Sri Lanka: The vicious circle of mobile advertising

Posted on March 10, 2009 / 6 Comments

I may be wrong, not having conducted a systematic study of mobile advertising in Sri Lanka, but the impression I have is that while there is plenty of it, it’s all about calling to maintain relationships if not about price/quality aspects. In the short term this works, because this is where people’s heads are. But unless there is more money in people’s pockets, it’s unlikely that the mobile operators will be able to continue to make money in the long run.

Voice is getting commodified and profits are declining. People are not taking up more-than-voice services because they do not have money and see mobile as a consumption good. If, on the other hand, it is seen as a production good, something that puts money in the pocket, is it not realistic to think that it will be better for the operators?

LBO has carried an interesting piece based on the exchanges at the LIRNEasia presentation to industry on March 4th. Perhaps the readers have more to say?

Sri Lankans low income customers of mobile communications, used phones least for business related activities in the region, potentially opening up a new marketing opportunity for celcos, a new study has found.

The so-called bottom-of-the-pyramid (BOP) mobile customers in Bangladesh used phones most for business, financial or work related activities a new study by the policy think tank, LirneAsia has found.

“Sri Lanka is at the lowest end where only 21 percent people said they used the phone daily for business related transactions” said Harsha de Silva, lead economist of LIRNEasia said.

“Whereas in case of Bangladesh where we heard so about phones and using phones as ways of getting out of poverty. And micro finance entrepreneur use was very high, whereas in Sri Lanka it was very low.”

6 Comments

Danny Boyle
March 10, 2009, 6:41 pm
I read the Minister of Telecom in Sri Lanka has critically injured in a bomb blast today.

How will that affect the SL telecom developments? What is your analysis?
Rohan Samarajiva
March 10, 2009, 6:51 pm
He was only called the Minister of Posts and Telecom. In actuality the Telecom Regulatory Commission is under the President, as is the partially privatized incumbent teleco. He had even publicly complained about it.
Sanjana Hattotuwa
March 10, 2009, 10:44 pm
Rohan, I’m surprised that you forgot to mention that telecoms development is also controlled, sorry supported by the Ministry of Defence under the President’s brother, so we should weather this incident rather well.
Akila
March 10, 2009, 11:37 pm
“People are not taking up more-than-voice services because they do not have money” Isn’t it questionable professor? It can be true for a majority of the people, but a good no of people use other VASs as well. Otherwise why the telcos invest heavily on providing those VASs?
Rohan Samarajiva
March 11, 2009, 12:12 am
Sorry, I thought the low takeup figures had been reported. The teleuse @ BOP research conducted by Nielsen for LIRNEasia showed that at the BOP at least take up of VAS is extremely low. Only SMS goes over 50%. Only 8% of users reported downloading of ringtones, etc. The only non-voice application that got 50% was checking credit.

But use another source: check the investor briefings of the telecos. They will all report that VAS, including SMS, yields around 9-12 % of revenues. Suggests low takeup across the board, not only at the BOP, doesn’t it?
Akila
March 11, 2009, 10:32 pm
Thank a lot for the answer and the information provided.
BTW Professor what about adding an comment follow up functionality for the site? So then no one will miss the follow up comments.
Thanks again.