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Mobile Advertising Industry Opportunities in Japan and the U.S.

Mobile Advertising Industry Opportunities in Japan and the U.S.
By: Nivedita Ojha

The mobile advertising market in Japan has been experiencing rapid growth and expansion during the past several years with considerable success. As more people turn to their mobile devices for everyday use, including making purchases, the importance of search based and content matched mobile marketing and advertising is gaining importance due to its success. Concurrently traditional mobile banner advertising and email campaigns are being used less and less as they have not proven to be as effective as they are in the online channel.

Japanese companies are now allocating more than 13% of their online marketing budgets to mobile marketing and advertising. This is a significant increase in budget allocation to the mobile channel from previous years and can be attributed to the new opportunities that have arisen within an open-market system that enables collaboration between operators, device manufacturers, and content providers — which ultimately serves consumers — and a revenue sharing model that favors content owners. )

Some interesting facts about mobile marketing advertising in Japan include:
 In 2008, $78 million or 13.7% of mobile advertising budgets were allocated to search based mobile advertising.
 More than 25% of Japanese mobile users respond to mobile advertising campaigns and either sign up for promotions or make purchases through their mobile devices. And more than 30% click on mobile advertising.
 In the U.S. the mobile advertising budget was $160 million in 2008 and this was spent on SMS, search , and display advertising.

According to a recent article by Christopher Billich of Infinita, there are Japanese mobile sites, such as Mobagetown, that are extremely popular with a large user base. As Billich states, “The site operates on a model that offers free browser based Flash games and social networking using avatars that users can dress up in a choice of more than 10,000 digital items.” These items can be purchased with a virtual currency that users obtain by clicking on advertising and registering with or shopping on affiliate sites. At the end of 2007, Mobagetown had more than 9 million registered users and served more than 15 billion page each month.

Leveraging the strength of the Mobagetown audience, Nike launched a promotion through the mobile channel that enabled users to dress their avatars in virtual versions of Nike’s new clothing line that is available in Nike’s retail stores. Nike offered a “limited edition” of some content that could only be obtained by users who went in to an actual Nike retail store where they would find the “limited edition” content on URLs that were hidden on stickers. Nike’s promotion, connecting mobile users with an interactive experience of their new clothing line, resulted in driving considerable traffic to Nike’s retail stores.

Contactless Transactions and Mobile Shopping
According to Christopher Billich of Infinita, between 2004 and 2006, wireless phone operators in Japan pushed for contactless transactions (RFID and NFC) to be standard functions available on mobile devices. Today, mobile commerce in Japan has surpassed mobile content revenues compared to three years ago. Mobile devices are quickly becoming a full-fledged shopping and payment device.

For example, during a recent baseball game, NTT DoCoMo launched a trial campaign that allowed consumers to participate in a mobile game and bet on the outcome of each inning. For this, the mobile users received promotional coupons which they could redeem “contactlessly” at McDonald’s.

In another example, Coke issued mobile coupons which could be used by simply touching the handset to Coke vending machines.

US Opportunity
Even though the US has one of the highest penetration of data packages in the world, mobile advertising has not taken on as expected. On an average, in Japan, each subscriber (mobile phone user) spends an average of $6 each year based on advertising they engaged with in the mobile channel whereas in the U.S. the average spend is less than $1 per year per subscriber.

If one were to compare mobile page impressions vs. online page impressions in the U.S., the website impressions would exceed the mobile impressions by more than 100 to 1. This may be one of the reasons why mobile advertising hasn’t yet received its dues in the U.S. Until we see mass adoption of mobile applications these numbers will most likely remain low, however, some industry experts have predicted that 2010 will be the year of mass adoption for mobile applications.

But the issue is even bigger. Based on the examples stated above we can see that the success of the campaigns was mainly due to extremely well “targeting.” Today the ads delivered on mobile applications are very generic and coming from the same pile as that of online ad networks. But slowly ad networks are adding analytics and new localized inventory. This will help to deliver targeted ads based on users, types of handsets and location.

In addition, advertising has also been created to generate two-way communication between the subscriber and the mobile application in Japan. Therefore, the success of mobile advertising is due to the fact that it is both engaging and interactive.

With the mass adoption of applications and localization of advertising we should eventually see the U.S. market take better advantage of mobile advertising, similar to the success that has been seen in Japan.



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