March 08, 2007


By Hisham Isa, Vice President (Marketing)

Content downloads – the bulk of many a mobile industry business plan – are stagnating. In some cases, they’re even declining. The take home percentage for a mobile service provider isn’t very exciting either. Take the case of a ringtone sale in The Philippines. Retail price is PHP 30 (US$ 0.6). Market rate for revenue share is 30 percent. So that’s just PHP 9 (US$ 0.18) per transaction before royalties and marketing costs. In some countries, the percentage drops to just over 20 percent.
So what’s a mobile service provider to do?

Well, at BuzzCity, we have three revenue streams: membership fees, merchant commissions and advertising. The area where I see the most growth and opportunity is the third item on the list. And I’m not alone in this view:

"The full value of mobile marketing lies in the ability . . . to create more relevant customer experiences among more receptive target audiences," writes IDC vice president Scott Ellison in a report released last week entitled “The Potential Actually Exceeds the Hype”.

IDC predicts that the mobile advertising market will grow more than 25-fold from US$160 million last year to more than US$4 billion in 2011.

“Mobile marketing can reach billions of mobile users in the developing world on an individual basis for the very first time,” the report continues “and thereby create new markets and customer relationships for brands.”

At BuzzCity, though, we’re already running over a hundred ad campaigns. Eighty percent of o
ur advertisers are repeat customers. Ads appear both on myGamma and on 1500 partner sites. Here are some examples:

* Mobile agency Mobiclicks is running ten campaigns for clients targeting users across South Africa.

* Malaysia-based mobile I.T. expert mTouche are running a regional campaign across southeast Asia. They chose to advertise on a mobile platform because of the rising cost of traditional print ads.

* US-based Cellufun is advertising across our network.

BuzzCity’s story is not typical of the industry at the moment – advertising already accounts for 15 percent of our total revenue and should rise to 40% in 2007 – but we believe we are at the forefront of the mobile marketing wave.

The next wave of content is likely to be specialised information (bus schedules, cricket scores, weather reports) with huge public appeal, and this is likely to
attract the most ads.

You’ll notice that the first adapters are companies also working in the mobile space. Brick and mortar firms have been slow to adapt, mainly I think because media agencies are still overlooking the mobile sector. This will soon change though. Here’s why:

1. Mobile phones are the best platform for reaching people outside major urban centres, particularly in developing countries. This is a big driver in places like India. Mobile phone networks extend beyond the big cities into areas with poor TV reception and limited newspaper or magazine distribution. Mobile networkers also have a very different demographic than internet users (see Kok Fung’s article).


2. It’s cost-effective. We auction our ad space – similar to Google. The higher a company bids, the more likely its ad will be shown. The average cost per click is 2 US cents for a campaign on myGamma, so a one-month mobile media buy for a regional southeast Asian campaign costs US$10-15k. Compare this with (a) internet ads or (b) print campaigns. Google ads cost at least 5-6 cents a click (popular keywords cost more!) A print campaign in a single country, Malaysia, is US$42k. That will buy you regional exposure for 3 months on a mobile platform.

3. Mobile marketing offers a unique one-on-one experience. With traditional media, the net cast is really wide. Plus TV viewers can take a break during commercials to go to the kitchen or toilet. Mobile networkers, on the other hand, keep their eyes on the screen. It’s easier to target content to them based on their preferences and usage patterns.

The biggest obstacle that service providers like BuzzCity face in this area though comes from telecom operators. In the PRC, for example, China Mobile is making it increasingly difficult (and expensive) for mobile phone users to surf outside of a pre-approved network. But more about this in the next blog entry from our China expert, Andrew Lim.Hisham Isa

For more about mobile adverstising, join us at Mobile Content World Asia 2007, where Kok Fung will be speaking about global trends.