Traffic grows faster than revenue in mobile market

By Arlene Burgos,

Posted at Apr 08 2011 01:54 AM | Updated as of Apr 08 2011 09:54 AM

MANILA, Philippines – The market has gone mobile. And it carries a small tool more powerful than any of the earliest computers ever were, capable of thrusting the communicating and computing public into a digital revolution.

This surfaced during talks and discussions on the opening of the two-day Mobile Marketing Conference 2011 at the Hotel Intercontinental in Makati on Thursday (April 7).

Marketers must recognize mobile as the largest and fastest growing media that could be integral to all marketing campaigns within the next two decades, said Rohit Dadwal, Managing Director of Mobile Marketing Association-Asia Pacific. He keynoted the conference dubbed “The Market is Mobile – Can Your Brand Keep Up?” Organized by the Internet and Mobile Marketing Association of the Philippines, the event gathered experts and thought leaders in the mobile industry.

Mobile has been used loosely to refer to the entire gamut of handheld devices ranging from cellphones and smartphones to tablets, and their capabilities ranging from short messaging system, voice calls, Internet browsing and various applications. These handhelds were referred to, at one point during the conference, as the “third or fourth screens” coming after television and computers.

Dadwal spoke on the importance of the mobile as a medium, citing data to show the enormity of the mobile market, its potential for growth, and the inevitability of it becoming a major vehicle for marketing and advertising.

The consumer is powering this “digital revolution,” Dadwal said.

He said traditional and digital marketing are "being pulled together by the use of mobile.”

“What does this mean for all the brands agencies? It means one thing: mobile is big… You have to accept that mobile is gonna be in all your marketing needs,” Dadwal said.

Mobile subscribers worldwide this year is at 5 billion, which is expected to double in 10 years. This makes mobile the other half of online in a “total digital universe.”

While the Internet remains the most used media channel worldwide, commanding an average of 19.5 hours of usage per week, and seconded by TV at 16.2 hours, mobile is not a far third at 13.1 hours per week.

“This (mobile) has the largest and fastest growing audience of any media… this is the media of the future,” Dadwal said.

More usage than revenues

Yet mobile’s growth and usage seemed to be outpacing the revenues it is able to bring businesses – for now.

“Mobile data usage has grown tremendously in the past. It is still growing. Traffic growth is outpacing revenue growth,” said Jerome Almirante, Head for Value-Added Services and Data Services at Smart Communications, Inc.

He cited a Cisco study saying mobile data traffic is expected to increase 66-fold by 2013, and this is “the challenge that all mobile operators are facing right now.”

Among the major drivers of growth is the dramatic increase in smartphone usage, as well as web-enabled feature phones, Almirante said.

But as the Philippines continues to battle with telecommunication infrastructure issues and the sensitivity to price of a vast portion of the market, these may not immediately replace the 2G phones, which refer to handsets that run on second generation telecom networks built mainly for voice services and slow data transmission.

Globe Telecom Inc. president Ernesto Cu sees a window of three to four years, although a tipping point may happen in an 18-to-24 month period as phone prices reach a P4,000-to-P5,000 threshold for the lower-income patrons of the 2G.

“Substitution (to smartphones from 2G) has begun… Peaks (of 2G phone usage) aren’t as high,” Cu said.

Almirante pegged the current smartphone and tablets at being 1% of the local market. Still, the prospect for smartphones and others in this league appears to be bright, and is worth the chase – as well as a proper marketing program.

'Opting-in and -out are musts'

“Downloading an app (application) is considered by many brands as the ultimate opt-in,” said Michael Palacios, Managing Director of Havoc Digital.

He underlined in his talk the importance of permission-based marketing, which gives users the option to sign in and out of an app or a promotional material.

“Our smartphones know who we are and what we do, in fact possibly more than our spouses do -- and that’s a scary thought,” Palacios said as he batted for permission-based marketing that employs a privacy policy and a marketing message from where users can “derive utility.”

The lure of social interaction, among others, appeared to be powering much of the activities in the smartphones. This month’s Facebook users in mobile jumped to 250 million from 100 million in February 2010. Among Twitter users, as much as 22% were on mobile in December 2010, according to a presentation by Frederic Levy, Associate Director at Netbooster Asia.

Yet, these figures seem to represent only the tip of the iceberg in terms of the mobile’s potential.

“We carry in our hands more computer power than what my original Mac had… (But) we are not doing anything magical, ” said Michael Smith, Director of Global Tech Initiatives for Yahoo! Southeast Asia. He was, during his talk, “Engagement in Mobile Social Networking Marketing,” referring to how powerful mobile computing had become.

“The pre- and post- (paid) world of phones are at odds with the true capabilities of smartphones,” Smith said.

He also echoed a sentiment among industry observers that the best may yet to come for mobile: “We have not reached the tipping point where the power that you carry around is really that useful.”