Leppäniemi, M, Karjaluoto, H. and Salo, J. (2004). The Success Factors of Mobile advertising Value Chain. E-Business Review, IV, 93-97. THE SUCCESS FACTORS OF MOBILE ADVERTISING VALUE CHAIN Matti Leppäniemi, Pehr Brahe Software Laboratory, matti.leppaniemi@oulu.fi Heikki Karjaluoto, Pehr Brahe Software Laboratory, heikki.karjaluoto@oulu.fi Jari Salo, University of Oulu, jari.salo@oulu.fi ABSTRACT This article aims to obtain a comprehensive understanding of mobile advertising (m-advertising) value chain from industry’s point of view on one hand, and from consumer’s viewpoint on the other hand. In this paper the authors develop a model describing the critical success factors of m-advertising value chain. This 5C model of m-advertising value chain indicates that the management of the five Cs is vital in defining business models in the m-advertising landscape. These five Cs are content, cross-media marketing, campaign management, customer database, and carrier cooperation. The paper further analyses the conceptual discussion of m-advertising and provides a coherent explanation of m-advertising. INTRODUCTION The recent evolution of telecommunications technology has paved the way for m-advertising to become an increasingly important element in the marketing mix in the coming years. Despite all the attention paid to m-advertising, only a few academic researchers have provided useful insights into this area. This may derive from the fact that the m-advertising market is in its infancy. Researchers have not even agreed whether the focus should be on internet-based advertising in the wireless devices (PDAs, WAP) or in the telecom sector (ads delivered via telecom networks). In the US the researchers have mainly focused on the wireless internet-based advertising whereas in Europe m-advertising has merely been understood as SMS and MMS based telecommunication (Add2Phone 2003, Enpocket 2002). These two views form very different basis for business models, for instance. This article aims to cast light on the challenges and future directions of m-advertising value chain by evaluating its success factors and developing a model that helps researchers and managers to better understand the critical components of this value chain. The following section provides insights into the conceptual discussion of m-advertising. The subsequent section discusses on the main players and their roles in m-advertising value chain. The final sections outline the main findings and their implications to both theory and practice. CONCEPTS IN MOBILE ADVERTISING There exists no commonly accepted definition for the concept ‘mobile advertising’. For instance, one of the largest professional associations for marketers, the American Marketing Association (2003) does not give any definition for mobile or wireless advertising. The Mobile Marketing Association (2003), the premier global association that strives to stimulate the growth of mobile marketing and its associated technology defines m-marketing as the use of the mobile medium as a communications and entertainment channel between a brand and an end-user. Mobile marketing is the only personal channel enabling spontaneous, direct, interactive and/or targeted communications, at any time, and at any place. Basically, mobile marketing can be seen as the process of planning and execution conception, pricing, promotion, and distribution of products and services through the mobile channel (IMAP 2003). However, it is valuable to make a distinction between mobile marketing and mobile advertising. According to the IMAP (2003) mobile advertising is defined as “the business of encouraging people to buy products and services using the mobile channel as medium to deliver the advertisement message”. This definition overemphasizes the process of buying instead of fully elaborating the substance of the advertising concept. Thereby, we should place emphasis on the influence of the message in the traditional sense of advertising. The definition of advertising provided by the American Marketing Association (2003) is as follows: “The placement of announcements and persuasive messages in time or space purchased in any of the mass media by business firms, nonprofit organizations, government agencies, and individuals who seek to inform and/or persuade members of a particular target market or audience about their products, services, organizations, or ideas.” According to the Merriam-Webster Dictionary (2003) advertising is defined as follows: “Advertising is the action of calling something to the attention of the public especially by paid announcements.” At the basis of the citations above and the common characteristics of mobile media we suggest that m-advertising can be defined as any paid message communicated by mobile media with the intent to influence the attitudes, intentions and behavior of those addressed by the commercial messages.