Ad Funded Mobile Content 2008

Ad funded mobile content
Forecasts and Analysis 2008
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Contents
Chapter 1
Introduction
1.1 Executive summary
1.2 Mobile advertising
1.3 Mobile content funded by mobile advertising
1.4 The focus of this report
Chapter 2
What mobile content?
Chart 1 Bango mobile content sales 2006-2007
2.1 Which mobile content is most appropriate
2.2 Mobile TV and video
2.2.1 Issues with mobile TV
2.2.1.1 Forms of advertising enabled by Mobile TV
Chart 2 Mobile TV handset penetration comparison
2.2.2 Subscriber take up
Chart 3 Mobile TV trends
Image 1 Sony Ericsson Bravia
Image 1.2 Sony Ericsson Bravia
Image 2 Nokia DVB-H Handset
2.2.3 Prospective impact
2.2.4 Live video streaming
2.2.5 Mobile ad funded TV and video
2.3 Mobile MMS
2.3.1 Converged handsets
2.3.2 Subscriber reach
2.4 Mobile social networking
Table 1 Examples of social networks on the mobile
2.4.1 Global phenomenon
2.4.2 Potential improvements and impact
2.4.3 Exclusively mobile social networks
2.4.4 LBA
2.4.5 Messaging
2.5 Ringtones
2.5.1 Target market base
2.6 Music
2
Contents
2.6.1 iTunes competitors

2.6.2 Market base
2.7 Mobile search
2.7.1 Revenue
Chart 4 US search engine market share
2.7.2 Ad funded models
2.7.3 Killer app
2.8 Mobile games
2.8.1 Market base
2.9 Mobile content growth
Chart 5 Content used in EU and US
2.10 Conclusion
Chapter 3
Implications of mobile ad funded content
3.1 Mobile operators
3.1.1 Opex
3.1.2 CAPEX
3.1.3 Ad funded MVNO
3.1.4 Mobile subscriber reach and contact
3.1.5 Network management versus content
management
3.1.6 Off portal versus on portal
3.1.7 Mobile operator case studies
3.1.7.1 3 UK
3.1.7.2 Vodafone
3.1.7.3 Orange
Chart 6 UK Mobile games market worth
3.1.7.4 Cellcom
3.2 Mobile handset vendors
3.3 Mobile advertisers
3.4 Mobile content providers
3.4.1 Adult content
3.4.2 Mobile magazine
3.4.3 Audio
3
Contents
3.4.4 Visual
3.4.5 Market leaders
3.4.6 What will be best suited to being ad funded?
3.5 Mobile subscribers
3.5.1 Mobile ad funded content benefits to mobile
subscribers
Table 2 Benefits and detriments of ad funded mobile content to
mobile subscribers
3.5.2 Targeted advertisements
3.5.3 Free content
3.6 Mobile advertising
3.6.1 Targted audience
3.6.2 Size of market base
3.6.3 Target market
Table 3 Mobile ad funded content market trends
3.7 Conclusion
Chapter 4
Global market reach of mobile ad funded
content
4.1 Developed markets
4.1.1 Target market segments
4.2 Advertisers using the platform
4.3 Emerging markets
4.3.1 Reduction in end user costs
Chart 7 Cost reducing mobile data usage
4.4 Click through rate
4.5 Age demographic
Chart 8 Age trends in mobile content
4.6 Best content
4.7 Mobile content standards
4.7.1 3GSM
4.7.2 3G HSPA
Table 4 HSPA-Enabled devices September 2007
4
Contents
4.7.2 4G and LTE

4.7.3 WiMAX
4.7.4 Mobile TV standards
4.8 Location aware advertising
4.9 Conclusion
Chapter 5
Mobile ad funded content available
5.1 Ad funded MVNO
5.1.1 Blyk
5.1.1.1 Blyk strategy
5.1.1.2 Drawbacks to strategy
5.1.1.3 Blyk branding
Table 5 Examples of Blyk case studies
5.1.1.4 Future for Blyk
5.1.2 Xero mobile
5.1.3 MOSH mobile
5.1.4 Ümobile
5.2 Mobile ad funded social network
Chart 9 Ad funded content in mobile social networks
5.2.1 M3 Mobile
5.2.2 itsmy.com
5.3 Greystripe
5.4 Mobile ad funded TV
5.5 Mobile ad funded content providers
5.5.1 Pitch/Play Phone
5.5.2 Myxer
5.5.3 innerActive Smart Media
Table 6 InnerActive Smart Media advertisers include
5.6 Greystripe
Chart 10 Trends in mobile internet users
Chart 11 Branding and advertising in ad funded mobile content
5
Contents
Chapter 6
Branding and advertising in ad funded mobile
content
6.1 Branding examples
6.1.1 Blyk: Penguin books
Table 7 Blyk’s Penguin campain stats
6.1.2 Greystripe: New Line Cinema
6.2 Market demographic
6.3 Display of mobile advertisements
6.4 Who will buy ad funded mobile content
6.4.1 What will mobile subscribers want from ad
funded mobile content?
6.5 Conclusion
Chapter 7
Market potential
7.1 Mobile advertising spend
Chart 12 Mobile ad spend forecast
7.2 The market landscape in 2013
7.3 Market demographics in 2013
7.4 Advertisers
7.5 Content in 2013
Table 8 Ad funded mobile content SWOTs
Chapter 8
Conclusions and recommendations
8.1 Mobile content providers
8.2 Mobile advertisers
8.3 Mobile operators
8.4 Mobile handset manufacturers
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Companies mentioned in this report
3 Fon 11
20th Century Fox Frengo
4INFO Gofresh
Adidas Goldspot Media
Advanced-television.com Google
Airtel Greystripe
Aka aki Groovr
Alcatel Lucent GSM World
Amobee media systems Honda
AOL innerActive Smart Media
Apple itsmy.com
Bango Jaiku
Bebo Jamster
Bluepulse JJB Sports
Blyk Jygy
Boots Loopt
Britekite L’Oreal
Buongiorno M3 Mobile
Calvin Klein M:Metrics
Cellcom Meet now live
CNN Microsoft
Coca cola Mig 33
COI Connexions MobiAd
ComScore Mobifun
Dada Mobile Entertainment Forum
Dada Ad Mobi TV
Daimler Chrysler Mobile Europe
Disney Mobile marketing magazine
Dodgeball Mobixell networks
Domino’s Pizza Moconews.net
Dynamic Logic Mocospace
ebay MOSH Mobile
EMI Motorola
Emarketer Myspace
Ericsson Myxer
Europa Natwest
Facebook NEC
Flickr Netsize
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New Line Cinema Ümobile
Nielsen Utterz
NME Visa
Nokia Vodafone
NTT DoCoMo Wadju
Opera What’s on TV
Orange Whrrl
Paramount Xero Mobile
Peekamo Xunii
Penguin Books Yahoo!
Pick me up Zyb
Pitch
Play Phone
Qik
Rhythm NewMedia
ROK Entertainment
Saab
Samsung
Shozu
Skype
SMART Telecommunications
Sniff
Societe Generale
Sony
Sony BMG Music
Entertainment
Sony Pictures
Splash mobile entertainment
Sprint
Strands
Suzuki
Telephia
Tellabs
The European Commission
The Guardian
T-Mobile
Treemo
Twango
Twitter
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Chapter 1. Introduction
As the content available to subscribers on the mobile grows in
quality and quantity, mobile advertising is also increasing in its
methods, sophistication and reach to global mobile subscribers. A
method that has allowed mobile content providers, mobile
operators and mobile advertisers to combine their energies is
advertising funded mobile content.
As mobile subscribers tentatively begin to explore the mobile web,

mobile operators, content providers and advertisers can take
advantage of this and gain vital brand exposure and revenues by
encouraging users to continue to push this trend. The mobile web
has had slow take up, due to the poor user experience suffered
and the high data costs associated with downloading content on
the mobile web. Mobile ad funded content has worked to reduce
these negatives by providing content and services that are cheap,
often free to the mobile subscriber by funding the content with
affiliated advertising. Subscribers are given a service that reduces
their costs, while the costs to the content provider can also be
reduced. The advertiser gains additional exposure of their brand
and a raised likelihood that the mobile subscriber will remember
their brand or message, and operators can also gain revenue,
particularly when the content is provided on their portal or
network.
1.1. Executive summary

Aspects of the mobile content market have been slow with
consumer uptake, particularly when content on the mobile web is
concerned due to the aforementioned barriers. However, recent
developments within the mobile industry have helped to drive the
market and will improve QoS for consumers. Mobile consumers
are now more easily able to search the mobile web for content
due to the improvements seen in the user interface of mobile
handsets and the improvement in speed and data charges. Touch
screen mobile handsets generally have larger screens making the
content more easily visible and negotiable. The ability to use a
touch screen allows for easier navigation as a lack of pointing
device such as a cursor on a mobile handset has seriously
hampered this in previous handsets. Mobile subscribers will be
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driven to use content on the mobile web if their initial user
experiences are positive, and developments in the handset
industry are a step towards higher QoS.
The interactivity of content on the mobile has also driven this

market. Web 2.0 apps that are beginning to make a presence on
the mobile encourage interactivity from the mobile subscriber, and
by encouraging the mobile user to interact with mobile content the
advertising messages and brands are more likely to be
remembered by the subscriber. Interactivity is also encouraged
with other mobile applications. For example, teaser
advertisements sent to a mobile subscriber by text message
request the recipient to respond to gain the full advertisement,
requiring the recipient to fully engage with the advertisement.
Mobile subscribers actively engaging with mobile advertisement

content is particularly encouraging, demonstrating that mobile
subscribers are not averse to receiving advertisements on their
mobiles and will actively participate in the process. For mobile
advertisement funded content this is particularly positive as it
demonstrates to mobile advertisers and content providers that
adverts around mobile content will be well received and may be
further acted upon, provided that the subscriber is not swamped
with advertisements.
Mobile subscribers have become used to free or cheap content

and services on the fixed internet, and while the mobile industry is
at pains to remind consumers that the mobile is not the same as a
PC, the transition must be smooth, and the standard of content
available must be high. The content that mobile subscribers can
access on the mobile is growing, in volume and in variation. As
this grows, the audience will also grow and mobile advertisers will
need to capitalise on this in order to reach diverse and targeted
new audiences. Mobile ad funded content provides an avenue for
advertisers, operators and content providers to access vital
revenue streams, and make cost savings which can be passed on
to the end user.
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1.2. Mobile advertising
Mobile advertising provides the opportunity to effectively target a
source of an enormous amount of potential consumers while still
remaining personable and tailored. However, the response and
uptake of mobile advertising has been varied in differing markets.
Overall, advertisers are wary of a media that is as of yet, not fully
tested and unsure in the market. The mobile web remains elusive
to some users and previous poor user experience would put some
subscribers off altogether, limiting the potential audience for
advertisers. Other forms of mobile advertising, such as SMS may
be perceived to be too much like spam found with e mail, and
advertisers would be naturally wary of alienating their audience.
However, mobile advertising is finding its way into the mobile
market and advertisers recognise the sheer size of the mobile
audience as having great potential.
The difference between mobile advertising and mobile advertising

funded content is that the adverts on mobile ad funded content
are generally "wrapped around" or embedded in the mobile
content which is then passed on to the consumer for free or at a
discounted price. Through this method mobile advertising will be
able to more specifically target its market segment, increasing
QoS and taking a step to driving revenues up. Mobile advertising
will continue to grow on the mobile and the quality of the
advertisements will be crucial to driving this market.
1.3. Mobile content funded by mobile

advertising
The use and downloading of mobile content has been varied in
differing markets. Mobile content covers many different types of
media including video and audio, games, and other content
emerging in the mobile and mobile web market. A particularly
negative aspect that some mobile subscribers have come to
associate with mobile content is high price. With the emergence of
some less than scrupulous suppliers of mobile content such as
ringtones, mobile subscribers will have been made aware by the
media of instances of hidden charges and astronomical costs that
some users have experienced. With the emergence of ad funded
mobile content providers can reassure mobile subscribers that
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minimal costs will be passed on to them. Subscribers must also
be reassured that advertising that they receive will be relevant,
and will not become like the spam marketing that has become so
prevalent on the PC. Advertising funded mobile content presents
potential advantages for all those involved. Mobile operators and
mobile advertisers can share the revenues that are generated
from this content as the amount of subscribers accessing and
responding to such content and advertisements increase.
Mobile content providers will also stand to benefit as by gaining

sponsorship from mobile advertisers, costs can be driven down.
This will also stand to benefit the end user as these cost savings
will also be passed on to the mobile subscriber in the form of
cheap or free mobile content. Advertising funded mobile content is
therefore an area which mobile operators, advertisers and content
providers must explore in ensuring the wider penetration of brands
and content and in ensuring a high quality of user experience.
1.4. The focus of this report

This report will focus on the benefits that can be gained from
players in the mobile industry entering the advertising funded
mobile content market. It will investigate the drivers and barriers in
entering and sustaining the business strategies and outcomes of
advertising funded mobile content, the market reception that has
been enjoyed so far and how the market will alter. The report will
critically analyse and examine the market for ad funded mobile
content and will discuss and examine the methods and strategies
currently in place and strategies that would be best employed for
future development in the market. The main players in the market
will be analysed as will their impact on the market. The separate
and combining roles of the mobile advertiser, operator, and
content provider will be discussed and examined and strategies
and recommendations will be provided in the report. The report
will evaluate the mobile ad funded content market as a whole and
will discus the drivers and demands, and the barriers to the
market place.
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Chapter 2 What mobile content?
The amount and variation of content available on the mobile
continues to grow. The amount of mobile content being
downloaded by mobile subscribers is also on the increase, with
Bango reporting mobile content sales at 30% from its content
providers in 2007, compared to just 5% in 2006.
As the diversity of content increases, so does the need for

adaptation for relevant advertising. It is crucial that the
advertisements are appropriate to the content they are
sponsoring, and that they are as relevant as possible to the
mobile subscriber in order to generate maximum ROI (return on
investment).
Chart 1. Bango mobile content sales 2006-2007
Source: Mobile Europe citing Bango

When considering the content to be sponsored by the
advertisement in question, players involved should ensure that the
adverts and content are age appropriate. Adverts for adult content
or that are irrelevant to the general age group that the mobile
content is marketed at, for example, may drive away the
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audience. In order to ensure maximum user experience and a
higher likelihood of subscribers responding to the advertisement,
advertisers should ensure a relevancy to the content and the
mobile subscriber. However, an advertisement that remains solely
tied to its specialist area of content or audience, runs the risk of
limiting exposure to potential new audiences and consumers, and
this should be kept in mind. Deciding which kind of content to
sponsor is also an important deciding factor, and this chapter
evaluates some of the content on the market in its
appropriateness for mobile ad funded content.
2.1. Which mobile content is most appropriate?

In deciding which mobile content is appropriate for mobile
advertising funding, content providers, operators and advertisers
must factor exactly how a brand or product will enhance the
service and how the content will enhance the reach of the brand
or product advertised. The varying use of mobile content will also
determine what kind of advertising is most appropriate to display
and sponsor. The type of content may also determine the length
of the advertisement, as longer more sophisticated mobile content
may be able to justify longer advertisements. Video
advertisements would be better suited with video content, and
banner adverts with audio and text content. The size of the screen
on the mobile handset will also have to be taken into account
when considering what to offer for mobile ad funded content, and
this can vary dramatically from handset to handset. This will also
have an effect on the kind of content selected by the mobile
subscriber and this will need to be monitored for advertisers and
content providers to grasp the more lucrative market segments.
2.2. Mobile TV and video

Mobile TV has been making a presence in the mobile market,
albeit slowly. Mobile subscribers may be particularly wary of using
this type of content due to the perceived slow data functioning on
the mobile, the small mobile screen and the perceived high data
charges that can be incurred on the mobile. However, as the
amount of devices capable of supporting mobile TV increases and
mobile handsets improve in terms of user interface, and the
perception for high mobile charges falls, mobile TV will be able to
14
take a stronger place in the mobile market. The mobile market
has seen an increase in the number of handsets with larger touch
screens that are more appropriate for viewing applications that
require a larger screen such as mobile TV, video and the mobile
web. The sophistication of mobile devices and technology means
that mobile subscribers are able to enjoy a variety of content
through this medium, from music videos through a mobile web
search to live TV.
The market for mobile TV varies globally. The higher penetration

for mobile TV is in Asia, particularly in South Korea, where 10% of
the population use TV enabled handsets. In contrast, the number
of users in Europe has been low. For example the highest
penetration of this application in Europe is in Italy, where less than
1% of the population use TV enabled handsets. The market for
such an application remains a small niche market in some areas,
and if mobile ad funded TV content is to have any success in the
European and US markets, serious issues need to be addressed.
Chart 2. Mobile TV handset penetration comparison
Source: Guardian.co.uk 2007
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2.2.1 Issues with Mobile TV
One such issue that has been noted is the need for a
standardisation of technologies to help enable mobile TV. This is a
particular problem in the UK market. The European Commission
is pushing for DVB-H (Digital Video Broadcasting-Handheld) to be
a mandatory standard through its member states, which would
allow greater interoperability for mobile TV between devices.
DVB-H is one of the more prevalent formats for mobile TV and is
implemented and enabled in handsets by a number of mobile
handset providers, such as Samsung and Nokia. The technology
is based on the DVB-T technology for broadcasting digital
terrestrial television, and takes into account the limitations of a
mobile device such as a lower power resource and roaming
environments.
There are planned launches in countries such as Spain and

Germany. The UK has a problem in this area as the band that is
required by DVB-H is UHF, and this band may not be freed until
the digital switch over from terrestrial to digital TV is completed in
2012. This and any other delays in implementing a standard can
seriously hamper the roll out and mobile subscriber awareness of
mobile TV and its interoperability.
3G technology also provides mobile video and TV, although this is

on a one-to-one streaming basis, rather than one-to-many,
(multicast broadcast) which can lead to problems with
overloading. In Korea and Japan the technologies used include T-
DMB (Terrestrial-Digital Multimedia Broadcasting) and ISDB-T
(Integrated Services Digital Broadcasting-Terrestrial) which
provide free-to-air mobile TV. While business strategies may
suggest that there will be more to be gained in revenues from
subscriptions for mobile TV, visiongain believes that free-to-air or
ad-funded services will be more successful and will generate
higher ROI in the long term.
Visiongain believes that mobile subscribers will be more likely to

watch mobile TV if it is free on their handsets, and will watch
mostly short clips, such as news clips or music videos. We believe
that mobile subscribers will be unlikely to pay for a service which
16
is often “free” on a home television set, and has a better user
experience. Ad funded mobile TV will allow mobile subscribers to
utilise mobile TV for free or for a very low charge, and the
advertisements will be accepted by the subscriber as a part of
payment.
2.2.1.1 Forms of Advertising enabled by Mobile

TV
Mobile TV would allow for more media rich forms of advertising,
provided that the adverts are short, and do not detract from the
content desired. Content providers must also ensure that the
advertisements and content are age appropriate. This will require
opting in and cooperation from the mobile operators in
determining the age of the mobile subscriber. With the increase in
the use of mobile search mobile subscribers could find
themselves unwittingly exposed to inappropriate content, and
content providers and advertisers will need to ensure a method of
age verification without pushing its target audience away with a
higher click distance. The genre of TV show should also have to
match the advertising in terms of relevancy, in terms of being age
appropriate. Music videos will be better suited to advertising other
music content or products, whereas news clips could take on a
more general kind of advertising.
Advertising funded mobile TV has been seen to enter the market

and some believe that it is one of the better ways to utilise ad
funded mobile content. Visiongain believes that due to its media
rich technology mobile advertisers will in turn be able to use more
media rich advertisements which may have a higher impact on the
viewer. Mobile advertising will also be utilised to push mobile TV
further into the main stream mobile market, where up to now,
outside the Asia Pacific market, it has had relatively little success.
The use of media to allow the service to be used for free will drive
consumer use.
The affect has also been seen with the mobile web. The take up
for the mobile web has been slow, due to the user experience and
high data charges. However, improvements in the user
experience, such as faster rates of connection and downloading,
17
the lowering of data charges and the introduction of flat rate
charges, have improved the perception of the mobile web and will
improve the number of users on the mobile web, which is now
becoming more commonplace on the mobile. Comparisons can
be drawn from this to mobile TV, improvements in the user
experience and the quality of the content will drive up consumer
use of this content, and a standardisation in technologies and the
use of adverts to drive down costs will push this content further to
mobile subscribers.
2.2.2. Subscriber take up

As previously discussed, subscriber take up has varied in different
markets, and remains low outside of Asia Pacific. There is also
conflicting opinion as to what subscribers want from a mobile TV
service. For example, the nature of the mobile device, in that the
battery power will only allow for a certain amount of viewing, and
the size limitations of the mobile screen, would suggest that the
most appropriate content for mobile subscribers would be short
clips and shows dedicated and moulded to the mobile handset.
However, a ComScore study of 2007 showed that users would

prefer to watch traditional mobile TV rather than content
generated especially for the mobile. 56% of those polled would
prefer to watch a whole show, rather than a version compacted for
the mobile. There was also a preference to general content over
focused content seen in the survey, with 53% of those polled
preferring general content such as news as opposed to focused
content such as extreme sports. This suggests that there is a
market for longer shows which would justify a higher number of
adverts to cover the cost. There are also suggestions that mobile
subscribers would be particularly receptive to ad sponsored
mobile TV. The ComScore survey showed that the greatest
consideration and potential barrier to the subscription of mobile
TV was cost, with 71% of all polled citing it as the primary
consideration. In a consumer behaviour study by Ericsson and
CNN mobile TV was the number one application that mobile users
wanted on their handsets; with 34% saying that it was the most in
demand application and 44% saying that they were to adopt it in
the next two years.
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In Japan there have been strong rises in the production of mobile

TV capable handsets, with, according to a news report by
advanced-television.com, "Cumulative shipments in Japan of
mobile phone handsets with one-segment terrestrial digital
broadcasting function topped 20 million as of the end of
December (2007)" and NTT DoCoMo introducing new mobile TV
capable handsets showing that the market in the Asia Pacific area
is positive. The standardisation of technologies and higher
bandwidth for mobile TV would also support this.
Chart 3. Mobile TV trends
Source: ComScore 2007
However, there is also dissatisfaction in this market. The low take

up of mobile TV in the European market would prevent
advertisers from sponsoring this kind of content locally. In Europe,
the highest take up of mobile TV is in Italy, where less than 1% of
the population have mobile TV enabled handsets, compared to
South Korea where 10% of the population have mobile TV
enabled handsets. The problem of gaining mobile TV subscribers
is highlighted in the UK market where, according to M:Metrics in
19
H2 2007, 0.7% of the total UK mobile subscribers watched
Image 1. Sony Ericsson broadcast TV on a mobile handset at least once a month, and
Bravia
0.9% watched any commercial programmed TV or video at least
once a month. This is an extremely low proportion of the market
and advertisers would be rightly wary of sponsoring such a market
segment. However, there is room for improvement in the service
which would encourage mobile subscribers to use the service and
would dramatically reduce churn. In a survey commissioned by
Tellabs when questioned as to why they abandoned mobile TV,
subscribers stated that the service was too expensive (45%) and
that there were issues with reliability (24%).
Source: Sony Ericsson

The issue of price can be solved by encouraging mobile
advertisers and brands to sponsor the content, thereby lowering
the cost to the end user with the potential to dramatically reduce
churn. Mobile advertisers will be aware of the massive potential of
Image 1.2 Sony Ericsson the mobile audience, with over 3 billion mobile subscribers world
Bravia wide.
However, the low penetration of mobile TV capable handsets

outside of Asia Pacific limits the potential audience to advertisers,
and this needs to be addressed before advertisers can truly
support mobile TV. Standardisation is crucial in this area and the
delays in the roll out of DVB-H in some areas of Europe need to
be addressed to resolve this issue. The expansion of 3G networks
which is underway in Europe will also help to drive penetration of
mobile TV and potential audiences and subscriber numbers. The
Source: Sony Ericsson implementation of flat rate charging on the mobile web has been
seen as a positive step for driving mobile subscribers to use the
mobile web and this would have the same effect for mobile TV.
Estimates place the number of mobile TV users in Japan at over 7
million according to Europa. This and the South Korea market are
clearly the markets which mobile advertisers can make the best
use in sponsoring mobile TV content. In the US and Canada
MobiTV, supplying broadband and mobile TV, has reported that it
has 3.5 million subscribers. The US and Europe have to reach a
unified standard in technologies and price setting before
advertisers will be convinced that there is a sustainable business
model to be had, and subscribers begin to take up the service in
earnest.
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Image 2. Nokia DVB-H 2.2.3. Prospective impact
handset
The impact of ad sponsored mobile TV will dramatically increase
the likelihood of the content gaining subscribers, as the cost to the
end user is one of the main barriers to the success of this
particular media in European and US markets. Ad funded mobile
TV will help to push mobile TV into previously slow markets for
the content. Ad funding may also help the content providers
reduce costs, and this may allow for more content at a higher
quality, which will reduce consumer churn as mobile subscribers
gain a higher quality of content with less of the costs passed onto
them.
Source: Nokia
Operators will be able to gain revenue from ad sponsored content,
which will help to counter falling ARPU. Visiongain believes that
the market in Europe will see a positive response to ad funded
mobile TV content, but that the Asia Pacific market will continue to
lead the way, and that consumers with greater penetration of
mobile TV capable handsets will provide the more tempting
audience for mobile advertisers, and will therefore have a greater
amount of access to ad sponsored mobile TV content. We believe
that mobile subscribers across most markets will be more
receptive to value added content when the pricing is driven down
by advertising sponsorship, and will be willing to accept adverts
on their devices for it. As content on mobile phones and the
mobile web becomes more sophisticated mobile TV will be used
by more subscribers, accepting that their mobile handset is much
more capable than just making phone calls, but has become a
multimedia device, which has been seen with the device
convergence of handsets coming to include cameras and music
players.
2.2.4. Live video streaming

Live video streaming on mobile phones will increase due to the
device convergence that has been seen in the mobile handset
market and this is a relatively new area in which mobile
advertisers can reach a targeted market segment. Qik is an
example of software that has responded to the device
convergence seen in mobile phones and allows users to stream
video live from the user's handset.
21
Mobile advertisers will also want to respond to the alteration in the

use of the mobile handset and in the increasingly "live" nature of
mobile subscribers. It is becoming more common for mobile
subscribers and non mobile subscribers to stay connected with an
online community by updating a status on a social network page,
by uploading photos, or as seen with Qik upload live video
footage. Advertisers therefore have a specific market of
technologically aware users, a specific demographic who can then
be approached with targeted advertising relevant to the behaviour
of the mobile user who wishes to transmit their daily lives over the
mobile web.
Mobile subscribers will want a method of transmitting live video

content that is inexpensive and advertising sponsorship is a
solution. For example, the user creating the video may give
permission for adverts to be played on their video when it is
watched by others; such is the practice of YouTube where users
can earn a proportion of the advertising revenue by permitting this
practice on their content. Qik is currently still in alpha stage at the
time of writing and only supports Nokia phones but visiongain
believes that live video streaming will grow popular on mobile
phones as social networking moves onto the mobile handset and
mobile subscribers gain access to handsets with greater
capabilities in this area.
2.2.5. Mobile ad funded TV and video

There are currently mobile ad funded TV models available to the
mobile market. As discussed earlier the strongest market is in the
Asia Pacific area but the market has opportunities in the US and
the European market as more trials are taking place to test the
reception for mobile ad funded TV. For example, Sony Pictures
Television has launched its Minisode network in the US on Sprint
TV, using Honda as the sponsor. A variety of mobile operators
have launched mobile TV and video ad funded services and trials
including Vodafone and 3. MobiTV supplies broadband and
mobile TV in the US and Canada and has approximately 3.5
million subscribers. Outside of Japan and South Korea the market
for mobile ad funded TV and video remains low due to previously
22
discussed problems with standardisation and perceived issues
with quality and price. However, that is not to say that the market
is not open in these areas. Consumers polled in various surveys
suggest that mobile TV and video has the potential to be popular
amongst mobile subscribers. There has also been a survey from
ComScore that shows that the most likely demographic for mobile
TV users (in America) is men aged between 25-34, giving mobile
advertisers a clear indication of the market demographic allowing
for tailored and relevant advertising which mobile subscribers
would be most receptive to.
The subscriber numbers for mobile ad funded TV and video have

the potential to climb high as more subscribers upgrade to mobile
handsets with a higher specification which will allow greater
access to the mobile TV content in turn boosting advertising
revenues that are sponsoring this particular content. If the
European and US markets wish to aim for the 10% population
penetration of mobile TV enabled handsets that is being enjoyed
in South Korea, then the standardisation of technologies is
essential to ensure a high QoS and reduce churn. Interoperability
will also benefit the consumer and reduce churn.
2.3. Mobile MMS

The use of mobile MMS is able to grow partly due to the increase
in the technical sophistication of mobile handsets and the
awareness of the applications across the mobile market. In the
creation of ad funded networks, which be discussed in further
detail later in the report, mobile advertisers have used MMS and
SMS to push their advertising to the consumer in exchange for
free content or network usage. The use of MMS has meant that
mobile subscribers can receive advertising on their mobile
handsets that is increasingly more sophisticated in quality and
quantity. In March 2008, Vodafone announced plans to launch ad
funded MMS newsletters in April which are free to subscribers on
an opt-in basis. The quality of adverts that can reach mobile
subscribers through this media allows for detailed targeted
advertising and, with Vodafone's venture and with ad funded
networks information will have already been gathered on the
individual subscriber through opting in which will create targeted
23
relevant advertising which will be better received by the mobile
subscriber and more likely to be acted upon. (i.e. higher
conversion rate).
2.3.1. Converged handsets

Previously separate functions and applications have now been
merged on to mobile handsets as the mobile phone becomes the
principal device that the mobile subscriber is rarely without. By
converging cameras and music players on to the mobile handset,
the mobile marketers and advertisers have a multimedia device
through which a variety of advertisements can be made. MMS
also gains by the sophistication of the mobile device, as mobile
subscribers can create increasingly high standard media from
their mobile handsets and use MMS to distribute them. By
sponsoring MMS content, mobile advertisers can reach a high
amount of mobile subscribers in a manner that is relatively
unobtrusive, as users will often subscribe to the content for the
advertisements or at least be fully aware that subscription to a
service will result in a certain amount of MMS advertising.
2.3.2. Subscriber reach

Since the majority of mobile subscribers will have access to MMS
media, this places the subscriber reach and audience potential for
the advertisers and content providers into the billions. With
approximately 3 billion mobile subscribers world wide and many of
these having access to a mobile device that has value added
capabilities, thanks to its device convergence the potential
audience for mobile advertisers and mobile content providers is
extremely high, with the potential to form a lucrative market. With
SMS and MMS, again mobile advertisers and content providers
have a market demographic which can be specifically marketed
to. The majority of SMS users are in the youth market, allowing
those involved to directly target the youth market with appropriate
advertising and content. The knowledge of the SMS market gives
a basis for the MMS market, and it is likely that the same market
segment uses MMS, again giving the advertisers a specific market
segment.
2.4. Mobile social networking

Social networking has enjoyed a boom over 2007 and this looks
24
set to continue over 2008. The success of social networking sites
such as myspace and Facebook have propelled the application in
to the media spotlight as their market value continues to grow.
Social networking sites are becoming accessible on the mobile
web. The fixed internet players and mobile specific entrants are
coming in to the mobile market and are responding to the needs
of the mobile subscriber to access information on the move.
There has also been an introduction of mobile ad funded social

networks, as has been seen with M3 Mobile, a social networking
service and itsmy.com, an ad funded mobile social networking
site. Mobile social networking reflects the mobility of the device,
the mobile subscriber and demands of the mobile subscriber
wanting their social networking PC experience to be relevant on
the mobile web and to give them the ability to become truly social.
Mobile social networking takes into account the rising capabilities

and revenue potential of LBS (Location Based Services) and how
LBS can increase the QoS of an application or advertisement
increasing the likelihood of the mobile subscriber acting on the
Table 1. Examples of advertisement, thereby driving up revenue for the advertiser and
social networks available mobile operator. Mobile content providers can also make use of
on the mobile LBS as seen with mobile social networking and deliver a higher
Loopt Wadja quality service and content. The amount of content in social
M3 Mobile Utterz networking is higher than in other single medium examined in this
Facebook Dodgeball
report. Social networking can include audio and visual content, as
Myspace Peekamo
Dada Aka Aki well as video and text, allowing for different forms of advertising to
Strands Bluepulse be utilised.
Itsmy Jaiku
Frengo Jygy
Twango Mig33 2.4.1. Global phenomenon
Shozu Mocospace The phenomenon of social networking has spread throughout the
Britekyte Treemo world, from the US, to China, Europe to Japan. This global reach
Zyb Meet now live
Groovr Sniff gives mobile advertisers a strong incentive to invest in this area
Fon11 Whrrl and sponsor mobile social networks with the aim of increasing
Flickr Xumii brand and product awareness to a large and diverse audience.
Twitter
The value of social networking has been recognised by
Source: visiongain
companies spending large sums of money to gain a place in the
market. For example, Microsoft paid $240 million for a 1.6% share
in Facebook in 2007 and 2008 saw the acquisition of Bebo by
AOL for $850 million.
25
The nature of social networking makes it suitable for both targeted

advertising and for large world wide brands. The global reach,
while positive for advertisers in the potential audience size, may
prove problematic when advertisers need to specifically target a
market segment and create relevant advertising specific to the
mobile subscriber, which is viewed as a necessity on mobile
advertising and mobile ad funded content.
However, there are methods being explored with varying degrees

of success to create more targeted advertising on social
networking sites. For example, Facebook launched Beacon which
was intended to allow users to share purchase details with friends
made on third party sites. However, this was met with a
particularly negative response regarding users' privacy, and this
could be a problem when it comes to advertising on mobile
phones. In order to make the adverts compelling to mobile
subscribers they must be relevant, and to do this certain
information must be gathered on the mobile subscriber. Some of
this can be done with registration details such as the location, age
and gender of the subscriber, however, subscribers may feel this
would infringe on their privacy and as a result disregard any
advertising. Dialogue with the mobile operator who carries
information on the mobile subscriber may also infringe on privacy
rules. Mobile advertisers must ensure that mobile subscribers are
aware of what information is being gathered and exactly how this
can benefit them; otherwise adverts will be met with hostility.
2.4.2. Potential improvements and impact

Mobile social networking will allow for a higher quality and
relevance in LBS (Location Based Services) and LBA (Location
Based Advertising) increasing the relevance of mobile advertising
with the content and increasing ROI. Mobile subscribers using ad
sponsored social networks on the mobile are more likely to be in
the vicinity of an advert through LBA, ensuring that subscribers
are targeted when nearest the product or services making the
most efficient use of an advertising and marketing budget.
26
Mobile ad funded social networks will allow for a more
personalised one-to-one advertising service. The improved
relevancy of this advertising on social networking will boost
revenue in this area, encouraging mobile subscribers to engage
with the adverts and act upon them more than they would on a
fixed PC social networking site. Mobile social applications and
relevant ad sponsoring on the content will be able to push users
from the social networking content to the recommended activities
and web pages, increasing the brand awareness and consumer
reach on the advert sponsoring the content. Social
recommendation which is seen on social networking sites will also
help to drive advertising on the mobile, when the sponsors are
recommended by users having seen and acted on the advertising.
2.4.3. Exclusively mobile social networks

Social networking is moving from the PC to the mobile. The
portability of the mobile device allows mobile subscribers to
become truly social, and allows them to communicate more
effectively with friends on a social networking site. The move to
mobile also recognises the culture in social networking of
constantly updating a user's status. Being on the mobile allows
the user to be more in touch with the statuses of their friends and
to communicate their status throughout the day, which is part of
the uniqueness of social networks. The feeling of mobility will
encourage users to use friend finding services available on some
mobile social networks, which will allow advertisers to reach their
audience accordingly. Some friend finding mobile social networks
do not allow advertising at present, however, ad funded social
networks can make use of this mobility and reach their target
audience with relevant targeted advertising based on behaviour,
location and status.
2.4.4. LBA
The use of Location Based Advertising in mobile ad funded social
networking will vary depending on the specific brand or service
sponsoring the social network. However, LBA has the potential to
massively increase the relevancy and consumer engagement with
advertisements increasing ROI. LBA allows mobile advertisers to
specifically target potential consumers by the basis of their
27
location, reducing the potential marketing spend as the advert
need only appear to the consumer when they are in the vicinity.
This is particularly beneficial for smaller local businesses that may
have a lower marketing budget than other enterprises. This also
raises the standard for mobile subscribers, as local search and
advertising is perceived to be the killer app on the mobile,
allowing mobile subscribers to "discover" relevant information and
advertising on their mobile handsets rather than be targeted with a
high amount of irrelevant information and advertising, like the
spam seen on the fixed PC.
2.4.5. Messaging
The portability of the mobile device allows mobile subscribers to
make more use of instant messaging services and messages
posted on personal pages on social networking sites. This will
also enable advertisers to target their prospective audiences more
effectively; depending on the information users feel comfortable in
giving the advertisers. Mobile subscribers have become used to
using instant messaging on the internet for free, and will want a
similar service on the mobile. Advertising sponsorship will enable
this and visiongain believes that mobile subscribers will be willing
to receive advertising for free mobile content.
2.5. Ringtones
The market for selling mobile ringtones continues to grow, with
ringtones advertised both on and off the mobile. Mobile ringtone
providers have received some bad press regarding their charges.
This is not exclusive to ringtone providers but it is one example
where the costs to the end user have received negative attention
and this is an area where advertisement funding would be
beneficial to the business. Where mobile subscribers pay a high
charge for mobile content like ringtones, advertising sponsorship
could dramatically reduce or even eliminate charges to the end
user.
Myxer is one content provider that is using advertising

sponsorship, supplying mobile content including ringtones. The
option of creating branded content through this media allows
advertisers to reach their audience through their choice of content,
restricting the notion that the advertising may be blocking the
28
content that the mobile user is searching for. This method of ad
sponsoring would be particularly useful for brands wishing to
advertise film through theme music, and chart song releases.
2.5.1. Target market base

The target market for content providers selling ringtones to is
generally the younger end of the market, although differing styles
of music for ringtones will appeal to different areas of the market.
Content providers can provide advertising sponsors with the
information necessary for the target markets of their ringtones,
allowing advertisers to target their audience accordingly.
2.6. Music
The music industry has had to battle to fiercely protect copyright
of music, especially since the internet has allowed for greater
ease in file sharing for music. Downloading music for a price on
certain websites has helped to control copyright, but has not
eliminated the problem as illegal file sharing still exists. As the
mobile web becomes more closely related to the PC web
experience it is likely that these problems will move on to the
mobile web. Mobile ad funded music content has become present
on the mobile and operators and content providers have been
trialling ad funded solutions for music and music videos.
EMI and T-Mobile are one example of these trials. The operator
and record label joined and offered ad funded content launching a
trial in the UK in 2006. There have also been trials from mobile
operators such as 3, which launched its ad funded mobile video
content with Rhythm NewMedia in 2008. The use of ad funded
music helps appeal to a wide demographic, as the varying music
genres will draw a wide audience. By sponsoring the content and
lowering the cost to the end user, mobile music content providers
are appealing to a wider audience and budget, and this also
ensures advertisers a greater audience reach.
2.6.1. iTunes competitors

One of the main competitors in supplying music for download is
Apple iTunes. If other business models begin to offer music
29
content for cheaper or even free, this would represent serious
competition for the label. The service from 3 UK saw a rapid
uptake with 25% of 3 subscribers signing up to the service in the
first six months, showing that this business format could represent
a threat to iTunes. For iTunes the competitive differentiator will be
cut price content versus brand loyalty. Apple has established itself
in the mobile music market, especially with the release of the
iPhone, but the price differentiator will be a competitive aspect in
the mobile music market.
Another issue that mobile music content providers will have to

address is the issue of interoperability. With some music in the
mobile market being only accessible or compatible with specific
hardware, consumers will be pushed away from this service if
they do not have the correct handset. This will reduce the
audience scope for content providers and advertisers, limiting the
revenue that can be gained from ad funded ventures. Apple was
rumoured to be investigating entering the ad funded music content
market, but lack of interoperability may well hinder its audience
reach. Given the size in sales of Apple products such as the
iPhone and the iPod, this may not at first appear to be terribly
problematic for Apple. However, mobile subscribers may be
pushed away from the lack of interoperability in a service. Also,
the iPhone has not been shown to have sold as well outside of
the US, which leads to the possibility of alienating a large
proportion of the mobile market.
2.6.2. Market base

The market base for mobile music is extremely varied. Therefore
mobile ad funded music content providers will need to ensure that
they can provide relevant advertising to their subscribers, gaining
information that is not infringing on the mobile subscriber's privacy
but gives enough intelligence to ensure targeted advertising.
Mobile advertisers can use information from the content providers
as to what music genre would denote which typical market,
increasing relevancy of the advertising, thereby increasing the
likelihood of the mobile subscriber engaging with and acting on
the advertisement. Opting-in strategies would also give
intelligence to ensure relevant advertising.
30
2.7. Mobile search

With the mobile web becoming increasingly accessible, mobile
search was an almost inevitable following. On the mobile web,
search is available through fixed internet search engines migrating
on to the mobile web and through increasing numbers of mobile
only search engines. While mobile search is not necessarily
mobile ad sponsored content, it is nevertheless a form of mobile
business that has become extremely successful, both on the fixed
and mobile web while being funded almost solely through
advertising. The mobile search market remains open for
competitors and ad funded content and search providers remain
an area that have been shown to be viable business structures by
the search market.
2.7.1. Revenue
The main search engine giants that have migrated on to the
mobile web, including Google, Yahoo! and MSN Live search
receive the majority of their revenue from advertising. Despite the
weakening economy in the global credit crunch, Google has
reported particularly strong profits, despite fears of a slowdown in
online advertising spending, with a 30% jump in profits reported in
April 2008. However, these fears in a slow down in online
advertising spend are not unfounded and ad funded content
business models would do well to assess the global economic
situation when structuring their budgets and business models.
2.7.2. Ad funded models

Mobile search engines gain their revenue from varying sources,
some directly from the user, but most gain revenues from
advertising. Google receives approximately 99% of its revenue
from advertising and has the greatest search engine market
share. Funding through advertising is clearly a sustainable
business model for search engines, which can rely on high
audiences using their search as an easier method of tracking
information and services on the web. Mobile ad funded content
may not be able to rely on the same amount of audience numbers
to tempt advertisers, but will be able to boast a degree of market
specification which will be beneficial to advertisers wishing to
specifically target their markets.
31
Chart 4. US search engine market share June 2008
Source: ComScore
2.7.3. Killer app

Mobile search, and more specifically mobile local search has been
anticipated as the killer app on the mobile, and ad funded models
will play a large part in this market demonstrating the reach of ad
funded business models on the mobile. It should also be
remembered that mobile search will be many mobile users’ first
port of call when it comes to locating content on the mobile,
including ad funded content. Mobile content providers must
therefore ensure that their positions on search engine rankings
are favourable by ensuring recognition of their home pages.
(Although it should be remembered that advertisers cannot buy
their way on to organic search results.)
2.8. Mobile Games

Mobile games also have a place on the mobile ad funded content
market and have been brought to the mobile market by content
providers and mobile operators alike. Mobile ad funded gaming or
"advergaming" have a targeted market demographic that will
appeal to advertisers and content providers alike, and content
32
providers can mould the games to the market’s specification and
can adjust the games to include relevant advertising and brands,
encouraging the mobile subscriber to engage with the
advertisement. However, visiongain believes that advergaming
revenues will account for a minor part of the mobile advertising
funded content market as users have been shown to be willing to
pay for this content. It will however also open up the market for
new entrants in reducing costs for games content providers.
2.8.1. Market base

The market base for mobile gaming is as varied as the games
available. However, advertisers have the ability to target specific
markets through the specific games that a mobile subscriber
chooses to download. By engaging in dialogue with the relevant
mobile operators and subscribers, advertisers and content
providers can assess what subscribers are downloading which
specific content, depending on privacy rules. Encouraging
dialogue with the mobile subscribers and an opting-in scheme,
advertisers can assess which advertisements to send to target
their markets, and can provide targeted advertising within the
game itself.
2.9. Mobile content growth

There has been support for mobile content over the years and
there is evidence that the amount of content and revenues
generated from mobile content will grow. The potential for growth
and revenue in mobile content will vary from the differing forms
and markets of mobile content. Mobile music will see a fall in
ringtones due to the decline in polyphonic ringtones, and the
growing demand for mobile music through music videos and
music streaming. Mobile TV, while slow to gain subscribers
outside of Asia Pacific will expand as standardisation increases in
Europe. Mobile gaming in the US alone is reported to have had
$566 million in revenue in 2006, demonstrating the popularity and
potential in this paid content. The revenue will be beneficial for all
concerned. Mobile operators will be able to reclaim falls in ARPU
through sharing revenues with advertisers and content suppliers
permitted on the network. Mobile content providers will be able to
reduce costs in receiving funding from advertisers and mobile
33
advertisers will gain higher brand awareness and global audience
reach.
Chart 5. Content used in EU and US
Source: M: Metrics Benchmark study April 2008
2.10. Conclusion
The mobile content that will be best suited to being driven by
advertising funding will evolve as the content available to mobile
subscribers increases in the amount and as the standards gain in
quality. New forms of content entering the market will have an
effect on what advertisers will choose to sponsor as well as the
forms that the advertising will take. Sales of mobile content are
continuing to rise as the mobile handset becomes more capable
of supporting more sophisticated content and greater memory.
The mobile content which currently presents itself as being most
appropriate for ad funding is mobile TV as this is the content,
particularly in Western Europe and the US, that needs incentives
to drive it into the consumer market. Content that has previously
been seen as expensive and subscribers are unwilling to pay for
would benefit from ad funding as free or cut price content will
34
drive subscriber use which in turn will push up the advertising
engagement and revenues.
The content over a mobile that will be funded by advertising will

be varied and dependant on what the subscriber has proved
willing to pay for. Interactive content and advertising will be driven
through ad funding as subscribers become more relaxed about
giving personal information in the receipt of free or cut price
content.
35
Chapter 3 Implications of mobile ad
funded content
Mobile ad funded content will affect the costs and market
demographic reach of all those concerned within mobile ad
sponsored content. The use of advertising on content will allow
greater reach for the advertising brand tapping into the 3 billion
subscriber mobile market, which will also allow the advertisers to
gain intelligence in marketing to mobile subscribers, which will
give greater potential in future advertising campaigns. Working
with mobile content providers and mobile operators, mobile
advertisers and advertisers new to the mobile market will be able
to gather intelligence on the mobile subscriber market which
would aid them in future campaigns, both on and off the mobile.
This would also come to benefit the mobile subscriber, in
receiving advertising of a higher quality leading to a higher
standard of consumer experience.
Mobile content providers and mobile operators will have cost

incentives for ad funded content, as allowing advertisement
sponsorship will reduce costs, and revenues from advertisers can
be shared. By providing mobile subscribers with competitive
incentives, such as cut price or free offers, to choose their specific
content, mobile content providers will gain a greater penetration in
the mobile market and mobile operators will be able to reap the
benefits found by content providers and mobile advertisers
through their networks.
3.1. Mobile operators

Mobile operators will gain through mobile ad funded content by
allowing and promoting ad funded content on their networks, and
by mobile ad funded networks entering the market themselves.
Discussed below are the main impacts that will occur for mobile
network operators from mobile ad funded content such as costs,
subscriber reach and which content will be found on mobile
networks to be most prevalent.
3.1.1. OPEX
Mobile ad funded content gives mobile operators an opportunity to
reduce their operational expenses through the sponsorship gained
36
through the advertisements. The implication of mobile operator
costs will be determined by the kind of mobile ad funded content
that is present on the mobile network. For example; an MVNO
would dramatically reduce operational costs in deciding to fund its
business from advertising sponsorship. MVNO Blyk has used this
strategy and subsequently can offer its subscribers free calls and
text messaging. However, the amount of funds present from such
a business strategy may be reduced, and therefore may have an
impact on the quality of the service, such as by offering a low
amount of free calling, which may lead consumers to believe that
the advertising does not justify the service. By allowing other
forms of ad funded content on to the network, such as games and
music, mobile operators will be able to share in revenues gained,
which will help to offset the costs incurred.
3.1.2. CAPEX
The capital expenditures of a mobile operator will affect the mobile
operator in potential future advertising needed to fund differing
content in the future. Some mobile operators may need to
upgrade their networks and adopt certain standards to achieve the
highest quality of content and advertising, or risk subscribers
defecting to other networks for a higher standard in QoS.
Investing in these areas may increase CAPEX for mobile
operators, but will be necessary in responding to the market.
3.1.3. Ad funded MVNO

The mobile market has seen the entry of ad funded MVNOs which
will be discussed in further detail later in the report. The market
has seen entrants including Blyk, providing ad funded networks to
the market, offering mobile subscribers the option of free calls and
SMS in return for accepting advertisements on their mobile
handsets. Ad funded MVNOs face challenges in attempting to
reach a targeted market segment, which has been identified as
crucial in mobile advertising. In targeting specific market
segments, as Blyk has done in targeting 16-24 year olds, the
networks risk alienating other potentially lucrative markets and
also alienating brands that would appeal to these markets. If the
networks choose to offer networks individually targeting separate
market segments costs will rise. If the network chooses to target
37
multiple market segments over the network then there is a risk of
the subscriber receiving untargeted ads which take on the quality
of spam, driving users away from the service. For smaller MVNOs
like Blyk, there is also the danger that if main stream mobile
operators should choose to offer ad funded networks this may
well push smaller less well known brands out of the market.
3.1.4. Mobile subscriber reach and contact

The mobile operators have the most contact and reach to the
mobile subscribers and this gives them the opportunity to
communicate with mobile subscribers and determine where the
target markets are for the mobile content providers and mobile
advertisers. Having the information regarding their individual
mobile subscribers, mobile operators therefore have the
intelligence to decide which content and which advert would be
best suited to the mobile subscriber.
If the mobile operators were to engage in dialogue with the mobile

content providers and mobile advertisers then a higher standard
of service would be passed on to the end user. Mobile operators
would have relevant information regarding their subscribers to
decide which ad funded content should be marketed to the
individual subscriber, judging by personal information and
previous behaviour. This method would help advertisers reduce
unnecessary marketing costs, in advertising the ad funded content
to targeted market segments. However, this method would have
privacy issues, as many subscribers would be unhappy with their
operators sharing their details with third parties. Strategies where
subscribers are actively invited to opt-in to advertising in return for
free or cut price content would be more transparent and
trustworthy to mobile subscribers. Mobile operators, having more
contact with subscribers would be more appropriately used for
providing information to subscribers regarding available ad funded
content based on their consumer knowledge and position to place
content in the view of the mobile subscriber.
3.1.5. Network management versus content

management
Mobile network operators must decide what content to offer their
subscribers and if ad funded content will be well received by their
38
subscriber market. Network operators must also determine
whether they will be offering separate ad funded content or if they
will provide an ad funded network when entering the mobile ad
funded content market. When operators debate this there are
several factors to consider:
• Who will best target the subscribers? The operator, the

content provider or the advertiser?
• Is there a specific market demographic within their subscriber
base which can be targeted by mobile ad funded content?
• Which content(s) fits best with the networks brand?
• What content would appeal best to their chosen market
demographic?
• Will the operator offer ad funded content or ad funded
MVNO?
3.1.6. Off portal versus on portal

When using the mobile web, subscribers have previously found
themselves limited to their operator's walled gardens. The "walled
garden" approach to the mobile Web has proved difficult on all
sides. The walled garden approach restricts the user to a specific
amount of internet space as defined by the mobile operator. This
approach, while maximising revenue for the specific providers,
limits the user experience. The Mobile Web could not become
popular under these restrictions and internet access has
subsequently been opened up on the mobile to some extent. The
control over the mobile Web is not solely in the hands of the
operators, but due to the nature of WAP and advertising, they
have managed to retain some control. The operator portals are
still viewed with the stigma of being restrictive and with the mobile
web opening up, more subscribers will feel encouraged to search
off portal for content, including mobile ad funded content.
However, the brands that are found on portal will be trusted by the
operator brand and can therefore be demonstrated as genuine
and as content that can be trusted by the mobile subscriber.
There are therefore arguments for keeping ad funded content both
on and off portal. Visiongain believes that mobile subscribers will
continue to search off portal, attempting to find an internet
experience that better matches the PC. But searches often start
39
on the portal, and having the content available from the subscriber
starting, limiting the click distance, their mobile web search would
give the ad funded mobile content the greater reach to the mobile
audience.
3.1.7. Mobile operator case studies

Below are examples of mobile operators who have trialled and/or
have launched mobile ad funded content. The promotion of ad
funded content from substantial operators and market leaders
demonstrates that ad funded content is viewed as a competitive
strategy in the mobile market and that it has the potential to
become more mainstream than we are currently seeing. The
examples below show that mobile operators are choosing a
variety of content to be funded by advertising, depending on what
they believe the mobile subscriber will or will not pay for. For
example, as evident from its strategy, Vodafone believes that free
mobile video content will be the best strategy for getting mobile
subscribers to try video content and after providing a high
standard of user experience for minimal cost to the end user,
Vodafone can minimise churn in this area. In the case of Cellcom
for its trial, it chose to fund mobile games with advertising. Mobile
operators believe that mobile subscribers will pay for certain
premium content, and that others need to provide mobile
subscribers with incentives to try the service with the aim of
gaining customer loyalty on the service.
3.1.7.1. 3 UK
In March 2008, 3UK launched the first ad funded commercial
mobile music video service in conjunction with Sony BMG Music
entertainment, powered by mobile advertising solutions company
Rhythm NewMedia. The service is available to 3 subscribers
through the 3 music page on the WAP site. The service was
launched following a successful service of free mobile video in
2007 in which during the first two months of roll out, around 10%
of the subscriber base of 3 UK had viewed video clips on the
service. By October 2007, it was reported that 1 million users had
registered for the ad funded service, demonstrating the customer
satisfaction for the service. This has demonstrated that mobile
subscribers, especially 3 UK mobile subscribers are willing to view
40
advertisements in return for free mobile content, and that 3 UK
has found success in music and mobile video content for ad
funding. In promoting mobile video through ad sponsorship, 3 UK
is able to provide financial incentives for its subscribers to try the
service, as there is little or no cost to the end user.
From the earlier launch of ad funded video content, 3 UK has

gathered from the successful take up that its subscribers are
receptive to videos on the mobile that are short, and are willing to
view adverts for the free service. 3 UK has applied this
intelligence to the ad funded mobile music video service, which is
appropriate to the subscriber behaviour. Music videos are
generally short, and this ties in with the behaviour monitored by 3
UK in its ad funded video service. According to 3 marketing
director John Penberthy-Smith (in an interview in Mobile
Marketing magazine), 3 customers are "happy to watch the short
video before the video clip because the ad is targeted at them"
reinforcing the necessity of keeping the content and the
advertisements sponsoring the content relevant and targeted to
the appropriate market demographic. This presents the best
opportunities for ROI for the advertiser and the best subscriber
uptake opportunity for content providers and mobile operators.
3.1.7.2. Vodafone
Vodafone has entered the mobile ad funded content market in
several areas of Europe, including Italy, Spain, Greece and the
Czech Republic. Vodafone has explored differing forms of content,
including ad funded peer-to-peer SMS and games in Greece,
Spain and the Czech Republic, while Vodafone Italia has launched
ad funded mobile video content in Italy. The service Free Video
was launched in January 2008, demonstrating the growing
number of mobile operators who believe that mobile video content
is the most appropriate form of content to fund from advertising,
minimising the cost to the end user and providing an incentive for
those who have never tried the service to sample the offering from
the operator. Vodafone has partnered with Amobee Media
systems to offer the ad sponsored content and it too is
considering which content is most appropriate to fund with
advertising and offer to its subscriber for free.
41
In an interview with mocoNews.net, Mike Eaton, head of content
at Vodafone UK stated that while Vodafone had plans for the
mobile ad funded video content market, that ad funded games
would not be appropriate, as this particular industry was one in
which users were happy to pay for the content, giving profitable
revenues. This suggests that providing some mobile content, such
as games, through advertising funding and offering them for free
to the consumer may devalue the content and alienate a
sustainable form of revenue. Mobile operators must therefore find
the appropriate balance between enticing their subscribers onto a
service by offering it for free and retaining a sustainable business
model for providing content, in which users are charged. To do
this operators must determine the popular content and which kind
of content subscribers are most likely to pay for.
In providing ad funded content, it is essential that mobile

operators maintain strong relationships with advertisers to ensure
a smooth running under the mobile operator brand. To this extent
Vodafone uses Dada Ad, which is responsible for recruiting and
maintaining relationships with mobile advertisers and running
mobile campaigns. Through this method Vodafone can ensure
smooth communication with advertisers while being able to
manage its network.
3.1.7.3. Orange
Mobile operator Orange has launched ad funded content in
France and is also trialling ad funded content in the UK. In
France, Orange has joined with Amobee and launched ad funded
mobile games trial in H1 2007. This was reported to be the first
mobile ad funded content trial in France and included sponsorship
from advertisers including Coca Cola and Societe Generale, Saab
and Mobifun. The objective of the trial was to determine the
attitudes of the Orange France mobile subscribers in regards to
ad funded games content and how consumers would react to
advertisements in mobile content, on their mobile handsets. While
other mobile operators have rejected mobile games as a source
for ad funded content, Orange France have chosen to market this
content to its subscribers. Research for the Mobile Entertainment
Forum has estimated that in the UK ad funded mobile games will
42
be worth £600,000 in 2008 ($1,167,970) and £41 million ($79
million) by 2012. It is clear that some operators and analysts
believe that ad funded mobile games represent an area of growth
in the market and time spent by operators investing in this area
would be worth while. However, visiongain believes that mobile
video and TV is the area which holds more potential in the ad
funded market, as subscribers have been previously shown to pay
for mobile gaming content, whereas mobile video can provide a
rich media experience for the advertisers and will drive
subscribers onto a new medium, which can be difficult given
perceptions of mobile data prices. Offering the service for free
would be an incentive for the mobile subscriber. As discussed
previously, ad funding in content such as mobile games where
subscribers have been previously happy to pay for the content,
providing advertising funding and allowing the content to be
downloaded for free runs the risk of devaluing the content.
Chart 6. UK mobile games market worth
Source: Mobile Entertainment Forum
43
In the UK in March 2008, Orange announced that it would be
trialling ad funded music content for 800,000 of its mobile users.
The music will be offered in four different genres; urban, pop, rock
and dance. Users can download the content from the Orange
world internet platform. The trial is set to last three months and
reflects a common download for mobile subscribers. As more
mobile devices become enabled with devices such as Mp3
players and larger video screens the demand for music and music
videos on the mobile handset will grow. Orange's UK trial reflects
the growing trend in mobile handsets and mobile subscribers, and
will be able to reach a growing number of consumers through this
kind of media.
3.1.7.4. Cellcom
Another mobile operator to have trialled ad funded mobile game
content is Israeli operator Cellcom. In July 2007, Cellcom
announced the completion of its ad funded games content with
successful results. Cellcom reported a 44% click through rate
demonstrating the effect ad funding can have on mobile content.
The ad funded mobile games market has demonstrated success
for the operator and shows that a substantial amount of the
market reacts positively to ad funded mobile games content.
3.2. Mobile handset vendors

Mobile handset vendors also have the opportunity to influence the
mobile content market. Nokia, for example, is taking steps in the
mobile TV market, and its mobile TV forum which endorses the
DVB-H standard and has launched it in countries such as Taiwan.
Mobile handset manufacturers have an opportunity to exploit
areas in the ad funded mobile content market which would hold
benefits for the advertisers, content providers and mobile
subscribers. The mobile handset vendor has some direct contact
with mobile subscribers and is therefore in a strong position to
provide market intelligence regarding specified market segments
which mobile content providers and advertisers can use in their
campaigns to provide relevant and targeted advertising, identified
as a crucial factor in mobile ad funded content. Mobile ad funded
content providers may decide to base their choice of content
44
display on mobile handset vendors, rather than mobile operators.
This may provide competition between handset manufacturers
and operators, opening up the market.
3.3. Mobile advertisers

The market for mobile advertising is extremely diverse. The
market is open to large corporate brands and smaller local
businesses. Advertisers on mobile ad funded content will have to
ensure that their brands and advertisements are relevant to the
user downloading the content. To some extent, the adverts could
also be relevant to the content itself although this does not have
to be strictly enforced. Some mobile content such as games can
contain the advertising within the content itself, rather than using a
"wrap around" technique. For example, in 2002 Daimler Chrysler
used online gaming to advertise. The game, "Get up and go"
featured Chrysler cars and was a passive way of advertising and
encouraging gamers to engage with the advertising. Suzuki used
a similar strategy in a mobile game in 2002. Mobile advertisers
can use this strategy for mobile gaming products by placing their
advertising brands and products within the content. With other
content, such as music and video, the "wrap around" strategy
would be more appropriate, allowing advertisers to promote their
brand within their own context and allowing content providers to
supply their content without advertising “piggybacking” on their
content.
3.4. Mobile content providers

Through mobile ad funded content, mobile content providers will
be able to obtain a greater reach of audience and the ability to
target market segments by complying with operators and mobile
advertisers. Ad sponsorship will also help reduce costs and in a
market where certain premium content, such as games and
ringtones, are flooding the market and heightening competition,
the ability to reduce costs will ease the pressure on some and
create a more sustainable business model.
Driving ad sponsored mobile content will help to push more

applications and services onto a single platform, reflecting the
level of physical convergence that has been demonstrated with
mobile handsets. Amobee has recognised this, by stating that the
45
ad funded mobile business can drive content and services on to
all handsets on the mobile platform. Amobee recognises that
having mobile content accessible through a paid method is one of
the major barriers to mobile content. Sponsoring mobile content
with advertising is a way around this barrier, and that in offering
greater consumer choice in this market ad funded mobile content
can flourish.
3.4.1. Adult content

When providing adult content, age verification will be necessary to
prevent the content being viewed by inappropriate underage
users. This will also apply to the advertising funding the content.
Advertising on mobile content will need to reflect the age of the
consumer and adult advertising will not be appropriate on mobile
content that is not directly aimed at adults, minimising the risk of
inappropriate advertising towards younger users. The adult
content market has a strong place on the mobile due to the
personable nature of the mobile handset and therefore content
providers may wish to consider keeping it at a price to the
consumer, as consumers have already shown a willingness to pay
for such content.
3.4.2. Mobile magazine

Hard copy magazines generally receive a large proportion of
income from advertising, and the same can be said for mobile
magazines, or "mobizines". Services are available for a
subscription fee, and some are free. Ad funding is a potential
business funding which may encourage a higher proportion of
users to take up the service. Mobile magazines operate in a
similar way to hardcopy magazines, in that ad funding is a
dominant part of the business structure. The mobile magazine
represents mobile entertainment ad funded content, following a
trend of moving hard copy products on to the mobile, as seen with
mobile directories and mobile maps.
3.4.3. Audio
Audio content, such as music and ringtones, has evolved from the
polyphonic ringtones to real music tones and music videos,
combining the audio and visual market. The ringtones content
market represents an older more established side of the market,
46
which consumers have been shown to be more willing to pay for
as the market has been sustained and expanded. Mobile
subscribers are now offered more sophisticated mobile audio
content options which present themselves as being more
appropriate for advertising sponsorship. Mobile ad funded music
videos are being offered by mobile operators in the market
representing a shift in market demands. Mobile subscribers now
have access to more sophisticated handsets which combine
calling and entertainment uses, such as video and music playing.
This in turn increases demand for content such as music videos
which are short and suited to a small mobile handset screen.
Mobile subscribers have previously been cautious with regards to
downloading large amounts of data onto the mobile due to
perceived high data costs and low speed. These issues are
improving and ad funding will also improve perception of these
services boosting demand. The ability of mobile subscribers to
download such content for free will encourage more users to use
the content, vital in gaining first time users of the content.
3.4.4. Visual
The heightened sophistication of visual content represents a
newer market in mobile content, and demonstrates a market that
is appropriate for advertising sponsorship. User generated video
content and broadcast mobile TV have varying popularities in
differing markets. The accessibility of user generated content and
the perception of high cost for mobile TV drives subscribers away
from the service, and ad funding would help counter this. The
incentive of gaining mobile TV content for free would drive more
first time users onto the service. A ComScore study revealed that
price was the biggest barrier to mobile TV for subscribers, with
71% citing it as the primary consideration. Trials conducted by
mobile operators with ad funded mobile video have concluded that
subscribers will accept an amount of advertising on their mobiles
in return for free content, demonstrating the potential in subscriber
take up that mobile ad funded TV has. Other visual content, such
as wallpapers and photos, have been in the mobile content
market for some time and subscribers have shown a willingness
to pay for them. However, with an increasing amount of
47
competitors emerging into the market the ability to offer free
content through advertising sponsorship would offer valuable
competition differentiation.
3.4.5. Market leaders

Mobile ad funded content is a relatively nascent market in
comparison to the other mobile markets. Trials for some operators
and content providers are ongoing, and therefore establishing
market leaders is difficult and subject to change. In the UK, mobile
operator 3 has seen a positive subscriber take up of its ad funded
content and the recent introduction of further content to the
service demonstrates the previous and anticipated success in the
service. Ad funded MVNOs are making an entry to the market, the
first in Europe being Blyk, and the first in Asia being ümobile. In
order to establish market leaders, this market will need to be
watched closely over the next five years to establish stayers in the
market and eventual leaders. While preliminary subscriber
numbers for ad funded MVNOs may be small in comparison to
more established operators, growth will be positive. Visiongain
believes that content such as music and video will be popular in
the ad funded market and these providers will demonstrate this
with strong performances.
3.4.6. What will be best suited to being ad

funded?
Visiongain believes that mobile TV will be the mobile content that
is best suited to being funded by advertising. From the evidence
generated by mobile operators and content providers, mobile TV
and video which is funded by advertising and can be offered to
subscribers for free is a sustainable business model that can
encourage first time users into the market place. While some
operators have offered mobile games and other content to
subscribers through advertising funding, visiongain believes that
since consumers have shown a willingness to pay for this content,
offering it for free may devalue the content. With mobile video and
TV, advertisers will be able to offer more sophisticated forms of
advertising, rather than banner advertising for example which
advertisers may find themselves limited to on other content.
Mobile subscribers downloading a mobile video or TV show will
48
be more receptive to TV ads, as this bears on the experience of
traditional TV, and therefore subscribers would expect this kind of
advertising, and would be more likely to engage with it.
3.5. Mobile subscribers

The lack of take up for mobile TV outside of the Asia Pacific
market would suggest a lack of demand for the service. However,
with the removal of certain barriers to the service, consumer take
up will increase. The awareness of mobile TV services needs to
be increased as does the number of mobile TV enabled handsets
available if the service is to gain traction in the global market. If
mobile subscribers are to be persuaded on to ad funded content
services then these services must market their benefits to the
mobile subscribers and will need to be accessible from their
handsets as early as possible. This will enhance the debate
between the benefits of on or off portal services. The presence of
ad funded content on a WAP page will give subscribers instant
awareness and access to the content. However, the recent falls of
operators' walled gardens has shown the eagerness of mobile
subscribers to search for content off portal. Also, to gain a place
on the operator’s WAP portal, the content provider would have to
have an understanding with the particular mobile operator which
Table 2. Benefits and
detriments of ad funded may limit expansion on other networks and in other areas.
mobile content for
mobile subscribers 3.5.1. Mobile ad funded benefits to mobile
Benefits Detriments
subscribers
•Reduction in •Possibility of Among the main benefits that mobile ad funded content providers
content price unwanted can market to subscribers is a monetary benefit. Mobile
•Raised advertising
subscribers who have previously been unwilling to use mobile TV
awareness of •Limit to
brands and amount of or have given up using it due to price will be encouraged onto the
offers “free” content service by ad funded models. The reach of content to mobile
•Targeted
users will also be beneficiary through ad funded content. By
advertising and
content reducing business costs through ad funding content providers will
Source: visiongain be able to target a greater reach. Also, content providers can use
the branding within their content, as seen in games, to target the
market segment of the particular brand as well as the typical
market segment of the content, and vice versa. By using mobile
ad funded content mobile subscribers will have access to
specifically targeted content and advertisements. Rather than
49
receiving irrelevant advertisements subscribers will be more likely
to engage with targeted adverts, which will feel more like a
service, providing the subscriber with information that is
welcomed, rather than ignored or deleted.
3.5.2. Targeted advertisements

In order to effectively advertise to a chosen market segment,
advertisers and content providers must utilise targeted advertising.
In order to offer targeted advertising to mobile subscribers, mobile
advertisers will need relevant information regarding their
consumer base. This may mean that advertisers will require
intelligence from mobile operators, although this may infringe on
privacy rules, which will alienate potential consumers. An opt in
scheme from the advertisers and content providers requiring
information from subscribers would be a more open way for
advertisers to gain information, giving consumers the ability to be
aware of exactly what information they are providing and what
benefits will be gained from it. Relevancy for mobile advertising
can be gained from LBA, and the location of mobile subscribers
accessing mobile content will allow mobile advertisers to target
more effectively. However, some mobile content use may not be
appropriate for LBA services. Mobile subscribers are unlikely to be
physically moving while watching mobile TV (with the exception of
being on transport) and therefore may have less need for location
aware ads. However, other forms of content are more accessible
on the move and the relevancy of LBA will increase the likelihood
of subscribers following up on an advertisement, increasing QoS.
3.5.3. Free content

The offering of free mobile content through advertising funding
holds benefits and disadvantages to content providers. On the
one hand offering free content maximises the audience potential
by allowing users of modest monthly budgets to access the
content, removing barriers to mobile subscribers and increasing
the perception that mobile value added content is available across
the market. However, there is also a risk that in offering content
for free of devaluing the content. There are therefore barriers to
mobile operators, advertisers and content providers to offering
solely free content. The majority of content that will be offered as
50
ad funded mobile content will be that which providers need to
provide incentives in order to gain consumer subscription in a
market which has so far seen relatively little take up rather than in
a market which has seen a consumer willingness to pay for
content.
3.6. Mobile advertising

Mobile ad funded content will allow advertisers to tap into an
audience previously held by the mobile operator. The advertisers
will be able to target specific market segments on what is a very
personal device. Rather than irrelevant advertising which can be
found elsewhere on the mobile, advertising through ad funded
mobile content gives the advertiser the opportunity to identify a
market segment and advertise accordingly. The varying content
will define market segments and advertisers can identify their
target markets on the mobile platform by communicating with the
content providers and operators who will have information on the
subscribers downloading the particular content. Advertising on the
mobile by nature invades what subscribers have come to regard
as an extremely personal item. It is therefore imperative that the
advertising pushed on the mobile device is relevant and that the
subscriber has wittingly opted in to the service. LBA has the
potential to effectively target the 3 billion global mobile
subscribers. The knowledge of a subscriber's location immediately
narrows the selection of a target market for the advertisers and
allows for location aware advertising, increasing the relevancy and
QoS to the subscriber.
3.6.1. Targeted audience

Mobile ad funded content will be able to target its audience more
effectively with shared intelligence that can be gained through
communication between the service providers. The mobile
operator holds the majority of information on mobile subscribers,
and mobile content providers and advertisers will be able to gain
information on mobile subscribers from opt in policies, which will
be beneficial as the mobile subscriber will be actively aware of the
fact that they will receive adverts in return for content, indicating
that they are willing to receive advertisements and will therefore
be more receptive to them and more likely to act upon them.
51
Mobile advertisers will also be able to reach a more targeted
audience by the intelligence gathered from the distribution of
different forms and genres of content. Mobile subscribers who
download specific types of content on a regular basis such as
specific genres of music or games will denote a specific market
segment that can be accordingly targeted by the advertisers.
3.6.2. Size of market base

There are estimated to be around 3 billion mobile subscribers
globally and while not every handset will be appropriate for
receiving mobile content, the majority market base will be able to
be effectively targeted by mobile ad funded content providers. The
variations of mobile content will differ in market size in different
markets. For example, mobile TV has a much larger market base
in the Asia Pacific market than in the US or European market due
to the number of mobile TV enabled handsets available. The
availability of less sophisticated mobile content such as ringtones
will be greater as there are a greater number of handsets on the
market that can support the technology necessary for the content.
Table 3. Mobile ad funded content market trends

Mobile TV Mobile Games Ringtones Music MVNOs
25-35 age bracket. Age bracket will vary Youth market Age will vary Niche/specialist
depending on the dependant on music markets. Age will
Will appeal most to game Suited to most genre vary depending on
those who have a variations of target market
better understanding Mobile handsets handsets Mobile handsets
of mobile technology with larger converged with mp3 Ad funding gives a
and their handset interactive screens players will competitive
capabilities at first. will benefit mobile encourage this differentiator in a
games market heavily populated
Those with higher mobile market
handset As subscribers have
specifications will be shown a willingness
more likely to enter to pay for mobile
into this consumer games it is unlikely
market that this will become
a large part of the
ad funded market
Source: visiongain
52
3.6.3. Target market

As discussed earlier, the target market will vary depending on the
market demographic for the different types of content. The market
will also vary depending on location, and the ability to effectively
target these markets will be enabled by LBA specifying the
advertising needed for the particular mobile subscribers. The type
of content will vary the market demographic including age and
gender, as shown by a study reflecting the age and gender of
those most interested in mobile TV. This will allow advertisers to
target market segments up to a point, but mobile advertisers must
be wary of alienating other markets, which will drive subscribers
away from the content and advertisements reducing ROI.
3.7. Conclusion
The implications of ad funded mobile content will affect not only
the mobile content providers, but the advertisers, mobile
operators, the consumers and to some extent the handset
manufacturers as well. As the market for ad funded content
grows, mobile strategies in content and advertising will evolve to
provide mobile subscribers with a targeted service.
Mobile content providers will be able to distribute mobile content

to a larger audience who will be encouraged by the fall in price of
mobile content which will also drive repeat business driving
revenues. The rise in revenues will allow for greater spend on
content driving amount and quality.
Mobile advertisers will be able to target a mass global audience

with relevancy and accuracy through ad funded mobile content.
Through offering the incentive of free or cut price content
advertisers will be able to gain information on mobile subscribers
on a new level. Where previously advertisers have been able to
only target mobile subscribers through general advertising, ad
funded content will gain an insight into the mobile subscriber and
encourage greater engagement and action on mobile advertising.
Developments in LBA and mobile search have helped to make
mobile advertising more relevant and targeted and these methods
will help to make mobile advertising in ad funded content all the
more relevant to the consumer.
53
Mobile subscribers and handset vendors will also feel the effects
of ad funded content. Subscribers will gain from content that is cut
in price and advertising that is directly relevant to them. The
element of choice will also be crucial for the mobile subscriber in
deciding what and how much advertising is delivered to them.
Mobile handset vendors will need to recognise the market
changes in mobile content as greater numbers of subscribers
explore the available content on the mobile platform. Mobile
handsets that allow for greater interaction with mobile content,
such as larger touch screens and greater memory capabilities, will
appeal to subscribers interested in mobile content and ad funded
mobile content.
Ad funded content will have an impact accross the mobile industry

as it drives content and advertising further into the pockets of
mobile subscribers.
54
Chapter 4. Global market reach of
mobile ad funded content
The impact and reach of mobile ad funded content will vary
depending on the dynamics of global markets. Factors that will
affect the impact of mobile ad funded content include cultural
differences, economic bands, language barriers and technological
interoperability. Mobile content providers, operators and
advertisers will have to overcome these barriers in order to
effectively target specific market segments over the mobile
platform. Advertisers will also have to consider the brand reach for
their advertising campaigns to be connected with mobile content.
The brands must have relevancy to the mobile subscriber and this
will vary in different geographical markets.
The technology available on mobile handsets in different markets

will also limit the amount of content and advertising available to
mobile subscribers and some markets will not yet be appropriate
for this strategy. Before launching ad funded mobile content into
the mobile market content providers, advertisers and operators
must consider the drivers and barriers in the market and whether
the reach of such content in the global market will uphold a
sustainable business. Mobile advertising is becoming more
commonplace and a greater amount of mobile subscribers are
becoming aware of advertising on their mobile handsets. This
coupled with a rise in premium mobile content opens up the
market for ad funded mobile content.
4.1. Developed markets

In the developed mobile markets, mobile subscribers traditionally
have more disposable income to spend on their mobile phone.
This would suggest that mobile subscribers would be more willing
to pay for value added mobile content and that offering such
content for free under mobile ad funded content would run the risk
of devaluing the content. However, developed markets offer
opportunities for mobile ad funded content as consumers have
greater accessibility to mobile content, leading to a greater
demand. In developed markets such as the US, areas of Europe
and Asia Pacific, mobile subscribers have access to mobile
55
handsets that are technologically capable of supporting various
kinds of mobile content, from music to TV. Again this varies when
the markets are studied separately.
Mobile TV has achieved greater penetration in Japan and South

Korea in comparison to the European and US markets where
interoperability of standards and availability of mobile TV capable
handsets has hindered the development of this market. In
developed markets, it can be assumed that the average mobile
subscriber is able to spend more on mobile content and has been
exposed to more mobile value added content than those in
emerging markets and are therefore more aware of mobile
content that is on offer in the market. This is a market therefore
that is more likely to actively search for mobile content and this
provides an opportunity for mobile ad funded content to market to
this area.
With paid for mobile content having become commonplace in the

mobile market, offering free mobile content in the form of ad
funded content would offer a valuable competitive differentiator in
the market. Charges for mobile services, including calls and data
downloads on the mobile web, are falling, and consumers will
expect the same for mobile content. By offering free or cheap
content on the mobile through advertising sponsorship, mobile
subscribers will be encouraged to use the content services,
furthering the reach of the content and the sponsoring advertising.
The reduction in price will also help to reduce churn as
subscribers find it easier to use and download mobile content
without dramatically increasing their mobile spend.
In developed markets, mobile operators who are struggling to

keep up ARPU may find added revenues in serving mobile ad
funded content. By allowing mobile advertising on to their
networks, mobile operators are able to charge advertisers or
share in the revenue received from advertising on the mobile
platform. The recent global credit crunch will also help to drive
mobile ad funded content. Consumers in developed markets,
particularly the US, are experiencing tightening credit conditions
and as a result this has reduced consumer confidence and will
56
limit consumer spending. By offering mobile content for free, or at
a cut price, mobile ad funded content can provide a service for
mobile subscribers which does not dramatically increase their
budget and can even reduce it should the consumer choose an ad
funded MVNO. In an economic climate where consumers find it
necessary to limit spending, companies and business models that
strive to offer consumers services and products that can save
money in order to pay for rising food, fuel and mortgage costs will
gain greater affinity with the consumer and will offer a competitive
differentiator in the market.
4.1.1. Target market segments

In developed markets, the target market will vary dependant on
the type of content and the branding of the advertising that funds
the mobile content. The market demographic for mobile content is
varied, given that the scope of mobile content and the number of
mobile content providers continues to grow. For example, mobile
content types can be broken down into separate genres appealing
to more specific areas of the market. For example, mobile
wallpaper content may appeal to the younger end of the market in
a broad sense. Content providers can then choose to offer
wallpapers that appeal to a specific demographic, for example,
wallpapers that reflect urban culture, narrowing the demographic
allowing content providers and advertisers to specifically target a
market segment.
Mobile content providers and mobile advertisers will have to

consider these options when creating a service for the mobile
platform. Mobile advertisers will need to consider whether ROI will
be higher if a generic brand to attract as broad a base as possible
is used to fund mobile content or if the adverts should reflect the
specific market demographic of the mobile content, which would
provide relevant targeted advertising, but may risk alienating other
parts of the market.
Mobile ad funded content therefore has the potential to appeal to

consumers across the market due to the reach potential of mobile
content coupled with advertising. The general target market of
mobile content would be to mobile subscribers aged between 16
57
and 35, being an age demographic with disposable income and
more likely to have experience with mobile content. The factor in
price will appeal across the market and will enable mobile
subscribers who have had little experience in mobile content to
enter the market and will allow newer forms of content which have
had less of an impact to reach new audiences. The addition of
contemporary advertising brands into mobile ad funded content,
such as EMI, will help to drive ad funded content into the
contemporary market. Specific ad brands being used, such as
Disney, will also help to target specific market segments and when
used within the content can drive the content towards their
preferred market.
4.2. Advertisers using the platform

A variety of advertisers will use the mobile ad funded content
platform, and the kind of advertising will depend on the content
and the audience that the content providers and advertisers are
targeting. Large brands will be able to increase the reach of their
brands on a personal device, increasing the consumer awareness
of the brand and giving the brand a personable feel on a
subscriber's handset, targeting specific market segments. Large
brands that have previously found it difficult to target consumers
on a smaller scale will find that on the mobile platform they are
able to reach consumers in a more targeted way.
Advertisers and content providers will have to cooperate with the

mobile operators in order to effectively target the mobile audience
and to gain access to mobile subscribers over the network and
the mobile operator’s portals. Mobile operators own the channel
and the pipes that transmit content to their subscribers and can be
selective about what subscribers view in their portals. With the
advent of off portal mobile web surfing mobile subscribers are
able to access content that is not dictated to them by the mobile
operator. However, by cooperating with the mobile operator
mobile ad funded content providers can ensure a greater and
more targeted reach to the mobile subscriber. By promoting
brands on mobile content, advertisers are ensuring a global
market reach that is more targeted to consumers than other forms
of advertising in the market such as TV, PC and billboards.
58
4.3. Emerging markets

Emerging markets offer an area in which mobile ad funded
content would provide a valuable service to mobile subscribers
who have less in the way of disposable income to spend on
mobile content. In emerging markets such as China mobile
content is set to grow strongly, and the approximately 600 million
mobile subscribers provide advertisers with an audience that can
be effectively targeted and with a growing economy represent an
audience with more to spend on content and on following up
advertising. It has been recognised that emerging markets such
as BRIC (Brazil, Russia, India, China) markets represent key
areas for growth in the mobile market following saturation in
developed mobile markets in the UK, US and Japan for example.
The unique cultures of emerging markets will have to be
considered when offering mobile ad funded content and
advertisers must be aware of cultural sensitivities (this is not
restricted to emerging markets) when offering advertising
alongside mobile content.
Emerging markets have been viewed by some in the mobile

industry as an area for development and this gives positive
signals for mobile ad funded content. However, due to more
limited economic means available to some in emerging markets
advertisers cannot expect the same kind of ROI as in developed
markets and the business of mobile ad funded content may not be
sustainable. While there may be a demand for cheaper mobile
content and MVNOs in emerging markets, sustaining them
through advertising may not be appropriate in some markets as
many would not be financially able to act upon the advertisements
presented to them in ad funded content. In BRIC markets where
mobile subscribers are in a financially viable position to respond
to targeted adverts, the use of ad funded content, especially
MVNOs, would provide an area in which mobile subscribers could
use to their advantage. While the financial benefits in ad funded
content provide incentives to those in the emerging markets, the
advertising is more likely to be utilised by those in developed
markets. The sales of mobile handsets in developing countries
such as Africa and areas of Asia has helped buoy a slowdown
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seen by mobile handset vendors in the global economic slowdown
of 2008. This surge of mobile handset sales in these markets
suggests a growing mobile market in these areas, but mobile ad
funded content has to perform in developed markets before it can
be pushed in emerging markets. Mobile subscribers with higher
spending capabilities will be reacting and acting upon mobile
advertising, and while those in emerging markets would benefit
from free content, advertisers may not view this as a sustainable
investment. Cheaper content and networks are a philanthropic
investment for those who need it in emerging markets but in
uncertain economic times businesses feeling the pinch must
consider their long term sustainability.
4.3.1. Reduction in end user costs

One of the principal benefits that mobile ad funded content brings
to the mobile subscriber in emerging markets is the dramatic
reduction in end user costs. The use of advertising alongside
content can also bring information to communities where the lack
of a fixed line means that the mobile is the sole connection to
Chart 7. Costs reducing mobile data usage
Source: The Netsize Guide 2008
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information and the advertising of local services, products and
information could provide a vital lifeline in some communities. The
reduction in costs of content through ad sponsorship will help to
drive these areas of the market, previously untapped, onto the
mobile content market. However, as previously discussed,
advertisers may be wary of investing in this area due to the
potential low ROI. The introduction of a free ad funded MVNO
would provide competitive potential in the emerging market place,
but sponsoring advertisers would be wary, given the unproven
market in this field.
The reduction in end user costs is not an exclusive factor to

emerging markets. The cost of data is a principle barrier to data
usage on the mobile in all markets which is where ad funded
content could excel. A survey conducted by Netsize revealed the
scale at which the perception of costs hamper mobile data usage
(see chart 4). This survey result demonstrates that in reducing the
cost of content, which ad funding would do, ad funded content
Chart 8. Age trends in mobile content
Source: Survey commissioned by Mobixell Networks
61
would be removing a significant barrier between mobile
subscribers and content, increasing the use of content and driving
revenues.
4.4. Click through rate

Israeli mobile operator Cellcom showed a particularly successful
click though rate with its trial on ad funded mobile games. Cellcom
reported a 44% click through rate, demonstrating the consumer
acceptance of advertising on mobile content and that consumers
were actively choosing mobile ad funded content. In order to
justify mobile ad funded content, the click through rate on the
content must be increased, and successful trials from Cellcom
and launches from 3 among others have demonstrated that
mobile subscribers are choosing to click through on mobile ad
funded content.
4.5. Age demographic

As discussed previously the market demographic will vary widely
with mobile ad funded content, and this includes the age
demographic. The type of content will determine the age
categories that advertisers will target. The type and genre of the
content will determine the age group using or downloading it, and
will vary with sub genres within content types. According to a
study from Comscore, mobile TV’s most popular demographic in
America is men between the ages of 25-34. Mobile ringtones will
appeal to the youth market and other content will be equally
variable.
4.6. Best content

The mobile content that is best suited to be funded by advertising
is open to debate. Some mobile operators and content providers
have chosen to drive ad funded mobile games, while others
believe that this method devalues that content. Others have
chosen to push mobile TV, funded by advertising. Visiongain
believes that ad funded mobile TV is a particularly appropriate
type of content to push with mobile advertising sponsorship,
especially in the European and US markets. By funding the
content through advertising, the cost of the content to the end
user will be dramatically reduced to the end user driving a form of
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a content that is little used in these markets, gaining subscribers
and reducing churn.
There are, however, barriers to this strategy. In markets outside of

the Asia Pacific, there is a lack of interoperability in network
standards that would allow the mass roll out of mobile TV in
European and US markets. The EU is pushing for the DVB-H
standard, recognised as a global standard for mobile TV, with
trials ongoing and launches complete in countries including
Albania, Finland, India and Italy. There is also the issue of
providing mobile TV capable mobile handsets, of which there has
been greater success in the Asia Pacific markets than in others.
However, the roll out of mobile TV capable handsets is a barrier
that handset providers should be able to overcome, given the rate
that consumers in developed markets upgrade their handsets.
Deploying mobile TV handsets to consumers will be smoother if
price is not affected and the benefits of such a service are well
marketed, particularly if the service is ad funded and the mobile
subscriber does not have to pay for it. By minimising any
inconvenience to the mobile subscriber and encouraging
interoperability, mobile TV can enjoy success in the mobile
market, given that research mentioned previously in the report has
suggested that mobile TV is a service that mobile subscribers
actively wish to see on their mobile handsets.
Visiongain also believes that ad funded MVNOs have a place in

the market by appealing directly to a market base. Blyk has
chosen to target students, but could expand to other target
markets in an effort to gain maximum advertising revenue and
avoid alienating potentially lucrative areas of the market. Trials in
which other forms of content are offered on an ad funded basis
such as games and other content that subscribers have been
shown to be willing to pay for previously will demonstrate whether
a sustainable business model can be achieved without devaluing
the content. The success in Cellcom's trial suggests that the
number of consumers viewing and downloading such content
increased when ad funding was introduced, driving the service
and increasing the reach of the advertising and content.
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4.7. Mobile content standards
In order to maximise the reach of mobile content, standards in
technology are required to allow a high QoS, reducing churn and
encouraging loyalty to the service. The standards mentioned
below have the potential to improve the speed and quality of
service for mobile content, particularly that which relies on the
mobile web. Speed and quality of content and data have been
major issues when it comes to the mobile web, and has put off
some mobile subscribers from using the mobile web and
applications like mobile search, although this is starting to improve
due to improvements in the service. Data costs have also been
perceived as a problem by mobile subscribers, however, the
changes in charging for the mobile web, such as flat rate charges
and charges per download rather than for the amount of time
spent on the web. Funding content through advertising will work
towards removing the cost barrier that prevent some mobile
subscribers taking up mobile content, which, when coupled with
an improvement in the QoS will drive mobile content further
towards mobile subscribers.
4.7.1. 3GSM
The implementation of the 3G standard has provided the mobile
user with a standard that allows the delivery of a range of
multimedia services. Mobile subscribers who use mobile content
will rely on this standard to allow the transmission of data needed
when downloading certain mobile content. The roll out of 3G is
more prevalent in European markets whereas, in the US for
example, the EDGE network is more prevalent. However, the
coverage of the network is spreading and, according to GSM
world is available in over 200 countries and territories. This allows
for greater interoperability of service, which will have benefits for
content on the network as well if mobile subscribers are able to
access the content in other areas, although charges will vary. The
data speeds available on 3GSM allow for around 300 kbits, giving
users fast access to mobile data, improving the consumer
satisfaction and QoS and allowing for more sophisticated mobile
content, such as music and TV, to be downloaded by mobile
subscribers in a fast and efficient manner. As the content available
to mobile subscribers becomes more sophisticated and requires a
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higher amount of data, networks with higher data capability will
become imperative to content providers pushing these higher
quality mobile contents in order to ensure a high standard of
service to their consumers and reduce churn due to
dissatisfaction.
4.7.2 3G HSPA
HSPA encompasses HSDPA (High Speed Downlink Packet
Access), first commercialised in 2006, and HSUPA (High Speed
Downlink Packet Access), which has seen major deployments in
European markets over the course of 2007. With over 850 million
GSM, WCDMA and HSDPA subscribers in HSPA-enabled
networks worldwide in September 2007 according to GSA
estimates, the potential impact of these technologies on mobile
content and applications should in terms of quality and
subsequent market adoption. HSPA technologies will enable
operators to provide advanced multimedia and content services.
In effect, MNOs hope that by enhancing the mobile broadband
experience and facilitating the adoption of mobile data services,
HSDPA will deliver on the original promise of 3G.
With theoretical download speeds of up to 7.2Mbps in the initial

Table 4. HSPA-Enabled phase, HSPA allows for uplink and downlink speeds three times
devices, September 2007
faster than the present UMTS networks, with typical real-world
Device Type Available rates of 400-800kbps for HSDPA, although some vendors claim
Handsets 124
Notebook PCs 59 this will drop to below 400kbps once more users are added onto
USB modems 23 the network. HSDPA can also be deployed at comparatively low
PCMCIA cards 38 cost to 3G - HSDPA upgrades come to 10-15% of the cost of
Wireless routers 27
Embedded modules 21 WCDMA network rollouts. Eventually, HSDPA will deliver
ALL DEVICES 311 14.4Mbps of bandwidth by 2009.
Source: visiongain
Throughout the course of 2006-2007, the spread of HSPA
deployments has marked notable increases in the volume and
variety of HSPA-enabled devices, covering both phones and PC
connectivity modules such as embedded laptops, wireless routers,
USB Broadband modems and PCMCIA cards. Table 4 shows the
number and type of HSPA-enabled devices available in consumer
markets around the globe as of September 2007. 79 ODMs
produced the total of 311 commercial devices.
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4.7.3. 4G and LTE

4G represents the next step in mobile communications for the
GSM network, which will have benefits for mobile and broadband
communications. 4G is being tested in countries including in the
US, Japan and Europe and initiatives surrounding 4G are being
trialled by some mobile groups. The mobile standard of Long Term
Evolution (LTE) was formed by Nokia, in collaboration with Sony
Ericsson, NEC and Alcatel Lucent, pushing the evolution of 3G
systems and creating a competitive standard for 4G. The initiative
is also intended to compete with WiMAX and will provide a
network standard with faster speeds that will continue to improve
the speeds for mobile data over a greater distance.
4.7.4. WiMAX
The evolution of WiMAX has experienced criticisms but has also
been hailed as the basis for the future of communications
providing a competitor to 3/4G networks. By adding competition in
the area consumers will benefit by networks competing to offer
the better service, giving greater speeds and QoS which will also
benefit mobile content. The ability to increase the distance of
wireless communication through WiMAX will also help those in
markets where terrain is hostile enter the mobile market and allow
greater transfer of mobile content.
4.7.5. Mobile TV standards

There are a number of alternatives in the market and a lack of
wide scale roll out in some markets is making the adoption of
mobile TV slower than in other markets. Aside from broadcasting
over the cellular network, a list of mobile TV standards include:
• DVB-H (Digital Video Broadcasting for Handhelds) Available in

the US, Europe, South Africa and Asia
• S-DMB (Satellite Digital Media Broadcast) Available in South
Korea and Japan
• MediaFLO Launched in the US, trialled in the UK and
Germany
• DAB-IP (Digital Audio Broadcast) Available in the UK
• ISDB-T (Integrated Service Digital Broadcasting) Available in
Japan
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• STIMI (Satellite Terrestrial Interactive Multiservice
Infrastructure) Available in China
• T-DMB (Terrestrial Digital Multimedia Broadcast) Available in
South Korea and Germany.
Until a standard is accepted in wide scale markets where mobile

TV has been slower to take off, such as Europe, mobile TV will
struggle as subscribers will want ease of use and some level of
interoperability as well as low price.
4.8. Location aware advertising

LBA has been identified as a key factor in mobile advertising as it
offers advertisers the opportunity to effectively target mobile
consumers by having awareness of their location and of the
services in the location that can be advertised to them. As
discussed earlier in the report, some types of mobile content may
not be appropriate for LBA due to the nature in which the mobile
subscriber uses that content. However, LBA could allow smaller
businesses with more modest marketing budgets to have a place
on ad funded mobile content, targeting consumers who are using
or downloading mobile content when they are in the appropriate
area. With the arrival of mobile social networking and ad funded
mobile social networks, LBA will have a significant part to play on
the mobile and ad funded content can gain targeted and relevant
advertising from this area which would increase consumer
satisfaction.
4.9. Conclusion
The bulk of ad funded mobile content will gain traction in
developed markets, notably Western Europe and the US. In areas
of Asia Pacific, free-to-air mobile TV may well negate the need for
ad funded TV and other forms of content will have to be utilised in
this market. Advertising on content will be best suited in a
geographical market where disposable income is high to ensure a
positive response to advertising, but will also be well received by
subscribers wanting to cut their mobile costs due to smaller
disposable incomes. In this case, ad funded MVNOs will gain
traction and popularity. Other more luxury forms of content that
are funded by advertising will gain more traction amongst
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subscribers in more developed markets at first, and will then move
to emerging markets as the low price allows subscribers to
indulge in what may have been content previously viewed as too
expensive.
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Chapter 5. Mobile ad funded content
available
While ad funded content is still a relatively young market, there
are various examples of ad funded mobile content available in the
mobile market. Various kinds of mobile content are emerging as
ad funded business models with varying degrees of success, with
advertisers, content providers and operators choosing different
types of content to promote and support. Web 2.0 applications are
making an impact on the mobile web and what mobile content is
available, and this has reflected on the entry of mobile TV and
mobile social networks into the ad funded market, and visiongain
believes that this will continue to be the case as we see more
examples of ad funded mobile content coming into the market.
5.1. Ad funded mobile MVNO

With the price of calling continuing to fall, mobile operators are
looking for methods to combat the fall in ARPU. One particular
method that would combat this and give a competitive
differentiator in the mobile market is that of ad funded MVNOs. As
mobile operators face increasing competition from low cost calls
from other mobile operators and cheaper or even free calls from
VoIP services such as Skype, lowering their respective prices to
keep up with the competition will have a detrimental effect on their
revenues.
By funding the network through advertising, mobile operators are

able to keep a sustainable business through charging advertisers
for space on their network and even a share in the advertising
revenues as well as offer mobile subscribers a competitive
service. This is extremely true in the current mobile market where
even the VoIP services are often subjected to some charge or
subscription over mobile phones. There are however, drawbacks
to the service. The number of free minutes and texts offered to a
mobile subscriber over an ad funded MVNO can be limited and
when subscribers go over they are charged at a normal rate
whereas other services offer a large bundle of free minutes, texts
and data downloading and VoIP service offers can be unlimited.
Also, some ad funded MVNOs on the market tend to limit their
69
target market to one specific segment which risks alienating
potentially lucrative areas of the advertising market and high
spending mobile subscribers. There are clearly areas in which the
ad funded MVNO needs improvement if it is to offer a truly
competitive service, but there is strong potential for the service to
compete amongst other mobile operators in a variety of markets.
5.1.1. Blyk
Entering the market in 2007, UK MVNO Blyk offers mobile
subscribers a package of free minutes and texts in return for the
subscribers receiving and responding to adverts sent to them on
their mobile handset by Blyk. The MVNO uses the network from
Orange to offer its service and when consumers have used their
free minutes and texts bundles, the call pricing reverts back to
Orange's pay as you go pricing. In 2008, Blyk intends to move
into the European market (Spain, Germany and Belgium) with the
aim to reach the 40 million young subscribers. As of April 2008
Blyk has signed up over 100,000 subscribers which, according to
their press release, is six months ahead of schedule,
demonstrating that, so far, the service can be viewed as a
success. The success for the MVNO is also a success for its
advertisers, with whom it is tied in, as the advertisements receive
exposure to a targeted audience increasing the chance for higher
ROI.
Blyk functions as an invite-only MVNO, allowing only those

between the ages of 16-24 to join. The subscriber can request an
invite, or can be invited in one of the tours that Blyk has taken
around universities to target their market. On joining the
subscriber receives a free SIM card, Blyk does not sell mobile
handsets and the subscriber will need an unlocked phone to use
the SIM, and on the SIM the subscriber receives 217 free texts
and 43 free minutes to any network per month. In return, the
subscriber opts in to an advertising campaign provided by brands
selected by Blyk on the basis of the subscriber information
provided. The subscriber receives up to six advertising messages
per day through MMS which pay for the subscriber's free calls and
text messaging over the network. By targeting a specific market
and having an opt in strategy by which the subscriber provides
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their information, Blyk has ensured that their subscriber is fully
aware of the advertising that they are likely to receive and are
less likely to regard this advertising as a nuisance and are made
fully aware of the benefits. Blyk also works on a social scale as
when a mobile subscriber has joined Blyk they can invite others to
join.
5.1.1.1. Blyk strategy

This strategy taps in to the social networking experience that has
experienced a boom online on the PC and on the mobile. The
popularity of social networking and the market of 16-24 year olds
will be particularly well linked in order to encourage as many as
possible from the desired market onto the Blyk network as the
market of 16-24 year olds is likely to be especially in touch with
the social networking culture that Blyk is harnessing to drive up
subscribers. The offer of free voice minutes and text messaging
will appeal to the younger market that may have less disposable
income due to constraints of a university education or an early
career, and will find relief in a free mobile network. By restricting
the amount subscribers need to spend on mobile calls and text
messaging, Blyk is allowing extra cash in its subscribers pockets
to be used on responding to its advertising rather than having to
pay for mobile calls. By freeing up consumer cash, Blyk is able to
receive the cash through a different source through the
consumers responding to the advertising.
5.1.1.2. Drawbacks to strategy

There are however, drawbacks to the service. In order to achieve
the highest quality strategy for advertising on the mobile, Blyk has
ensured that its advertisements are as targeted and relevant as
possible by targeting a very specific market, allowing only 16-24
year olds to sign up to the service and by running the service as
an invite only service. While this may increase the popularity of
the network by adding a feeling of exclusivity, it also alienates
other areas of the market and brands that may not wish to limit
themselves to a single market. This risks alienating potentially
lucrative areas of the mobile advertising market and could weaken
the network as it becomes associated with providing a service to
only a singular market. There is also an issue with the amount of
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minutes offered on the network. The subscriber is offered 217 free
text messages and 43 free voice minutes. The number of voice
minutes is extremely low and when the subscriber goes over the
subscriber can top up on the tariff used by Orange's pay as you
go, at £0.10 ($0.19) per text and £0.15 ($0.29) per minute for
voice calls. While Blyk has estimated that compared to the
average pay as you go tariff for the 16-24 year old market where
the mobile subscriber can save over £280 ($554) per year, this
does not take into account the fact that contract mobile network
offers offer a much higher number of "free" minutes and texts for a
fixed charge, with lower charges per text/minute outside of these
bundles. While Blyk is able to offer the competitive differentiator of
offering truly free minutes in exchange for advertising, other
operators are also offering competitive bundles on contract, and
subscribers on contract may not be swayed by a low number of
free minutes per month. Blyk is therefore more competitive to
those on a pay as you go package, and to the areas of the youth
market on a strict budget.
5.1.1.3. Blyk branding

The brands that are being used by Blyk are given the flexibility to
target mobile subscribers who are more likely to be actively
interested in their brand or message due to the 100% opt in
strategy used by Blyk. This gives advertisers for large corporate
brands such as Boots and L'Oreal the opportunity to target
individuals whereas with other methods of mobile advertising, a
large corporate brand message may bypass the mobile subscriber
due to an ambiguous message and limited reach. The advertising
brands used by Blyk will also need to be flexible enough to
expand as Blyk plans to launch in Europe in 2008. This will be
particularly beneficial to larger brands with a global reach, and by
gaining subscriber knowledge as has been the case in the UK
brands will be able to continue to target specific markets. The
relevancy of the advertisements means that Blyk is able to boast
a 29% average response rate, in comparison to 4.5% of mobile
advertising pushed by SMS without profiling the subscriber.
There have also been higher response rates on Blyk's advertising

campaigns. For example, when Penguin Books advertised the
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release of the novel "Slam" by Nick Hornby the campaign
received a 67% response rate, demonstrating the effect that
targeted advertising can have on the mobile, and that advertisers
will gain an engaged audience with the potential for higher ROI
and revenues.
Table 5. Examples of Blyk case studies

Brand Total response Blyk solution Results
Boots: To generate 1st campain 13 % 2nd Blyk sent subscribers MMS Approximately 70% agreed
awareness of brand and campain 14% messages over two to receive follow up offers
christmas fragrances campains during christmas from Blyk
shopping peaks
Natwest: To increase 34% Blyk sent 2 part MMS 1 in 6 responded to adapt

customer base for adapt dialogue to relevant age account and 1 in 3
account for 11-18 year group with information responded to student
olds and 18+ student account MMS
account
Blyk sent MMS messages 84% men and 82%
JJB Sports: Enhance 62% asking subscribers their women agreed to further
awareness of brand and favourite brand of messages
new footwear footwear, then sending
back relevant information
and JJB stockists
L’Oreal: Drive new product 40% Blyk sent initial MMS and 66% responded to
and brand follow up competition offer completed MMS and 70%
the competition
COI Connexions: 36%
Investigate scale of Blyk sent SMS messages 1 in 8 Blyk respondents
bullying among 16-19 year on days away from work visited the Connexions
olds and school to relevant age website that day
group
Source: Blyk
5.1.1.4. Future for Blyk

Due to the nascent nature of ad funded MVNOs, it is currently
difficult to predict whether they will become a popular service or if
they will remain a niche in the market. Visiongain believes that the
competitive differentiator of offering free calls will help to make the
service more popular but in order to achieve higher market
penetration the service must offer a greater number of free
minutes, and that the markets targeted will have to be expanded.
73
The networks may wish to keep targeting separate markets, but
they will have to offer more markets the chance to use the service
(i.e. not just the youth market in this case) and target these
markets accordingly with relevant advertising through separate
networks, which will mean that the service avoids alienating rich
areas of the market.
5.1.2. Xero Mobile

Based in the US, Xero mobile aims to bring together advertising
and the mobile platform, a service that will be aimed at targeting
the college student market, aiming at an age range of 18-24,
which Xero mobile estimates to hold 17.3 million subscribers. Like
Blyk, Xero mobile plans to offer a free service to its subscribers by
funding the service through targeted advertising to its consumers.
Xero mobile harnesses mobile advertising in the form of TV, mail
and messaging.
Subscribers will also be sent extra incentives in the form of

coupons and vouchers, adding to the financial benefits of the
service. The service was in talks with ROK Entertainment, with the
aim of being purchased by ROK, but in H1 2008 the talks were
abandoned. If the service is able to launch into the 17.3 million
subscriber market of college students in the US then Xero mobile
has the potential of tapping into a lucrative market, given the
market size. The style of the advertising solutions that Xero is
offering, such as vouchers on the mobile that can be presented to
participating stores on the mobile handset and TV advertising, will
allow relevant advertising to be targeted directly to the relevant
consumer. However, the MVNO has yet to launch and visiongain
believes that it will miss the narrowing window for entering the
market. Also, the recent loss of ROK Entertainment as a buyer
placed doubt on the MVNOs future, and little or nothing in the way
of development has been heard of since.
5.1.3. MOSH Mobile

MOSH Mobile, based in the US, offers mobile subscribers the
option of receiving adverts in return for free wireless services
aimed at the youth market between 18 and 24. Like Blyk, the
service invites subscribers onto the network, but offers
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subscribers rewards on other mobile applications and material
goods. For example, the subscriber can earn reward points for
Apple iPods, iPhones or Visa gift cards. Like other ad funded
MVNOs subscribers are required to fill in a survey upon joining to
ensure that the advertising is as relevant as possible.
To ensure customer satisfaction with the service, MOSH allows

subscribers to earn reward points quickly, with 50 points available
for a dialogue. Subscribers are given choice and control which will
increase the popularity of mobile advertising and reduce the
possibility of the advertising becoming regarded as junk mail.
Subscribers can choose specific times as to when they receive
advertisements and can request more if desired. MOSH claims
that their reward points never expire, so the subscriber can
deactivate the service and come back at a later time if they so
wish. Choice and control will be imperative in gaining support from
mobile subscribers for ad funded content, and MOSH has
recognised this in giving control to its subscribers.
5.1.4. Ümobile
Ümobile is the first ad funded mobile network service to be
launched in Asia. The service has been launched in H1 2008 in
the Philippines and, like others on the market, has targeted a
specific age group in order to allow advertisers to target specific
market segments. The network is open to 18-35 year olds on an
invite only basis. On joining, members fill in a questionnaire giving
advertisers valuable information ensuring that advertising is
relevant, increasing ROI. The MVNO is owned by SMART
telecommunications and to drive subscriber take up the MVNO is
offering deals to subscribers who sign up between June 1 2008
and August 31 2008. Benefits to subscribers signing up within this
time frame include:
• Free PHP100 load every month for the first six months-
financial attributes continue to appeal to the ad funded MVNO
customer
• Mobile VoIP (Fring)-VoIP allows the network to provide its
subscribers with a solution that can be low cost as well as
high quality and competitive
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• National coverage-Allows the network to compete in the local
and national market improving the QoS for the subscriber
• Rewards scheme-The subscriber can claim rewards through
the advertising offered through the network, increasing the
competitive differentiator of the MVNO
• Mobile broadband access-Access to boradband enhances the
communication package and again gives the MVNO a
competitive standing in the market
• PC calling with a virtual phone-This is not yet available on the
service, but will enhance the communication as a package
that the network is offering
The introduction of an ad funded MVNO in Asia represents the

growing acceptance of adverts on the mobile phone in return for
free or cut price content globally. The MVNO has taken into
account the differing standards of handset that will be used by
subscribers in the market, as the SIM can function on handsets
that use GSM, 2.5G and 3G. Ad funded content over this MVNO
will appeal to a market that will want to reduce their outgoing
mobile costs, and will also appeal to a young market. Ümobile has
recognised its target market and will be able to advertise
accordingly. The drive to pull in as many subscribers as possible
through the June to August offer drives up a sense of urgency, as
well as exclusivity to the network appealing to the youth market
which will in turn drive up the advertising revenues.
5.2. Mobile ad funded social network

Social networking has been extremely popular on the PC and has
migrated onto the mobile web, where subscribers can become
truly social with the aided mobility of a mobile phone. Mobile
social networks are particularly well placed strategically for mobile
advertisers, partly because of the large audience numbers that
they have been enjoying on the PC that will migrate onto mobile
which is especially the case for social networks like myspace and
Facebook. Facebook alone has over 60 million registered users
and Myspace over 100 million registered users.
The audience potential for mobile social networks is a serious

incentive for mobile advertisers to target this market, and with the
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information that subscribers give on social networks advertisers
will be able to target their audience effectively. Mobile advertisers
will also be able to make use of the mobility that mobile social
networking has to offer as location aware mobile social networks
come in to the market. Mobile social networks that actively track a
subscriber or their "friends" location, as is the case with mobile
social network Loopt, will also be able to strategically advertise to
the subscriber using LBA. While Loopt is not advertising on its
network social networking sites can use this technology to fund
their service through advertising and offer their subscribers a
targeted and relevant service.
Chart 9. Ad funded content in mobile social networking
Source: The Netsize guide 2008
Ad funded content is believed to be a significant contributing

factor in mobile social networking. In a survey by the leading
mobile communications and commerce enabler Netsize (see chart
6), the majority of respondents believed that ad funded content
will dominate in this area. This survey demonstrates that ad
funded content will be significant in one of the strongest growing
online applications that is social networking. By gaining
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dominance and traction in this area ad funded content can gain
stability and revenue potential in a strong area on the mobile.
5.2.1. M3 Mobile
An example of an ad funded mobile social network is M3 Mobile.
Currently still in Beta stage, the service allows mobile subscribers
to make connections with others on the network and for adverts to
appear that are deemed relevant to the user in that the product or
service is in the vicinity of the subscriber or their "friends" and
subsequent offers conjoining the product can be made. Based on
the interests of subscribers shown on the network and the
networks groups, advertisers can effectively target their market
segments and use location to further narrow down the target
market which can help to lower costs if advertisers are paying
only when their ad is displayed.
Mobile ad funded social networks such as M3 Mobile have the

advantage over ad funded MVNOs and other forms of ad funded
mobile content in that LBA is able to add much more relevancy on
this kind of content, as the mobile subscriber is most likely to be
using the content, and engaging with the screen when on the
move. The nature of location aware social networks on the mobile
denotes that the subscriber may be using it to locate friends while
on the move, and therefore adverts that appear on the screen are
likely to be relevant in both location and time. In the case of an ad
funded MVNO adverts which are relevant are sent to the user
throughout the day, without necessarily having relevance to the
users location. With other forms of content such as games and
mobile TV, the subscriber is less likely to be physically moving
while using the content, due to the physical difficulties that this
would incur. Mobile social networking is therefore an appropriate
type of content for mobile advertisers to fund using LBA which
would increase the relevancy of the advert and increase QoS for
the content.
5.2.2. itsmy.com
A mobile only social network, in April 2008 itsmy.com announced
that it had 1 million users. The service is mobile only, and the
company behind it, Gofresh, has pushed the service on to the
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mobile platform, off portal, and allows users to view and create
mobile content. The creation of user generated content
encapsulates the control given to mobile subscribers which will
help drive the success of ad funded mobile content. By making
subscribers absolutely aware of what they will receive in return for
advertisements that subscriber can choose whether or not to
receive the advertisements and the content. UGC echoes this in
allowing subscribers to create their own content on the mobile.
5.3. Mobile ad funded gaming

Some operators and content providers have chosen to supply ad
funded mobile gaming to mobile subscribers, which can provide
advantages for mobile advertisers and content providers. Mobile
gaming has been present in the mobile market for some years
now and subscribers have shown a willingness to download and
pay for this content. Some believe that offering mobile games to
subscribers for free as ad funded will devalue the content.
However, there are examples of mobile ad funded gaming
providing some success. One such example is that of Cellcom's
trial, where a click through rate of 44% was experienced. With
mobile games, the brand and product of the advertising can be
woven into the content itself, further ingraining the brand into the
mind of the subscriber. The brands can choose how their content
is used and in what game, thereby engaging with the audience,
increasing the likelihood of the subscriber remembering the brand
and acting on the advert.
5.4. Mobile ad funded TV

Visiongain believes that mobile TV and video is one of the more
appropriate types of mobile content to be funded by advertising,
as it offers a strategy to get content which has not achieved the
same consumer penetration in European and US markets as it
has in the Asia Pacific markets. When offered as ad funded
content, mobile TV will be able to achieve a higher response from
mobile consumers since it will be dramatically reduced in price,
although other issues regarding interoperability and quality will
have to be addressed as discussed earlier. An example of ad
funded mobile TV is that of GoldSpot, providing ad insertions
solutions for mobile TV, which has launched a trial for mobile ad
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funded TV mobile platform. In January 2008, it was reported that
GoldSpot received $3 million in series A funding. In April 2008
GoldSpot announced its "trial in a box" with the aim for advertisers
on the mobile TV platform to be able to test the platform and
determine the market available to them.
GoldSpot Media has recognised that advertising funded models

are a key strategy in driving mobile TV and that the
advertisements must be targeted according to the market
demographic. As demonstrated by other ad funded mobile content
solutions seen, targeted advertising is a key factor in gaining the
attention and retaining the subscription of mobile subscribers,
allowing for the best revenue potential for mobile advertisers
which will also be beneficial to the content providers and
operators sharing in the success.
5.5. Mobile ad funded content providers

Mobile content providers are looking to ad funding to subsidise
and to target a booming industry of online advertising which is
migrating to the mobile. Established brands are looking to
advertising funding in order to gain a higher mobile audience and
revenues from advertising. For example, in September 2007
Myspace launched an ad funded mobile service in an effort to
push the brand further to mobile audiences and gain in mobile
advertising. In order to provide some competitive differentiation in
the market where the amount of content available is high, mobile
content providers are able to provide free services to mobile
subscribers through advertising funding, which will have different
reactions in the market depending on the content. Below is a
selection of examples that have provided ad funded content in
differing forms.
5.5.1. Pitch/PlayPhone
As reportedly the first mobile content provider in the UK to provide
advertising funded content, the company provides mobile content
in varying forms. The content covers mobile entertainment and, in
May 2008, a merger with/acquisition by PlayPhone was
announced which Pitch described as an effort to increase the
subscriber base and increase the reach of Pitch's mobile
entertainment content.
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In 2006, Pitch announced its intention to offer free mobile content

which would be funded by advertising. The content on offer from
PlayPhone is currently available at various subscription prices.
The content available allows mobile subscribers access to content
spanning from games to video. By combining mobile marketing
and entertainment, Pitch (and Splash mobile entertainment, a
name under which the company also trades) are ensuring a global
reach for advertisers and content.
5.5.2. Myxer
Founded in the US Myxer provides mobile content including
wallpapers, ringtones, games and videos that are funded by
advertising. The service extended into the UK in January 2008
and the amount of content available to mobile subscribers
continues to grow. According to Myxer nearly 4 million people use
Myxer to download mobile content from the internet, from over
250,000 pieces of content. The method of ad funding for Myxer
content is not limited by location and through the cost incentives
and variety of content available will be able to appeal to a broad
Chart 10. Trends in mobile internet users.
Source: Dynamic Logic for Greystripe, cited on MobiAd
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market base. According to a study in the UK the MEF found that
ad funded mobile entertainment is set to produce $286 million in
revenue by 2012. There are clear indicators that ad funded
content and content that will be well suited to advertising funding
have growth potential in uptake and revenue, as demonstrated by
these figures.
Myxer, in offering ad funded content in a variety of media,

therefore has the potential to capitalise on this growing market. In
expanding from the US to Europe, Myxer can take advantage of
the growing use of mobile content and more sophisticated mobile
content such as mobile TV in these markets.
5.5.3. innerActive Smart Media

Providing a platform for ad funded mobile entertainment,
innerActive Smart Media is responding to the growing global
demand of mobile subscribers for entertainment on the mobile
device. The mobile handset has become a multimedia device and
as such is capable of supporting content such as entertainment
that subscribers are utilising in forms such as video, music and
games.
Table 6. InnerAcvtive
Smart Media Advertisers In June 2008, the content provider announced that it would be
include: teaming with Buongiorno, number one in mobile entertainment,
Adidas Pick me up which also provides ad funded entertainment over the mobile. The
Calvin Klein Paramount combination of these two providers demonstrates the positive
Domino’s Pizza Motorola
ebay response that ad funded content has received from mobile
20th Centuary subscribers, which has also been seen by the positive click-
Fox through rate experienced by innerActive. Brand owners on the
Sony Pictures
NME platform have experienced approximately 40% click through rates.
What’s on TV Such positive results show that subscribers are not only willing to
receive adverts on their mobile handsets for free content but will
Source: innerActive Smart Media
also actively engage with and respond to these advertisements.
InnerActive Smart Media enables content providers and

advertisers to directly target their consumers through its products
in games, video, music and WAP targeting mobile entertainment
in forms that have proven acceptable to the mobile consumer. The
platform has delivered advertisements for games content
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providers including Jamster, gauging the click through rate for its
ad funded games (39%). Visiongain believes that consumers have
proven willing to pay for mobile games and that ad sponsoring this
content may cut off a lucrative market. However, innerActive has
found that 78% of its games players were new users,
demonstrating that ad sponsoring this content draws in a high
amount of users that previously would not have used the content
due to the price.
Mobile content providers, advertisers and platforms providing

areas for ad funded services will have to judge whether a
particular form of content will be approporiate for advertising
sponsorship. In deciding this factors will include the value of
content. Mobile entertainment has been indentified as a market in
which mobile subscribers are receptive and free content through
advertising sponsorship offers a valuable competitive
differentiator.
Chart 11. Mobile internet film advertising trend
Source: Dynamic Logic for Greystripe, cited on MobiAd
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5.6 Greystripe
In January 2008, it was announced that Greystripe and Opera
would partner for ad funded mobile games. Greystripe's Adwrap
method is used by twenty distributors, and Opera is the latest to
join. Greystripe describes itself as "the world's first in-game mobile
ad network and the world's first ad-supported mobile game
distribution platform" and has the ability to reach millions of
subscribers through its distributors and the portal
GameJump.com. Greystripe delivers adverts that are wrapped
around mobile content, encouraging consumer engagement with
their content and advertising.
A recently announced campaign result for Yahoo! on Greystripe

has demonstrated the effectiveness of Greystripe's methods. The
two month campaign, running from May 2007 to July 2007,
revealed a click through rate of 4.2%, compared to WAP
advertisements which yielded a click though rate of only 1-2%. A
campaign for New Line Cinema regarding the film The Golden
Compass in November 2007 revealed a click through rate of 5.6%
Placing advertisements alongside mobile content therefore not
only increases the amount of content downloaded due to it being
free or reduced in price, mobile advertisers can also expect a
higher click through rate on their advertisements leading to a
higher ROI, as also demonstrated by the Cellcom trial. Mobile
advertising campaigns also have a beneficial effect on promoting
brands and brand awareness which has also been seen by the
Greystripe campaign.
In a study for Greystripe following the results of The Golden

Compass campaign trends among mobile internet users were
revealed which could be used in further ad funded campains.
Chart 10 demonstrates that use of the mobile internet is higher
among subscribers who frequently patronise cinemas and films
than those who do not. The study also revealed the proportion of
mobile users who used their mobile handsets to watch film trailers
and search for film times (see chart 11).
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This study carried out for Greystripe demonstrates trends that can
be exploited by mobile advertisers in mobile ad funded content.
By gaining an understanding of mobile users actions on the
mobile web and in mobile advertising campaigns, advertisers can
provide better advertising that the mobile subscriber is more likely
to use. By gaining knowlege that regular film goers are more likely
to search for film times on the mobile web, advertisers can target
their audience accordingly. By gaining a knowledge of the amount
of mobile subscribers using the mobile internet and that market
demographic, advertisers and content providers have a better
knowledge of their market. This allows ad funded mobile content
to be more targeted and therefore more welcomed by the user
driving up engagement with advertising and ROI potential. Ad
funded content represents a compelling format for mobile
operators, advertisers and content providers and the campaigns in
Greystripe's ad funded content demonstrate the potential for
success for those involved.
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Chapter 6. Branding and advertising in
mobile ad funded content
As demonstrated by various mobile advertising campaigns, mobile
ad funded content is a useful tool for advertisers wishing to
expand the reach and recognition of their brand. The 3 billion
mobile subscribers that represent the market potential in targeting
the mobile market can be reached on a device that is extremely
personal. Therefore the advertising must be targeted and relevant
and this offers the opportunity for large brands to reach
consumers on a more personal level than other forms of
advertising increasing the consumer engagement with the
advertising while maximising the ROI potential.
Brands are able to make the best use of mobile space by utilising
wrap around advertising, or advertising within the content itself.
The advertising used can vary as mobile data capabilities grow.
Video and banner adverts can be used on the mobile, a rise in
data speeds and in the number of handsets with large touch
screens allows for more detailed visual advertising on the mobile.
Consumers can also engage with mobile advertising through SMS
or MMS advertising on the mobile. One such example, as seen on
the search engine 4INFO uses a "teaser ad" via text message to
gain the users attention, when the user responds the advertisers
can be sure that the consumer is actively engaging with the
advertising and sending the remaining advert gives the likelihood
of higher ROI as the advertiser is already assured of the
consumers interest in the product or service.
Mobile content funded by advertising gives mobile advertisers the

opportunity to push brands and services further into the pockets of
mobile consumers by encouraging consumers to use content with
advertising by offering it for free or at a cheap price. Consumers
who have actively chosen to receive advertising with their content
are made aware of the benefits and are requested to opt in
providing details which the advertisers can use to effectively target
their audience. The type of content offered varies, and advertising
methods can be dependent on the content. Below is a selection of
branding examples from various ad funded mobile content
providers.
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6.1. Branding examples

6.1.1. Blyk: Penguin Books
In order to promote the novel "Slam" ,Penguin Books advertised
through the Blyk network, the UK's only ad funded MVNO, to
reach mobile subscribers using a variety of advertising methods.
Blyk was able to specifically target its audience due to its opt-in
policy where all subscribers must submit details to allow Blyk to
advertise to them more effectively. The subscribers of the Blyk
MVNO (which operates on an invite only basis) are aged between
16 and 24, although subscribers who go over the age while
subscribed to the network are allowed to stay on. This allows Blyk
to narrow down its subscriber market from the start, giving brands
vital information as to what market they can realistically target
using the ad funded MVNO and which products or brands would
be most suitable. The opt in requirements give Blyk the
information relevant to an advertising campaign, and the
responsive nature of its subscribers towards its adverts also gives
the advertisers the opportunity to produce engaging adverts that
produce the opportunity for higher ROI.
For the Penguin campaign Blyk used text, visual and audio
advertising over the mobile via MMS to give maximum exposure
to the novel being advertised, and to keep the brand fresh in the
subscriber's mind, even those who responded "No" to wanting
further information on the novel were sent a website address for
Penguin Books. In advertising the novel to subscribers, Blyk
created a two part MMS dialogue encouraging subscribers to
accept an audio reading of a celebrity reading an extract from the
novel. Subscribers were also offered the option of saving a "Slam"
wallpaper to their handset, promoting the brand and the product.
According to Blyk, the use of audio clips to promote a book was
"a media first" and the click though rate of the advertising
demonstrates the effectiveness of using different varieties of
media in mobile advertising. The total response to the
advertisement was 67% and of those, 51% requested the audio
clip offered. Blyk was also able to determine the best times in the
day to advertise to their audience and reach their target market,
identifying the times between the hours of 11am and 3pm,
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targeting students or those at work typically on a lunch break,
ensuring a time of optimum attention from their subscribers.
From information gathered on their subscribers in preliminary

registration, Blyk would also already have knowledge on the
likelihood of certain subscribers being receptive to advertising
regarding this novel increasing the likelihood of a response and
the subscriber following up the advert with a purchase. The
publishing brand of Penguin has enjoyed the success over the ad
funded MVNO by making use of varying mobile content. The
audio content allows subscribers an insight into a published work
that they may not ordinarily receive from the traditional forms of
mobile content, expanding the advertising methods that can be
used on ad funded content as well as expanding the brand and
products that can be advertised. Blyk also made use of more
traditional mobile content by offering mobile wallpapers to promote
the product, ensuring that the advertising covered an array of
mobile content accessible by as many subscribers as possible.
Table 7. Blyk’s Penguin campain stats

Brand aims Blyk strategy Response and outcomes
The aim of the Penguin advertising In order to target as wide a •Total response: 67%
on the Blyk network was to: consumer base as possible while
keeping the advertising relevant Blyk •”Yes” response 51%
•Drive consumer awareness amongst employed the following strategies:
Blyk subscribers of the launch of the •”No” response 49%
novel “Slam” •A two part MMS message was sent
to subscribers offering an audio clip •Book buyers 16% more likely to
•Increase awareness of the brand respond
Penguin and its website •Those who replied yes were sent an
www.penguinbooks.com as the audio clip of the opening chapter of • Book lovers 35% more likely to
primary destination for consumers for “Slam” read by a celebrity respond
new and the latest book releases
•Those who replied no were sent an
message detailing the address of
Penguin’s URL
• Subscribers were also given the

opportunity of downloading a
wallpaper for the novel
Source: Blyk
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6.1.2. Greystripe: New Line Cinema
In November 2007, Greystripe launched an advertising campaign
for New Line Cinema to promote the release of the film “The
Golden Compass.” Greystripe used its "Adwrap" solution to push
its advertising of the film to potential film goers downloading
Greystripe's ad funded mobile games, which resulted in a 19%
increase in the subscribers’ awareness of the film and a 9.5%
increase in those interested in seeing the film. During the
campaign, Greystripe was also able to compile additional
information which would be beneficial for future advertising
campaigns alongside mobile content. For example, it was found in
a subsequent study that 35% of users polled would use their
mobile phones to show film times, and 29% of users polled said
that they would download film advertisements onto their mobile
handsets.
This study demonstrates for Greystripe that mobile subscribers

who are interested in film are likely to download content onto their
handsets, demonstrating a revenue source for both the mobile
content provider and the mobile advertiser. The campaign by
Greystripe demonstrates that using ad funded mobile content can
raise awareness of a brand and of a specific product which will
boost the revenue for the product advertised creating a positive
reputation and ROI for the advertisers and the mobile content.
6.2. Market demographic

The market demographic that mobile advertisers have in the
mobile market in extremely large and diverse. Given that there are
approximately 3 billion mobile subscribers globally advertisers
have both the bonus of a large global audience and the danger of
creating advertising that is not targeted enough in trying to reach
as many consumers as possible. In response to this content
providers and advertisers operate opt in schemes through which
valuable information on the mobile subscribers can be gathered
which allows the advertising funded mobile content to be targeted
and relevant to the subscriber, which in turn increases the QoS of
ad funded content, increasing consumer satisfaction and reducing
churn. The market demographic for ad funded content remains
diverse, but by using the opt-in schemes advertisers can narrow
down their target markets and deliver targeted advertising.
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6.3. Display of mobile advertisements

As the content varies so too will the method of display for mobile
advertising with mobile ad funded content. As discussed earlier,
adverts must remain short to justify their placing and to keep the
attention of the mobile subscriber, and certain forms of advertising
will be more appropriate to specific types of content. The ad
funded MVNO Blyk has demonstrated that it can use a variety of
advertising methods due to the ubiquitous nature of the mobile
network. The network is constantly connected to the mobile
subscriber as the mobile phone is almost always with the mobile
subscriber. Advertising sent to the subscriber can therefore be
varied as it is linked to the network and handset as a whole,
rather than a more specific style of content such as ringtones or
wallpapers.Idle screen advertising over the mobile has also been
proposed as a method that presents a competitive advantage for
mobile advertising. The idle screen of the mobile is the first view
point for the mobile subscriber and therefore advertising on this
space increases the reach of brands. The subscriber is offered
advertising without having to request it, and can remove it if
needed with minimal interruption to the mobile user experience.
Longer and more complex adverts will be better suited to content

that is also longer and more complex in order to justify its
presence and avoid consumers feeling that advertising is taking
over the content. Mobile TV and video content will be able to
justify video advertisements while ringtones may be more
acceptable with banner advertisements. Providing that the
advertisements are short, most formatting will be compatible with
differing varieties of content, avoiding the content being swamped
by advertising.
6.4. Who will buy mobile ad funded content?

It is generally believed that the age range of those downloading
mobile content will be between 16-34. This is reflected in the age
restrictions of subscribing to some ad funded content, such as
Blyk's age range of 16-24. The younger end of the market is
generally targeted by mobile content and ad funded content,
although the age range climbs for differing content. Mobile content
is able to appeal to a wide range of ages and tastes. Mobile TV
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will appeal to a broad market depending on the content shown, as
TV programmes placed on the mobile platform will attract their
own market base. Content such as games will have a more fixed
market in terms of age, but the differing genres will appeal to a
broader market base. In Western Europe and North America
mobile content will continue to be a popular feature, and with
mobile operators expanding into emerging markets it can be
expected that mobile content will also move into these markets.
6.4.1. What will mobile subscribers want from

ad funded mobile content?
In order to entice mobile subscribers to use mobile ad funded
content, providers must ensure that the content is of high quality,
that the advertising is relevant, and that the cost to the subscriber
is either minimal or that there is no cost to the user. In accepting
advertising on a personal device, the mobile subscriber must also
be assured that they are receiving a high quality deal in terms of
content. In accepting advertising in return for content, subscribers
have been shown by some cases to be happy to receive the
advertising in return for free content, and in these cases the
advertising has been relevant and targeted according to previous
demographic investigations. In investigations discussed earlier in
the report, mobile TV has been identified as the top application
that subscribers in the US want to see on their mobile handsets.
Mobile TV in developed markets is the content that mobile
subscribers will demand when a standard has been agreed upon,
particularly in Europe, and when the penetration on mobile TV
capable handsets grows.
6.5. Conclusion
Brands that previously found it hard to target a large audience
over the mobile with relevancy will benefit from ad funded content
due to the opt-in nature of the content. The size of the mobile
audience can be capitalised upon by mobile advertisers in ad
funded mobile content due to the information gained from
subscribers in opting-in to receiving the content and advertising.
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Chapter 7. Market potential
The market potential of ad funded mobile content represents an
opportunity for advertisers to tap into a subscriber market
numbering 3 billion with adverts that are relevant and targeted,
and thereby more likely to produce higher ROI. As mobile content
becomes more sophisticated the advertising offered in or
alongside it will also become more sophisticated, and give a
higher standard of service incorporating technologies and displays
that are superior and can give a high standard of user experience.
The UI of mobile devices has continued to improve and this will
also drive mobile content and mobile ad funded content to mobile
subscribers allowing for content and adverts that are easily
accessible with an experience that is on a par with more
traditional forms of advertising, and in some cases an
improvement.
The market potential of mobile ad funded content is linked with

the development of 3G and 4G networks as well as the
standardisation of connection and bandwidth for mobile TV. In
emerging markets where 3G and related content are starting to
make an impact, such as China and India, mobile ad funded
content will be able to grow rapidly as these markets hold a large
amount of subscribers, giving advertisers a large audience to
market to. In India, there are over 260 million mobile subscribers
as of July 2008 and China has approximately 600 million mobile
subscribers. These markets represent large and fast growing
markets that mobile advertisers and content providers will be able
to target with sophisticated and targeted advertising, allowing for
relevant advertising in a large market that would be unavailable
through more traditional advertising.
The market potential of ad funded content is dependant on the

standardisation of content and the relevancy of the advertising.
Advertisers sponsoring mobile content will be reluctant to allocate
high budgets until a standard is reached for aspects of mobile
content. This is particularly relevant to mobile TV in areas of the
US and Europe where a standardisation in mobile TV is needed.
In Japan and South Korea, free-to-air mobile TV will be more
appealing to advertisers, subscription mobile TV models may gain
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fewer subscribers due to economic reasons and advertisers will
need to reach as large an audience as possible. The market
potential for ad funded mobile content offers some lucrative
opportunities but issues on the mobile will need to be addressed
to truly unlock this opportunity such as user experience,
standardisation and audience participation and acceptance.
7.1. Mobile advertising spend

The spending on mobile advertising will continue to grow, and
different areas of mobile content will see varying increases in
spend on advertising. Visiongain believes that annual global
mobile ad spend will hit the $1 billion mark by the end of 2008
due to encouraging signs seen from ad funded MVNOs in which
subscribers have reacted positively to targeted advertising and the
growth of the mobile web. Due to these positive attributes
emerging from the mobile content market, visiongain feels that the
projected total ad spend will be at $1 billion by the end of 2008.
Emarketer has predicted in the past that mobile ad spend will be

$1.7 billion by 2008, and other analysts have predicted that the
total spend on mobile advertising will be over $1.1 billion by the
end of 2008. However, visiongain believes that this figure may be
too optimistic as mobile advertisers may remain reluctant to
allocate large budgets to mobile advertising while the standard of
user experience on the mobile web and with mobile content
remains low. Until the user experience can be altered, mobile
subscribers will not be persuaded onto mobile content after a
negative experience and valuable audience numbers will be lost.
For this reason visiongain believes that spend on mobile
advertising will be more cautious during 2008, closer to $1 billion
or possibly falling just under. This is less than some analysts are
predicting but annual ad spend will pick up speed and traction in
the market over 2009.
The mobile phone is the place for advertisers to market to their

audience, meaning that spend in this area will grow as more
advertisers recognise the size and potential of audience that can
be reached through the mobile device. For this reason ad funded
mobile content will become a lucrative area for advertisers to
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market to their audience and spend in this area will grow to $10
billion per year by 2013.
Chart 12. Mobile ad spend forecast
Source: visiongain
7.2. The market landscape in 2013

By 2013, the ad funded mobile content market will have grown
outside developed markets and into BRIC markets where the
emerging 3G networks and growing number of mobile subscribers
will drive demand for mobile content. The growth in BRIC (Brazil,
Russia, India and China) markets will drive demand and usage of
mobile content as these are considered to be the mobile markets
growing at speed. As the subscribers in these markets gain
access to faster and cheaper networks and more sophisticated
handsets (the iPhone is to be sold in India by Vodafone and
Airtel), the demand for mobile content will grow, and the
availability of cheap or free content in emerging markets where
disposable income may be less will be particularly relevant.
The BRIC markets also provide an extremely large population for

advertisers to target with relevant and location aware advertising.
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This will be a crucial factor in creating and perpetuating the
success of mobile ad funded content on a global scale. In order to
prevent advertising on mobile content becoming resented by
mobile subscribers as an invasion of privacy or related to junk
mail, mobile advertisers must ensure a relevancy that will include
location awareness across the globe. In BRIC markets, access to
the mobile web will be used instead of the fixed line PC access to
the internet where this step of fixed line access may be skipped in
favour of a mobile option. In these markets, the mobile web will be
a vital link and advertisers will be able to use this to connect to
their audience through relevant content.
In other markets, ad funded mobile content will gain traction in

areas of Western Europe where 3G networks have gained a
strong foothold. In Japan and South Korea, free-to-air mobile TV
will provide mobile advertisers with content that is growing in
popularity and accessibility to mobile subscribers. In the US where
the EDGE network has a more dominant position, handsets that
are improving the user interface on the mobile web will encourage
mobile subscribers to make a greater use of mobile content and
ad funded mobile content. Advertising on the mobile is becoming
more accepted by mobile subscribers in the US, where
approximately 23% of mobile subscribers have been exposed to
mobile advertising over a thirty day period, according to Nielsen,
half of which responded to the advertisement. Advertising on the
mobile is becoming more commonplace in developed markets and
subscribers are showing a willingness to accept and respond to
advertisements over the mobile, particularly when free content is
provided by the advertisements. It is therefore expected that ad
funded mobile content will gain traction worldwide, from
developed markets to BRIC markets in 2013.
7.3. Market demographic in 2013

Currently, the market demographic for mobile content remains at
the younger end of the scale. Mobile subscribers aged between
16 and 34 are more heavily targeted by ad funded content and
MVNOs, as seen with Blyk. Mobile subscribers aged above 16
and below 35 are more likely to download mobile entertainment
content and can therefore be expected to have handsets that are
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capable of supporting content. This market demographic is also
more likely to have financial constraints (i.e. students) and would
therefore welcome the opportunity of receiving mobile content for
free and be more receptive to the advertising sponsoring said
content.
The market in 2013 is likely to be similar, with mobile content and

ad funded content appealing to the younger end of the market.
However, with the emergence of niche MVNOs, it is also likely
that niche ad funded MVNOs will be launched that will target other
areas of the market, offering advertising that will appeal to a
specific market segment, whether that segment is related to age
or interests. Mobile entertainment that is funded by advertising will
remain popular with the youth market and the increasingly
sophisticated handsets that are entering the market will enable for
greater viewing and interaction with the content. The youth market
will provide a lucrative base for advertisers, although in expanding
to other markets, advertisers will be able to specifically target their
markets allowing for a higher ROI.
7.4. Advertisers in 2013

Mobile advertisers and content providers will face greater
challenges in 2013 as they will have to market strategically on a
global scale. Relevancy and targeted advertising and content will
be needed and on a global scale, this presents further
opportunities and challenges. The emergence of BRIC markets
and the ability for advertisers to reach their audience on a global
scale means that advertisers will have to evolve further in order to
advertise on a relatively new platform and to make that
advertising both relevant and far reaching. The opportunity to
advertise to a potential of 3 billion mobile subscribers worldwide
represents a potentially lucrative opportunity. Location will be a
crucial factor in advertising for ad funded mobile content as this
will dramatically increase the relevancy of the advert, increasing
the likelihood of the subscriber engaging with and responding to
the advertisement, increasing the ROI potential. Mobile
subscribers are becoming increasingly aware of the value of their
location and are therefore more likely to respond to adverts that
are more relevant to their location.
96
The heightened success of the advertisements of the platform will

reflect on the content as the advertisers will be able to spend
higher budgets on sponsoring content allowing the content to be
driven to a wider market. This will also help to drive ad sponsored
mobile content into a more diverse market while still allowing
adverts to remain targeted and relevant to the consumer. By
targeting their audience by location and information gathered for
opt-in mobile content, mobile advertisers in 2013 will have a
greater knowledge of their market and will be able to advertise
accordingly giving a higher standard of user experience to mobile
subscribers.
7.5. Content in 2013

In 2013, we believe that mobile content, and ad funded mobile
content in particular, will become much more interactive with the
mobile subscriber and that this will enrich the content and improve
the user experience enormously. Mobile subscribers will be
encouraged to opt-in to using ad funded mobile content which will
encourage the subscriber to engage with the content and
advertisement. This will also allow advertisers to gather
information on the subscriber increasing the relevancy of the
advertising. The content will involve more audio and visual as
mobile TV, video and music make a greater impact in the mobile
content market.
Free-to-air mobile TV will increase in popularity and visiongain

believes that it is this model that will particularly appeal to
advertisers sponsoring mobile content, as consumers will be more
willing to use free-to-air mobile TV rather than pay a subscription
to mobile TV. As the bandwidth improves, mobile TV across
Western Europe and the popularity of mobile TV will grow as the
market is already seeing handsets that are capable of displaying
mobile video.
97
Globally we expect the popularity of mobile ad funded content to
be ranked in the following order by 2013:
• Mobile search and social networks

• Mobile TV and video
• MVNOs
• Music
• MMS
The development of mobile content seen so far, such as the

penetration of mobile TV in the Asia Pacific market and the launch
of ad funded MVNOs in Europe demonstrate that ad funded
content is being accepted by mobile subscribers and will increase
as advertisers and subscribers grow in confidence in the
advertising and user experience capabilities of the mobile
platform. Mobile search remains a killer app on the mobile
handset and this will create a lucrative opportunity for mobile
advertisers. Mobile social networks capitalising on mobile web 2.0
applications will also drive advertising revenues. Mobile TV and
video will be the content that mobile subscribers will actively
participate in advertising campaigns, increasing relevancy and
revenue potential.
Table 8. Ad funded mobile content Strenghts, weaknesses, opportunities and threats

Strengths Weaknesses Opportunities Threats
Proven consumer Targeting niche markets Large market base to Possibility of overzealous
acceptance of ad funded drives away other target advertising being regarded
content in trials potentially large markets as “spam”
Ad funding brings in
Potentially lucrative Revenue must come from market that previously may Devaluing of content
funding source subscribers acting on not have paid for content
advertising which cannot Potential saturation of
Targeted advertising be guarunteed content market
through opt-in strategies
Cost saving benefits for

consumers
Source: visiongain
98
Chapter 8 Conclusions and
recommendations
To conclude, it has become clear that the mobile is the new
platform for advertising. Mobile content sponsored by advertising
is one avenue in which advertisers can push their brand and
products to the mobile audience, while avoiding being viewed as
junk mail or an invasion of privacy. Advertising funded mobile
content will drive mobile content to a wider audience as it
becomes able to target specific market segments, grow revenue
and budgets to allow for a greater distribution of content.
Mobile content providers will be able to distribute content to a

wider audience, and will also be distributing content that is more
interactive and sophisticated than some of the content currently in
the market. Operators have the greater share of knowledge
regarding mobile subscribers, including locations and activities,
and can be encouraged to share this knowledge in order to
provide a service that is as relevant to the consumer as possible.
Privacy concerns that mobile subscribers will have in this area will
need to be addressed.
Mobile advertisers will make a greater use of the mobile

subscriber's location when advertising on the mobile, increasing
the relevancy of the ad and driving up potential revenue.
Encouragement of subscribers to opt-in to ad funded content will
also increase the knowledge of mobile subscribers interests
thereby allowing advertisers to target their market as specifically
as possible.
Handset manufacturers and vendors will also have to recognise

the altering market in mobile content, as a greater mobile
audience becomes aware of more sophisticated and interactive
content available. Mobile handsets with larger interactive screens
will increase in popularity as access to mobile content grows. All
those concerned in the mobile content market will have to
recognise the emergence of ad funded mobile content when
considering their future strategies.
99
8.1. Mobile content providers
Mobile subscribers will come to expect more sophisticated content
over their mobile handsets, particularly as the mobile web
becomes more accessible. As the bandwidth for certain types of
content improves and mobile subscribers gain greater access to
the mobile web, competition for mobile content and ad funded
mobile content will be driven up. Mobile content providers should:
• If not already doing so, mobile content providers should look

to gaining sponsorship from relevant advertisers, which will
dramatically cut costs that are passed on to the mobile
subscriber, driving up usage and revenue potential from
advertising. Mobile users who would have previously been
unwilling or refused to pay for mobile content represent a new
market that can be opened up by ad funded mobile content.
• Engage with operators regarding the current interests of

mobile subscribers where possible. Content providers can
also discuss with operators the possibility of positioning their
content at as early a viewing point to the subscriber as
possible, such as on the WAP home page.
• Encourage an opt-in strategy to advertising funded content to

provide tailored services and encourage engagement of the
mobile subscriber with the sponsoring advertisement.
• Ensure that content is age appropriate and consider the

safety of younger users. This can be helped by an opting-in
strategy.
• Consider making content available on both the PC and the

mobile, allowing mobile subscribers to bookmark content for
use on both devices.
• Ensure the content is accessible and that the click distance is

low. This is especially important when considering the speed
and user experience seen so far on the mobile web.
100
• Consider providing niche content, such as niche MVNOs
which can be funded by advertising and appeal to a specific
target market.
8.2. Mobile advertisers

The relevancy of the advertising sponsoring mobile content will be
crucial in the future success for ad funded mobile content. With
this in mind, mobile advertisers sponsoring mobile content should:
• Consider the importance of the location of the mobile

subscriber. The presence of GPS on mobile handsets is
becoming more common and this should be utilised by mobile
advertisers as a means to making advertisements as relevant
to the mobile subscriber as possible.
• Ensure through opting-in policies that enough information is

gathered on the mobile subscribers to make the advertising
as relevant as possible.
• Mobile advertising can take a variety of forms, but this must

be kept relevant to the content that is being sponsored by the
advertisement. Content that is purely text, for example, would
not be appropriate to be sponsored by a sophisticated video
advertisement.
• Advertising on ad funded content should be kept relevant to

the market demographic of mobile content purchasers.
• Adverts must not overshadow the mobile content, or

subscribers may feel short changed.
• Location on a local and national basis must be considered

when advertising over the mobile platform, and is especially
relevant in keeping advertising relevant when sponsoring
mobile content. In this context, language and currency must
be interoperable across different countries. This is especially
important to brands who advertise on a global scale.
101
8.3. Mobile operators
Mobile operators will control much of the space in which ad
funded mobile content is presented to the subscriber. Because of
this, cooperation will be needed with mobile operators in order for
the mobile subscriber to receive a tailored service. Mobile
operators can also gain revenues from allowing advertising and
ad funded content on to their networks. Mobile operators should:
• Investigate allowing certain information of their subscribers to

be used to provide a tailored service in ad funded content.
However, privacy issues will be delicate here.
• Mobile operators should use location information of their

subscribers to allow for a relevant advertising service.
• Look into investigating what specific mobile content would be

best suited to their market of mobile subscribers over their
networks.
8.4. Mobile handset manufacturers

Due to the increasing sophistication of mobile content handsets
will be required to handle varying amounts of content. Mobile
handset manufacturers and vendors should:
• Ensure that their handsets allow for simple navigation when

on the mobile web in order to allow mobile subscribers to
access mobile content more easily.
• Drive standards in mobile handsets that allow for content such

as mobile TV to function on the handsets.
• Large screens will be particularly important for the viewing

and interactivity of mobile content. Mobile handsets will need
large screens particularly in the wake of the growing
popularity of visual content.
102
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Ad funded mobile content

Forecasts and Analysis 2008

2.6.1 iTunes competitors

4.7.2 4G and LTE

As mobile subscribers tentatively begin to explore the mobile web,

1.1. Executive summary

The interactivity of content on the mobile has also driven this

Mobile subscribers actively engaging with mobile advertisement

Mobile subscribers have become used to free or cheap content

The difference between mobile advertising and mobile advertising

1.3. Mobile content funded by mobile

Mobile content providers will also stand to benefit as by gaining

1.4. The focus of this report

As the diversity of content increases, so does the need for

Chart 1. Bango mobile content sales 2006-2007

Source: Mobile Europe citing Bango

2.1. Which mobile content is most appropriate?

2.2. Mobile TV and video

The market for mobile TV varies globally. The higher penetration

Chart 2. Mobile TV handset penetration comparison

Source: Guardian.co.uk 2007

There are planned launches in countries such as Spain and

3G technology also provides mobile video and TV, although this is

Visiongain believes that mobile subscribers will be more likely to

2.2.1.1 Forms of Advertising enabled by Mobile

Advertising funded mobile TV has been seen to enter the market

2.2.2. Subscriber take up

However, a ComScore study of 2007 showed that users would

In Japan there have been strong rises in the production of mobile

Chart 3. Mobile TV trends

Source: ComScore 2007

However, there is also dissatisfaction in this market. The low take

Source: Sony Ericsson

However, the low penetration of mobile TV capable handsets

2.2.4. Live video streaming

Mobile advertisers will also want to respond to the alteration in the

Mobile subscribers will want a method of transmitting live video

2.2.5. Mobile ad funded TV and video

The subscriber numbers for mobile ad funded TV and video have

2.3. Mobile MMS

2.3.1. Converged handsets

2.3.2. Subscriber reach

2.4. Mobile social networking

There has also been an introduction of mobile ad funded social

Mobile social networking takes into account the rising capabilities

The nature of social networking makes it suitable for both targeted

However, there are methods being explored with varying degrees

2.4.2. Potential improvements and impact

2.4.3. Exclusively mobile social networks

Myxer is one content provider that is using advertising

2.5.1. Target market base

2.6.1. iTunes competitors

Another issue that mobile music content providers will have to

2.6.2. Market base

2.7. Mobile search

2.7.2. Ad funded models

2.7.3. Killer app

2.8. Mobile Games

2.8.1. Market base

2.9. Mobile content growth

Chart 5. Content used in EU and US

Source: M: Metrics Benchmark study April 2008

The content over a mobile that will be funded by advertising will