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Bachelor Thesis BACHELOR THESIS Mobile advertising and marketing A study of how location-based services is developing the mobile advertising eco-system and its business models Sixten Sidfeldt Bachelor of Science Industrial and Management Engineering Luleå University of Technology Department of Business Administration, Technology and Social Sciences ABSTRACT Purpose The goal of this research study was to examine the current state of mobile marketing and advertising. With focus on how location-based services currently transforms the mobile advertising ecosystem and its associated business models. Method The research study was conducted in association with different market leading industry actors, residing from diverse ends of the mobile advertising value-chain. This provided a broader spectrum for the study and the research questions sought answers to. The gathered empirical data was compared with existing theories providing possibility for further analysis and ultimately to draw conclusions for the research questions. Conclusion The research study concluded that location-based services will play a pivotal role in the coming years for mobile marketing and advertisement, both from the application perspective but also from mobile search integration. The market of location-based advertising is currently in an early stage, but shows high growth potential. The research study also concluded that location-based advertising follows the theories of regular mobile advertising, with the main exception that everything revolves around location. This provided difficulties for the parties involved, since location adds geodata that can that enable identification of specific end-users, as in the location gate scandal. To overcome this dilemma actors clearly- and openly reveal their strategy, on geodata harvesting. The geodata is collected either with the possibility to identify end-users, in an anonymous way or no harvesting at all. The applied business models are adapted from those of online advertising, the empirical data though showed that the industry is switching towards a more transaction-based business model aside from the exposure business model that is currently serving the majority of the mobile medium. Table of Contents 1 INTRODUCTION ....................................................................................................................... 1 1.1 INTRODUCTION TO LOCATION-BASED SERVICES ................................................................................ 1 1.2 INTRODUCTION TO MOBILE MARKETING ......................................................................................... 2 1.3 INTRODUCTION TO LOCATION-BASED ADVERTISING .......................................................................... 3 1.4 BACKGROUND .......................................................................................................................... 4 1.5 PURPOSE ................................................................................................................................ 5 1.6 DEFINED RESEARCH QUESTIONS .................................................................................................... 5 1.7 DELIMITATIONS ........................................................................................................................ 5 2 LITERATURE REVIEW ................................................................................................................ 6 2.1 RESEARCH QUESTION 1 .............................................................................................................. 6 2.1.1 MOBILE MARKETING ...................................................................................................................... 6 2.1.2 KRUM MODEL FOR ADVERTISING CAMPAIGNS ................................................................................... 10 2.2 RESEARCH QUESTION 2 ............................................................................................................ 11 2.2.1 DRUMMOND AND ENSOR MARKET EVALUATION MODEL ..................................................................... 11 2.3 RESEARCH QUESTION 3 ............................................................................................................ 13 2.3.1 MOBILE TRACKING POSSIBILITIES .................................................................................................... 13 2.3.2 MOBILE ADVERTISING MEASUREMENT ............................................................................................. 15 2.3.3 BUSINESS MODELS ....................................................................................................................... 15 2.3.4 INDUSTRY APPLICATION OF BUSINESS MODELS .................................................................................. 16 2.4 RESEARCH QUESTION 4 ............................................................................................................ 17 2.4.1 PERMISSION, PRIVACY AND SPAM AFFILIATION .................................................................................. 17 2.4.2 MMA MODEL TO ENSURE USER PRIVACY AND ADVERTISING RELEVANCE ................................................ 18 3 METHODS OF INVESTIGATION ............................................................................................... 20 3.1 INTRODUCTION ...................................................................................................................... 20 3.2 RESEARCH PURPOSE ................................................................................................................ 20 3.3 RESEARCH APPROACH .............................................................................................................. 21 3.4 RESEARCH STRATEGY ............................................................................................................... 21 3.5 RESEARCH LITERATURE REVIEW .................................................................................................. 21 3.6 RESEARCH DATA COLLECTION ..................................................................................................... 22 3.6.1 QUANTITATIVE OR QUALITATIVE DATA COLLECTION ........................................................................... 22 3.7 RESEARCH SAMPLE SELECTION ................................................................................................... 23 3.7.1 THESIS PARTICIPANTS ................................................................................................................... 23 3.7.2 INTERVIEW AT SONY ERICSSON ...................................................................................................... 24 3.7.3 INTERVIEW AT NAVTEQ ............................................................................................................... 24 3.7.4 INTERVIEW AT APPELLO SYSTEMS AB .............................................................................................. 25 3.8 RESEARCH DATA ANALYSIS ........................................................................................................ 25 3.9 RESEARCH ACCURACY .............................................................................................................. 26 4 EMPIRICAL FINDINGS ............................................................................................................. 27 4.1 RESEARCH QUESTION 1 ............................................................................................................ 27 4.1.1 INTRODUCTION TO MOBILE ADVERTISING AND LBA ............................................................................ 27 4.1.2 TW ON THE NMS STRATEGY WITH LBA .......................................................................................... 29 4.1.3 TW ON THE VALUE CHAIN FOR LBA ................................................................................................ 31 4.1.4 NAVTEQ MEDIA SOLUTIONS LBA MODEL ....................................................................................... 32 4.2 RESEARCH QUESTION 2 ............................................................................................................ 37 II 4.2.1 MARTIN SVENSSON ON THE MARKET FOR MOBILE ADVERTISING ........................................................... 37 4.2.2 TW ON THE MARKET FOR LBA ....................................................................................................... 39 4.2.3 FRAN ON THE MARKET FOR MOBILE ADVERTISING AND LBA ................................................................ 41 4.2.4 PETER TYREHOLT ON THE MARKET FOR MOBILE ADVERTISING AND LBA ................................................. 42 4.3 RESEARCH QUESTION 3 ............................................................................................................ 43 4.3.1 TW ON THE BUSINESS MODELS OF LBA ........................................................................................... 43 4.3.2 JAMES ON THE BUSINESS MODELS OF LBA ........................................................................................ 45 4.3.3 PETER ON THE BUSINESS MODELS OF LBA ........................................................................................ 46 4.4 RESEARCH QUESTION 4 ............................................................................................................ 46 4.4.1 TW ON THE PRIVACY INTRUSION AND POSSIBLE SPAM AFFILIATION ....................................................... 46 4.4.2 JAMES ON THE PRIVACY ISSUES ....................................................................................................... 47
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