Desperate LG clings to mobile ads

Smallest wireless carrier looks for business models beyond telephony

By Kim Tong-hyung

LG Uplus, the country’s smallest mobile-phone carrier, is vowing to give Google and Apple competition in mobile advertising as it continues to search for revenue models beyond its traditional telephony business.

In a lavish news conference in Seoul Thursday, LG Uplus, formerly LG Telecom, announced its aspirations for the mobile advertising and marketing business, looking to take advantage of opportunities in the booming market for mobile devices.

The company plans to provide around 500 products and features related to selling advertisements displayed on small screens, such as those on smartphones like the Apple iPhone and Samsung Electronics Galaxy S, by the end of this year.

The business will also allow consumers a wider range of mobile applications (apps) that could be downloaded free or cheaply on the handsets, with a larger number of quality apps being ad-supported.

The advertisements will be displayed on all data-enabled mobile devices, company officials said, including the iPhones and rival products powered by the Google-backed Android operating system and Microsoft’s Windows Mobile, company officials said.

LG Uplus’ advertisement services will be available on Apple’s mobile devices and also products powered by the Google-backed Android mobile operating system and Microsoft’s Windows Mobile. The advertisements will be displayed in banner formats or delivered in text messages, with users being allowed to customize the information they are subscribing to as well as when and how often they receive it.

LG Uplus currently has around 30 clients, including news organizations, such as the Chosun Ilbo and YTN, electronic commerce providers, computer games firms and social media sites to make applications where LG Uplus’ advertisements can be placed.

The mobile advertising platform will eventually expand beyond smartphones and also be employed to tablet computers, Web-connected televisions and other data-enabled products, company officials said.

``It’s crucial for us to find businesses that target the entire population and all companies as potential clients, as it’s hard for us to just rely on our telephony customers to keep growth alive, and we believe mobile advertising can certainly be promising,’’ said Hyun Jun-yong, who heads LG Uplus’ service development division.

``Our mobile advertisement platform will be open to anyone, whether they are our rival telecommunications carriers, big companies or small-and-medium enterprises, and independent developers who have previously struggled to cover the costs for applications development and find a reliable revenue model. We are ready to provide a working ecosystem.’’

It appears that LG Uplus is entering a market that is crowding quickly. Google, which acquired mobile advertising firm AdMob last year, and Apple, which pushes its own advertising platform in iAd, have already made forays in the potentially lucrative market.

Korean Internet companies like NHN, the operator of search giant Naver (www.naver.com), and Daum (www.daum.net) have thrown in their hats as well, while SK Telecom, LG Uplus’ bigger mobile telephony rival, is expected to announce its business plans for mobile advertising soon.

It bears further watching whether LG Uplus could differentiate itself to establish itself as a meaningful presence in the new market. Geographical boundaries are even less relevant in the mobile Internet realm than they are in the desktop world, and Korean companies and software developers are already showing a strong acceptance for globally-present platforms like AdMob and iAd.

LG Uplus claims that its local knowledge for delivering customized solutions for Korean clients will provide it with an edge over foreign competitors, but Naver and Daum are simply more experienced in this area, while SK Telecom can obviously be a lot more powerful in terms of influence and financial muscle.

Finding a reliable business model beyond voice communication is desperate for LG Uplus, which currently touts ``Beyond Telecom’’ as it corporate motto. The company is the smallest of the country’s three mobile-phone carriers, which also include market leader, SK Telecom, and KT, the exclusive local provider of the iPhones.

LG Uplus doesn’t appear to have a prayer of challenging the mobile telephony hierarchy, as it continues to be burned by its decision to skip third generation (3G) WCDMA telephony, and is now desperate to expand its customer pool beyond its wireless business.