NeoMedia Technologies, Inc (NEOM)

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DD 3G content at tipping point
by Suzy Bashford Marketing 20 Sep 2006

http://www.brandrepublic.com/bulletins/media/article/593576/3g-content-tipping-point/

News Corp's multimillion-pound investment has signalled the rising stock of mobile content.

The hype around mobile media since the much-publicised 3G auctions in 1999 is enough to make any marketer weary when they read yet again that the channel is coming of age.

But the decision by Rupert Murdoch's News Corporation last week to snap up ringtone firm Jamba sends a clear signal that this market is at last ripe for generating substantial returns.

The global media giant has bought a 51% stake in the company, which created Crazy Frog, for $188m (£99m). News Corp plans to merge it with Fox Mobile Entertainment and sell clips, ringtones and wallpaper, as well as launch additional formats.

'People have been talking about mobile marketing for years, but this is a strong sign of confidence in the medium,' says Jamyn Edis, senior manager, media and entertainment strategy practice at Accenture. 'In the last generation of phones, it was very much companies and press getting excited about it, but there was no consumer hype or awareness; now there is.'

Nevertheless, Edis warns that the market is still in its infancy and full of unanswered questions. He predicts that it will take about two years before clear business models are established.

'We know that consumers like texting and ringtones. But will they like music? Radio? TV? Advertising? We don't know. There is a lot of promise, but the market is still there for the taking,' he adds.

Major players from a number of sectors are throwing their hats into the ring. Microsoft, for example, is trialling a 'clip and share' service, which enables users to forward snippets from live broadcasts to friends. ITV, meanwhile, is trying to bolster its fading revenues by offering behind-the-scenes clips of its most popular shows, such as The X Factor. It has struck a deal with mobile network operator 3 to stream, or 'simulcast', its TV content. And BT and Virgin have launched BT Movio, which enables users to subscribe to TV and radio channels via their mobiles.

Initial research suggests that news, soaps, music, documentaries and sports are proving the most popular 3G content. Consumers also have an appetite for user-generated content, such as 3's SeeMeTV, which receives more than 1m download requests every month.

Somewhat predictably, mobile adult content is also set to soar, according to Juniper Research, and will be worth $3.3bn (£1.8bn) by 2011.

However, the market will not generate significant revenues until all parties commit fully to supporting the mobile channel, according to Thomas Husson, mobile analyst at Jupiter Research.

'Content owners - in other words, broadcasters - are not sharing the risk yet,' he says. 'We are not at a stage where it is considered profitable enough to integrate the cost of producing content just for mobile. But it is a promising market and it will happen in the next couple of years.'

Operators such as 3 are inevitably keen to speed up this process by encouraging production companies to create bespoke content. It launched a '3 Pilot Pitch' competition earlier this year, offering the prize of a £50,000 budget to develop the best mobile content idea.

3 is also at the forefront of developing a viable business model for the less- developed mobile advertising market. Advertiser interest in mobile has been limited, but there are signs that this is changing. Last week, Coca-Cola, General Motors, Gillette, Nike and Toyota signed up to support mobile video trial conducted by T-Mobile and EMI.

Graeme Oxby, 3's marketing director, argues that mobile requires a unique form of advertising. 'It can't be intrusive or get in the way of letting the customer do want they want to do,' he says. 'That is why I don't believe consumers will listen to an ad before making a call in return for the call charge being waived.'

While mobile advertising may offer up an opportunity to reach the elusive iPod generation, content has to be compelling enough for consumers to actively seek it out.

One of the most successful methods to date, according to Oxby, has been topping and tailing clips, as Budweiser did with its sponsorship of football-related content during the World Cup.

A number of barriers make it difficult to predict the advertising potential of mobile. One is the uncertainty over the rights of actors and musicians who have worked on the ads, which forced ITV's mobile service to go live without them.

The Institute of Practitioners in Advertising is currently tackling this issue; those involved are speculating that it will be resolved by early next year.

Another obstacle is that only 9% of the UK population has a 3G phone, though operators point out that this figure is likely to rise quickly, given that consumers change handsets on average every 18 months.

It is not surprising, then, that advertisers are holding back. A recent Accenture survey showed that while 52% of marketing directors are interested in mobile advertising, fewer than 5% are allocating budgets to it.

Indeed, most advertisers are pondering exactly how they can benefit from the mobile revolution. 'For me, this is the biggest unanswered question,' says Edis. 'I can see where it benefits telecom companies, network operators and content owners. But for advertising, it's too "Wild West" at the moment.

'There is talk of local, customised, targeted advertising, but that is very much a pipe dream at this stage,' he adds. 'It seems to me that companies such as Coca-Cola are getting more out of the PR than the actual activity.'

DATA FILE - GLOBAL MOBILE AD REVENUE PROJECTIONS (dollars m)

2006 2007 2008 2009 2010 2011
1 Mobile TV 173 577 1272 2259 3247 4368
Broadcaster/cellular 48 196 534 1220 2078 3101
Video 125 381 738 1039 1169 1267
2 WAP 36 161 531 1181 2122 3130
Search 3 21 101 317 775 1496
Banner ads/other display 33 140 430 865 1348 1634
3 Messaging (SMS & MMS) 629 1320 1872 2308 2587 2694
4 Mobile music 29 97 216 392 588 850
5 Mobile games 5 15 39 87 181 310
Total 871 2170 3931 6227 8725 11,352

Source: Informa


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