Grey Wins $80 Million Account for 3G Introduction in India

Reliance Communications Will Launch Faster Mobile Service, Paving Way for Increased Monetization in Market

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MUMBAI ( -- In India, where cellphones rather than computers are the gateway to the internet for consumers, the introduction of faster third-generation (3G) service is expected to lead to an explosion in mobile marketing and subscriber revenue.

The 3G marketing blitz will be led by Reliance Communications, India's second-largest mobile phone operator. Reliance won licenses in an auction earlier this year against rivals Vodafone Essar and Bharti Airtel to offer 3G services in 13 key areas of India, including major cities such as Mumbai and Delhi, and plans to introduce the faster service in late 2010 or early 2011. In the biggest pitch so far this year in India, Reliance just awarded the new 3G advertising account, estimated at up to $80 million, to Grey Group.

Better known to Indian consumers as RCom, Reliance had 110 million subscribers in June 2010, making it one of the world's leading telecom companies in terms of subscriber numbers in a single country.

"The mobile advertising landscape, still in a nascent stage in India, is bound to change dramatically," said Sudhir Nair, VP of Grey's G2 direct and digital business for South Asia in Mumbai. "If the popularity of social networking and associated content is any indication of the internet space in India, 3G, with its additional bandwidth, will trigger a similar phenomenon in the mobile space."

India's mobile phone market is growing quickly with 20 million new subscribers added each month. India will have a billion cellphone subscribers by 2013, and is likely to have 150 million 3G connections by 2014, according to Wireless Intelligence, a service of trade group GSMA.

Little has been done to monetize the market so far. That's likely to change with the introduction of faster 3G services, which will be an introduction to the internet for many subscribers in India, where fixed-line internet connections have grown much more slowly than in Europe, the U.S. and even other parts of Asia.

India's mobile carriers expect 3G data revenue per user to reach $11 per month, up from $5 a month for voice services.

An area likely to expand quickly with the arrival of 3G services in India, which has a thriving domestic entertainment industry, are wireless music services. Reliance is already moving into this area, signing an agreement with Universal Music to offer a 3G music service.

Universal's catalog of international and Indian music, including tracks by local stars such as Sunidhi Chauhan and Shaan, will become available to subscribers of RCom's Simply Music service. The service includes access to full-track music downloads, video streaming, live concerts and ringtones on 3G mobile phones. Music downloads currently comprise 35% of RCom's value-added service revenues. Nokia launched its own unlimited music download service, Ovi Music Unlimited, in India about three months ago.

Reliance's first ads are likely to break by the end of September, a Grey executive said. Previously, local agency Cartwheel handled creative for RCom's basic GSM mobile services, while DDB Mudra oversaw ads for its Netconnect broadband wireless business. Industry sources said both incumbents took part, along with JWT and McCann Erickson. In a separate pitch, Reliance split its media business between OMD and MEC.

Mr. Nair said he believes ad budgets in India will rise by as much as 25% following the arrival of 3G in India. "It could also serve to kick-start innovation with specialized content, adver-gaming, social networking, m-commerce, communities and a host of other initiatives finding quick relevance."

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