Thursday, November 30, 2006

Is 2007 the year of the mobile? Hedge your bets!

So did 2007 turn out to be the year of the mobile?  Um, no.  But this piece (first published Dec'06) points to three drivers of mobile growth, devices, content, and audiences.  It omits connectivity, one of the key factors; it turned out that all-you-can eat tariffs were pretty important too (as they were with the web).

It’s six years now since the government raised £22.5 billion in the biggest auction ever – selling five licences to operate 3G mobile phone networks.  It was subsequently described by the academics who advised the government as “the biggest auction since Didius Julianus bought the entire Roman empire in AD195”.

Didius only lasted 66 days before being murdered, and the buyers in this auction were hoping for a little better.  With so much to recoup, operators have been understandably keen to get consumers to buy in to this technology.  But progress has been slow to date.  We don’t see people making video calls on the bus, and WAP was a disappointment to most consumers, who stayed away in droves.

Whilst the hype was huge, the reality was that the devices were clunky, the content poor and the audience small.  The cost of using this as a marketing medium rarely stacked up – often because the small audience sizes meant that the fixed costs of setting up a mobile marketing programme were disproportionate to any value received. 

Add to this the understandable concern that marketers felt at the intrusiveness of this medium, and it didn’t really add up to a massively attractive proposition for marketers.

And yet.  We all know that the mobile phone is in everyone’s pocket all the time – it’s there when no other medium can reach a consumer.  As users we feel uniquely disconnected when we forget to take it with us, and extremely stressed when we lose it.  So the potential in this as a means to reach people is massive – but so far, it’s been just that – potential.

But 2007 could be the year that this all changes.

There are three fundamentals that need to exist for this market to take off – devices, content, and audiences – and we’re seeing change in all of these right now which could lead to a tipping point in the coming year.

Devices have come a long way in a short time – with bigger screens, better connectivity and easier navigation.  But a significant development has been the popularity of offline activities – like photography and MP3.  With phones now sporting 5 megapixel cameras, and the popularity of Sony Ericsson’s walkman range, consumers are increasingly adopting more sophisticated handsets.  iPod sales are down for the first time, as the market moves towards these converged devices.  The consequence of this is that the phones now in the hands of consumers are capable of a much better online experience.

On the content front, the last few months have seen the appearance of a range of new services - Vodafone now claim 183,000 subscribers to their Sky mobile TV service, and deals for Yahoo, Google, eBay and skype have all been announced with operators.  Sports, games, news and chat are all adding to the options available, and consumers are becoming more sophisticated in their usage - downloads of videos and music are growing as revenues from ringtones and wallpapers decline.

Finally, audiences are starting to respond, and the numbers are looking healthier.  Nokia generated 200,000 branded downloads during the last X-Factor series, and EMAP claim 2500 comments a day come in via mobile to their FHM site.  According to the Mobile Data Association, 14 million people used the mobile internet in September this year.

If this was the internet advertising market, it’d be 2003.  We’ve just been through a period of massive over-promise, and a couple of years of false dawns.  Most people are still on dial-up, but broadband is starting to make an impact on audience figures, and we’re starting to see an upsurge in business activity as the sector is reinvigorated.

Christmas is just a few weeks away, and we’re going to see a lot of shiny new phones being unwrapped.  Will this new injection of devices and audience be the spur the mobile industry needs finally to create a new mass internet market?

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