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All About … The launch of mobile 4G

It could herald an exciting new era in mobile advertising.

It sounds all very portentous, this “fourth generation” thing. And, indeed, when people use generational language, they’re doing it to convey something epic and epoch-making. We’re invited to meditate on a great leap forward.

But the number four usually takes us to the outer edge of the resonance of this language. In the computer hardware world, people got to four and stopped counting in the 80s; and the internet never even made it to Web 3.0.

Likewise, the advent of mobile 4G probably marks the beginning of the end of the market’s pioneering phase. 4G was unveiled (sort of) in the UK on 11 September by EE (formerly Everything Everywhere, the owner of the Orange and T-Mobile brands) – and EE’s announcement chimed rather neatly with Apple’s launch of the 4G-enabled iPhone 5 on 12 September.

Interestingly, though, behind the headlines, there were reasons for continuing disquiet. With 3G, we were proud in the UK that we were ahead of the game; with 4G, we’re significantly behind the rest of the developed world. While 4G is up and running in many markets, EE, for instance, is the only operator here to have been given permission to use limited chunks of 4G bandwidth.

Its rivals will have to wait until Ofcom gets around to selling off frequencies formerly used by analogue terrestrial TV stations. And, of course, the likes of O2 and Vodafone are furious (legal action may yet follow) about this competitive disadvantage. On the other hand, EE hasn’t actually introduced a working service yet and it won’t be able to offer 4G coverage to the whole population until 2014.

The slightly fragmented nature of the UK situation is, some say, symptomatic. Mobile 4G, they argue, contains some worryingly retrograde elements – notably a lack of common standards around the globe. Buy a 4G-enabled machine in the UK and you might discover that it struggles to offer 3G performance when you take it to the US.

But there’s no doubt whatsoever that 4G could herald a potentially exciting new era in mobile advertising. The long and the short of it is that it promises to be much faster (five times faster is the oft-quoted figure) than 3G – and this has to be of interest to consumers and advertisers alike.

1.  So far, we’ve seen each mobile generation coincide more or less neatly with a decade, beginning with 1G in the 80s. Mobile advertising only really began to gain traction in the 3G era, which saw the launch and the inexorable rise of the smartphone.

2.  Thanks largely to the popularity of the Samsung Galaxy S2 and the Apple iPhone 4S, smartphone penetration is, according to Ofcom, above 40 per cent in the UK (and some other sources such as comScore argue that this is a conservative figure).

3.  Ofcom expects to begin a 4G bandwidth auction process before the end of 2012. EE is already testing a 4G signal in London, Bristol, Cardiff and Birmingham, and will almost certainly bid for more capacity in the auction. For EE – and its rivals O2 and Vodafone, for that matter – the national roll-out of services isn’t expected to begin in earnest until mid-2013.

4.  Analysts believe that 4G will add new momentum to an already-burgeoning mobile advertising market, with much of the growth coming in rich media and video executions. The most recent Internet Advertising Bureau/PricewaterhouseCoopers mobile adspend study recorded that the UK market in 2011 was worth £203 million – more than double the previous year’s figure.

5.  A study published last week by Adsmobi and MobileSquared forecasts that UK smartphone penetration will rise to 80 per cent in 2016. It also predicts that the UK mobile advertising market will be worth just under $400 million in 2012 and will total around $1 billion by the end of 2016. By then, it adds, rich media will be a feature of all mobile advertising campaigns – and the mobile video advertising market across the EMEA region will, in 2016, it argues, be worth close to $4 billion.

6.  That, in turn, implies a rise in the basic unit price of mobile advertising inventory. A recent report from M&C Saatchi points out that UK smartphone ad rates have increased by 20 per cent on average over the past 12 months, with demand beginning to outstrip supply for the first time.

WHAT IT MEANS FOR …

THE CONSUMER

- Fans of 4G talk enthusiastically of the uninterrupted video streaming and “super-fast” download speeds that it promises. Sadly, though, there’s an irreconcilable paradox in play here. As ever (it happened rather quickly with 3G), content providers will rapidly soak up new bandwidth capacity in their drive to deliver ever-richer media. This wider, deeper river (which is effectively what 4G is) may soon silt up again.

THE MOBILE ADVERTISING MARKETPLACE

- James Hilton, the chief executive of M&C Saatchi Mobile, argues that, as increasing demand for premium mobile inventory continues to put pressure on prices, the winners on the agency side will be those not just with expertise and insight but with scale too. He says: “Smaller media buyers simply don’t have the muscle to win on price.”

- Rob Jonas, the vice-president, EMEA, at the mobile advertising network InMobi, adds: “We’re at the cusp of a very exciting time, with 4G promising to deliver high-quality, rich media experiences to consumers. With mobile rapidly becoming a unifying platform for advertising campaigns, through rich media campaigns on a smartphone or tablet, the advertising sector has much to be positive and excited about.”

- And Paul Berney, the chief marketing officer at the Mobile Marketing Association, says that advertisers shouldn’t worry about the market overheating. “We’re seeing continuing growth in the numbers of impressions that the mobile ad networks are serving and we’re seeing highly effective click-through rates too. Mobile is on an upward trajectory every where. The outlook is very positive,” he states.

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