The ‘M’ in M-Commerce Stands for Marketing

Perhaps we’re finally seeing some strides made toward the arduous task of solving the mystery of mobile commerce. When all is said and done, m-commerce may not be commerce at all, but rather another conduit for marketing and CRM that leaves the transactions to other channels.

Anyone trying to figure out the m-commerce market, or the wireless market in general, in recent years has had to deal with divergent statistics. How many people are using wireless Internet access? How many are interested? Consumer research says millions. Supply-side numbers say billions. M-commerce appears to be shaping up as a microcosm of the the wireless industry as a whole — one that, to this point, has overpromised and undelivered.

The M-Commerce Symposium at Internet World Wireless 2001 in New York was full of caution for companies pinning their hopes on m-commerce as the “next big thing.” The opening remarks of the symposium from Patrick McVeigh, CEO of OmniSky, served as a reminder that, especially in the United States, wireless still has a long way to go. While wireless data has prospered in certain vertical segments for years (just ask Avis or UPS), the United States remains in the beginning of the early adopter phase. Wireless networks are behind in their rollouts, and the speeds the networks are generating aren’t what has been promised. The pattern of overpromising and underdelivering has disappointed some early users who have tried wireless technology and expect it be more like their PC-based Internet access. Most networks in the United States have 70 to 90 percent of the population covered, but most people will encounter “dead areas” on their ride home from work, and people that live in valleys may not have wireless coverage at all.

Against this backdrop of a shaky wireless market, Tom Miller, vice president of the Internet strategies group at CyberDialogue made a presentation that attempted to answer the question “Are Users Ready for M-Commerce?”

According to CyberDialogue’s data:

  • 54.3 million adults in the United States (age 18 and older) used “localizable” content on the wired Internet during the third quarter of 2000. They accounted for 55 percent of those who spend $500 or more online.
  • Two-thirds of online spending in the United States comes from the Top 50 markets — where wireless data networks are up and running.
  • 16.1 million online adults in the United States have Net-ready wireless devices: 18 percent use the Internet feature; 29 percent use it daily; 60 percent use it weekly; and 15 percent rarely use it.

It’s not that wireless Internet users aren’t a good market for making online purchases. Wireless Internet users report they’ve been using the Internet for an average of 5.2 years, and they spend double the amount of time online per week than non-wireless Internet users. Nearly 90 percent of wireless Internet users shop online using the wired Internet, and they make three times as many transactions as non-wireless users, spending three times as much. They are more than twice as likely to download coupons or participate in frequent shopper programs. The demographics are even good: wireless Internet users are 60 percent male, have a median age of 30, and make around $81,800.

So what’s the problem? Fourteen percent say they have used wireless Internet access for m-commerce (compared to 68 percent for email and 39 percent for instant messaging) and m-commerce in this case is defined as seeking information about products, not only conducting transactions. According to Miller, wireless Internet use is seen as information oriented, not transaction oriented. Twenty-five percent of online adults who said they are likely to use wireless said they were interested in using it for shopping. More than half (53 percent) said they would use it for driving directions; 36 percent said they would use it for news. A full half said they had no interest in m-commerce at all.

“Consumers aren’t there yet in understanding it or appreciating it,” Miller said.

Here’s what Miller’s numbers found:

  • 400,00 Americans are looking for wireless shopping, and they aren’t doing it everyday. In fact, many are doing it out of curiosity or incidentally.
  • 4 million are interested in m-commerce, but double this amount are interested in messaging applications
  • M-commerce will not drive wireless adoption.

Miller said m-commerce will morph into a complementary marketing tool for contextual marketing and CRM and become part of a contextual marketing proposition, where customers will be reached where they are ready to buy, whether in their cars, at their PCs, or at kiosks in malls. In the key markets, Miller said he expects this transformation to take 4 to 5 years, perhaps as long as 9 years for it to reach ubiquity. Wireless has more value as a marketing tool than as a transaction tool, Miller said, because navigating and entering information on the devices is not easy. Even banner ads, the most maligned marketing tools have seen success when put in a contextual environment.

Miller isn’t the only analyst who sees marketing as the future of m-commerce. Gigi Wang, senior vice president of IDC’s communications and Internet research has called wireless a “customer service enhancement rather than an evolution of e-commerce.” Because most transactions resulting from a mobile device will be made through other channels, Wang said the ROI in wireless applications should be measured in a firm’s overall revenues.

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