3G will boost advertising budgets of telecom operators

The completion of the third generation (3G) radio spectrum auction last week has not only opened new opportunities for the winning telecom bidders but also the media and entertainment companies. Given the prevailing super competitive conditions in the telecom market, operators will push up their advertisement spending to secure the largest pie in small but lucrative 3G market.

In fact, telecom operators have been the fastest growing segment in terms of advertising spending. For instance, Bharti Airtel has witnessed a CAGR of 29.2% in its advertisement budget while the Idea Cellular has seen annual increase of 42.2%. With the 3G services coming up now, advertisement spending will see further push as all the operators try to take advantage of being the first mover.

Further, most of the telcos will be able to counter balance the higher advertisement spending through generating higher revenue from advertisement. Telecom has itself become a popular advertising media and with the 3G services, advertisement through this platform will become further colourful and interactive. This will fetch operators to earn more revenue too.

Already the 3G telephony, with high-end features like fast internet connection, audio and video streaming, mobile TV and real-time multiplayer gaming, has been a great driver of mobile advertising in all the markets where it has so far started. The story is certainly going to be repeated in India. All in all, it is a win-win scenario for the operators.