China’s Mobile Charge: Madhouse CEO Joshua Maa Reveals the Framework and Future of the Chinese Mobile Beat
Competitive Advantages
Since March 2006 Madhouse has established itself as the most powerful first-mover in the China mobile media advertising sector.
For Advertisers and Agencies, Madhouse delivers the most cost effective media buy campaigns through targeted ad serving on mobile. For publishers, Madhouse delivers maximum revenue returns and ad space inventory utilization
Madhouse key competitive advantages:
- Most advanced mobile ad serving system technology - MadServing
- Owner and operator of China’s largest and most dynamic mobile ad network - MadNetwork
- Strongest industry team drawn from 4A agencies, interactive media, mobile carriers, WVAS, and IT
- Positioning as a partner to established agencies and media buying houses
- Ability to offer one-stop comprehensive mobile marketing campaigns via MadSolutions, MadServing, and MadNetwork
The mobile medium is vastly different than other communications or marketing channels because it incorporates mobility, time sensitivity, interactivity and advanced personalization. It presents an opportunity for marketers to literally place a brand in a consumer’s hand. These ingredients will help lay the foundation for the emergence of mobile as a powerful mainstream media in China.
How does the mobile marketing climate in the US and China differ? Are we still lagging behind?
Differences in the US and China markets that affect the mobile marketing ecosystem include the fact that US operators buy handsets in bulk from handset makers such as Nokia and Motorola and then distribute them to end users as part of a package (1 year plans that include a phone, etc). As a result, the US has fewer overall handset models and the operators have greater control over handset specifications and functionality. In China, users go to an electronics or phone shop directly to buy the handset of their choice. Once purchased, the Chinese user then inputs her SIM card into the handset and begins to make calls. For this reason, China has over 1,000 handset models on the market, creating a highly fragmented handset environment that lacks common standards: different screen sizes, operating systems, memory, and applications. The difficulty of adapting advertising content and campaigns to so many different devices creates barriers to entry.
Another difference is in user habits. When China launched SMS services, the carriers priced SMS low — a single text message was priced at 1/4 the price of 1 minute of airtime. The result: SMS has become a killer application. Chinese users are highly accustomed to sending and receiving text messages on their phones. In 2005, 305 billion SMS were sent in China (this is not a typo!). Besides sending text messages, Chinese users are very active in the realm of mobile content. China has numerous Nasdaq-listed providers of mobile content and services, tapping a mobile content market that reached nearly US$ 1.3 billion in 2005 according to Credit Suisse. In addition to paid content, China’s mobile users actively surf the mobile Internet. China Mobile reports over 100 million mobile Internet users on its 2.5G networks. Analysys forecasts China’s mobile Internet user base will grow from 115 million in 2006 to reach 230 million in 2008, outnumbering traditional PC-based Internet users. Traffic on off-deck sites in China is significantly higher than on official carrier sites. Leading off-deck sites such as WapTX, QQ.com, 3g.net.cn, and Kong.net provide free content, services, and community to their user bases.
China has not yet launched 3G. Many expect 3G licenses to be issued in China over the coming 6 months, whereas the US already has 3G networks up and running.
One mobile area where the US leads is in mobile email; Blackberry-type devices have never really caught on in China.
Japan is still the leader in mobile media, but advertisers in China are aware of the love affair Chinese are having with their mobile phones, and may be a step ahead in adapting to mobile media as an advertising channel. When 3G arrives in China allowing users to enjoy affordable and high-speed access, we expect the China mobile advertising market to race ahead of its US and European counterparts.
What are the current trends/emerging technologies affecting China’s mobile industry?
China is just moving into its “mobile Internet media phase”, which is something we saw in Japan 5 or 6 years ago. Mobile Internet GPRS service is available nearly everywhere in China, and operators are offering flat-rate monthly packages to encourage users to go online with ã€Â
In addition to going online with their phones, users in China input urls into their phones to visit “off-deck” sites. In China we call them Free WAP sites. Friends can send url links via SMS to create a viral effect for sites or interesting advertising campaigns.
Many mobile Internet users now enjoy downloading to their phones short video clips, such as 30-second TV commercials, and some even watch live streaming TV through viewers downloaded into the phone.
China is just beginning to introduce 2D barcode reader software that can be downloaded to the phone. Once users have the software installed, they use their camera-phones to take a picture of the barcode, which is then translated into a url link to the relevant site which can then be visited via connecting to the mobile Internet.
Mobile payment is another area with a lot of activity as operators partners with banks and third party solutions companies to offer services to end users.
What are the current challenges mobile marketing faces in China, in terms of audience, legislation, etc?
Mobile marketing in China started off on the wrong foot annoying users with vast amounts of unregulated spam promoting non-branded or even illegal products. Earlier this year the regulator stepped in and the situation has improved a great deal.
Madhouse is focused on next-generation mobile marketing, which is similar to Internet marketing: text and banner ads placed on sites, where the user has the option to click if interested.
In Q1 2007 Madhouse will launch highly targeted mobile video streaming ad serving; in Q2 2007 we will work with major operators such as China Telecom and off-deck portals such as WapTX, QQ, 3g.net.cn, and Kong.net to launch a contextual targeting ad serving system for mobile along the lines of AdWords and AdSense, but with high-level targeting capability and frequency caps.
We see mobile Internet marketing via MadServing (ad projection and reporting platform) and MadNetwork (website publishers we represent to advertisers) as the most scalable mobile marketing business model.
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