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TAPPING THE LINE
BY REHAB EL-BAKRY
The imminent launch of 3G mobile services in Egypt
has media experts pondering the possibilities for advertising. The
new technology, which brings smooth streaming video to mobile phones,
could revolutionize the way advertisers deliver their message. Business
Monthly explores the possibilities.
Think back to the first time you ever saw a mobile phone on TV.
Chances are it was a clunky black cordless phone with a telescoping
antenna that was too cumbersome to fit comfortably in one hand,
let alone a shirt pocket. Many doubted the unwieldy device would
ever catch on.
But it did. Over the past two decades, the mobile has evolved well
beyond its basic function as a portable telephone. New 3G technology
– which permits faster data transfer and better voice quality
– transforms the mobile handset into a powerful multimedia
device that can be used to surf the Internet, listen to music and
radio, or watch streaming video and live television. “Utilizing
3G technology, mobile phones are becoming about a lot more than
just making phone calls,” says Mikkel Druker, director of
product marketing in Nokia’s International Mobile Phones Division.
“Our research indicates that our users are now depending on
their mobiles to stay in touch, but also to access the Internet,
conduct business transactions and as a camera. With the availability
of 3G technology and mobiles that can provide a wide variety of
applications, all electronic devices will begin to converge into
your mobile. You can send e-mails, finish work presentations, listen
to the radio or your music and even watch television all on your
mobile. This is the future.”
Amr Shady, CEO of T.A. Telecom, an Egyptian telecom company specialized
in mobile advertising, concurs. He says the technology that comes
with 3G networks “opens the door to an infinite number of
possibilities that will [change] the way people deal with their
mobiles.” It could also soon revolutionize the way advertisers
tap into their potential consumers. “The thing about mobile
advertising is that it affords advertisers a lot of flexibility
to personalize their ads to the right target audience. This increases
the chances of your ad being viewed by the right consumers.”
Prior to the rollout of 3G networks, mobile advertising was limited
to simple text-only messages sent via SMS. With 3G, advertisers
are able to transmit media-rich advertising – in essence,
miniature television commercials. Advertising promises to be more
creative, and with more visual impact. Moreover, location-based
services that filter user data into special devices to identify
the user’s geographic proximity, allow advertisers to deliver
contextual announcements, coupons and video commercials direct to
individuals’ phones.
For instance, a driver approaching CityStars Mall might receive
on their mobile a digital coupon for free parking and a short commercial
announcing a sale at the store sponsoring the parking voucher. And
if the individual is a frequent shopper at this store, their personalized
discount would be included in the message. “This is not a
vision... this is something that’s already happening in the
world around us,” says Shady.
Advertisers in Europe, North America and Asia have already begun
exploring the possibilities. After a slow start five years ago,
3G technology has become pervasive enough to warrant mass media
application. According to a recent study by the US-based Online
Publishers Association, mobile advertising netted just $45 million
in 2005, but, if current growth patterns continue, this could soar
to $1.26 billion by 2009.
TV in the palm of the hand
Advertisers are particularly excited about 3G’s enhanced video
capabilities. With transfer rates up to 2 Mb/second, 3G networks
are fast enough to support streaming video or live broadcast television.
Mobile Internet Protocol Television (IPTV), in essence, turns 3G-compatible
mobiles into “mini televisions,” explains Shady. “People
will be able to tap into television channels that have the appropriate
technology to watch exactly the same content that would appear on
their television set, but with a 10 to 15 second lag. This is one
possibility afforded by the technology.”
And wherever there is television, there is advertising. Shady says
IPTV opens the door to a number of scenarios. “Once you have
the technology available in the market, there are a lot of options
in terms of models that you can follow when it comes to advertising
via mobile telephones.”
One model already familiar to satellite television subscribers and
Internet users is pay-per-view downloading where channel operators
make available music and video files that can be downloaded against
a fee and played on 3G-compatible handsets. “In some markets,
payment is made per download, while in other markets, users subscribe
to the service for a fee and receive limited or unlimited downloads
per month, depending on the payment schemes,” explains Shady.
Advertising comes in the form of sponsorship. Television channels
and specialized agencies provide reports to advertisers that identify
which programs are most popular with each demographic group. Based
on this information, the advertisers sponsor programs that fit their
target audience by subsidizing the cost of each download in exchange
for the right to place their commercials either before the downloaded
program, or during it. Users benefit from discounted – or
in some cases free – downloads, while advertisers are able
to present their products and services to a well-defined target
audience. Moreover, the advertiser benefits from the audience’s
association of their company with free or subsidized content of
interest to them.
Another model is live streaming music and video broadcasts. Radio
stations already have the technology, and television stations can
easily add it if it does not already exist, to process signals in
a format readable by mobile networks. As 3G mobile users begin tuning
in, advertisers are certain to respond.
“In the case of live streaming, the operator could reach a
deal with the television channels that opt to sell mobile-television
specific ads. As the user streams the station on his or her mobile,
the ads would appear as they do on their television set,”
explains Shady. “In this form of mobile advertising, the user
doesn’t have the option of choosing whether or not to receive
the ad – they opt in to receive the ads simply by choosing
to stream a certain channel on their mobile.”
Alternatively, mobile operators could create their own “mobile
television channel” where they broadcast their own looped
content, Shady explains. “They would, for instance, have two
hours’ worth of programming that could include a newscast
from a news television channel, videos of the top 20 songs and an
episode of a sitcom, and loop it to restart every two hours,”
he says. “Mobile users would tune into this unique mobile
television station and watch the programs on the go.”
In this model, the mobile operator sells ad slots valued according
to where they appear in the looped program. “The ads could
appear every time the loop starts or just in the program loops that
appear at certain times of day,” Shady explains.
An alternative medium
If you’re thinking this is another technology trend that will
never reach Egypt, think again. Mobile advertising is already here.
Text message (SMS) advertising was introduced in the early 2000s
and has proven popular with everything from restaurants to retailers
to entertainment venues. Late last year, Mobinil introduced video
streaming, allowing users to tune into select television channels
such as Mazika and Al Arabeya using advanced 2.5G-compatible handsets.
With 3G technology, users will have more options and faster download
times, and – for the first time – access to smooth,
live streaming video and television broadcasts. The enhancements
make mobile advertising a more attractive option. “Now that
Egypt and other countries in the region, particularly in the Gulf,
have launched or are launching 3G networks, mobile phones will quickly
become part of the media campaigns launched by advertisers,”
predicts Shady.
Everyone stands to gain. Operators will profit from the revenues
of downloads and commercial broadcasts; advertisers will be able
to deliver higher-quality ads directly to their target audience;
and consumers will have access to a wider range of content on their
mobiles at subsidized prices. “In most markets, the revenue
generated by the ads translates into cheaper downloads for the end
user, and in this region, it will be no different,” Shady
predicts.
How much cheaper is anybody’s guess, but if Europe’s
experience is anything to go by, sponsorship could cut the price
of downloads on Egyptian 3G networks by 25 to 50 percent. “The
better the pricing scheme, and the more affordable and variable
it is, the more people will use the service,” says Shady.
Mobile video ads can best be described as television commercials
that fit into the palm of your hand. They tend to be shorter –
running between five and 10 seconds (as opposed to television commercials,
which range from 30 to 60 seconds) and more interactive. A short
teaser ad, for instance, might be followed by an option that allows
the recipient to view additional video on the advertiser’s
products and – if they like what they see – purchase
them using their mobile.
As mobile advertising is a new medium, the possibilities are endless,
says Rick Sizemore, principal analyst for multimedia content and
digital advertising at the international research and consultancy
media technology firm iSuppli. “If utilized correctly, mobile
advertising could become a very effective component in advertising
campaigns,” he says. “It’s short and to the point,
it can be interactive, and it can further the branding as well as
the reach of an advertiser.”
But will advertisers buy in? Probably not, says Mohamed Mostafa
Kamel, an account manager at Result, a Cairo-based media-buying
agency. He says Egyptian advertisers and media agencies will have
a difficult time dealing with the new technology and adapting their
commercials to the new medium. “First of all, the time limitation
is simply too strict in order for us to be able to get a visual,
a jingle and message – in just five to 10 seconds this is
just not feasible,” he says.
Kamel expects advertisers will adopt a wait-and-see approach vis-à-vis
mobile advertising. And there is always the risk that the alternative
medium will go the way of online advertising, which is a $4.2 billion
industry worldwide, but never took of in Egypt.
Wael Nazeem, group account director at advertising agency Saatchi
& Saatchi in Cairo, believes the potential is there, but the
local market could be slow to embrace this alternative advertising
medium. “By their nature, advertisers in Egypt are conservative,”
he says. “They tend to [cling] to the traditional mediums
like print and television.”
He recalls the reluctance of advertisers to include even well-established
mediums like radio in their product campaigns. “Radio advertising
had pretty much fallen off the map until Nile FM and Nogoum FM launched
a couple of years ago and even then, many advertisers wouldn’t
consider it as part of their campaigns even though it was cost effective,”
he says. Advertisers only cued into radio advertising after media
companies and advertising agencies began conducting studies to better
understand the demographic of radio listeners and the shows they
tune in to.
One major obstacle is awareness – only a handful of advertisers
recognize the potential of mobile advertising; even fewer know how
to apply it in the Egyptian market. Nazeem predicts that, initially
at least, mobile operators will have to lead by example, running
mobile ads of their own to demonstrate the commercial viability
of these ads and generate interest. “This will serve as a
demo for other companies.”
Multinationals familiar with mobile advertising in their other 3G
markets and with deeper pockets to experiment with alternative media
ad campaigns are likely to respond first. “International giants
such as Pepsi or Coke might be more willing to tap into this type
of advertising because it will serve as a branding alternative...
to supplement campaigns in other media,” Nazeem says. It would
also be easier for these recognized brands to get their message
across in 10 seconds, as established brands do not need the introduction
that newer local brands require.
But Sizemore insists that if properly used, mobile advertising can
be a cost-effective tool for firms of all sizes, from the biggest
MNCs to the smallest mom-and-pop operation. “If [there is]
a small shop with only one branch in one city and it succeeds in
identifying who its target consumer is and uses mobile advertising
to reach this group, it has effectively launched an advertising
campaign at a much smaller price than it would have cost to take
out an ad in the local paper. But the key here is understanding
the user.”
Targeted ad campaigns
Proponents of mobile advertising argue that it is more powerful
than other media because the mobile handset is more personal than
a billboard or television, while the ads themselves can be directed
exclusively to the most appropriate audience. “It’s
all targeted,” says Nazeem. “If you identify the right
recipients, your ad can be 100 percent effective, which is better
than any projection you can get with any other form of media.”
And more cost effective. Mobile ad campaigns internationally can
range in price from $5,000 to $10,000 per campaign to as high as
$100,000 and $200,000. By contrast, television advertising campaigns
in identical markets can run into the millions. Just how much mobile
advertising in Egypt will cost once 3G services are launched is
yet unknown. “We’ll have to wait and see,” says
Nazeem. “If reasonably priced, this might be a good supplementary
medium [for advertisers].”
For now, at least, the biggest challenge in Egypt is finding the
reliable data that advertisers demand. “There is simply no
information based on which a media agency can advise its client
to use this new medium, when we basically have no information to
offer them,” says Result’s Kamel. “And then even,
if we find out who the ads are being sent to, how do we measure
the effectiveness of the ads?”
Fortunately for advertisers, mobile operators usually keep billing
and credit data on their users – details on the account holder’s
address, age, sex, profession and calling habits. Nearly 90 percent
of Egyptian mobile users have prepaid lines, which involve no billing
and thus make it difficult for advertisers to know who exactly is
seeing their ad. While it is relatively easy to determine how many
consumers view an ad – simply track the number of downloads
containing the ad or number of streaming connections at the time
a commercial is aired – measuring the response to these advertisements
is, experts admit, currently not as simple.
Mobile operators seeking to increase their revenues could soon start
making subscriber data available to advertisers. But don’t
expect to be swamped by ads. While mobile advertising is highly
lucrative, operators who have spent billions of pounds to get their
3G networks up and running are not likely to do anything that jeopardizes
their subscriber base. Bombarding a customer with inappropriate
ads could not only mean annoying them, it could mean losing a customer.
“The point is,” says Sizemore, “you want the people
to download the content and stream television on their mobile, so
you should do all you can to increase their use of your network.
So [you] don’t alienate them.”
While no law explicitly prohibits operators from selling your data,
they are more likely to require that advertisers adopt an “opt-in”
system. “This is a system by which the user of the network
signs up to receive ads about certain products or services. This
would give the operator the [green light] to pass their contact
and some of the pertinent information and data about this person
to the advertiser,” explains Sizemore. “Here’s
a scenario. If you’re an avid Starbucks coffee lover and you
signed on to receive their ads on your mobile, the network would
automatically detect you every time you’re near a Starbucks
and would send your phone an ad with a coupon. So the consumer would
then associate these Starbucks mobile ads with freebies, making
him or her more than eager to receive their ads.”
HITTING THE TARGET
Conducting a successful mobile advertising campaign depends
to a large extent on identifying the technology present in
the market – mobile phones, network capacity, battery
duration, etc. – and creating ads of value to the consumer
and the advertiser’s brand. There are also a few other
factors for advertisers to keep in mind.
• Advertisers should identify the objective of their
mobile advertising campaign – is it designed to influence
the perception of the consumer, further brand awareness or
increase sales? Clearly identifying the objective will determine
the content of the ad, as well as where and how often it appears
• It is important to identify the audience to whom
the ad is targeted as well as their consumption behavior and
purchasing power. Even the best ad ever produced will fail
to get results if it is sent to the wrong consumers.
• Understand the technology supporting the mobile ad.
The decision to send consumers a video ad, a multi-media message
(MMS) ad or an interactive ad will all depend on the goal
of the advertiser. Each format has its pros and cons, and
advertisers should select the one that best achieves their
campaign’s target.
• Spend time understanding your customer’s experience
from the moment they receive the ad until they – hopefully
– purchase your product or service. It is important
to think of the time of day during which the ad appears as
well as well as how convenient or inconvenient it would be
for the customer to view this ad at a given time.
• Carefully consider the placement of the ad. While
streaming, it’s important to place the ad in a program
that is most likely to be viewed by the target consumer. There’s
no point placing a feminine care product ad during a football
match typically viewed by males, nor is it wise to place a
men’s shaving cream ad during a soap opera typically
viewed by females.
• Decide which factors are most important in selecting
the program of content in which your mobile ad will appear.
Decide whether the ad location and program be selected based
on the channel, the target audience or cost.
• Determine the ideal frequency for your ad to appear.
It’s always tricky to find the balance between placing
the ad often enough to make an impact versus bombarding consumers
to the point that they are annoyed by it. |
Laying the groundwork
Marketing experts point out that the growth of mobile advertising
is inextricably tied to the successful penetration of 3G technology,
particularly handsets. Without the latter, advertisers have no way
to reach the consumer. “For mobile advertising to be successful,
the technology being used in any given market, such as the capacity
of the network, speed and the penetration of 3G-compliant phones
that facilitate the use of the applications, have to be taken into
consideration,” says Sizemore. “There’s no point
in launching an ad campaign via mobile if only a few people have
mobiles that support this type of technology.”
As of press time, Egypt’s first 3G network is expected to
roll out later this month. UAE-based Etisalat paid LE 16.7 billion
last July to secure a 3G license, while incumbent operator Vodafone
Egypt shelled out LE 3.4 billion to upgrade its 2.5G license to
3G compatibility. Egypt’s other existing operator, Mobinil,
purchased a partial 3G license for LE 1.7 billion that allows it
to utilize half the frequency allotted to 3G networks – still
fast enough to carry video streams.
Yet even without an operational 3G network, mobile phone makers
have already reported brisk sales of 3G-compatible handsets. Nokia
launched its first 3G mobile in Egypt in 2004 – three years
before the first Egyptian 3G license was sold. The company currently
has 15 models in Egypt covering the full budget spectrum.
The preemptive marketing strategy was guided by the handset maker’s
decade of experience in the region. “We have come to understand
the pattern of consumers in this region,” explains Jarmo Santala,
Nokia’s general manager for north and west Africa. “There
is a certain segment within the Egyptian consumer [market] that
we knew would likely be interested in the 3G technology once it
was introduced. So we launched the phones and began intensive advertising
in order to increase the number of these handsets on the market.
Moreover, we sought to introduce a variety of these phones because
we wanted to have an array of products with a range of prices in
order to increase the penetration of 3G-compliant phones in the
country.”
Still, with prices ranging between LE 3,000 and LE 5,000 or higher,
3G mobile phones by Nokia and other makers remain out of reach of
all but a small portion of the Egyptian population. But not for
long, says Santala, who expects demand for 3G-compliant phones to
increase dramatically once 3G networks actually launch. As sales
increase, economies of scale will bring prices down, making 3G phones
temptingly affordable to a larger market segment.
But a lot is riding on how operators price their 3G services. “Right
now, we have to wait and see what the pricing scheme for 3G services
will be,” says Santala. “That will determine how quickly
consumers use the network.”
He is optimistic, however, about the potential for growth. He points
out that the Egyptian market has been among the most competitive
in the region due to early deregulation of the mobile sector. The
Arab Republic of Egypt National Telecommunications Organization
(ARENTO), which later split to become the NTRA and Telecom Egypt,
launched the first commercial GSM mobile network in 1996. But it
was the licensing of two private operators, Mobinil and Vodafone
Egypt (formerly Click GSM), that inflated the market from just 90,000
in 1998 to over 19 million today, with a 16.5-percent penetration
rate.
The introduction of 3G services is expected to increase mobile sales
and use. “We anticipate that there will also be very fierce
competition over 3G service when it comes to pricing,” says
Santala. “This is to the benefit of the consumer and is likely
to increase penetration.”
If operators play their cards right, says Sizemore, they could tap
into a highly lucrative market – downloads. “Up until
two years ago, people didn’t really think downloading content
on their mobile was all that important, but over the past two years,
the numbers have continued to grow as the price of downloads was
reduced and the price of phones came down,” he says. “It’s
up to the operator to create the niche, just like they did for mobile
phones altogether. A decade ago, they were a luxury and now we can’t
seem to live without them.”
Not only does 3G technology broaden the spectrum of downloadable
media, it also creates a more attractive demographic for advertisers.
While the SMS market is dominated by teenagers who pay small sums
to download ring tones, wallpaper and music clips, 3G promises to
add high-quality news casts, business reports and television programming,
which tends to attract bigger spenders.
One way to encourage downloading is to reduce the cost of content.
Better still, says Sizemore, offer free content. Research indicates
that most people are willing to view mobile ads if there’s
something in it for them – like free downloads. In a recent
survey in the US, one in five people said they would accept ad-supported
content if it would reduce the price of downloads. However, three
out of four indicated they would download even more ad-supported
content if it were free. “I think that operators are coming
to realize that they can ultimately push a lot more ads if they
provide the content for free,” says Sizemore.
For advertisers keen on venturing into the 3G arena, the new technology
offers an entirely new medium for experimentation. The novelty card
could be a huge selling point, and intrepid advertisers who lead
the way will almost certainly stand out from their competitors.
Consumers should prepare to be dazzled.
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