Mobile advertising, a revenue source for telcos

by Ashutosh Desai    Jun 04, 2010

Comviva is the process of providing its mobile advertising services to two operators in India. Speaking to CXOtoday, Atul Madan, VP (Mobile Advertising), Comviva declined to name the operators but said that the services will be begin in the month of July. The operators will leverage Comviva’s expertise in text-based as well as ring back tone (RBT) based advertising solutions.

Since the operator has user information and even profile subscribers on the basis of usage, it is able to focus on the right audience instead of relying on random advertising. This, said Madan, adds value to the brand and the operator also gains a share of the revenue.

Madan also said that earlier operators never earned any revenue from running advertisements except from the data access charges. "Operators felt they are getting short changed. So they started with WAP-based advertising. But the content will always be limited here."

The company considers a call initiator as a possible influencer amongst his or her social network. To support this theory, the company is using its AdRBT platform Comviva which allows an operator to target the person who is called, instead of the one who initiates the call. In addition, this form of advertising is "more targeted than simple SMS blasts," feels Madan.

In the case of AdRBT, the caller only needs to be subscribed to the service. If a mobile service subscriber is not part of the network, "the advertising will be gender neutral and localized." With text-based advertising, there are options such "tag-along advertising, wherein an SMS is appended with an ad, thereby making use of the unused character count," said Madan.

Apart from the two operators that will use Comviva’s mobile advertising solutions, the company is considering markets outside India. "There are a lot of local partnerships that you need to have," said Madan. The company is looking at two markets in South east Asia and Middle East. "In South East Asia the two markets where we should focus is Indonesia and Philippines. In the Middle East, we are looking into Egypt and UAE. We are also exploring Saudi Arabia because it is a big market but we are not completely decided on it."

Advertising, in the operator’s share of revenue, is still a very small portion of the pie. In 2009, mobile advertising revenue worldwide was estimated to be US $2 billion. This is expected to increase over the next 4 fours. According to Madan, approximately US $1.3B came from the US and Japan itself. With regard to future projections, Madan said, "There are many estimates. They range varies from US $12 billion to $19 billion, by 2014. It is still nascent so estimates are widely fluctuating." In the India, the market is expected to be roughly about Rs. 500-600 crores in the next 2-3 years, which means around 500-600 crores in the next 2-3 years.