July 2006 - Mobile Marketing

Go, Go Mobile Marketing

By Paige Muller

Marketing to consumers was easy back in the days when there were only three TV channels and a handful of radio stations. Today’s consumers are on the go 24/7 and have many more media options, making it increasingly difficult to reach them through traditional channels. Adding to the challenge, they multi-task and use multiple media channels, oftentimes simultaneously.

Retailers are spending more of their marketing budget to pinpoint which media will reach each customer. With mobile marketing, retailers can keep pace with elusive customers and reach them anytime, anywhere.

For the purpose of this article, the type of mobile marketing being described is permission-based, which allows customers to individually choose or opt-in to receive information from a specific company, with the option to opt-out at any time. This does not include unsolicited advertisements delivered through a mobile channel.

As the number of cell phone users increases, so too does the use of text messaging.

In fact, text messaging is where e-mail was 15 years ago and voicemail marketing was five years ago. While European adoption rates are approximately two to three years ahead of the U.S., they are a strong indicator of what’s in store for the U.S. market. M:Media reports that an estimated 98 million U.S. households will have a cell phone by 2010. This equates to 93 percent or almost one in every household.

ERA’s 2006 Electronic Retailing Buyer study found that 81 percent of all electronic buyers currently have a cell phone. And though it found little appeal for opt-in messages at 1 percent, it must be noted that the results are applicable only to an audience of consumers who have made at least one purchase through electronic media, and not a broader universe comprised of consumers in general or cell phone owners, which would yield markedly different results.

Among surveyed electronic media buyers, cell phone ownership comes in second (81 percent) behind Internet access (86 percent) by just 5 percent, and ahead of cable TV owners (60 percent).

U.S. retailers are increasingly entering the on-the-go marketing space to take advantage of the coming shift. “Ninety percent of all brands plan to be involved in mobile marketing by 2008,” says Mike Romano, executive vice president of sales and business development for SmartReply, a leading company in the voice marketing industry. “Up to 25 percent of budgets will be devoted to mobile marketing within the next two years.”

Why should direct response marketers care? Because it is completely consumer driven, retailers are able to capture the Holy Grail of marketing: highly targeted, segmented relationships with loyal consumers. Even retail giant Wal-Mart is getting into the game. In recognition of the value of the individual customer, its marketing strategy is moving from “Come one, come all” toward a more direct marketing focus that includes mobile marketing.

The perception that text messaging is a youth-oriented channel is as outdated as the rotary telephone. Adults ages 25 to 45 have become the fastest growing demographic, as consumers have become more adaptive to cell phone usage and content has become more targeted to their interests and lifestyle preferences. The World Wireless Forum forecasts almost 100 percent penetration of cell phones among 20- to 40-year olds by 2007. Additionally, they report a 44 percent increase in the number of seniors ages 50 to 60 who own cell phones, to 23.29 million. Interestingly, the reason for people’s increased comfort and usage of text messaging is due in part to shows like “American Idol” and “The Apprentice.” The incorporation of text messaging to vote for contestants has popularized the feature across consumer demographics and increased retailers’ interest in mobile marketing as an effective way to reach their customers.

Mobile marketing campaigns, however, are about more than downloading ringtones, games and contests. More and more mobile marketing plans are tied to business goals with measures in place to deliver quantifiable ROI, unlike traditional marketing media, where it is difficult to gauge whether or not consumers pay attention to what they see, read or hear.

Mobile Marketing Campaigns Can Be Used For:
Welcome/thank you messages
Reminders and service messages
Announcing promotions and events
Introducing a new product or service
Building loyalty
Conducting customer surveys
Reducing attrition
Gaining consumer insight

According to information from SmartReply and a 2006 retail study by Forrester Research, retailers that earn the trust of customers can use text messaging to:

  • Communicate critical purchase and event information. Mobile marketing gives retailers an alternative way to provide customer service to their consumers by sending information like order confirmations, e-receipts and shipment status.
  • Segment and target customers with more relevance. Rather than blanketing the media landscape in the hopes of connecting with elusive consumers, mobile marketing allows retailers to target consumers wherever they are with messages that are relevant to their wants, needs and preferences. For example, if a retailer has an overstock of snowshoes, consumers who live in cold-weather states can be specifically targeted to receive a promotional message.
  • “Consumers are receptive to mobile value-added services as long as the consumer can define frequency of the marketing and the nature of the content via their mobile device,” says Laura Marriott, executive director of the Mobile Marketing Association. A study by the MMM found that most consumers are interested in applications that provide information about products and services.
  • Add a new channel to multichannel shopping. Research suggests that multichannel customers spend more-because customers who shop in multiple channels are more engaged-and cell phones represent yet another channel to connect with these consumers. ERA’s 2006 Electronic Retailing Buyer Study showed that media crossover is prevalent when it comes to people’s purchasing behavior. Seven to eight of every 10 radio, home shopping and TV infomercial buyers have purchased products through a different electronic media.

In addition to its many benefits, mobile marketing is compliant with the Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act of 2003 because it is permission-based. This law, which became effective January 1, 2004, covers e-mail whose primary purpose is advertising or promoting a commercial product or service, including content on a web site. The Act establishes requirements for those who send commercial e-mail, spelling out penalties for spammers and companies whose products are advertised in spam (should they violate the law), and gives consumers the right to ask e-mailers to stop spamming them.

Though widespread adoption of text messaging is about two to three years away, now is the time for direct response retailers to begin educating themselves about this new channel and learning best practices from early adopters.

Consumers are on the go. With mobile marketing, retailers can be everywhere their consumers want to be.

Paige H. Muller is ERA’s vice president, marketing communications. She can be reached at [email protected].


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