Business Models in TelecoMMunicaTions - Comarch

6 > In Focus
Figure 2 Mobile Advertising Revenue Growth, Worldwide, 2006-2011
Source: Gartner (January 2008)
14, 000
12,000
10, 000
8,000
6,000
4,000
2,000
0
2006 2007 2008 2009 2010 2011
The emergence of these new merchants and
providers in the mobile arena leads to additional
revenue, but not necessarily for telecommunications
service providers. Mobile service aggregators
like Google, Yahoo, Apple or Facebook are already
exploring this market and are succeeding in monetizing
mobile advertizing. End-customers pay only
a part of the price of mobile services while the rest
of the revenue is collected from advertisers.
Forecasts predict significant growth of the
mobile advertising market over the next few years.
This will be possible due to increasing adoption
of mobile internet as well as implementation of
larger screens on mobile devices, leaving more
real estate for advertisers.
Transformation of advertising expenditure and
new opportunities for advertisers also contribute
to changes in the business model for mobile providers.
First of all, a mobile device stays with the
user all day. We grab our phones when we wake
up and keep interacting with them until we go to
sleep. There is no other marketing channel that provides
similar, continuous contact with the target.
Users listen to the radio, watch TV, use computers
or read newspaper for only few hours a day. Mobile
phones are with customers all the time.
Some may say, having constant access to the
customer does not necessarily mean more ads can
be delivered. But what if ads can be perfectly targeted
and provided precisely when and where they
are really needed? What if advertisers know who
the customer is, where they are located and what
they are looking for? Correctly targeted advertising
could be appreciated, if not desired, by customers
and result in dramatically improved response rates.
Technologies like mobile RFID, LBS, 2D bar codes
and real-time video processing support mobile
marketing and enable accurate targeting, making
it significantly more attractive to customers than
any other form of advertising.
Over the past few years many consumers, especially
the younger generations, have realized that
social networks take communications to the next
level. Instead of sending vacation pictures to our
friends and family or calling them with invitations
to birthday parties, consumers now use social networks
to let the outside world know about their
lives. It seems only natural for users to move from
the desktop application to the mobile terminal and
take their social network on the go. For the mobile
industry, this fact represents a significant change,
even a revolution. For many users, the mobile version
of Web 2.0 could become the most commonly
used application on their phones.
All this puts tremendous pressure on traditional
voice and data service providers. Analysts predict
that by 2012, the number of traditional mobile
voice minutes in Europe will drop by more than
40%, and will be replaced by other applications
like VoIP, social networks or click-to-call.
Carriers are trying to navigate this new world by
offering next-generation applications that could
respond to the new demands of customers and
prevent them from moving to third-party providers.
Is this the right direction for carriers? Shouldn’t
they accept the fact that the best applications will
be developed by those who specialize in these
areas? Carriers have a lot to offer as aggregators,
combining networks with third-party applications,
content and advertising. Platforms equipped with
the following attributes provided by carriers would
become unique and valuable propositions for independent
application providers.
> Their own customer base
> Their own network
> Brand recognition
> Marketing data
> Location data
> Identity and Authentication
> Policy Management
> Established invoicing and payment channel
Customer-centric vs. telco-centric
model
Depending on how mobile carriers react to the
changing market environment, there are two overarching
models that can be foreseen as a future
configuration of the mobile industry. Carriers will
either continue to position themselves as dominant
service, content and device providers, or they
will adjust to changes by offering attractive delivery
platforms for external third party providers.
In the first scenario, carriers would not be able to
compete with other providers, and could merely
become “bit pipes” losing a significant part of the
revenue. In this customer-centric model, carriers
lose their dominant role in the value chain. This is
very analogous to what happened to internet service
providers. ISPs have no control over where
and what equipment customers buy as long as it
is compatible with their networks, what service
customers use for email, IM and VoIP calls, who
the content provider is, and ultimately who delivers
ads. The ISP is just a part of the value chain
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