The digital revolution led to a major development of online internet which is now capturing significant advertising revenues from traditional media. Mobile internet will have another major impact on the media industry.

In media, there are two distinct revenue sources: sell content, or earn money from selling ad inventory. The key to a telco’s motivation is to increase ARPU and to retain subscribers by creating stickiness. Content is key to a mobile operator’s activities in bringing people to visit the mobile WAP pages.

So SK Telecom, Korea’s leading mobile operator, has set up its own content services such as MelON, the ubiquitous music service, which can be experienced both on the mobile and internet. And SKT also created AirCROSS to capitalize on the mobile internet advertising growth. AirCROSS was set up in 2000 as a separate mobile advertising and marketing subsidiary, because SKT believed that mobile internet will be like regular internet, another unique media type. Things have picked up speed since 2005.

What do you see is the role of mobile in the overall media mix?

Mobile can become a bridge between conventional broadcasting and on-line, off-line marketing activities, based on accurate targeting. The unique characteristics of mobile can provide marketers with a more effective and strategic approach to planning an integrated marketing mix.

Also, due to the unique emotional bond that most consumers have with their mobile phones, such devices can provide a more intimate and trusted means of delivering a message to customers. With the help of mobile subscriber profiling, marketers can deliver a much more effective “narrow-cast” marketing message, like using precision-guided “smart bombs”.

What is the state of mobile advertising and promotion in Korea right now?

There are several kinds of mobile advertising in Korea today:

a) Push tools: SMS, MMS, MOA which can only be used once the consumer has “opted-in” to receive messages.
(note: MOA is the term used for the waiting screens before a WAP page loads, where maximum 3 different ads per day are allowed to be rotated)

b) Pull Tools: Banner ads and search based ads through the mobile internet.

c) Ring-back tone services: These include services such as Biz-Ring or Event-Ring where you download a prerecorded promotional messages and use it as ring-back tone. Another type of service is a corporate jingle ring-back for callers waiting to speak to any employee of a corporate subscriber, such as the MiniCar Ads, or Corporate Jingles etc.

Are all of these kinds of mobile advertising equally popular?

In the beginning it was all SMS push, but now the other types are growing. For example, mobile content providers are now working with mobile WAP pages which just started last year.

Also, now that there is a flat fee for mobile internet in Korea, banner advertising on mobile will grow. Previously the government would not allow banner advertising. They wanted to insure that users would not receive large bills for looking at banners. Now banner ads are allowed but only for subscribers who pay a flat fee. There are 21 million subscribers of SKT in Korea, and to date only 3 million of these are on a flat fee basis, but this will improve soon.

All these tools are used for narrow-casting targeted groups and are intended for users to respond to the ads to get more information and increase purchase motivation.

What have you found to be the most effective mobile campaigns?

Those that are involving Sampling and Promotion. When people get something without charge, it really works. They first get an SMS, they are asked to participate, and when they participate, they get a free “gift”.

Tell us about the famous Gillette Campaign – how did that work ?

Gillette asked AirCROSS to develop an innovative campaign to promote the launch of its new product, the “Fusion” razor.

As an initial step we extracted the appropriate target group from the entire database of “opt-in” subscribers of SKT in order to communicate effectively through this mobile tool.

Then we sent push SMS, MMS and MOA messages to a selected group of 1.2 million people. The response mechanism was a confirmed call button that connected to Gillette’s landing WAP page, where they could download a coupon for a free sample.

And what were the results?

491,423 people visited Gillette’s mobile WAP pages, a whopping 40% response. And 240,000 people downloaded the coupon and received a free sample of the product distributed nationwide through CVS.

This response rate was phenomenal and the campaign was a huge success, greatly exceeding the expectations of the client.

Sounds fantastic. Aren’t there any privacy issues?

Well, we don’t get all the information from the operator, we can only get the information for their gender, age, and where they live, but without their names. The SPAM issue is very hot in Korea and there are very strict regulations. So at any point if a subscribers doesn’t want to get these messages, they can opt-out and we have to stop.

Please explain Gifticons, what are they?

Gifticons are a smart gift coupon delivery service that AirCROSS operates exclusively in Korea. The Gifticon idea started from campaigns such as Gillette and Coca Cola, where the subscribers were sent an SMS to download a free coupon which enables them to get a free gift at a local convenience store.

As example, we helped Coca-Cola promote the launch of their new “Ergo grip” bottle via Gifticons. People who saw information about the free sample program on various media like on-line banner ads were invited to visit Coke’s homepage and simply enter their mobile phone number. They then received an SMS which guided them to download a bar-code. When they visited a participating CVS store and showed the barcode to the cashier, they would receive a free bottle of Coke in the new design.

Through this campaign, Coca-Cola successfully launched their new bottle design at a significantly lower cost compared to past sampling activities.

So you are creating a new marketing trend with Gifticons.

Yes. After these successful campaigns we thought of Gifticons as a way to give gifts when away from home to make your loved ones happy. For instance – buying chocolates for your wife on Valentine’s Day even from a distance.

We worked with SKT very closely for 6 months to develop this concept. We also had to develop the WAP and web pages for NateON which is SKT’s mobile and internet service which has 13 million subscribers. We worked very closely with SKT because we had to make sure that the mobile phone number could be linked to the individual barcode, and also we needed SKT’s billing system, without which this project would not work.

What was the biggest challenge?

The most critical thing was to find the right gift items for consumers. The key was to convince the retailers to give us the right to use and sell their products on our websites and to negotiate revenue sharing agreements. It was very hard to convince the product suppliers about this since it is a very low margin business, but we are talking millions of people when it works.

Gifticons are a beginning of mobile commerce. They will be extended to flowers, books and other items too.

Anyone can send or receive Gifticons from the internet. Total mobile subscribers in Korea are 40 million, SKT subscribers are 21 million, so that is the potential market. Nowadays, we are averaging 5,000 Gifticons delivered a day, and with an average price of the item at $3, we raise $15,000 per day revenue. We expect this to grow to 10 times in the future. The key is finding good products to sell as gifts online.

SKT is now planning terrestrial TV ads to promote Gifticons and they started promoting Gifticons in theaters too. Informing people about what a Gifticon is will be the key.

How many people does AirCROSS have to do all of this?

We currently have 83 people on staff, with roughly the following breakdown:
• 30% work with the ad agencies to create the wap pages and plan campaigns
• 20% work in online advertising, creating cross marketing campaigns
• 20% work on new business development, and developing new ideas like Gifticons
• 20% are technical staff
• 10% are in administration.

Thank you very much, BJ Yang, and congratulations on your success!