Mobile operators spread network with ad tie-ups

Written by Diksha Dutta | Diksha Dutta | New Delhi | Updated: Dec 26 2011, 10:05am hrs
Declining margins, coupled with increasing competition, are forcing mobile operators to adopt new models of advertising. While, earlier, they would tie up with handset providers to advertise schemes such as bonus talk time, these days, the advertisements centre around social networking and data services.

Vodafone, for example, has come up with a specialised Facebook offering, while MTS has entered into a tie-up with Acer and HP. And these companies are now using TV commercials in a big way to push their products. To an extent, advertisers feel that Airtel's branding with F1 and MTV's Coke Studio are examples of how mobile operators are partnering other brands to offer more than simply free talk-time to subscribers.

Data services currently contribute just 10-12% to the overall revenue of operators. But there is a lot potential for growth there. According to KPMG, the revenue from non-SMS-based services increased from R6 billion in 2006 to R83 billion in 2011. On the other hand, SMS-based revenues grew at a much slower rate, from R24 billion in 2006 to R70 billion in 2011.

Alok Agarwal, chief operating officer (South West Asia), Cheil the advertising agency of Samsung said: There has been a rise in co-branded promotional activity in the telecom sector. Mobile operators are keener than ever on aligning with other brands. We are seeing a lower interest in tie-ups with handset providers, though. This is because most of the co-branding is now happening for data usage, and not just call usage."

Agrees Anuradha Aggarwal, vice-president, brand communication and insights, Vodafone: Consumers are looking at benefits and solutions. At times, the benefit can't be offered in isolation and, therefore, another complimentary product is needed to deliver it. Its a win-win case for both products as well as the consumers. We have partnered with Samsung, Facebook, Blackberry and HTC in advertising."

Co-branding means good economics for both brands as the advertising spend is usually shared. Amitesh Rao, director, brand and media, MTS, said: We have tied up with other non-telecom brands like HP and Acer. We have a shared marketing budget in advertising across print and retail outlets. Rao added that MTS has a TV campaign with HP, along with print ads and retail visibility. This is to promote our data services. Within handset providers, there have always been alliances, but outside it, it is a recent phenomenon, he said.

In some cases, the advertising budget is divided equally. But this varies with different brand tie-ups.

Rajiv Rao, executive creative director, Ogilvy India, Vodafone's advertising agency, said: The trend we might see in the future is of mobile operators tying up with more and more non-telecom brands for advertising. We never saw advertising above the line in the last 10 years in the telecom sector when it comes to campaigns like Facebook and Vodafone."