Marketing via mobile phones is coming to America. Cell phone penetration of the U.S. population just passed 50 percent, and SMS is now possible across previously incompatible American systems. Though local calls on landlines for voice, Internet, and instant messaging are all comparatively cheap here, the prospect of linking this newly national SMS capability to email and instant messaging could make the expected U.S. growth explosive. To move quickly and surely in this new space, U.S. firms can look to Europe, where mobile telephony is rapidly becoming a viable marketing channel.
The first movers on both sides of the pond are network operators, software and technology providers, and service providers. All stand to gain from a growth in wireless marketing. Frost & Sullivan forecasts by 2006 in Western Europe, 65 percent of wireless subscribers will be willing to accept an expected flow of 37 billion wireless ads and alerts per year, generating roughly $467 million in marketing revenues. To get there, the channel must deliver value to advertisers and consumers alike.
The cell phone appeals to advertisers for many obvious reasons. Consumers carry them every day, everywhere, and mobile phones are almost always "on." Thus, the channel has high presence. As a personal environment, the device commands high attention, leading to high impact. Individual targeting allows greater relevance. Consumers can respond quickly and easily or store messages and respond later, delivering convenience to the consumer and efficiency to the marketer. Finally, the mobile channel is novel and has little commercial clutter, leading to higher standout.
Ultimately most important to advertisers, the channel does deliver. London-based mobile marketing firm Enpocket recently sponsored an independent survey of approximately 5,200 consumers. Reviewing some 200 SMS campaigns conducted from October 2001 to January 2003, 94 percent were read, generating a 15 percent average response rate and a 27 percent best response rate (added benefit: 23 percent showed or forwarded the message to a friend). Frost & Sullivan cite two recent studies, American and European, showing 15 to 18 percent CTRs as average, with best CTRs up to 52 percent. The channel works, if you know how to work it.
The simplest application, wireless advertising, works just like advertising in other channels: It sponsors or subsidizes content. Current wireless content is usually data services: news, stock prices, sports scores, weather, and travel information. Both Coke and Pepsi have sponsored wireless versions of fantasy sports leagues. Wireless tie-ins allowing TV viewers to participate with programs, especially reality shows such as "American Idol," have proven quite successful.
Today's most successful application, at least the most popular among marketers, is wireless promotion, which also works just like its offline counterpart. In the U.K., for example, among Campaign magazine's top 10 SMS campaigns last year, 5 stimulated product purchase with contest entry codes on their products' packages. Customers could text the code back in the hope of winning prizes. A sixth stimulated a high-value product trial by putting a contest entry code in a print media campaign. There is, of course, talk about using cell phones to deliver barcodes that can be scanned at retail points of sale and other advanced applications.
Whether advertising or promotion, marketers can measure and track wireless response in real time and can respond quickly and easily based on the responses they elicit. In this regard, wireless is similar to email, Web site, call-center and other two-way, direct-to-customer channels that can be guided by data and generate new data.
This leads to today's leading-edge application, wireless marketing, a broad range of communications that target, inform, collect data from and enable customers to perform certain tasks. The near-term goal is to forge another interoperable channel for managing customer relationships, creating brand experiences, and delivering targeted added value.
Nestlé recently ran a month-long SMS-delivered trivia contest about NESCAFÉ coffee. When the consumer answered one question, another arrived. As back-and-forth messaging progressed, customers were offered bonus points if they provided personal information -- age, gender, income, shopping habits, and so forth. Nestlé will use this data in a two-year SMS marketing program promoting sauces to homemakers, fortified drinks to young athletes, ice cream to preteens, and so on.
Wireless or not, all campaigns guided by or collecting personal information face the same hurdles:
Good practice prevails in Europe, perhaps because violations can backfire so badly. Carriers there want to reduce churn and strengthen retention in the face of increasing competition and high debt from license acquisition costs and network investments.
Advertising, promotion, and data-based marketing are traditional practices being repurposed for the wireless channel. But the channel has a dimension for which there is no clear antecedent: the network. Not the technical infrastructure of towers and routers, but the users' friends, relatives, and coworkers who populate their address books. They are, so far, beyond our reach. Mobile communications can enable and enrich the users' social relationships in real time and space. It's not clear whether marketers can, or should even try, to enter this terra incognita. We'll explore those challenges in part two.
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