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Mobile: Looking Ahead

James Belcher
Mobile: Looking Ahead James Belcher

China will soon have more than 500 million mobile phone subscribers. The country's 1.3 billion people provide a fertile base for huge demand, and its robust electronics manufacturing sector is supplying handsets on a mammoth scale.


This massive and growing market is served by a duopoly of mobile carriers: China Mobile and China Unicom. These two companies are the two largest mobile operators on the planet, by far. And the former company is close to twice the size of the latter.


 


One advantage of a duopoly is the brand-building associated with high name recognition. China Mobile is not only the largest mobile carrier in the world, it's the fourth most valuable brand worldwide, ahead of such also-rans as Google and Citibank, according to a Millward Brown-led study.


 


Still, new phones and service offerings will require new advertising. The good news for marketers is that advertising gadgetry online has been successful in China, with IT products, PCs and mobiles getting the most browsing activity among respondents to a Shanghai iResearch Co., Ltd. study published in June 2005.

 


Although advertising online is not an either/or proposition for most marketers, those who eschew online ads should only do so with a strong word-of-mouth campaign, since that method trumps even budget in terms of influencing purchase decisions, according to a GMI poll of online consumers in November 2005.

 


As for mobile advertising, much of it is done via China Mobile's Monternet and China Unicom's Uni-Info, making the firms some of the country's largest advertisers. There are many SMS-based ads in particular, with paid SMS services, promotions, broadcasting tie-ins, lotteries and the like. Entire SMS-based industries have sprung up. Mobile users in China sent about 300 billion SMS messages last year, or around 700 per user, according to CNET. CNET's Little Red Blog recently detailed the mobile spam problem which has grown along with advertising on Monternet:


"My company has long experience selling: Guns, roofies, eavesdropping devices, fake Taiwanese currency, multiple use keys, assassins and private detectives, tax receipts and fake diplomas. Contact Ah Qiang," read a recent example of Monternet spam.


Part of the spam problem is the relative anonymity of mobile phone accounts in China. One hundred RMB (about $13) in untraceable cash and five minutes is what it takes to become a China Mobile subscriber. Subscribership has grown faster than the MII can regulate, when it comes to things like spam. MII is now moving to require all subscribers register with an identity card.


Some mobile advertisers are allowing opt-outs to fight the problem. China Mobile and Feituo Wuxian Technology Company partnered in March 2006 to allow domestic firms to advertise on mobile phones. Users opt-in (or out) to the ads using through a special channel on Monternet


James Belcher is a senior analyst at eMarketer. Contact eMarketer directly. This article is drawn from eMarketer's new report, China Mobile.

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