KPN Launches Mobile Advertising Trial

| May 4, 2007 | Wireless Services - Europe | Competitive Update

Analyst: Emma Mohr-McClune

Current Perspective: Positive/Neutral
Vendor Importance: High
Market Impact: Very High

Event Summary

On May 2nd KPN initiated an 18-day mobile advertising trial, together with advertising partners Nestle, Adidas, Wehkamp, Videoland, New York Pizza, Benelux Film Distributors, Ferio Travel and GlaxoKleinSmith. All prepaid customers of KPN and Hi! will receive a commercial message from one of these brands each time they request a credit check SMS. In the next stage of this pilot, KPN will ask customers to preference the brands they would be willing to accept advertising or commercial messaging from. KPN has confirmed its intention to launch ad-funded SMS or voice services going forward.

Analytical Summary

• Current Perspective: Slightly positive on KPN’s initial mobile advertising trial. Although the planned ‘opt-in’ ad-funded service model will certainly create a valuable revenue stream for KPN in the mid-term, this dumbed-down pilot can only test customer acceptance for commercial messaging in one, non-consensus, SMS context.

• Vendor Importance: High to KPN Mobile, as mobile advertising is set to be a high-priority project going forward. As a multi-brand operator with an established, ready-segmented customer base, KPN is beautifully aligned for a targeted mobile marketing strategy.

• Market Impact: Very high on the Dutch mobile market, as this pilot is short-term, and KPN is planning to launch a suite of ad-funded services (including ‘free SMS’ or ‘free voice’ in exchange for advertising consent) shortly after. Such an innovation would require an immediate competitive response from all players.

Recommended Competitor Actions

• T-Mobile should address the ‘fatal flaw’ in its web’n’walk strategy: T-Mobile is unable to initiate a advertising strategy from a portal offering dominated by Google search, a service which essentially takes all data users ‘off-portal’. T-Mobile NL should be looking to replicate KPN’s SMS-driven mobile advertising strategies as one of the only options in the immediate term.

• Orange NL should be gathering information and experiences from Orange UK and France regarding recent mobile advertising pilots in other markets, particularly banner ad trials in association with Orange World. An attention-grabbing mobile advertising strategy could just give Orange’s mobile content proposition a badly-needed second wind.

• Vodafone NL should anticipate that KPN will leverage its multi-branded identity to full effect going forward, to create higher-value mobile advertising campaigns and relationships. Advertising agencies and advertisers will be quick to see the benefits of targeting ready-segmented niche groups (such as Ay Yildiz’s Turkish-Dutch community, or Hi!’s youth base) via distinct KPN multi-brands.

• All competitors shouldn’t read too much into the exclusion of KPN brands such as Simyo or Ay Yildiz from this initial trial. The reason why this trial has included Hi! customers as well as KPN-brand customers is because these brands share the same USSD prepaid credit check systems. KPN is likely to extend its mobile advertising strategy across all its entire multi-branded entities, moving beyond SMS to exploit advertising opportunities across multi-branded portals such as KPN Today and Hi! There, going forward.

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