Home / Industry / Mobile ads are fast becoming central to marketing strategy

New Delhi: Google has a new trick. The undisputed leader in the mobile advertising space has used its latest version of the Android operating system, Marshmallow, to deliver customized advertisements on the locked screen of a smartphone, silently pushing the ad while the device is being charged.

If you are an online shopper, you are likely to see ads from start-ups like Limeroad and Myntra pop up on your mobile. Similarly, if you like to read online, you will perhaps find yourself a target for news and content aggregator apps such as The Times of India and Tazzify.

Marketers have been targeting audiences on mobile phones for almost a decade in India. But what has changed significantly is the way they are doing it.

As cheap smartphones proliferated, Internet penetration increased and customers shifted to mobiles as the preferred medium to consume information, firms are spending more marketing dollars to chase those potential customers on their small screens.

Along the way, mobile advertising, too, has evolved from SMS and call-based marketing in 2006-07 into a more sophisticated phenomenon that includes mobile web and in-app ads, mobile search and social networks.

From a $25 million market in 2011 in India, mobile advertising has expanded to $70-$80 million in 2015, growing at 60-70% annually, according to industry estimates. Firms are spending 2-4% of their overall media advertising budgets on mobile ads. The spend is expected to grow to 15-20% of the overall media exp-enditure by 2020, analysts say.

To be sure, the mobile advertising market is still minuscule. But industry experts say mobile is becoming central to the media strategy in India not only for the new breed of companies that are born digital, but also for large traditional conglomerates such as Unilever, Procter & Gamble Co., Nestle SA, among others.

According to a Groupe Speciale Mobile Association report, the number of Indians accessing the Internet over mobile devices expanded from less than 100 million in 2010 to nearly 300 million at the end of 2014. This is likely to double to 600 million by 2020, which presents a huge opportunity for marketers.

There are a number of factors which have come together that make the mobile such an effective medium, said Milind Pathak, chief operating officer, Madhouse South Asia, the unit that operates under the digital arm of WPP Plc’s GroupM.

“People are spending a disproportionate time on their mobiles as compared to other mediums like TV, laptop and tablet, which is the main reason for advertisers to put their money in there," he said. GroupM, the largest media buyer in India, puts its mobile ad spending at 1.5-2% of its entire media advertising spending.

“Apart from scale and reach on mobile, you have a strong ability to personalize the content according to your target audience," said Pathak.

For instance, online travel firm Yatra ran a campaign on Facebook earlier this year prompting users to install and use its mobile app. It placed mobile ads on the news feed of smartphone users, including those who showed an interest in travel. The campaign, which ran between January and May, saw app installs going up by five times and a 28x return on ad spending. Currently, Yatra gets half of its bookings through its mobile app.

Internet companies like Google Inc. and Facebook Inc. caught on the trend in India early on—a move that helped them become two of the largest entities in the country’s mobile advertising space.

These companies conceived new strategies for India, which included customized and promoted search results, links, photos and videos, among other things. Facebook, for instance, is focusing on capitalizing on the shift to mobile, growing the number of Facebook marketers, and making its ads more relevant and effective, the company said in an email.

Indian companies like InMobi Technologies Pvt. Ltd and Vserv Digital Services Pvt. Ltd also got into the game early, which gave them a significant share of this market.

InMobi focuses on mobile displays, a category that makes up about 50-70% of the mobile advertising market. In 2013, InMobi bought Overlay Media, a company that delivers personalized content to mobile users.

Other companies chasing those ad revenues in India include Yahoo Inc. and Cheetah Mobiles Inc., the Chinese mobile app firm that made its debut in India in September. The latter uses big data analytics to understand the behaviour patterns of potential customers and target them with appropriate products. In August 2014, the former bought mobile analytics company Flurry, which tracks user behaviour on apps.

What Flurry does for Yahoo is similar to what Overlay Media does for InMobi. It creates a user profile based on the insights provided by data analytics, which, in turn, advertisers use for targeted marketing. A user persona could be that of a “tech enthusiast" or “new mother", based on their online activities such as shopping or reading.

For Yahoo, one of the bigger focuses remains mobile, a key platform for advertising that has just taken off in the country, according to Nitin Mathur, Yahoo’s senior director of marketing for the Asia-Pacific.

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