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Five questions you wanted to ask on the SingTel-Amobee deal but were afraid to ask

Zafar Anjum | March 9, 2012
We asked these questions to two Ovum experts and here are their answers.

Why is stepping into the mobile advertising market important for SingTel (through the acquisition of Amobee)? 

Nicole

Nicole McCormick, Senior Analyst, Asia Pacific Telecoms Strategy, Ovum:  Mobile advertising is a revenue growth area which seems to be gaining some traction.  Apart from traditional banner ads, new opportunities include targeted deals and coupons.

Why couldn't SingTel develop its own inhouse mobile ad platform? What is the need to buy a company like Amobee? 

Nicole McCormick: SingTel is serious about mobile advertising as a new growth pillar, hence it makes more sense to buy Amobee than to build a similar venture from the ground up which would have taken considerable time to match the scale of Amobee.

Why did it have to be an all cash deal? Don't most companies offer a mix of cash and shares/stocks when they acquire a new business? 

Nicole McCormick: SingTel simply had the cashflow to buy Amobee outright, which is not unusual.

Isn't this acquisition (and hence business redirection) a bit too late in the day for SingTel? How is it going to stack up against the big players such as Google's AdMob and Apple's Quattro?

eden

Eden Zoller, Principal Analyst, Telecoms - Consumer, Ovum: Mobile is no longer a new advertising channel and many of the barriers that held it back in the past have been overcome.

Mobile advertising has many attractive qualities. It presents brands with huge potential reach, particularly in emerging markets where mobile will be the primary means by which many people access Internet services.

Another attractive aspect of mobile advertising is the potential for high engagement and personalization. But although several large global brands have adopted mobile as part of their wider digital advertising strategy for the majority it is still used in a tactical, ad hoc way. A survey of US brands conducted by Ovum on behalf of the Interactive Advertising Bureau, revealed that the mobile advertising issues of highest concern to marketers are consumer privacy (40 percent) device operating system fragmentation (39 percent) and lack of standardised metrics (31 percent). The survey also revealed that for mobile advertising budgets to increase, brands would need evidence that mobile advertising could demonstrate a sound/better return on investment. 

In terms of the advertising competitive landscape, the market is actually less fragmented than it has been in the past. There has been considerable consolidation over the past four years with many of the key players being acquired by larger, stronger companies - Google's acquisition of Admob is a case in point.

Is Singtel going the same way as Yahoo--by losing its focus? Wouldn't SingTel be better off by hiving off its non-core business into a subsidiary (to absorb Amobee)?

 

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