Monday, August 6, 2012

Does Mobile Commerce Make More Sense Than Mobile Advertising?

If you are a tier-one mobile service provider exploring large potential future opportunities, it matters greatly how big each potential new business might be. Though most such firms will place lots of bets, and wait to see what develops, tier one service providers cannot waste time on "small" opportunities. 

Typically, services such as mobile advertising, mobile payments or mobile commerce, machine to machine communications or enterprise-oriented services are on the list of such possibilities. So how big might "advertising" be, compared to "commerce?" 

It's a hard question to answer, in part because "mobile advertising" and "mobile commerce" clearly overlap, while mobile commerce overlaps with mobile payments and banking. 

Google Wallet or Isis, for example, both envision their mobile wallets becoming a hub or intermediary for all sorts of deals, offers, coupons and loyalty and reward programs, even though mobile wallets are seen as intimately related to mobile payments. 

In fact, it might be the case that the interest in "mobile advertising" now should better be described as an interest in mobile commerce, anchored initially by mobile wallet efforts. 

At least in part, mobile commerce also makes sense because research from Nielsen in 2011 already was showing that 29 percent of smart phone owners use their phone for shopping-related activities. 

But at least so far, few of the top activities conducted by mobile shoppers are extremely conducive to direct mobile service provider participation. Some 38 percent of respondents conduct in-store price comparisons (38 percent of mobile shoppers), about 38 percent browse products through their mobile Web or apps while 32 percent report reading online product reviews.

The opportunity for mobile service providers to create value and a role in those activities and ecosystems is largely unclear. Mobile wallets, on the other hand, could represent a much more logical role for a mobile service provider. 


US Mobile Ad Spending, 2011-2016 (billions and % change)




Mobile advertising, for example, might represent $2.6 billion in 2012 revenue, and little of that flows to mobile service providers. Mobile commerce includes sales of mobile content, purchasing of services and products, mobile offers and deals, for example. That activity, even exclusive of sales of ring tone, mobile video or games, shows, already had reached 




  mobile comm wire post_chart1_shopping activities 



 Apps, which account for the majority of mobile phone time in the U.S., may be the key to shifting consumers from browsing products on their phone to making purchases, some would argue.

There also is a relationship to mobile payments as well. Although only nine percent of mobile shoppers have used their phone to pay for a purchase at a retail point of service terminal, 71 percent of app downloaders would be interested in an app that allows them to use their phone as a credit card. 

Even those preliminary figures suggest the potential, from a mobile service provider perspective, of pursing mobile commerce, wallet and payment initiatives, compared to mobile "advertising," in a narrow sense.

Loyalty, offers and other revenue streams related directly to mobile wallets are feasible and logical, but might more logically be seen as mobile commerce rather than mobile advertising revenue streams. 

mobile comm wire post_chart2_phone as cc

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