The mobile market in South Africa is a challenging environment for mobile advertising, but also ripe with opportunity. Vodacom, the largest operator in South Africa, has very quickly established a very successful mobile advertising business. Read this in-depth discussion with Rick Joubert, head of mobile advertising & social media at Vodacom, and download a presentation from him “5 Principles for Mobile Operators, Some advice from an early mover”.

Key Take Aways
During our wide ranging conversation, it struck me that even with all the barriers and hurdles to mobile advertising that we hear about so often, Vodacom has been able to build a thriving business in a short time. Thinking about the reasons behind this, it seems there are several.

• First, the way the mobile advertising business unit was setup and supported within the company, and the understanding of Vodacom that they would need to invest in people, technology, and market education.
• Second, the creativity to tailor propositions that appeal to each economic segment of the country.
• And finally, the basic belief that any advertising or ad-funded service should create value for the consumer.

Perhaps these conclusions could be applicable in other markets, especially those developing areas of the world which are experiencing rapid growth of mobile subscribers and where mobile advertising is beginning to take off.

Unique Aspects of the South African Market
According to Rick Joubert, there are several aspects that make the South African market very different from European or North American markets, including economic, cultural, and infrastructure factors.

Rick explains, “We have two fairly distinct economic segments operating side by side. Basically there is a very sophisticated 1st world marketplace on one hand, with very advanced infrastructure, coupled with a “developing world” mass market. So the services you offer and the business models and the price plans have to take this into account.”

In South Africa, 90% of the connections are pre-paid, with a fairly low average ARPU for pre-paid customers of about US$8 to US$10 per month. The average ARPU across all customers is US$18 to US$20, so its clear that the small group of post paid customers spends a lot and really pulls the average up.

Another factor which people often overlook about South Africa is that there are 11 official languages – it is a very heterogeneous society. According to Rick, “this means that it is quite hard to do any traditional ‘mass market’ marketing, because you can’t communicate with everyone in a single language and in a single cultural context. This is actually a big opportunity for the advanced targeting capabilities of mobile advertising.”

A third factor which is important to understand is that PC-based internet penetration is very low, currently about 8%. On the other hand, there is very good penetration of mobiles, around 80% to 90%. So like most of Africa and certain parts of Asia, really the only way for a lot of people to access internet is through their mobile.

Taken together, these factors have presented some unique challenges and opportunities for Vodacom in the area of ad-funded mobile services.

Rick continued, “I have noticed in Europe and North America that mobile advertising tends to be closely associated to mobile internet and rich media – WAP, mobile TV, video services, etc. We set out from the very beginning to treat the mobile advertising opportunity in a much broader context. Although we have services and have propositions in these high end areas, we believe there is a huge opportunity in wrapping ads around simple voice and text.”

Ad-funded Services for the Masses
A great example of an ad-funded mobile service that truly fits a market need is Vodacom’s “Please Call Me” service (see the box). This has proven to be incredibly successful, with about 20 million messages a day, a very large number in a country of 48 million people!

Rick explains why ‘Please Call Me’ is so right for South Africa: “This is a great service for a mixed economy, because you basically get to redistribute wealth. It enables people with very low income to initiate a call with a more affluent subscriber – for example an employee asking their employer to call them – without incurring the cost of the call.”

Another example of a mass market service is the Ad-Me service that is just going live now. It is an opt-in permission-based, push advertising service. Basically a subscriber signs up, provides some limited amount of personal information, and then receives targeted ad messages. In return for receiving advertisements, certain incentives are offered: discount vouchers, free competitions, special offers and free give-aways.

Rick explained the special appeal of this type of service. “For our customers with very limited income, originating telecommunication messages can be expensive, so they may not use their mobile too frequently. Receiving advertising messages doesn’t cost the consumer anything, and is not seen as spam. On the contrary, people actually like to receive messages particularly when the message content relates to relevant special offers or exclusive discounts.”

Just launched in early 2008, and with almost 100,000 opt-ins already, Vodacom believes they can have a million participants by early 2009.

Mobile Advertising for the High End Market
Vodacom also operates the Vodafone Live! portal in South Africa. This site serves about 20 million page impressions per month, and has about 1.5 million unique customers per month, making it effectively the largest digital property available for advertising in South Africa (the largest South African website generates about 1 million uniques per month).

In addition to running banner ads on the portal, Vodacom also offers branded content propositions on Vodafone Live!, called “mini-sites”.

“We’ve done these for a number of brands, but a great example is Nike. We hosted a mini-site on the portal, and the subscribers were able to download a whole range of Nike branded content – screensavers, wallpaper, videos – all free of DRM so with loads of viral potential” said Rick.

He continued: “The key thing is that it was no cost at all to the subscriber – the content was free, and we also did not charge for the data transport. Vodacom recovered the cost of transport from the advertiser. It was a good value exchange proposition.”

Was it successful? Very, with 84K downloads in 3 weeks.

Key Factors for Success
Vodacom has generated this success in mobile advertising very quickly. Commercial pilots began in the summer of 2007, and the services went live in October of the same year. They have run some 250 campaigns for more than 30 brands, both local and global (including Coke, Nike, BMW).

Rick identifies several key reasons why his team was able to get traction so quickly, and suggests that any operator planning on venturing into mobile advertising should keep the following in mind:

• make sure that mobile advertising is set up as a separate business, not just a new product in an existing portal business;
• get a telco insider to lead the Mobile Advertising team, but then populate the team with media people;
• use ad sales houses that are focused on mobile only;
• align value chain incentives to traditional media incentives, make sure that ad and media agencies are not dis-intermediated;
• encourage campaigns that include end-user value.

Educating & Evangelizing
When asked about the readiness of advertisers and agencies for mobile advertising, Rick said “Brand managers and marketing managers are aware of the emergence of mobile as a medium, but they are unclear how to fit mobile into their overall mix, and what inventory is available and appropriate. We’ve had to do a lot of education and evangelizing.”

As part of this effort, Vodacom launched a website to educate the market about mobile advertising. You can check it out at www.on-the-line.co.za.

Successful Market Reaction
One thing that is very encouraging for Vodacom is that there have been extensive repeat campaigns – at the moment about 75% of experimental campaigns lead to second and third campaigns. And certain ad inventory is sold out up to 2 months in advance. Clearly consumers are engaging with the services and the brands, and advertisers are seeing value.

Rick added “We’ve even had a few cases of customers calling our support center, and asking why they didn’t get an ad – they saw it on a friend’s phone and they wanted the ad also!” Just proving that if done right, mobile advertising can be a good value for everyone.

Conclusion
Mobile advertising has clearly gotten off to a great start at Vodacom in South Africa, with engaged consumers and satisfied advertisers. Currently 12 people are dedicated to mobile advertising at Vodacom, and this number is planned to double in the next 12 months. Rick and his team are now working on additional services they can offer which will increase the available ad inventory.

It looks like this approach – strong corporate backing plus targeted ad propositions plus a commitment to create customer value – is a formula that the industry would do well to consider as the various markets develop around the world.