mocoNews - Interview: Jeremy Makin, Int'l Development Manager Of Mobile Ads, Vodafone: Beyond The Banner

Dianne See Morrison
mocoNews.net
Friday, May 22, 2009; 8:00 AM

British telecoms giant Vodafone (NYSE: VOD) is moving beyond the banner. The world's largest carrier by revenues, is introducing or trialing a number of new mobile advertising formats, some of which are based on the ever-trusty text, and others that take advantage of a user's location as we reported yesterday. After years of hype, it seems that mobile advertising is finally seeing the type of growth in revenues that Vodafone's international development manager of mobile advertising Jeremy Makin says has pushed it past "the toddler stage". Makin reports that Vodafone's mobile revenues across the group grew 70 percent year on year, and that growth "would have been faster if not for the recession, which has pushed it back 18 months." Makin gave us a bit more detail on what Vodafone is working on, where it's seeing particular growth and potential new models. Here's what he had to say:

Banner Ads Rule, SMS still reliable: Banners ads produce the "majority of revenues" for Vodafone, but it is seeing growth in other advertising products, including those based on texting. "Please Call Me Service," developed by its South African JV Vodacom two years ago, has been particularly successful with pre-pay customers. The service was created after Vodacom found their pre-pay customers had developed a "language of rings" to avoid running down their credit. The carrier subsequently launched its "Please Call Me" service in which customers can send an ad-funded message that tells the receiver to call back. Vodafone has since introduced the service in other strong pre-pay markets including Spain and Egypt, with more country launches planned, including its Eastern European territories and India. Said Makin, "From an advertising perspective, it works really, really well. It's got a very strong reach, which you can get very quickly. In South Africa, users send over 20 million ["Please Call Me] messages every single day."

Branded apps: "Applications are very important for us moving forward," says Makin referring to Vodafone's recent announcement to offer developers the software to create apps to sell to the carrier's customers. Like everyone else, Vodafone has seen the success that advertisers have had creating branded apps for the iPhone. Says Makin, "it's a big branding opportunity, to build functional, entertaining, fun apps, which we've started to see with the iPhone." But Makin says the carrier can offer an even wider net to advertisers, since apps built for Vodafone will supposedly work across the entire network, "for every single device from every single manufacturer." Vodafone could earn revenues from either the ads that are "injected" into the applications. Or, the carrier may create their own apps, "apps we know customers want, and where we can go to brands to sponsor," says Makin.

Will we ever see ad-funded minutes, like Blyk? Last week, ad-funded MVNO Blyk, which operates in the UK, said it would only launch in additional countries if it could secure carrier's as partners, ostensibly to help in the costly buisiness of acquiring users. But what do carriers actually think of the model? Makin: "We're already seeing that kind of model in some of our markets, though it's not extended to voice. In the Czech Republic, for example, we have SMS Gratis where 18-25 year olds can opt in to get "unlimited texts" every single month in return for viewing ads as texts are sent. What we are trying to do is NOT cannibalize our existing revenues, but to add to them. I'm not saying [the Blyk model] won't ever happen?but it's about growing revenues not substituting one for another. There's no reason why we wouldn't look long and hard at the Blyk model, which was very successful and customers and advertisers loved it. The fundamental issue with Blyk?is that it had limited reach?but we have got that missing bit. We have got the huge reach and the customer relationships in existence already. We're not going to dismiss it, but mobile advertising from our perspective is very much about growing revenues not substituting one for another."

Exclusive ad sales partners: It's been widely reported that Vodafone will end its exclusive ad sales partnership it has with Yahoo (NSDQ: YHOO) in the UK in a shift in strategy that will allow the carrier to increase its ad revenues, by allowing more partners to sell ads. Makin wouldn't comment on whether the contract would end or not, or if it simply plans to phase out the exclusive part. It sure sounds like from reading between the lines that Yahoo probably won't have an exclusive pact, but that the carrier probably won't allow an unlimited number of ad sales partners, which could add a whole lot of confusion to the market, despite bringing in choice, if not more revenues.

Says Makin, "We're reviewing our options. We're happy with Yahoo, but there are pros and cons to both [an exclusive partnership and having many partners]. Ultimately, what we want is a sales partner that has good relationships with agencies and clients and can sell the mobile medium effectively?and maximizing the revenue from the agency and brand world." Last autumn, Vodafone began allowing British sat-broadcaster Sky to sell its own inventory, so far the only media owner it allows to do this. Says Makin, "With the Sky deal, ultimately they know their inventory very well and know their product very well and do a good job of selling it."


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