T-Mobile , Yahoo! and mobile Internet ad euros

Thomas Husson | January 16, 2008, 03:49 PM

T-Mobile and Yahoo! today announce a strategic partnership which will see the first display advertising appear on T-Mobile’s Web'n'Walk service.

I don't think there is any major difference between this agreement and that already announced between Vodafone and Yahoo! Interestingly, both operators have selected Google as their mobile search engine. The only difference I see is that T-mobile really pioneered the mobile open Internet when they launched Web'n'Walk (2.8M customers at the end of q3 2007) as early as November 2005 while Vodafone only recently revamped its approach a few months ago across Europe. In terms of mobile consumer Internet tariffs, T-Mobile's offer is also more attractive.

Via Yahoo!, advertisers now have a direct access to 2 of the main operators in the UK.

This is another proof of how buoyant the mobile advertising market is. JupiterResearch just published a report on this specific topic. Clients, see the full report here (which includes consumer survey data for the main European countries, analysis of a recent executive survey and a detailled forecast spreadsheet). Non-clients, see more details in the press release here.

I find it always interesting to see the way it is picked up in the press, beyond those who simply copy and paste the PR. There are some comments saying our approach is very conservative...Why? Because they compare it with other institutes' forecast?! My answer would be:

1) This would not be the first time (see here). Not sure this means we are conservative or that some players are way too optimistic. The same company predicting mobile marketing to exceed 20bn$ globally is also the one who said mobile music would exceed 18bn$ in 2011. Just have a look at the current size of the whole music market today (including CDs) or read my colleague's Mark Mulligan blog and you will get my point...

2) 1,300,000,000 euros (I insist; not dollars) is a pretty decent figure. Bear in mind it is only for mobile display / mobile search advertising. It does not include SMS, MMS marketing. It does not include coupons, bar-codes,...Those are NET revenues, pure advertising spent...and last but not least this is "only" for 17 countries in Europe not for the whole World...As always, figures need to be interpreted with caution as long as you don't know the methodology. It might well be that some research firms include creative costs, technology spent, discounts and have a wider approach including many of the other marketing tactics. We have started building a mobile marketing messaging model in Europe. If you are interested in participating in it and have insights on the SS7 issue and on SMS volumes/prices, please get in touch.

3) There are significant opportunities. It is mainly a question of timing and the next 2/3 years will see a transition / education phase. Bear in mind it took roughly ten years for the online ad spend to represent a noticeable share of the total ad cake (still <10% in most countries even though some users spend more time on the web than in front of their TV...). However, mobile enables interaction with individuals, not households, due to its personal nature. More than any other medium, mobile can be leveraged to make the most of unique contextual (e.g., time of day, location), individual, and behavioral targeting.

4) Even if you look at more advanced countries such as Japan, the mobile advertising market is not that huge. According to Dentsu (the leading advertising agency there), the total mobile ad market represented 240M euros end 2006. At the end of November there were 94.5M mobile customers in Japan. That's roughly 2.5 euros / year / user. At that time, 3G penetration was at 64% and mobile Internet penetration at 87% according to the Japanese Ministry of Internal Affairs and Communications...not really the kind of penetration we see over here yet. From what I have been told, there is so much inventory available, that CPM prices went down very significantly.

So, coming back to the T-Mobile / Yahoo agreement, it seems to me a very interesting and relevant one in a growing market. According to an executive survey we conducted a few months ago, of marketers having used or planning to use mobile marketing, 64% planned to use banner advertising on mobile portals, and 68% planned to use banner ads on off-portal mobile Internet pages during the next 12 months. These marketers also consider the mobile Internet to be the most service enabling future growth of mobile advertising revenue (58%).

While it is a good thing to test the medium if you want to interact with a younger audience, it does not mean at all advertisers will invest massively in the short/medium term.

Such an agreement is the way to build the market step by step. It sounds to me a better approach than some of other operators wanting to go their own route. It is probably the best way to ensure real revenues moving forward.