Mobile Advertising in Navigation Driver’s Seat November 18, 2009Posted by Bahadir Sahin in English, Haber (News).
Tags: Mobile Advertising, Tele Atlas, U.S. mapping data
After turning the navigation application world upside down, Google created more drama with the pending purchase of AdMob; rumors persist about a worldwide iPhone to be offered by Verizon; Microsoft is dumping MSN Direct; in a crossover, Dell will introduce a smartphone, while AT&T will offer a smart book.
Life won’t be the same for application providers now that Google announced a free, richly featured, turn-by-turn navigation service, available first on Verizon’s new Droid phone. Google has turned current business models on their heads, hastening the decline of fee-based mobile applications, particularly for navigation and other location-based services. Companies will have to follow Google’s lead and find ways to obtain adequate advertising revenue. Mobile advertising has wind in its sails, but app providers need deep pockets while they find their way to revenue.
In part two of its one-two jab, Google is buying mobile advertising network AdMob to shore up its advertising capability for Google Maps Navigation. Google makes most of its ad revenue on text-based advertising connected to search results and hasn’t had the means for display ads, the graphic ads you often see on websites. AdMob specializes in delivering these ads, which are often used by big spending brands. E Marketer Inc. estimates the U.S. mobile advertising market at $416 million this year, climbing to $16 billion by 2013. Other mobile advertising network companies in this space include Quattro Wireless, JumpTap, and Millennial.
A key to enabling the shift to ad-supported navigation was Google’s break last month from Tele Atlas (owned by TomTom) for U.S. mapping data. Mapping companies charge their application partners with a per-user fee that would have made a free navigation application prohibitively expensive. Google has been collecting its own mapping data for the last several years. For other navigation providers, the per-user cost of mapping data will make it hard to duplicate Google’s offering. It will be interesting to see how mapping companies Tele Atlas and Navteq react.
If you build it, will they come? Industry research indicates that people are willing to accept advertising if it is “done right” in exchange for free or discounted service. HipCricket, who has a dog in this fight, recently released survey results that show that 41% of their respondents have visited a retailer’s website from their mobile phone. The most common activities were to find store locations (70%), determine store hours (51%), get directions (39%), and receive offers (29%).
The Google offering isn’t good news for wireless carriers and their navigation providers, such as Networks in Motion or TeleNav, or companies with stand-alone personal navigation devices (PNDs). TomTom and Garmin shares fell sharply on Google’s announcement. Personal navigation devices are popular in Europe. Berg Insight estimates 3.5 million cars in Europe will have an on-board telematics device by the end of this year. Increasing availability of GPS handsets in Europe should catalyze growth of handset-based navigation.
MSN Direct. Are there parallels between last weekend’s movie 2012 and Microsoft’s announcement to shutter MSN Direct on New Years Day 2012? While it isn’t quite the end of the world, and unfortunately doesn’t involve John Cusack, many navigation devices get feeds from MSN Direct. Other uses includes weather, stocks, news, and calendar notifications. Microsoft states that, “Leveraging unused FM radio spectrum to broadcast data represented a step forward in 2004; however, many choices today, including Wi-Fi, Cellular, FM RDS and other digital networks, are now readily available and are continuing to grow in popularity. Despite good initial MSN Direct adoption, these alternatives have significantly reduced demand for MSN Direct service.”
Global iPhone. Word on the street is that Apple will release a new global iPhone next year that can access both CDMA2000 and UMTS 3G networks on all global wireless networks, including Verizon. Many estimate that iPhone sales could double if the exclusivity with AT&T is dropped. AT&T network limitations, speed, and tethering capabilities have been issues. In addition, the FCC has been concerned about handset exclusivity deals and currently has AT&T under a microscope. The rumored new phone, said to be a smaller version of the iPhone, is to have a 2.8-inch screen.
Enter Dell. It is a mash-up. Dell confirms plans to enter the smartphone business with its Mini 3 phones to be distributed through China Mobile and Claro (Brazil). AT&T Mobility will launch the first smartbook that combines the connectivity of smartphones with the larger display of a netbook. It is a mixed up world. Smartphone, netbook, smartbook. Carriers and device companies are jumping sides.