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Pesky Calls Give Way to Full-Fledged Mobile Display Advertising in India

Wednesday, November 30th, 2011

Kabil Sibal, communications minister of India, recently announced that the National Do Not Disturb (NDND) service will be fully activated from September 27th of this year. The Telecom Regulatory Authority of India (TRAI) has implemented a new set of measures including a fine of Rs. 25,000 to 250,000 (US$500 to $5000) on defaulting firms. Customers who register for the NDND services will be blocked from receiving marketing calls or SMSs. In another recent development, TRAI has also imposed a cap on the number of SMSs able to be sent per day by any subscriber to 100.

The DND system has been functioning well in developed countries, as well as several developing countries. While it’s an effective way to curb pesky marketing calls, the DND procedure also imposes restrictions on mobile marketers to reach out to target customers. In countries like India, such a restriction could have a huge impact on the mobile marketing industry. India now has over 858 million mobile subscribers,1 and the number of mobile connections in urban areas had reached 565.71 million by the end of July of this year. The overall wireless tele-density has touched 71.59. By 2014, wireless subscriptions in India will account to more than 97 percent of the country’s population of 1.26 billion, according to market research firm iSuppli Corp.2 Mobile marketers, who had enjoyed the freedom to impose their marketing offers on customers all this while, are likely to bear the brunt once the DND system is made completely active.

India, labeled as one of the world’s largest consumer markets, has been the favorite target of several fast moving consumer goods (FMCG) companies, banks and media firms. Compared to their foreign counterparts in developed countries, an average Indian consumer has been more receptive to advertising and marketing offers. The consumer mindset in India is more typically lured by “buy 1 get 1 free” offers or “book an air ticket and get two movie tickets free” offers. For them, if it’s the choice between a not-so-urgent flight and free movie tickets, they will not find any harm in opting for a flight instead of a train. After all, they are going to get two movie tickets FREE!

With mobile phone reaching the majority of Indians regardless of their gender, economic class and profession, it has been a golden opportunity for these companies to target the world’s largest consumer base in the most efficient manner. Mobile marketing is cheaper and more effective than conventional marketing methods involving personal visits and/or display advertisements.

While the NDND system has been active in India for many years, it did not yield the desired results due to lack of cooperation from telecom operators. Marketers succeeded in sending bulk SMSs to target customers and reaped benefits out of it. This was evident in the explosive growth of the mobile marketing segment in India. With the new NDNC in place, subscribers are given the freedom to block all marketing calls/ messages or opt for a few select services according to their preference. For example, if a customer is interested to get attractive offers on credit cards, he/she will get it only if they register for that service through the NDNC registry. Suppose a customer who had already registered for DND now wants to get selective SMSs on his/her mobile; they will have to first deactivate the DND service and then repeat the entire process to register for receiving customized messages.

With this procedure, it becomes clear that the NDNC will have a devastating effect on the mobile marketing business. Mobile subscribers in India generally fall into one of five groups, namely students, laborers, housewives, professionals, and senior citizens. If we analyze the general responsiveness of each group towards marketing calls, we can see that students and housewives are more receptive to marketing calls or messages, but in most cases they fail to generate business for the marketer as they are not the earning member in a family. The class of laborers and senior citizens usually discard these offers as most of these offers either do not match their financial status or are not relevant to them. The category of professionals, which includes employees of all levels, is the best target of marketers because they have the potential to spend on items they want. This category of mobile subscribers is also the largest consumer segment in India as they spend most of their time outside home.

Having that said, the NDND implementation will cause marketers to lose their most prospective target, i.e., the professionals category, which is more educated and eager to get competitive offers from shops and service providers. The reason for this is that they are the category that is the most annoyed with marketing calls. In today’s competitive scenario, professionals are facing the pressure to perform, and they do not have time to lend their ears to the long and monotonous speech of the telecaller to get him or her an attractive offer. The NDNC is a boon to them, as it would stop the nuisance that follows these subscribers 24 hours a day, at home, office, party or wherever they are.

Once a customer registers for “DND”, it is very unlikely that he/she will recall the service in the future. As more subscribers start enjoying this freedom, they are likely to advise others to follow the same procedure. No doubt, service providers are likely to receive as many DND registrations as the number of subscribers in their registry within a few months of installation of the newly completed NDND.

With Indian telecom authorities becoming stricter on pesky marketing communications, mobile operators have adopted a careful approach in implementing the system that would reduce inconvenience to customers. Leading operators like BSNL, Airtel, Vodafone and others have set up the DND Registry to allow customers to opt for DND according to their preferences. The request will be addressed within the stipulated time. Moreover, operators are also obliged to stop spam messages and e-mails getting spread through their networks.

As mobile penetration increases, the risks associated with data security will also rise. To tackle these challenges, operators will be forced to adopt advanced network technologies and platforms that could help them launch a hassle-free and secure service to their customers.

In such a scenario, it is worthwhile to have a glimpse at the future of mobile marketing in India.

Mobile Advertising a Lucrative Option for Marketers

With mobile SMS marketing taking a hit by NDND, mobile display advertising will emerge as the future opportunity for marketers. According to Abhay Doshi, senior director at Marketing Flytxt, future mobile marketing in India will be driven by advanced trends like Location-Based Services (LBS), Augmented Reality (AR), Mobile Internet, Mobile TV and social media. According to Doshi, the success of these advertising campaigns will be defined by their “relevance” rather than “reach or frequency.” Services such as Augmented Reality enables marketers to present customized offers that meet the requirements of customers. For example, an augmented reality service may present a list of restaurants in a particular street close to the customer serving his/her favorite cuisine at discounted rates, instead of providing him/her with the entire list of restaurants in the area. Such a customized offer will be irresistible to customers, so the conversion rates are also high.

With the proliferation of 3G service in major cities in India, marketers will find new ways to reach out to target customers through non-traditional means. They may leverage the service to launch intuitive multi-media advertising campaigns through social media, mobile Internet, and mobile TV. A study conducted by Wireless Intelligence4 estimates that 3G connections in India are set to grow three-fold between 2011 and 2015, to 400 million by 2015. The proliferation of cheaper smartphones will fuel the adoption of 3G among average Indian customers who prefer to stay connected 24-7. Mobile Internet and Mobile TV will replace traditional advertising platforms as the former offer live, enthusiastic offers as and when a customer needs them while on the move.

Despite the challenges offered by increasing regulatory measures like NDND, mobile operators see a great opportunity in the flourishing mobile advertisement markets. As the competition gets fierce, telcos look for ways to monetize from the available opportunities as a measure to sustain ARPU and manage customer churn. Mobile advertising is a tangible way to add revenues, so operators are keen to leverage this opportunity by forming partnerships with advertising firms and technology providers. Soon the mobile landscape will evolve from “that of a dumb pipe provider to a media owner,” as said by Flytxt’s Abhay Doshi.

Mobile advertising, especially display advertising, in India is picking up momentum, according to Naveen Tewari, CEO, InMobi, a provider of mobile advertising services to global customers. Currently, India is a US$25 million market for mobile advertising. A recent survey conducted by InMobi establishes that 70 percent of respondents in India have realized the value of mobile advertising. Tewari says it’s time for advertisers to take up this opportunity.

However, lack of awareness still remains as one of the main reasons that hinder the adoption of mobile advertising in India. Mobile advertising is often interpreted as SMS advertising, so brands are reluctant to adopt the marketing initiatives in fear of being black-listed for spam. Mobile advertising brings tremendous revenue opportunity for advertisers as well as operators. A recent survey by Insight Express has found that mobile advertising is 4.5-5 times better in delivering ROI than online advertising. Mobile campaigns, according to Tewari, continue to be a powerful ad channel for marketers, outperforming online advertising by roughly three times across a variety of metrics, including ad awareness, message association and purchase intent.

With telecom authorities going strict on the pushy SMSs and marketing calls, mobile display advertising remains as the best alternative to reach out to target customers. Customers are accustomed to display advertising seen through conventional channels, so the resistance to such ads is less. These ads usually appear along with subscribed apps or while browsing the mobile Web, so it becomes a voluntary ad invited by the user. The future of mobile advertising looks brighter as more and more mobile advertising firms emerge with cost-effective mobile marketing solutions and service providers offer affordable tariff plans to advertisers.

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