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Vodafone was one of the first major mobile operators to commit serious resources to mobile advertising.
The industry has grown and changed a lot since then, and Vodafone’s strategy has also evolved, culminating with some major announcements recently about applications, network services, and Vodafone 360.
We took the opportunity of these announcements to visit Vodafone’s new offices in London to get some further detail on these plans as well as an update on Vodafone’s overall strategy towards mobile advertising and marketing.
Just two years ago, when mobile advertising was truly in its infancy, we did an in-depth article about Vodafone’s approach to mobile advertising (see the MobiAD article).
Their initial approach was to set up a specialized division with the Vodafone Group to focus strictly on mobile advertising. The central group was responsible for setting overall company strategy in this area, for coordinating regional mobile advertising groups, and for launching global initiatives.
This approach allowed Vodafone to get started quickly and the mobile advertising business grew significantly. Now that mobile advertising has become a more mainstream part of the business, responsibility for mobile advertising has also moved and is now an operational group embedded in Vodafone Internet Services group.
For this update, we spoke with John Kelly, Principal Manager for Vodafone Marketing Solutions, and Jeremy Makin, International Development Manager-Vodafone Marketing Solutions.
At a strategic level, Vodafone’s plans moving forward are meant to take advantage of two of its key strengths:
#2 Unique Capabilities: the fact that it is a mobile network operator means that it has certain unique capabilities and can provide certain services that no other company in the value chain can.
This combination of scale and operator capability allows Vodafone to play a couple of distinct roles in the mobile advertising value chain. First, they are a major media owner – directly offering their own advertising products to the market. And second, they are a media enabler – offering services to other advertising players to make their advertising more targeted, more relevant and more effective.
John Kelly points out that “it’s this combination of media owning and media enabling services that will allow Vodafone to prosper in a fast developing and quickly evolving market.”
Mobile advertising is a rapidly growing business at Vodafone, nearly doubling over the past year. In these early stages, most of this revenue has come from banner display ads.
Vodafone plans to build on the success of the existing display advertising business in a two main ways.
In addition, Vodafone has been an active participant in projects such as the GSMA mobile media initiative (see MobiAD article and interview about this project). This project addresses the issue of having a common, cross-operator way of measuring mobile media, and should help increase the effectiveness of mobile display advertising over time.
At the same time that Vodafone is working to grow display advertising, they are also very actively looking at mobile advertising formats that go well beyond portal based display, and are putting a lot of resources in this area. These new ad formats can be driven by technology advancements, evolving consumer behaviors, or sometimes by unique characteristics of a particular market.
John Kelly explains, “our emphasis will be on diversifying our offering away from a reliance on “internet style” banner advertising into formats that take advantage of and have a closer fit to the many unique properties of mobile.”
Vodafone has already had some notable success in this area. One service, “Please Call Me“, was developed by Vodafone’s Vodacom subsidiary in the South African market. It was triggered by the local consumer habit of ringing someone once then hanging up in order to request that they call them back. The Please Call Me service provided an elegant, ad-funded alternative to this informal system.
This service now has over 20 million messages per day in South Africa, the ad inventory is sold out for months in advance, and similar services have been launched by Vodafone in several other countries including Turkey, Spain, Egypt and the Czech Republic. (for more detail on Please Call Me, see this MobiAD article Mobile Advertising Done Right In A Unique Market).
Another example took place in India. Vodafone found that people in that market often take a longer time to answer their mobile than in other markets. In other words, they let it ring longer before picking up. As a result of this market understanding, Vodafone has trialled and now launched an ad-funded ring-back tone service so that callers can hear something other than the standard ringtone while waiting for people to answer. Vodafone then also brought this service to the German market.
Beyond these examples, Vodafone is continuing to experiment by running a wide range of additional mobile marketing trials in markets around the world.
Many of these will be built around one of the fundamental strengths of mobile – messaging.
As John explains, “Messaging is a great way to engage. First, brands and agencies all understand it. Secondly, the reach is amazing, with essentially all phones supporting SMS. And finally, almost all consumers are today sending and receiving text messages, so it is already part of their life.”
Some examples of the projects that Vodafone is working on include:
All of these build on established consumer behaviors and have the potential to grow into significant advertising channels. And market trials are an important step realizing this potential.
As Jeremy Makin explains, “Getting the customer experience right is paramount, our belief is that success lies in a move towards permission based marketing rather than following a classic broadcast advertising model. The key factor here is ensuring the customer provides consent to participate. With all of our programs we need to ensure that customers see inherent value – be that special offers from the brands they value, latest news and updates etc.”
In the past couple of months, Vodafone has made a number of major product announcements related to mobile advertising. These included the Vodafone Application Manager, opening up network service API’s, and most recently Vodafone 360.
To get a better understanding of these, we spoke with Amer Hasan, Senior Manager of Applications and Developer Programs at Vodafone Group.
One of the main things Vodafone wants to achieve is to give application developers easier access to their subscribers, and to make it easier for subscribers to find and download interesting applications. This will be very important for the advertising industry as mobile apps have developed into a major marketing channel.
A major step in this direction is the Vodafone Application Manager.
The App Manager has been available on Series 60 handsets for some months. It is now live in 9 markets – UK, Italy, Germany, Spain, South Africa, Netherlands, Portugal, Greece, and Ireland.
The Apps Manager provides several key functions:
Beyond this, the Apps Manager gives access to an “Apps Shop”, which is a download site for additional mobile applications.
Finally, the Apps Manager also provides a framework which allows applications to work in the background. In other words, once an application is running, it can be put into “minimize” mode which lets it continue to be active in the background.
One very nice feature is that the icon for an app in “minimize mode” can be modified and updated by the app, so that, for example, it can always indicate the temperature, a stock price, or some other information.
Apps are also good media to carry ads. App developers can of course source ads for their apps where ever they like, but in mid-2010 Vodafone plans to give develops the option of choosing a Vodafone managed ad solution.
The Vodafone ad solution would manage the ad serving and developers could also choose to have Vodafone handle the ad sales activity. This sort of in-house ad serving platform might well be able to deliver improved targeting by utilizing all the information that consumers are willing to make available. These ads could also be combined with ads on the Vodafone portal to provide a more integrated campaign.
Enablers such as these would enhance the effectiveness of the advertising and would represent a value-add that Vodafone could provide.
Another big issue facing app developers is how to gain visibility in the market and “stand out from the crowd” now that there are close to 100,000 apps in existence among all the platforms and app stores. Vodafone has plans in this area as well.
In the future, Vodafone will offer promotional packages to developers to enhance the distribution of their apps. These packages might utilize, for example, app store listings or display advertising to promote selected app’s.
Another major project within Vodafone is to make various network services available to developers through a series of developer API’s. This will allow developers to build more powerful, interesting and innovative applications with less effort.
These API’s will be developed and released over a period of time. The first two that Vodafone is working on are billing and location, but there others under consideration such as an API for presence.
As an example, let’s consider the billing API. The purpose is to give mobile app developers the ability to charge directly onto the subscribers phone bill. This would make their business life much easier, but clearly it has to be done carefully and securely to keep the customers happy.
At the moment, Vodafone is planning to support several different billing models. Initially a simple “pay per application download” model would be available. The second step would most likely be a subscription model for application download.
And finally, a true micropayments capability would be implemented which would support the allow apps themselves generating billing events. As an example, if a customer purchased a music track from with an app, the app would be allowed to send the charge to the customer’s monthly Vodafone bill.
The most recent announcement is the launch of Vodafone 360. This is a new set of internet services for the mobile and PC which gathers all of a customer’s friends, communities, entertainment and personal favorites – such as music, games, photos and video – in one place.
A major focus of Vodafone 360 is giving customer’s a better experience when using social media. 360 does this by bringing together contact info, status updates, and messages from services such as Facebook, Twitter, Windows Live Messanger, Hyves, and others.
Services such as Vodafone 360 will be good at attracting and retaining an audience that can be monetized through advertising, and 360 will initially include some display advertising. Beyond this however, Vodafone says they will be actively looking to support additional opportunities where these services can enable customers to connect with brands and products that are of interest to them.
Sharing information is a fundamental part of social networks, and one thing Vodafone 360 does it to give customers control over the information they share. This can be simple things like music favorites, or very critical information such as their physical location.
Mobile services and mobile marketing based on location is going to be a big growth area in the years to come. A mobile operator usually knows where a subscriber physically is, and providing a good way for the consumer to control access to that information is going to be critical for these services to become successful.
Pieter Knook, Director of Internet Services at Vodafone Group said, “Vodafone 360 enables customers’ digital lives. Customers can stay in touch and share experiences through social networks, instant messaging, email, apps, maps, music and buying digital content on their mobile bill, with the personalised address book at its heart.”
Many would argue that the next phase of the mobile marketing industry and the mobile industry in general will be marked by application driven consumer services, as well as ubiquitous access to mobile internet.
Clearly Vodafone has made a long term commitment to leveraging their unique position to enable developers to create better, more compelling apps for consumers. And they have combined this with efforts to make it easier for developers to reach larger numbers of these consumers.
In a world where many people debate what position mobile operators will eventually play in the mobile ecosystem, I think these give us a good idea of some of the “value-add” that mobile operators will start to provide .
In an interview with Investors Daily, Vodafone CEO Vittorio Colao said that with mobile advertising “there’s clearly monetization potential,” and that Vodafone needs “to create the conditions for having this monetization really happen.”
And why does Colao believe that mobile will be an important media channel? “At the end of the day it’s about the time people dedicate to using a medium. It used to be six hours per day of television and one hour per day of newspapers. Now time is moving to new media. There’s a huge amount of time that people spend each day looking at the screen of their mobile device.”
For more information about Vodafone mobile advertising, visit the Vodafone Marketing Solutions website.
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