African mobile operators are missing an opportunity

Posted: February 19, 2015

Rick Joubert, 11 February 2015 The mobile medium has moved beyond hype and early adoption and is touching the mainstream consciousness in advertising and media.

A few examples:

  • Thought leaders like Brian Solis making a radical argument for a “Mobile as the only screen” paradigm in design,
  • Mark Zuckerberg repeatedly proclaiming Facebook as a “mobile company” (and proving it recently when it became evident from a quarterly financial results report that Facebook’s mobile advertising revenue now accounted for 69% of revenue),
  • Google executives pronouncing “mobile has won”
  • Leading e-commerce processors reporting that transactions concluded on mobile already account for over 25% of all on-line purchases
  • Leading researchers reporting that on-the-fly consumer research using mobile phones can make or break the fortunes of South African retailers.
  • Mobile already accounts for over 15% of total media spend in some (northern hemisphere) markets e.g. in the UK market mobile ad spend is already larger than newspaper spend and is forecast to overtake total print ad spend in 2015

Marketing managers at the world’s leading brands have finally understood that mobile needs to be an important part of their overall strategy – and this has sent ad agencies scrambling to ensure that they are able to meet client expectations. It is now unusual to not see a mobile strategy in an agency pitch or even a standard media plan (although execution still remains a problem due to the scarcity of experienced mobile marketing resources).

To date it is the so-called OTT (over the top) players – not the mobile operators -who are dominating the mobile media landscape.

Companies like Opera, Twitter, Facebook, Google and countless other applications and services – all relying on the internet access infrastructure provided by the mobile Telco’s and public Wi-Fi services to enable delivery.

In most African markets we are still seeing low smartphone (less than 20% overall) and mobile Internet services uptake (yes these are growing at an incredible rate but feature phone usage remains dominant).

This gives mobile operators in Africa an opportunity no longer available in most other parts of the world: to position themselves to capture a significant share of the value that is being created by the emergence of mobile media and not cede all such value to the OTT’s.

African operators should start by “fishing where the fish are” and prioritise development of media opportunities around basic access (voice, SMS, USSD, mobile web) – leveraging their existing media assets, especially those that already have large audiences and simply require media monetization.

The monetization of assets like hundreds of millions of existing text notifications (via ad-tags to these), which fly around the network daily, is a no-brainer (and some operators have woken up to this).

Very few if any are attempting media monetization of the millions of calls being made daily – and more importantly not being made (because people can’t afford to make them but might if some were ad-funded).

Are ad-sponsored calls for the emerging African consumer a bad idea?

Why are no African operators monetizing the ring-back real estate when a caller is waiting for a call to be answered?

Why are no African operators expanding consumer access to the web through brand sponsorship i.e. enabling free or cheap access supported by ads?

At an even more fundamental level there is the issue of basic enabling services.

The “meat and potatoes” stuff that makes mobile marketing work with above-the-line media.

Why is it still so difficult to get a universal SMS short code (a single short code for all operators in a country) provisioned in many Africa markets?

Why do so few operators offer reverse billing for SMS allowing brands to fund consumer engagement?

Why do so few African operators offer ready-to-go USSD application service access for brands (other than banks)?

Even when the above services are offered their value is often greatly diminished if they are offered by a single operator in isolation within a country: African operators should collaborate to make services available to marketers with a view to creating a valuable mobile marketing ecosystem; it serves no purpose to be competing in a market which has not yet been created!

Even though Africa mobile operator data service access and revenues are growing at a blistering pace, prices are falling and data margins are tight. Data revenue is therefore far from a panacea for African operators as recently evidenced by some of the more mature African operators’ results.

Operators should (and indeed are) looking for new revenue streams in order to keep growing and many have experienced significant commercial success outside of their core telecommunications platform by aggressively inserting themselves into the financial services and payments value chain (mobile money). The opportunity to create value in this space exists because of the relative weaknesses of the banking systems in these markets.

African operators have a similar opportunity in mobile media: the ecosystem is still weak, the large mobile media players (OTT’s) have not yet established a dominant foothold due to the relative immaturity of mobile data and internet services and smart device ownership.

The window of opportunity is closing quickly.

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Rick Joubert is the CEO of Yonder Media and the founding chairman of the MMA (Mobile Marketing Association) in SA