Mobile operators are figuring out the right model to take advantage of mobile internet and are looking at the iMode model of taking a fixed percentage on content, according to an Irish mobile messaging company that has emerged as the largest premium SMS advertiser in the UK.
Dun Laoghaire-based Red Circle is the largest spender on print advertising in the UK market for direct-to-consumer mobile content and the company told siliconrepublic.com that it spends on average £12m (€17.5m) sterling a year on advertising.
Red Circle was established in 1999 and revealed before Christmas that it has generated a turnover of in excess of €25m a year.
The company competes head on with premium SMS firms like Jamster and Partymob for consumers, offering everything from ringtones to wallpaper and video content for their mobile phones.
Typical brands Red Circle partners with include Saatchi & Saatchi's Global Urban Media Division as well as leading men's magazines Loaded, FHM, Nuts Magazine and Maxim.
Before Christmas the company revealed it had sent its 50-millionth premium text message.
Red Circle's chief operations officer Cathal Fay told siliconrepublic.com that when the company started off it had a monthly advertising budget of £20,000 sterling per year with which to target consumers with its mobile content offerings.
"Premium phone messaging services is a dynamic market and generates £1.6bn sterling a year in the UK," said Fay. "Our business model is to offer mobile content direct to consumers. If they see an ad in a publication like FHM or Loaded and want a particular item of content, whether it's a ringtone or video for their phone, they can order via interactive voice response (IVR) or by premium SMS.
"Because of the messaging system we don't have to deal with credit cards as the mobile operator just facilitates the collection of revenue. It takes the headache of revenue collection away and allows us to focus on winning market share."
Fay said that the market for mobile content is to grow at a rate of 29.5pc a year between now and 2010.
"People expected that the lion's share of revenues from the premium SMS business would be kept by the mobile operators but the reality is that players like Red Circle and our competitors would actually own 70pc of most mature European markets."
Fay added that he anticipates the impact of user-generated content such as that on Bebo and MySpace will have an enormous impact on the mobile market.
"The impact will be significant and we anticipate an increased richness in mobile content that will predominate and take advantage of new technology on mobile phones."
Fay said that mobile operators are figuring out the right model to take advantage of a richer mobile internet and are looking at the iMode model of taking a fixed percentage on content.
"They are standing back and thinking that rather than control content provided through their own portals or walled gardens [they can] encourage independent providers like Red Circle to develop content for this emerging scene."
By John Kennedy