Portable Navigation Devices to Outsell In-vehicle Nav Systems, Says TRG

TRG - May 13, 2005 Aside from commercial or marine applications, most global positioning systems (GPS) are installed in cars --helping people get from point A to B while driving. But market research firm TRG says a new breed of navigation systems is about to change this, as millions of consumers will soon get driving directions via their cell phone or PDA.

Navigation systems are most often sold as original equipment by the auto makers. They typically include a color screen in the center console that provides maps and turn-by-turn driving instructions. These systems also provide voice output so the driver can keep their eyes on the road while driving. But vehicle navigation systems are costly options, and customers that opt for these features are typically buyers of luxury cars or high-end SUVs. According to a TRG/Metafacts Consumer Survey, 61% of navigation systems go into luxury vehicles. But a new class of systems--called PNDs (for Portable Navigation Devices)--is about to make these features very affordable. "These portable solutions offer almost the same functionality as in-vehicle navigation systems, but at a fraction of the price," said Phil Magney, TRG's principal telematics analyst. With entry prices starting as low as $300, portable navigation devices come with color displays and removable memory cards. They function much the same as the OEM-fitted solutions--often using the same map database providers. And since PNDs are portable, they can be taken from car to car - a big advantage to consumers who would not want to limit the use of a navigation system to one vehicle. The PND category actually evolved from Pocket PCs, as they are about the same size and feature similar hardware. In fact, most Pocket PCs or PDAs can be turned into navigation devices when connected to a GPS receiver. Similarly, some cell phones (a.k.a. smartphones) can be converted into navigation devices--obtaining map and traffic data "on-demand" from central servers. According TRG reports, in-vehicle navigation system sales are projected to top 8.5m units this year, while portable navigation devices (PNDs) will come in close to 8.2m units. By 2011, TRG expects annual sales of in-vehicle navigation systems to exceed 20m units while PNDs should exceed 100m units. Navigation System Potential - Yearly Sales (in millions of units)

Device Type	USA 2005	USA 2011	WW 2005	WW 2011
In-vehicle Nav Systems	1.17	4.4	8.5	20.2
Portable Nav Devices	1.45	17.8	8.17	109.9
- Dedicated Nav Devices	0.68	2.29	4.11	12.5
- Smartphones/PDAs w/Nav	0.48	6.63	1.86	28.3
- Cell phones w/Nav	0.29	8.9	2.20	69.1
Total In-vehicle & PND	2.62	22.2	16.7	130.2

Source: TRG, 2005

pnd sales market opportunity size

Mobile Phone Subscribers Support Incentive-Based Advertising

A new report has found that about one-quarter (26%) of current mobile
phone subscribers say they would be willing to watch advertising on
their cell phone if in return they were to receive free applications for
their phone. Smaller numbers (7%) of wireless subscribers say they would
be interested in receiving promotional text messages if they were relevant.

"This seven percent 'coalition of the willing' represents a huge market
given the fact that there over 200 million cell phones in the United
States. Wireless Service Providers need to balance the value of
advertising revenue with the potential of irritating their subscriber
base which could potentially increase churn," said Joe Porus, Vice
President and Chief Architect for Harris Interactive.

These are some of the results of a nationwide online survey of 1,125
U.S. adults conducted by Harris Interactive between August 9 and 14, 2006.

Advertising on cell phones is yet another sign that wireless
communications is changing the nation's social fabric and the way people
communicate. The survey found that 38 percent of wireless subscribers
say they now consider wireless to be their primary form of communication
and one in three (36%) believes that cell phone service is more personal
and direct than land line telephone service.

Of note, in April 2005, one in 10 (9%) U.S. adults said that they had
abandoned their wireline (landline) telephone service completely in
favor of using their wireless phone exclusively. At that time, another
five percent said that they were seriously considering this and would
switch within a year and forty-seven percent said that they were
somewhat considering it.

Joe Porus further comments, "Ma Bell could become a name for Trivial
Pursuit?before you know it as more and more consumers are cutting the
cord and going wireless only. Ultimately consumers see wireless as a
more convenient, cost effective and personal form of communication. So,
targeted cell phone advertising seems a natural development in the
wireless phenomenon."

http://www.cellular-news.com/story/20011_print.php

Europe Takes to Location-Based Cell Service

http://www.businessweek.com/print/technology/content/oct2006/tc20061013_164404.htm

Services that give cell-phone users place-based info fast are finally taking hold in Europe—and are welcomed by revenue-hungry providers

Five years ago, mobile-phone makers and wireless operators waxed poetic about the prospects for technology that would offer consumers maps, traffic reports, and localized search from the palm of their hands. But the march toward so-called location-based services was impeded by primitive phones, pokey connections, and a dearth of enticing applications. "Uptake was a catastrophe," bluntly declares Ralph Eric Kunz, vice-president of multimedia experiences for handset giant Nokia (NOK ).

Now, thanks to higher-resolution color screens, faster wireless data links, and the arrival of browser-enabled handsets, the picture is finally beginning to brighten. Sales of software and services that let consumers find a nearby post office or the fastest route to a destination are finally starting to take off. And mobile operators burned by the previous wave of hype are dipping their toes back into the business. Swedish-Finnish operator TeliaSonera, for instance, now offers 10 location-based services, including Yellow Pages, weather information, route displays with voice prompts, and a "friend-finder" capability.

The success of such services is key for carriers looking to encourage wireless data usage to compensate for sagging voice revenues. And after a half-decade of gestation, growth finally is expected to be brisk. Wireless research firm Berg Insight of Gothenburg, Sweden, figures European operator revenues from location-based services will soar from $180.5 million last year to $780 million by 2010. Still, they'll only account for 1.8% of nonvoice services.

FAMILIARITY FACTOR. One reason consumers are more open to location-based services on mobile phones is that they have grown familiar with standalone navigation devices from companies such as Holland's TomTom. PC-based "geo" services—ranging from MapQuest maps to Google Earth (GOOG —also have whetted the appetite of customers who want to find places and things fast, and online. Analysts say the evolution to handsets is a natural.

Mobile operators are eager to muscle in. Berg Insight says that more than 50% of wireless providers in Europe now offer local information services of some sort. Most provide city maps and "points of interest" services, allowing people to find the nearest movie theater, for example. Some also have plunged into tracking services for businesses.

Norway's Telenor (TELN) offers a broad array of services, including maps and local weather. It has also piloted a free news-scrolling service, in which users paid a small fee to pull up the full article. In the U.S., Cingular Wireless (T ) aims to roll out a raft of location-based services by mid-2007.

BETTER ACCURACY. Another development that should help kickstart the business is Global Positioning System technology (GPS). The satellite network can locate objects with an accuracy of about 30 feet, vastly increasing the accuracy and utility of location-based services. By contrast, non-GPS location techniques, which involve finding a user by estimating his or her distance from nearby cell towers, are usually accurate only within a range of 300 feet.

Nokia plans to include a GPS transceiver chip from Texas Instruments (TXN) in its upcoming N95 smartphone, which will be available in the first quarter of 2007. Nokia's Kunz predicts that the rollout of GPS-enabled phones will happen even faster than the rollout of camera phones. Taiwan's Mio Technology also offers a phone-PDA-GPS hybrid called the A701 that runs on Microsoft's (MSFT ) Windows Mobile 5.0. ABI Research predicts that a quarter of all 3G handsets will include GPS capability by the end of 2008.

But despite the technological improvements over the past five years, operators and handset makers have to redouble marketing efforts to avoid another flop. A key factor is making the cost of wireless data services clearer to consumers. Orange UK, the British mobile arm of France Télécom (FTE ) is already trying to do that with the cost of mobile Internet access, offering unlimited evening and weekend browsing for $9.50 per month. Some location-based services are delivered free, while others are charged on a per-use basis.

Renewed optimism aside, industry sources admit that location-based services won't be a significant revenue generator for some time. But after the fiasco five years ago, analysts say the industry's more realistic approach is fitting. "You only get one chance to do it right," says Niek van Veen, a mobile-telecom researcher at Forrester Research in Amsterdam. For operators in search of new revenue streams, their moment has arrived.

Value of Local Search while mobile

http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/10-17-2006/0004453023&EDATE=
Citisearch

"Consumers want trustworthy local content on the go and will
increasingly rely on their mobile devices to find that
information," said Greg Sterling, Principal Analyst at
Sterling Marketing Intelligence."Citysearch has a trusted
brand and their new mobile services will help
meet growing consumer demand."

MObile advertising $11.3 billion by 2011

Advertisers are warming to mobile phones as a way to tout
their brands. Mobile ad revenue will jump to $11.3 billion
worldwide by 2011, up from $871 million this year, says
Informa, a market research firm.

It forecasts that search-related mobile ad revenue will
climb to $1.5 billion in 2011, up from just $3 million this
year.
--

Local ad market opportunity size Borrell Associates $7.7 billion

http://www.medialifemagazine.com/artman/publish/article_7930.asp

Borrell Associates, which tracks online ad spending,
forecasts 21.8 percent local growth this year to $5.9
billion. It is forecasting 31.6 percent growth in 2007, to
$7.7 billion in local online ad spending. And even then it
will only be just past the halfway point, accounting for
roughly 30 percent all online advertising. It will still
have another 20 percent to grow to reach its proper share of
the 50/50 local/national ratio of offline media.
--
Media planners and buyers, responding to a recent poll by
Media Life, echoed this thinking. When asked what the most
appealing thing is about local online advertising, the
largest share--some 48 percent--agreed with this statement:
“Tight targeting. It allows me to find the audience I’m
after.” The second-largest share, 17.4 percent, agreed with
the statement: “Accountability. I like to see what I’m
getting for my money, and local web advertising delivers.”
---

Mobile text ads response US euro etc.

Mobile Text Ads Lag
by Mark Walsh, Wednesday, Oct 4, 2006 6:00 AM ET
MOBILE TEXT ADS HAVEN'T QUITE caught on in the United States yet. The
response rate to text ads by U.S. mobile subscribers was only 7 percent
in August compared to rates as high as 29.1 percent in Europe, according
to new research by mobile measurement firm M:Metrics.

The lagging U.S. response rate partly reflects that text ads are far
less common here than in Europe, where subscribers are more accustomed
to getting them. Almost 67 percent of mobile subscribers in Spain, for
instance, reported receiving an SMS ad in August--compared to only 12.8
percent in the United States.

Still, even the U.S. response rate of 7 percent is far higher than for
many types of interactive ads. Hodgman likened the high response rates
to mobile text ads to those of e-mail in the Internet's early days,
before the explosion of spam. And as most commercial e-mail messages
then were sent by Internet service providers, so now most text ads are
sent by mobile operators promoting their services.

http://publications.mediapost.com/index.cfm?fuseaction=Articles.showArticleHomePage&art_aid=49116

Ad sales calculations good

Let's go to the numbers…. Froosh's income statement for YouTube looks
like this:

Home page ads: $175,000 a day x 30 days a month = $5.25 million in
revenue
One ad per videostream served @ 100,000,000 streams a day @ a $0.50
to $2.00 CPM = $50,000 to $200,000 x 30 days = $1,500,000 to $6,000,000
in revenue
For a total of about $7.5 million a month in revenue.

Says Froosh: "Call me crazy, but that means that just with its main page
alone, YouTube more than covers its bandwidth charge…"

Well, not so fast.

First, let's look at the numbers Froosh relies on. According to
PaidContent, Froosh's source for the numbers on which he builds his
projections, which does notYouTube is probably still running in the
red.seem to have verified the financial terms of the home page placement
conclusively (in comments, the reporter says it is "speculative"), the
$175,000 generates about 400,000 viewers for the advertiser. This
language suggests that it is may be a CPC deal, rather than CPM-based
and that makes more sense since the CPM at $175,000 per day with 400,000
viewers would be $437.50, which is high-bubble pricing that, to my
knowledge, no one pays for impression-based advertising today.

If it is a CPC deal and YouTube is generating one click in 50
impressions, it would take 20 million impressions to generate 400,000
viewers. Given that the site has about 40 million streams a day, it's
not beyond the realm of possibility that they generate that many clicks,
but one wonders whether the home page is seen even a small fraction of
the time—many streams come from embedded players, so there is no actual
contact with the YouTube site.

The second problem with Froosh's numbers is that he uses the figure
100,000,000 video streams a day to calculate other ad revenues.
PaidContent reports that YouTube streams only 40 million videos a
day—less than half the basis of Froosh's revenue calculation. And some
of that inventory is presumably consumed by the front page placement
(which would assume a home page clickthrough rate of four percent, not
beyond reason, but close), so let's say that YouTube has free inventory
of perhaps 30 million impressions a day, not 100 million.

If that's the case, at CPMs of between $0.50 and $2.00, the potential
revenue is only $15,000 to $60,000 a day, as little as $450,000 a month.

Now, let's discount all the revenue by 20 perent to account for the cost
of sales. And, because no sale is unnegotiated, let's assume that many
customers are paying less than the rate card. We can't guess what the
actual fees are, because they are unpublished and "speculative" at this
point, but we can assume that some of the days of the month are not
fully paid placements on the home page, whether because of discounts or
make-goods on inventory needed to meet advertiser expectations.

So, that's 20 percent off revenue for sales cost and let's say 20
percent off for discounts and make-goods, so the company is really only
likely to be making $175,000 on its home page every other day or so. At
a 40 percent discount for sales and discounts, the monthly revenue from
the home page leaves $3.15 million a month from the premium placement on
the home page.

Now, the CPM rate Froosh used for his calculation of other revenue is
pretty optimistic. Much of the AdSense inventory may sell for pennies,
rather than dimes or dollars, for example. I'm only going to say that a
$0.50 CPM is very aggressive and, therefore, YouTube probably makes less
than Froosh estimates. For argument's sake, let's agree they make the
low end of Froosh's estimates, another $1,500,000 a month.

Now, it looks more like YouTube's monthly revenue is probably closer to
$4.65 million. That still feels high, but I'm willing to live with it.
Does that make YouTube "wildly profitable" and Froosh argues?

Short answer: No. PaidContent does provide a figure for bandwidht used
daily by YouTube, about 200 terabytes a day. I've looked into streaming
and downloading bandwidth pricing and find that most providers are
offering a Gigabyte of throughput for around $0.85. That would place
YouTube's daily bandwidth costs at $170,000, or $5.1 million a month.

Let's be really aggressive and assume YouTube is getting a deep discount
from Limelight Networks, its hosting provider (though probably in trade
for equity, which investors need to be leery about, because it dilutes
the value of future shares and may represent a big increase in real
costs if the deal lapses). If Limelight is charging $0.45 a Gigabyte for
throughput, YouTube's costs are $90,000 a day and $2.7 million a month.

But throughput isn't all the costs YouTube is paying for. Storage of all
that data costs something, especially as you have to replicate data
across the world to support high-performance playback. These costs are
factored into Limelight's pricing. In other words, Limelight is probably
charging something closer to $0.65 per Gigabyte than $0.45.

Let's revise the bandwidth costs up to account for storage and
maintenance costs to $130,000 a day and $3.9 million a month.

I've never seen employee numbers for YouTube, but if it isn't 50 people
I'd be surprised. At an average salary of $50,000 a year, the company is
looking at about a quarter million a month for salaries. Add other
overhead, such as office space, computers, accounting and marketing, and
you're looking at about $400,000 to $450,000 a month in salaries and
general and administrative costs.

So, finally, back to the numbers. Is YouTube "wildly profitable"? If we
take the adjusted numbers and add in expenses, the answer is certainly "No."

Total Revenue is $4.65 million a month after sales costs and discounts.
Bandwidth/Hosting Costs: $3.9 million a month
Salaries, G&A and other costs: $450,000 a month
Profit = $300,000 a month or a net margin of about 6.4 percent.

That looks like YouTube may be breaking even, but we've been generous in
revenue calculations and, perhaps, in the cost of people and operations.
YouTube is probably still running in the red.

Admob- click-through rate 3-4% Mobile ads

--------------------
Admob Serves 250 Million Ads
Related Topics: Adv/Marketing — Permalink - Comments (1) [by james]
E-Mail This Post/Page

Pay-per-click mobile advertising company AdMob has announced it has
served 250 million page impressions per month now (worldwide), and it
started eight months ago. More interesting, its click-through rate is
3-4%, which is a lot higher than similar ads on the web but a lot lower
than some other forms of mobile advertising. The real question with the
click-through rate is whether mobile advertising is inherently more
valuable to consumers so they use it more or whether the higher rate
compared to the web is based on novelty and accident value…

-----------------------
Yahoo To Show Search Ads On Mobile Devices In US,UK
http://www.cellular-news.com/story/19699.php

Yahoo said, so far, ad rates appear to be comparable to those seen for
the PC, but in time could prove to be even more lucrative.

- Yahoo has found that mobile users are receptive to search ads because
they are relevant and tend to enhance the user experience rather than
detract from it. Boom said he expects that the medium will attract
advertisers selling products and services that are interesting to people
when they are on the go, such as restaurants and travel-related companies.

http://www.cellular-news.com/story/19699.php

Mobile ads, $11 billion

Informa Telecoms & Media predicts that by 2007, advertisers will likely
spend over $11.35 billion worldwide on placing ads on mobile devices.

Informa predicts that there will be 2.1 billion mobile subscribers
worldwide 2007, and nearly 4 billion by 2011.

According to a survey conducted by Informa on 630 mobile consumers, 40
percent said they were willing to view ads when watching mobile TV and
video, 35 percent were willing to see ads when playing games, and 27
percent were willing to view ads to listen to music, (all in exchange
for reduced content costs). Text messages are apparently the least
undesirable way for consumers to receive ads.
--

Mobile ads ok if targeted properly

NEW YORK Consumers are ready to receive marketing messages on their cell
phones, but only if they're relevant to their interests, according to a
survey.

Roughly 80 percent of those polled said they're amenable to targeted
mobile ads. About 68 percent of those interested in getting ads would be
willing to provide some personal information to improve targeting.

"Consumers are ready for mobile advertising but an important caveat: ads
must be targeted," said Enpocket CEO Mike Baker, in a statement.
"Operators have the demographic, transactional and behavioral data
necessary to deliver marketing and advertising that meets consumer need
for relevant advertising on this most personal of devices."

Enpocket, a Boston-based mobile marketing company, commissioned a survey
by Harris Interactive of 1,200 consumers already using mobile Web
services in the United States, United Kingdom and India.

Mobile marketing has been slow to catch on, particularly in the U.S.,
which has lagged European and Asian markets in adopting data services.
Research firm eMarketer projects U.S. mobile marketing spending of $220
million next year, rising to $435 million in 2009. In its "most
aggressive" outlook for the new market, mobile-marketing spending would
reach top $760 million.

On the down side, the survey also found some consumer reticence to
direct marketing via text message, the most common form of mobile
advertising today: 58 percent of respondents said they preferred banner
ads on mobile Web sites to text messages from brands.

Overall, the survey found mobile marketing still lags behind traditional
media in consumer acceptance. Only 37 percent said text message ads are
acceptable, compared to 74 percent for newspaper ads and 69 percent for
TV commercials.

http://www.adweek.com/aw/iq_interactive/article_display.jsp?vnu_content_id=1003190108

MObile Entertainment Stats

Almost every wireless industry conference has its obligatory "carrier bashing" panel of mobile content start-ups and medium-sized companies complaining about how mobile carriers do not "get" content. With few exceptions, the parade of statistics, anecdotes and panelist opinion seem to pull on Star Wars imagery of plucky rebels taking on an entrenched empire.

Carrier representatives typically take such criticism in stride, secure in the knowledge that the vast majority of content start-ups need carriers more than carriers need content. Those with sharp ears can pick up the translation of a typical carrier position on mobile content as "Yes, compelling mobile content and services are critical to our future business, but no, we're not going to do much more than point developers and/or content originators to our portal where they can upload it." Why the contradiction?

It could be that carriers are being true to the stereotype, which makes the fact that they somehow muddle through to make huge profits all the more infuriating. However, the truth is a bit more complex, even though a simple reading of the revenue numbers makes the carrier strategy of offering full moral support (and little else) not as duplicitous as conference audiences are sometimes led to believe. Indeed, it might just be a very sensible way to go.

Marketers should remember that mobile content has been talked up since at least 1997, when some of the first wireless application protocol (WAP) phones came out. Next year will make a decade, so it might be a good time to check out just how much real money all that effort has generated. If we dig into the money side, it is clear that non-voice services constitute only a small part of the overall revenue pie. This chart from the end of last year projects total mobile revenues to rise by about $300 billion over the next four years to reach $1.5 trillion by 2010.

In October 2005, Morgan Stanley pegged non-voice revenues at $74 billion, of which some 70% were related to messaging (SMS, MMS, IM, mobile e-mail). Even in mobile-data-heavy Japan, the largest mobile Internet category in terms of usage continues to be e-mail.

Taking a look at the non-voice, non-messaging market of pure-play mobile content, the current global mobile content revenue figure is about $20 billion. At current growth rates, that market should double by 2010.

In the US, the latest eMarketer numbers show that messaging still leads the non-voice category and will continue to dominate for the foreseeable future. By 2010, there is a decent chance that entertainment services and content might equal messaging as a non-voice revenue generator. But that is a long way off in mobile Internet years.

More to the point, if we look at how US subscribers are actually using their mobiles, we see that different flavors of messaging, text and photo overshadow other categories. It seems that despite the best efforts of wireless marketers inside and outside of carrier organizations to convince consumers otherwise, most people still believe and act as if the mobile handset is a communications device after all.

Thus, by 2010, the preceding charts suggest that the pure-play mobile content sector will account for about 3% of total wireless revenues. Conference panelists can dress it any way they want. But the carriers are not being conniving when on the one hand they say that mobile content is very important to them and then do little to follow it up. If they say that content does not count, they have painted themselves into a corner to where they are mobile voice providers — no more and no less. This will make life very uncomfortable for certain operators that spent billions on 3G licenses on the idea that people would use their mobiles for content. Strategic maneuvering aside, the fact is that non-messaging-based mobile content as a stand-alone source of revenue is and will remain trivial to the mobile carriers.

For that bit of industry gloom, marketers should only give thanks. The inability of both mobile carriers and content providers to create a substantial, sustainable, transaction-based mobile content market means that they need to work with brands to make mobile Internet work. Most of that work will involve messaging of some kind or another. Stay tuned next month for eMarketer's report on the state of mobile message marketing around the world. Click here to be notified when it is released.