Mobile Advertising

Ghassan Hasbani
CEO International Saudi Telecom
Customer ownership in the telecom industry has shifted from
being exclusive to operators to shared amongst different players
Customer Ownership

OTT Devices
/OS

Operators

Mobile World Congress 2012, Barcelona

 While mobile broadband transactions are on the rise, prices and
revenues are under pressure…

Mobile Broadband Connections * Mobile Broadband ARPU

(Billion) (2010-2014) (USD) (2010-2014) (incl. price of content)

1,464 107.8 -5%

+12% 101.9
1,332 96.9
1,213 18.3 92.4
416 17.0 87.9
15.8
1,075 393 14.7
13.8
932 367 23.7
22.9
334 281 22.2 21.5
244 20.5
303 20.5
226 20.2
204 289 19.7 19.3
257 19.2
182 225
185
149 229 32.5 30.3
164 198 28.4 26.8 25.0
104 133

194 220 231 240 249 12.8 11.5 10.8 10.1 9.4
2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
User Generated Music Games TV/Video Other

Note: * Defined as instances of session activations

Source: Ovum
Mobile World Congress 2012, Barcelona
 … since revenues of telecom operators still rely heavily on pure
telecom services

Telecom Products Building Blocks Operator Revenue Breakdown

(Emerging Markets)
 Subscription for connection through
o Mobile
MobileNetwork
Network 6%
Connectivity o Fixed Wireless Access 11%
o Wireline Network

 Voice
 Messaging (IM, SMS, MMS, etc..)
Services  Multimedia (TV, Video calls, etc..)
 Data (Internet, CoS, Roaming, etc..)

 Small Screen
Devices  Large Screen/Portable
 Home/Office Gateway 82%

 Mobile Advertising
Content/  Mobile Applications Connectivity & Devices
Applications  E-commerce
 Gaming and entertainment Services
Content
Source: STC International

Mobile World Congress 2012, Barcelona

 The growth gap between data usage and operator revenues
highlight a significant uncaptured value for telecom operators

Data Traffic vs. Operator Revenues ILLUSTRATIVE

Everything Voice The Drive of Data Everything IP

Growth

Data Traffic

Who is Transaction
capturing Based
this value? Opportunities

Operator Revenues

1980s-1990s 2000-2009 Moving Forward Time

Mobile World Congress 2012, Barcelona
 During the next four years, online revenues are expected to grow
exponentially, with many streams shifting to Mobile
Online Revenue Streams
Advertising Space: USD 62Bn (US Market)

News Digital E-Commerce Gaming Applications Cloud

Online Ads
Subs & Ads Couponing Commission Services

2015 USD 50Bn 2015 USD 8Bn 2015 USD 3.9Bn 2015 USD 28Bn 2015 USD 5Bn 2015 USD 9Bn 2015 USD 17Bn

2012-2015 2011-2015 2011-2015 2011-2015 2011-2015 2011-2015 2011-2015

17.3% CAGR 14.8% CAGR 37.2% CAGR 10.2% CAGR 24.2% CAGR 31.6% CAGR 54.3% CAGR

Combined Revenue Streams will amount to USD 121Bn by 2015

Source: IDC, HP Forecasts

Mobile World Congress 2012, Barcelona
 Globally, mobile advertising revenues alone are expected to reach
USD 7.7Bn…

Global Mobile Advertising Revenues Leading Global Players

(In USD Million) (2011 - 2014)

7,651

+28%
6,011

4,675

3,681

2011 2012 2013 2014

Source: Ovum, PWC

Mobile World Congress 2012, Barcelona
 … with considerable contribution from emerging markets in
Middle East, Africa and Asia Pacific

Mobile Advertising Revenues in Emerging Markets

(In USD Million) (2005 - 2014)

4,053
183
Middle East & Africa
Asia Pacific 3,187
113

+38% 2,540
68
2,078
41
1,678 3,870
1,423 23
3,074
1,062 13
2,472
4 2,037
557 1,655
1,410
358 2 1,058
227 0 555
227 0 358

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: PWC
Mobile World Congress 2012, Barcelona
 Six growth drivers for Mobile Advertising have been identified
for Telecom operators

Mobile Advertising Growth Drivers For Telecom Operators

Scale Immediate Call for Action Real Time Location

 Continued Growth of mobile  The interactive nature of mobile ads  Leveraging on real time location
broadband penetration vis-a-vis through SMS, MMS and internet features of the mobile network,
other media channels such as TV and  Triggering of impulse purchasing operators can offer efficient location
Fixed broadband (immediacy effect) based advertising
 Increase in mobile applications
development, download and
consumption

Targeted Marketing High Gross Rating Points* Transaction Enabler

 Better understanding of individual  With low broadcast frequency,  The mobile network combines an
customer behavior since Mobile is mobile ads are already reaching a advertising platform and a payment
more personal than TV and PC large base of individuals platform (m-payment)
 Customer behavior Insights are  As such, by increasing the frequency  Highly secured mobile networks
obtained from browsing data, billing of mobile ads, impact will multiply provide consumers a sense of
information, personal preferences, significantly security that enables and encourages
traffic rates …etc transactions

Note: Gross Rating Point index being defined as reach times frequency of the advertisement
Mobile World Congress 2012, Barcelona
 Scale

The scale and growth of mobile broadband is considerably

higher than those of TV and Fixed Broadband

Global Users
(Millions) (2011 - 2014) CAGR
2,632
Mobile BB : 27%

2,153

1,514
1,717
1,887

1,294 TV : 6%
1,118
1,056
943 998

704 745
652 Fixed BB : 7%
606

2011 2012 2013 2014

Mobile Broadband TV Fixed Broadband

Source: Ovum, PWC, WBIS, STC Analysis

Mobile World Congress 2012, Barcelona
 Immediate Call For Action

Mobile ads trigger immediate consumer action by focusing on

selected essential functions

Top 10 Essential Mobile Functions

May 2011, % of respondents

Texting 21.6%
Comments
Internet 16.7%
 Immediate call for action is triggered
Email 15.7% through the use of interactive mobile
ads via SMS, MMS and internet
Call 7.8%

GPS 6.9%  The top three functions, as perceived

Facebook 5.9% by consumers, are also the top main

functions used in mobile advertising
Apps 4.9%

News 2.0%

Bluetooth 2.0%

Calendar 1.0%

Source: Prosper Mobile Insights

Mobile World Congress 2012, Barcelona
 Real Time Location & Targeted Marketing

Targeted marketing and location-based campaigns are growing

in the US market to reach 48% of total mobile campaigns

Mobile Campaign Targeting Mix

April 2011, % of campaigns (United States)

10%

48%

52% 34%
56%

Broad reach Targeted audience reach Local market Demographic Behavoral audience

Source: Millennial Media

Mobile World Congress 2012, Barcelona
 High Gross Rating Points

Mobile advertising can generate high Gross Rating Point at a low

cost compared to traditional media

GRP Definition Mobile Advertising GRP

 High reach to the target

audience (80% to 90%)
Reach due to the use of CRM
tools

High Mobile
X Advertising GRP
at a low cost
 High frequency at lower
cost achieves much
Frequency higher impact than other
media due to the high
opportunity to see of an
SMS, MMS or internet ad

Mobile World Congress 2012, Barcelona

 Transaction Enabler

Around 75% of smartphone and tablet users are online shoppers,

driven by the enablement of mobile online transactions

Online Shopping via Mobile Device

May 2011, % of respondents (United States)

25%
24%

19% 19%
17%
16%
15%

12%
11%
10% 10%
9%
7%
6%

Daily Weekly Several times per Once a month 4 or more times per Less than 4 times per Never
month year year

Smartphone Tablet

Mobile World Congress 2012, Barcelona

Despite the attractiveness of Mobile advertising, Operators
should be aware of potential challenges

Mobile Advertising Challenges

1 Customer experience disruption

 Mobile advertising partners should be tightly controlled to avoid
overwhelming customers with ads
 Customers may have the option to opt out of receiving mobile ads

2 Customer privacy concerns

 Customer will need to be classified in micro-segments to avoid use of
personal behavior and information
 Location history should not be available but location information should
be used instantaneously

3 Potential regulatory and legal restrictions

 Laws and regulations should be carefully examined to avoid conflicts

Mobile World Congress 2012, Barcelona

Thank you