On Mobile: Business in Europe

Christian Kreul

In my last article I wrote about the advantages of mobile targeting and how it generates more revenue for all your efforts. Now I’d like to give you a general overview on the online mobile business in Europe.

The adoption of mobile handsets in Europe started slowly in the late 1990s and exceeded the 100 percent penetration in Europe in 2006. By the end of 2009 there were 136 million mobile Internet users in Western Europe compared to 90 million users in North America and over 200 million in India.

According to Juniper research the mobile adult market in Western Europe was worth $711.8 million in 2009.

I started to work for a mobile billing company early in 2005 and this was my first experience in this type of business. It was very interesting to see how much money companies from all different industries (mainstream and adult) generated on mobile phones in those early days. And - it was very surprising to realize that mobile adult content was the strongest revenue generator of the verticals.

The adult industry generated more revenue than daily newspapers or TV channels, which had, and still have, much more power to promote mobile content. The second very impressive factor to me was that there was no single major adult brand on board. We are talking about unknown small companies, selling adult content to mobile users worldwide and generating a six-digit revenue number every month. So these companies were the really early adopters, and Smartphones were far, far away.

The strongest market in those early days was the U.K. I’d go so far as to describe them as the mobile driver or the mobile pioneers in Europe. The British carriers did a great job to market the mobile Internet to their subscribers. Germany, certainly the largest country and economy in Europe, was far behind the U.K. mobile market due to several developmental factors.

The potential of the mobile Internet was ignored for a long time and the carriers missed opportunities to promote it properly. Further, there was a “never change a running system” attitude — it’s working, don’t mess with it. The SMS text chat business was huge in Germany and this was what everyone concentrated on. So why try out something new?

Another barrier was the fact that the carriers tried to make quick money from inexperienced users. The carriers who distributed the phones branded them with their logo and placed a special “Internet button” on the front. Many people accidently hit this button and a mobile connection was established for hours and even days without the knowledge of the user. Of course the majority of users didn’t have a special data tariff. One month later, on their next invoice, people were shocked over the astronomic fees they had to pay for mobile browsing which they were never even aware of. Newspapers, blogs, magazines and TV stations reported on this topic and people became more and more cautious, even scared!

But several years later with the launch and high demand for Smartphones and the proper data tariff plans, the mobile business has really picked up in Germany. To further influence progress and adoption, there were also a lot of regulations put in practice for the huge SMS text chat business, and people had to find new revenue channels. The mobile Internet was the perfect alternative for them.

According to Juniper research the mobile adult market in Western Europe was worth $711.8 million in 2009 and was the strongest market for adult mobile content in the world with a share of 42 percent. For comparison, the North American market was worth $ 64.3 million in 2009.

One of the big advantages is the mobile billing option, which can be offered in Europe and other regions. People are used to paying for their content on a mobile phone and the carriers are more liberal when it comes to adult content. Of course you have to follow both the rules of the carriers and the individual countries, and every carrier and each country have different content regulations. It really doesn’t matter if you’re offering hardcore, softcore or glamour content —users are consuming it and, more importantly, are willing to pay for it.

Also, times have shifted. In the earlier days most users just browsed within their carrier’s deck or portal. Once they established a connection to the mobile Internet and opened their mobile browser they immediately arrived on their carrier’s portal. As it was more complicated to navigate the mobile web compared to today’s phones the user remained within the carrier’s portal. Of course many carriers also covered the adult section as well. It was really hard for small guys and niche companies to participate at this point, as the carriers preferred large and well-known brands. And of course we have to mention that the carriers took most of the generated revenues from content owners for this service.

However, over the years this concept and construction has changed dramatically. Users realized that there is a world outside of the carrier’s portal with many more choices. People started to use search engines or entered URLs directly into their mobile phone browsers. And from here started the triumphal procession of the mobile Internet and everyone was able to jump on that train! Today the carriers are well on their way to just becoming “bit pipes,” like ISPs. If you compare this with the development of the Internet you can see a lot of similarities.

Do you remember the time when you had to throw away a lot of CDs from ISPs like CompuServe, AOL and MSN every day? Once you used one of these ISPs, established a connection to the Internet and opened your browser — what was the first site? The site of your ISP, right? No search engines were there. So, almost everything happened right within that portal. News, weather information, stock market news and entertainment — everything was included in your ISP’s portal. Luckily search engines changed the way in which we used the Internet. And exactly the same has happened to the mobile carriers.

With the changes of the mobile user behaviors we are seeing increasing traffic from month to month — and with the right billing technology behind it good conversion rates.

Currently we see typical conversions of 1:50 to 1:150 for countries where we have mobile billing in place. The most important countries in Europe where you should get involved are: Germany (including Austria and Switzerland), France, Netherlands, Spain and the U.K. Currently these countries are the best converting countries within the SexGoesMobile affiliate network.

If you’d like to send me any questions, feedback or ideas for other articles, contact me via ck@sexgoesmobile.com or my XBIZ.net profile www.xbiz.net/SGMChris.


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