Laurent Herbillon explains the recent TF1
agreement and Bouygues’ strategy for
mobile advertising

Bouygues Telecom is one of the leading mobile operators in France. Laurent Herbillon is Director of Service Development and Innovation, and is responsible for mobile advertising activities within Bouygues. Laurent took some time with us to explain the overall mobile advertising strategy at Bouygues, as well as the details of some recent business developments.

We’ve been working on mobile advertising for quite some time. A couple of years ago, we setup special areas on our i-mode portal and on our WAP portal for advertising, and we’ve been selling the space on this section to advertisers. Its limited to this certain area, its not banners all over the portal. Users can also subscribe to a push email message that informs them of the best promotions of the week.

Is this advertising space available to all advertisers?
We’ve actually been quite careful to insure that the customer’s first experience of mobile advertising is a good experience. At first we limited the advertising space to just 8 advertisers, and we’ve always worked with our agents to be sure we had high quality companies, products, and ads.

We’ve also made sure that with each advertisement there is a specific benefit for the customer. Its not just an advertisement, but by interacting with the ad there’s something special for the customer. By this I mean he might win a ring tone or a specific mobile discount. For example, we’ve done promotions with Marionnaud (a French perfume store) where the customer would get a discount simply by showing the banner on the mobile to the cashier in the shop.

And how have the results been from this advertising section?
The results have been quite good. For example, looking at campaigns we did with Peugeot, SNCF (French railway), Societe Generale, and Marionnaud, we’ve had click through rates of 16% to 20%, which is pretty high.

Also, a number of these campaigns were run simultaneously on multiple mobile operator networks, and the best results always came back from the Bouygues Telecom portal.

What factors do you think are responsible for this strong response?

I think there are three things that make the difference.

1. the way the advertising section is integrated into the portal makes it easy to get to the ads
2. the quality of the ads and the offers is good
3. the fact that it was not too “aggressive” towards the end user

We’ve learned from these trials that we have to be very careful with our ability to control the commercial pressure put on the customer, either by Bouygues or other players, and to make sure they don’t react badly to an overwhelming advertising campaign.

Do you have other mobile advertising projects underway?
Yes, we’ve also started building an opt-in database of consumers which includes significant profiling information. Its still quite small at the moment, but we’ve been able to start monetizing it and are learning in the process. And of course our plan is over time to build the size of that base significantly.

Let’s now talk about Bouygues’ overall strategy for mobile advertising.
Its very clear – our strategy is to use the advertisements to reduce the cost of content for the end user. We don’t see advertising as the next “revenue generator”. We think our top priority is to make content free, in order to increase the mobile multimedia penetration.

We will soon be launching a series of projects on our portal and in partnership with other content providers, i-mode and WAP sites, with the clear objective of making them free in terms of content charge.

What do you think about “ad supported” compared to “ad funded” approach?
When I say “free”, I mean free; its not a question of price reduction. Our customer surveys have showed that really there is no price elasticity. In the consumer’s mind, its either you pay, or its free. Customers are ready to accept an ad-funded service if its free, but something like a subscription discount to get advertising is not going to work.

So in the next months we’ll be doing a trial of taking some of our most popular content sites and making them fully free. We now are working to setup the right process so we can sell the available space on the sites.

Which brings us to TF1. Can you tell me something about the agreement with TF1?
(note: TF1 is a large French TV broadcaster, and is also owned by the parent company of Bouygues Telecom)
Certainly. TF1 will be selling the ads for the Bouygues portal. They will also be serving the ads, using a technology from a company called CellCast. We decided not to develop our own ad server, as we want to focus on our core business. This is why we are partnering for ad sales and serving.

Will the other i-mode and WAP sites also sell their ads through TF1?
At the moment, the agreement with TF1 pertains only to inventory on the Bouygues portal.

Our approach with our content partners is a very open, flexible relationship. We had to choose an advertising company for our own inventory, and we picked TF1. We don’t want to impose our choice on other content providers. Other companies may already have existing ad selling partnerships that they will use. However, of course TF1 has a huge reach, and would be an ideal ad selling partner for other content providers that want to put ads on their sites. Its up to them to choose.

Overall, do you think that the mobile advertising will mirror online advertising development?
I believe the mobile phone offers some special advertising opportunities that we have not yet explored. So far its been very much a “copy/paste” of the web model, banners and search.

I think there are great opportunities with certain very specific types of operator inventory. For example when someone is downloading a game, or when they are dialing a number, or when they are launching a video, there is the chance to put an advertising message there. This is inventory that only exists on the mobile, and we need to learn how to use it.

Bouygues is also doing a lot of work on mobile commerce. How do you see mobile commerce working with mobile advertising?
The reality is that mobile commerce is still just beginning. Its clear that advertising is a good way to develop m-commerce, but its not enough. To start a ‘virtuous circle’ for mobile commerce, I think you need to have 3 key enablers in place:

1 – there have to be good m-commerce sites on the network
2 – advertising has to work to bring customers to the m-commerce sites
3 – customers have to have an easy way to pay

Although its early days, the parts of the m-commerce solution are starting to come together. We now have some good m-merchants on our site including e-bay, Amazon and some French m-merchants. And this summer we are bringing out an m-wallet which will ease the process of buying something on the mobile.

How will the m-wallet work?
Well we’re not going to replace banks – the idea is more simple. Customers will enter their credit card information and address into their phone once, and when they want to buy something on the mobile, they can just use this information. The idea is to facilitate the process of buying something on the mobile, because today its still very complicated.

“Contact-less services” is another technology that Bouygues has been working on, how do you see this working with mobile advertising?
I think that contact-less has a great future with advertising, because it lets you communicate with the customer at just the right moment. Let me explain.

When a customer has the capability to pay for petty cash purchases with their phone, the operator will in essence be “present” at this very critical moment. The operator will know exactly when the customer is paying, and there will be the possibility to send an advertising message, a price discount, or a customer relationship management interaction. This is a very critical moment to be able to communicate with the customer.

Last question: on a more personal basis, what one or two things do you think have to be in place for the mobile advertising market to realize its full potential?

Really I see two things.

The overall market, including the operators, has to learn what is special about mobile. There is a very intimate relationship between a consumer and their mobile phone. Its very different, it can’t be treated like TV or online. The industry will have to invent new formats that give specific benefits to the customers – just applying existing models is not going to help the market.

The second thing is that we have to help the customer handle the “commercial pressure”. Today our customers receive SMS and MMS from content sites and operators. If in addition there are lots of banners on the portals, its going to be too much. We have to find a way to protect the customer from feeling overwhelmed by mobile advertising. Or else we will kill a market that does not exist yet.

Thank you very much Laurent, we look forward to seeing all of these plans develop.