On the media side, key issues include finding viable business models; understanding the mobile ecosystem well enough to make informed decisions regarding content, revenue models, technologies, services, partners and market opportunities.

On the advertising side, brand managers, agencies and small and medium business (SMB) operators are trying to be smart with their media plans and spending allocations among multiple media platforms to drive the purchase funnel. Making the mobile platform even more challenging in the consumer environment is the fast pace of evolution not just in technologies but also in how consumers and businesses are adapting to the mobile environment.

BIA/Kelsey has conducted three waves of “Mobile Market View” (“MMW”) which is a consumer study of U.S. adult mobile phone users in the fall of 2007, 2008 and the latest results released in November 2009. One of the key emerging trends we see in the latest research is a solid consumer movement toward using the mobile platform for non-voice communications including search, text messages, email, video, social networking and mobile web browsing. We see fast growth continuing in adoption of smart phones (29% of consumers now have smart phones) and data packages (37% of mobile users now have data plans).

Based on consumer trends, we see revenue growth for content, search, directory, ad networks and of course mobile service providers. BIA/Kelsey sees the fastest revenue growth occurring in local search and mobile video services. The high trajectory revenue growth model will be advertising but we also see subscription and content on demand services as strong components of mobile revenue mix.

For advertisers, agencies and brand managers, this growing use of mobile has significant implications for their media strategies. From 2007 to 2009, consumers have essentially doubled their use of the mobile platform for non-voice communications. This represents a fundamental and rapid shift in media use which needs to be considered in determining the appropriate mix and spending levels among local media platforms. Media companies that do not currently offer a differentiated mobile advertising option increasingly will find it difficult to satisfy advertisers drawn to mobile’s ability to drive brand metrics such as increased awareness of advertising campaigns and messaging. Ad messaging can include not just search and mobile web but also video as we see nearly a fifth of mobile consumers have received or sent videos each month.

The mobile platform is becoming integrated into consumer habits in a more pervasive and sticky manner than any other medium in history. It is fast becoming a mission critical part of the media industry for publishers and advertisers.

Article prepared by Rick Ducey, Ph.D., Chief Strategy Officer, BIA/Kelsey

First published in ShowSmart, a publication by NABShow, which can be read at:
http://www.nabshow.com/2010/email/ShowSmart/LandingPage/ShowSmart_issue2.html#3

One thing that stood out as a theme throughout today’s sessions was mentions of the mobile opportunity. This was mostly discussed in terms of how the mobile device can extend the viewing or listening audience in an incremental fashion

“Building on a mature media platform, mobile has the ability to extend home-based viewing,” said NBC Universal VP of Technology Standards and Policy Glen Reitmeier.

This comment reminded me of data I saw recently from MobiTV, indicating that 85 percent of mobile video viewers report watching more TV. In principle, its also similar to comments made later by Arbitron Exec VP Pierre Bouvard that online radio listeners aren’t reporting any detraction from the amount of terrestrial radio they’re listening to.

Back to mobile, its opportunities with broadcast media are further supported by looking at the fact that both are delivered over the air. Regulatory and technology barriers stand in the way of mobile devices receiving broadcast signals, but we are starting to see some companies such as MobiTV (carrier delivered subscription service) and uStream (iPhone app) move in that direction.

“When we talk about mobile, for once, here is an industry that is a plus for [broadcast],” said Dick Wiley, Partner at D.C. Law Firm Wiley Rein. “We’re going to continue to see improvements in storage capacity for immediate viewing and playback. Getting content wherever and whenever will be something that is well tailored to younger viewers.”

We’ll pick up the discussion tomorrow in a session devoted to many of these topics:

How Broadcasters Can Get the Local Edge in Mobile

What are the opportunities for broadcasters in local mobile media? Well start with the BIA/Kelsey forecast of the advertising revenue growth in local mobile media to 2013. Well identify specific opportunities for broadcasters in new parts of the advertising pie. This includes local content, mobile video, messaging and even interactive applications for mobile devices. In addition to advertising revenue models, subscription revenue models are also explored. Broadcasters can leverage local content, local sales forces and develop cross platform media campaigns to add unique value to their sales and marketing solutions.

Speakers:

Sam Matheny, General Manager, News Over Wireless
Ivan Braiker, CEO, HipCricket
Michael Boland, Program Director, Mobile Local Media, The Kelsey Group

In a forecast released today, BIA’s The Kelsey Group (www.kelseygroup.com), a division of BIA Advisory Services, LLC (www.bia.com), predicts U.S. mobile search advertising revenues to grow from $39 million in 2008 to $2.3 billion by 2013.

One of the drivers behind the forecast is the growth of mobile Internet users. BIA’s Kelsey Group anticipates “a tenfold increase in the number of mobile Internet users during the forecast period—from 5.2 million in 2008 to 56.2 million in 2013.”

BIA/Kelsey will present the forecast during “Winning Media Strategies,” its first conference to focus on the new media landscape and the opportunities for traditional media businesses and online companies, May 20-22 in Washington, D.C. The National Association of Broadcasters (NAB) recently partnered with Winning Media Strategies to demonstrate the importance of mobile and other online methods of distribution to the broadcast industry.

The read BIA’s recent press release on this forecast, please click here.

The next frontier for broadcast radio and television stations is to go mobile. Mobile? Strange that this should be considered broadcasting’s next frontier when it was the original wireless medium. But the fact is that about the fastest growing and most exciting media platform today is the mobile phone. While national media companies have come to the table to play, local broadcasters remain largely absent from the table. It is time to elbow your way in!

BIA recently (Oct 8th) hosted a webinar covering this topic. It will be available on our website for on-demand viewing next week and I strongly encourage you to check it out if you are interested in this topic.

What will it take to get broadcasters to become part of the next frontier which is the mobile ecosystem? My view is that these ingredients are critical:

1. Collaboration with key players in the mobile ecosystem – carriers, vendors, publishers, ad networks. Broadcasters cannot and should not go it alone. Open up your opportunities by sharing the risk and the reward.
2. Technology strategy – broadcasters can leverage their own ATSC networks, this needs to be part of any mobile technology plan.
3. Content strategy – broadcasters have content which makes them “publishers” in the parlance of the mobile ecosystem. Content has great value. Local news, weather and information, particularly audio and video, has great and growing value.
4. Sales strategy – broadcasters have an incredible value asset in their locally deployed sales forces. But you will need to speak to how this asset can be used to create value in the mobile platform with your partners.
5. Revenue strategy – the mobile ecosystem plays host to a variety of revenue models ranging from simple SMS ads to fully immersive experiences such as combining advertising with location-based services which can direct customers to the nearest retail outlet and even query the store’s inventory and display what’s in stock and the prices along with any applicable discounts for the mobile shopper.
6. Execution strategy – Learn the mobile ecosystem, determine how to best leverage your network, how to interoperate with back-office applications, accept and integrate with carrier and other third party cultures and be both open to and ready to change your own workflow to organize around success. Develop goals, milestones and relevant metrics to assess performance.
7. Patience – once you’ve developed your plan, be patient. The sales cycle may be longer than broadcasters are used to. Be realistic in setting your goals and time frames. Nothing wrong with being aggressive but if this is not tempered by realism, you’ll take your eye off the prize too soon and then the other guy will walk away with the winnings.

BIA’s strategy consulting group can help you with these seven steps to success. In the figure below we summarize our strategy methodology which flows from developing a grounded understanding of the media ecosystem into a strategic assessment of your company and then onto developing a road map and implementation. The last stage is the end game, either to create shareholder value or to pursue an exit strategy.

A webinar put on by this morning by BIAfn (The Kelsey Group’s new owner) delved into the main trends that are lining up to make mobile TV a reality.

One enabling factor, for example, has been the growth of mobile broadband such as 3G networks. This is analogous to the broadband penetration that has made online video explode, and to the next generation fiber networks that will bring us IPTV.

“Bandwidth has changed things quite a bit in mobile telephony,” said BIA Chief Strategy Officer Rick Ducey. “Television is becoming a wireless medium for the first time.”

Building a Model

Parallel pushes are happening in mobile with better smart phone penetration, better device standards (i.e. iphone), and consumer comfort levels — all of which are bringing mobile video closer to reality. Following behind these trends will need to be broadcaster and advertiser adoption.

“The technology infrastructure is in place,” said Ducey. Business models are aligning and the possibilities for growth in mobile marketing are there.”

BIAfn forecast the opportunity to be $2 billion in annual revenues, based on delivering content to the incremental eyeballs that will view mobile video content. This consists of $900 million for TV networks and syndicators, and the remaining $1.1 billion for local broadcasters.

So far we’ve seen mobile television manifest largely in the content offerings of major carriers such as Verizon’s VCast and Sprint TV. These have programming arrangements directly with content networks like Fox Sports and CNN — deals that have been necessary to bring this content to market.

But going forward, an interesting dynamic will be led by the Open Mobile Video Coalition (OMVC), which consists of 800 television stations forming common standards to deliver direct video feeds to not only cell phones but laptops, portable media devices and in-car systems (projected to be the largest source of nodes among these). The move to a digital broadcast standards will enable all of this.

“Mobile can be the third leg of a stool in the digital proposition for broadcasters,” said OMVC Executive Director Anne Schelle.

Good Things Come in Threes

Overall, the opportunity comes down to the three screens strategy we’re hearing more and more about from the likes of AT&T. A continuity of services has the appeal to attract and retain users while creating unique revenue opportunities for carriers who broaden their “ownership” of the network.

“If everything is internet based, and that’s the way it’s starting to be, can’t we get one subscription across television, mobile, and internet?,” posed Ducey. “The technology is there and what’s being developed are the business models and implementation to bring it to the marketplace.”

There will be lots of moving parts such as subscriber revenues and ad support, involving a host of Ad networks like AdMob. Another opportunity on the local level will involve the growth expected in Mobile local search and location based services as we’ve examined, and as supported by recent eMarketer data.

But for mobile TV and its opportunity for broadcasters, a key point is that carriers will partner rather than build to obtain the content and distribution channels they need. Their longstanding closed networks have eroded to some degree by mobile search technologies and the partnerships we’ve seen with the likes of Google (Android) and Apple (iPhone).

A similar dynamic will occur with the development of mobile TV delivery platforms, opening lots of opportunity for broadcasters, and media companies with existing video content and distribution assets.

BIAfn provided these estimates in a recent report prepared for the NAB, Study of the Impact of Multiple Systems for Mobile/Handheld Digital Television (click for report). In the report, BIAfn asserts that this tremendous opportunity from M/H DTV is possible as long as an industry standard is adopted and technology is deployed quickly.

To highlight this report, BIA conducted a Webinar on Thursday, February 21^st, with Lynn Cloudy, Sr. VP of Science and Technology at NAB, Mark Richer, President of ATSC, and Dan Hsieh, a consultant for OMVC. Presenting on behalf of BIA were Mark Fratrik and Rick Ducey, authors of the report. Following the webinar, the panelists answered some questions. Due to time constraints – not all questions were answered.

Below, please find answers to those questions that were not answered during the Webinar. Answers without names are responses from Mark and Rick, except where they both provided separate answers.

How much additional revenue can be expected from M/H devices for a small market TV station (market 200, mostly a farming community)?
Our estimates are based on incremental viewing to local television stations on these new M/H DTV devices. For your market, you’d need to (a) estimate the number of M/H DTV capable devices that will be in use in your market; (b) estimate the incremental hours of additional viewing your particular station would attract from M/H users; (c) estimate the ability of Nielsen or some other service to measure and report these ratings; (d) estimate your ability to convert that additional viewing into sales revenue from advertisers.

Gannett and Nexstar are holding off on committing to digital multicast networks because they want to be sure to reserve enough spectrum for mobile TV. How much spectrum will be available for multicasting after mobile TV is up and running?

Rick Ducey – This depends on several factors all related to each station’s “bandwidth budget” and the particular M/H technology used. Generally, we would expect stations interested in offering M/H services along with a mix of HDTV, SDTV and datacasting services would allocate a minimum of 2 Mbps to M/H for some or all of the broadcast day part.

Mark Fratrik – The allocation of DTV bandwidth to different services is both a technology and business decision. Owners and managers will want to consider the economic return on their bit stream allocations among services. BIA has seen broadcasters make different decisions based on strategic and tactical decisions related to their company and their market environment.

How was the 130 million ASTC-M/H enabled handsets by the end of 2012 reached? How do you think best the broadcasters and the mobile network operators need to cooperate to insure a successful ASTC-M/H launch?

We detail our assumptions in the full report, which is available for free download at http://www.bia.com/mhdtv. The mobile network operators, along with Google and Yahoo are pursuing an open network policy which means the key factor now is to convince handset manufacturers that there is a viable M/H DTV market and they should build this capability into their handsets for operation on mobile networks. Further, given the competition between cellular network operators, we believe that there will be an effort to provide these services in order for one company to get a leg up on the others.

Do you see the penetration of M/HH devices in rural and small market areas being significantly lower than penetration levels in large markets?

Actually, on a per capita basis, M/H services may be more attractive in smaller and rural markets than in larger markets which tend to be better served by Wi-Fi, 3G networks and services such as MediaFLO.

If the iPhone, arguably the most successful mobile adoption in history, only captured 1/2 of 1% in its first year, how many different mobile phones will have to adopt this mobile broadcast technology to get to 130MM handsets by 2012? How long is the mobile phone development cycle and is it realistic to think that there will be handsets on the market that carriers have approved within 6 months of the standard being set?

We go into specifics in the full report. But we were told by CE and handset manufacturers that if they are convinced there is a viable ecosystem (content, transport, revenues, retail distribution channels for handset, etc.) that they can scale up for this level of operation. Our estimates were based on current production levels, the key question is whether CE and handset manufacturers would be motivated to install M/H DTV capability, not whether these production levels are realistic, they are.

Any concept of the kind of investments broadcasters can start thinking about making to enable mobile TV transmission?
Depends on the final system, but our sense is the investment relative to the opportunity is relatively minimal, perhaps on the order of as low as $100K to several hundred thousand dollars.

What is the likely reaction of cellular providers (Verizon, Sprint, etc.) to this? Try to kill it? Control it?

Rick Ducey – Cellular providers have begun to accept some loss of control over their networks and the inevitability of the move to “open networks.” For example, Verizon will now certify 3^rd party devices to operate on its network.

Mark Fratrik – In theory, cellular operators have much to gain from a M/H DTV successful launch and would want to cooperate. They are in intense competition amongst themselves and are looking for any type of service enhancement that would differentiate their businesses. Even if they don’t participate at all or to any great extent in the broadcaster M/H business model, a broadcaster success would prove out the market for mobile video and stimulate VOD, subscription and other mobile video models more open to the operators.

Service providers, such as Verizon using MediaFLO, offer a nationwide service. Broadcasters will have different content in each market, which is less desirable for vehicular. How much of a disadvantage is this in your market estimates?

Different content from each market is a huge plus for local broadcasting. As for inter-market vehicular travel, we foresee the opportunity for services to develop content hand-offs. To date, much of the mobile use is actually personal use rather than vehicular use, so this may not be much of a disadvantage in the short run. However, going forward a mix of local, regional and national services will likely be necessary to fully address consumer (and advertiser) demand.

On an early slide you stated Mobile Ad Spending would be $16.2 million. On later slides you talk about 1/2 a billion to $1 billion in revenue for TV stations. What was the $16.2 million?
The smaller estimate was produced by market forecasters not even considering the power of M/H DTV advertising and dramatically underestimated the potential we modeled once you factor in DTV advertising sale potential.

What types of audience measurement are possible other that diarys?

To be determined, but clearly Nielsen with its Anytime, Anywhere measurement goal would place mobile video measurement high in its priorities.

Will we really be able to get Verizon, Sprint, etc… to offer these MP/H capable phones? We may have to share our revenue with them, which in the first few years will minimal.

Assuming the open mobile network movement bears fruit, it is very realistic and there may well be viable business cases where broadcasters do not share M/H revenues with mobile operators. Also, remember that a cellular handset manufacturer is part of two of the proponent technology consortiums.

# # # # # # # # # #

If you have a question you would like our industry experts to answer, or comments, please send them to Michael Hackmer at: mhackmer@bia.com

The potential revenue windfall of mobile/handheld digital TV is just a pleasant little benefit of this upcoming revolution. Imagine a time in the so near future (2009!) when programming and interactive services can be downloaded onto anything with a screen – from your iPod to your GPS system to your cell phone to your PSP. And if advertisers make it free to consumers, industry experience shows the rollout to the marketplace will happen faster and deeper.

After BIAfn’s webinar (on Thursday, Feb 21, 2008) on the topic, it’s good to hear there’s a clear-cut timeline for all of this. Facts: analog TV shuts down (February ’09) driving the need for broadcasters to offer and promote new digital services; DTV spectrum is ideal for mobile/handheld video, says the Open Mobile Video Coalition, which has more than 800 commercial and public broadcasters committed to the development of mobile/handheld digital television; the Advanced Television Systems Committee has a very aggressive standard setting schedule and has divided the initial work into three primary layers of steps in the delivery process; and, OMVC’s hardware field tests, dubbed “IDOV,” (Independent Demonstration Of Viability) are being conducted now in San Francisco but soon will extend to Las Vegas, Washington, Chicago, Columbus, and New York.

The ATSC comments on the webinar made me think about why we have allowed the public to associate wireless only with cell phone or Internet services? Broadcasters must remind their audiences that digital is over the airwaves despite their receiving it through cable, fiber or satellite. And, OTA could mean a simple, free delivery system to multiple devices if the platforms are accepted by the industry. Mark Richer of ATSC pointed out that broadcasting was wireless before wireless was cool. Truer words…

Back to that windfall. The headline writers love that BIAfn is estimating there will be an incremental $2 billion of local and national advertising revenue for TV broadcasters after mobile digital TV is rolled-out. True enough, but haven’t we known that the second coming of the broadcast industry was around the corner? BIA has been saying for some time that the broadcast companies are in a period of repositioning that will soon become apparent throughout the broadcast ecosystem. They’re making strategic purchases and sales of their stations today in anticipation of being able to fully capitalize on the arrival of DTV and their ability to provide content – familiar or unique – in different formats and through different methods tomorrow.

Of course the genesis of Thursday’s program was NAB’s FASTROAD Project. NAB commissioned BIAfn to evaluate the marketplace implications of having versus not having a standard in place for mobile/handheld digital television technologies. BIAfn’s analysis included a broad assessment of the mobile video marketplace and what opportunities were out there for broadcasters and wound up producing a 130+ page report that emphasizes the critical need for early uniform standards adoption by the industry. Another aside found in the report is a chapter on the historical perspective of previous broadcast technological innovations.

It’s a guarantee, though, that one year from now we’re going to be at the start of the mobile digital revolution. This is it. Never before have we seen the management of broadcast television companies so actively involved in making sure the technological process of mobile content is in place with the digital conversion. This is happening at breakneck speed because it’s not just a gamble for them it’s really the future of television.

Start your engines.