponsor them – increase loyalty
• Use available space and monetize it – new revenues
• Create new distribution channels – new revenuses
• Revenue from not presenting ads...?
Common pricing models:
• CPM – pay per impression (cost per thousand)
• PPC – pay per click
Important parameters:
• CTR – Click-through rate
• Conversion rate
10. Potential of the Mobile Advertising Revenue Stream
Is it the Killer Application?
Or Cash Cow?
Let us calculate simple business case for mobile portal banner advertising:
• Unique users: 1 million per month, 100 thousand per day
• Average session length: 10 minutes
• Amount of banner impressions per session: 10
• CPM 0.1 €
• Revenue = 100 € per day (3 k€ per month)
•
•
Another case for SMS campaign:
• Addressable users: 1 million per month, 33 thousand per day
• Campaign throughput: 1 SMS per second
• CPM 8 €
Revenue = 264 € per day (8 k€ per month)
No, it does not look like cash cow yet, but – multiplication, better targeting with higher prices...
11. Important Considerations
•
Advertising is very sensitive service
• It must not bother subscribers – disastrous example is
e-mail spam (also legal issue)
• Maximization of profit from mobile advertising might
cause enormous churn
• Privacy concerns – not possible to disclose personal
profile to 3rd party (prohibited by law)
•
How to overcome it?
• Give incentives to subscribers – free services sponsored
by ads
• Target ads – subscribers would receive only relevant ads
that they would appreciate (discount coupons etc.)
• Add ads to messages that would be sent to them anyway
(service messages like call completion notification etc.)
•
Effective technical solution requires presence of SDP
12. Quick Feasibility Assesment
•
Mobile Advertising is growing opportunity where operators
should claim position in value chain
•
Mobile Advertising could be the revenue stream of future
•
It is meaningful to use SDP
•
But not at any cost – the revenues would not be so high*
* Example: failure to launch Blyk as fully ad sponsored network
14. Basic Landscape
The main
functional blocks
are:
• Mobile Device
• NW Platforms
• Ad Server
Ad Server
Serve ads
Get profile
Network Platforms
Important parameters:
• Subscriber profile
(gender, age,
education, home
location, monthly
spend, interests...)
• Location
• Access NW type
(2G, 3G...)
15. Architecture for Banner Advertising
Internet
Ad Server
Browsing
The banners are
displayed as
inserted to the
web pages (e.g.
mobile portals).
The insertion of
Ad codes should
be made by
service provider
(Java Script or
link to a dynamic
image).
Banners
Profile for targeting
Network Platforms
B2B Gateways
B2B Gateways
Browsing
Browsing
Proxy
Proxy
Service Bus
Service Bus
Adaptors
Adaptors
The targeting profile
can be transferred
already in-band using
HTTP headers
BSS/OSS
BSS/OSS
16. Architecture for Messaging Campaigns
The message ads
can be received on
almost any device –
from legacy mobile
phone to cutting
edge latest
smartphones.
They might be many
types of messages:
SMS, MMS, WAP
Push...
Ad Server
Messages
The list of subscribers to be
addressed has to be
prepared in advance.
Target base list (off-line)
Network Platforms
B2B Gateways
B2B Gateways
Service Bus
Service Bus
Messaging Centre
Messaging Centre
BSS/OSS
BSS/OSS
17. Architecture for On-line Campaigns
Important option is
advertising in service
messages – when any
platform is sending
messages that the
subscriber wants to
receive.
The Ad Server receives
request from the Service
Platform amended by the
subscriber‘s profile.
Ad Server
Advertising Messages (incl. user profile)
Network Platforms
B2B Gateways
B2B Gateways
Another option is to
provide sponsored
calling.
Service
Service
Platform
Platform
Service Bus
Service Bus
Adaptors
Adaptors
BSS/OSS
BSS/OSS
The Service Platform
retrieves the ad text from
SDP.
18. Architecture for In-application Advertising
Application running
on the device is
displaying ads that
are retrieved from
Ad Server.
Operator can
enhance the
communication with
the Ad Servers.
But usually the
operator is
bypassed (e.g.
Gameloft, EA
Mobile, Google or
iAd).
The targeting profile can
be transferred in-band
using HTTP headers of
retrieved from B2B GW.
Ad Server
Advertising Messages (incl. user profile)
Network Platforms
B2B Gateways
B2B Gateways
Browsing
Browsing
Proxy
Proxy
Service Bus
Service Bus
Adaptors
Adaptors
BSS/OSS
BSS/OSS
19. Practical Experience from O2 CZ
•
•
Czech market
O2 CZ
• Advertising inventory and portfolio
• Solution example
• Plans
20. Czech Market Overview
•
•
•
•
•
•
•
Small country, 10.5 million of inhabitants
More than 14 million mobile subscribers
3 mobile network operators:
• Telefónica O2
• Vodafone
• T-Mobile
Biggest internet portal is not Google – it is Seznam.cz
O2 CZ is providing Mobile Advertising services already
for many years
Other mobile operators as well...
Big competition from Internet players (Seznam.cz,
Google...)
21. O2 CZ Advertising Inventory
SMS support in devices in the network
• 99 %
MMS support in devices in the network
• 66 %
Web browsing support in devices in the network
• 83 % (but only 36 % is active so it is actually about 30 %)
Ad adaptation to particular device is necessary
22. O2 CZ Advertising Inventory
SMS/MMS campaigns
• About 5 million of addressable subscribers
Service SMS
• Who Called Me (Called Party unavailable) –
monthly 16 million messages
• Call Me Back (Calling Party has no Prepaid
Credit) – monthly 300 thousand messages
• Recharge Me (Calling Party has no Prepaid
Credit) – monthly 60 thousand messages
Mobile Portal
• More than 500 thousand unique subscribers
monthly
Mobile TV
• Both for 3GPP mobile phones
and iPhone
23. O2 CZ Mobile Advertising Portfolio
http://www.petmilionu.cz
SMS/MMS campaigns
• CPM 200 CZK (8 €)
• CTR 1 - 1.5 % (with good targeting up to 7 %!)
Mobile Portal Banners
• CPM 2.5 CZK (0.1 €)
• CTR 1.1 %
Call Completion (Who Called Me)
Kvido sponsored voice calling (mainly for fixed lines)
Sponsored SMS web gateway
• Web page advertising
• In-message advertising
24. O2 CZ Mobile Portal Banner Advertising Solution
Currently no particular SDP solution in place
25. O2 CZ Plans for Mobile Advertising
•
Continue and further develop current advertising services using
group Amobee Ad Server
• Improve accuracy of targeting
• Add new advertising channels
•
Work on 3rd party advertising support.
•
Utilize common group platforms as UNICA SDP when they are
ready.
26. Assessment of Mobile Advertising
Future Development
• Market perspective
• Leading technologies and expected strategies
• Apple iAd
27. Mobile Advertising Market Perspective
The segment will definitely grow:
• There are 4 times more mobile phones than TV sets already.
• The banner response rate (CTR) is much higher than on web (more than 5 fold).
• Mobile phone is personal device – ideal for targeting.
• User can be identified – effectiveness is easily measurable.
Extrapolation of further development in the area:
• Established fixed Internet players as Google, Microsoft etc. would expand.
• With mobile phones capabilities fully supporting Internet there will not be big technical
difference.
• With SDP almost every company would be able to reach all the mobile advertising
methods.
• Operators will be able to monetize user profile (anonymised) using SDP.
• Users will be defending – on technical level (antispam, antiadware...), on legal level
(privacy laws...).
28. Leading technologies
Display advertising - banners, links, search, sponsored applications...
Apple
• iAd
The others will follow as they already did for touchscreen phones and application stores.
Google
• AdSense, AdMob
Other players
• Microsoft
• Nokia
• AOL
• Yahoo
• Jumptap
• Greystripe
• Millennial Media
• Adware providers (Tribal Fusion, Zango...)
29. Apple
iAd
• In-application advertising
• iAd network launched July 1, 2010 through Quattro
• Already when announced it caused lot of controversy by
blocking competitive ad networks (limiting T&C)
• Apple is trying to establish new kind of advertising platform
• premium – minimum account spend of $1m
• advertisers will not only pay a CPM $10, but also a $2 PPC
• revenue share with developers 60 %
• Focus on North American market now – it might be expected
that some markets will be omitted – similarity to iTunes
• Technically interesting – HTML5, try to supersede Adobe Flash
• Implication for operators
• they are forced to be dumb-pipes
• Apple is trying to avoid telcos as much as it can (WiFi...)
Advertising sponsored software
ware
30. Summary
1. Mobile Advertising is the revenue stream of
future, but it cannot replace current streams
2. The revenue source will grow stronger in the
future and is really showing the money already
3. Operator has still chance keep its position in
the value chain - but must provide value and
do it sensibly
4. SDP is a key enabler for it
5. Apple is a trendsetter – expect spread of ad
sponsored applications
6. Operator might to decide to join this trend as
application developer or might boycott it
