• May 1, 2008
  • By Jessica Tsai, Assistant Editor, CRM magazine

The Moving Target

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It seems like just yesterday the Internet was that neat trick our computers could do. Today, it's become our primary source for giving and receiving information. Mobile technology is a natural extension of the Internet--and yet, despite promises of a mobile revolution, the reality has yet to manifest itself in the United States.

In the pockets of more than 250 million people, the mobile phone is for most a necessary appendage. We've forgotten how we ever managed to be punctual without them or how we kept track of so many numbers. Bill Jones, president of mobile marketing service provider Air2Web, recalls his days as a mobile-phone designer for Nokia: "It was amazing the number of attributes people looked for in picking a phone." Today's devices have become far more personal than a computer. Customers select phones that resonate with their personalities. In China, for example, a strong belief in numerology motivates consumers to spend extra for lucky phone numbers. Mobile accessories are so important in Japan that nail salons often decorate phones to match the consumer's nails. As a result of this strong personal connection, marketers have been wary of appearing intrusive--customers are likely to be much more sensitive and far less forgiving.
As with the development of the Internet, however, patience is a virtue. "In 1995, there were no ads on the Internet," says Neil Strother, an analyst at JupiterResearch. "Now it's accepted that just about all commercial sites have some form of advertising and we don't bat an eye--that's probably what we'll get to at some point [with mobile marketing]." As of now, he says, "we're kind of like mid-'90s for online when it comes to analytics." Many mobile capabilities are borrowed from Internet technology, but the applications are far from a perfect fit: Web surfers leave electronic footprints known as "cookies" on the sites they visit; mobile-phone users don't. Moreover, unless consumers are directly using coupons, vendors have a difficult time making a direct connection between a mobile promotion and a conversion. (See "Coupons Without the Clipping," October 2007, page 14, for more on mobile coupons.)

Mobilizing Mobile
About five years ago, marketers began recognizing the targeting power of the mobile device. A confluence of better technology, higher adoption, and larger-bandwidth data plans transformed the perception of mobile from being just a toy to the interactive device you have with you all the time.
But the added capabilities come with added complexities. "It's impossible to just decide to do it on your own," Jones says. There's no set recipe for any successful marketing campaign--and a mobile effort just ups the ante. As with any other campaign, the critical first step is figuring out your goals. Who are you targeting? Is it to promote brand awareness? Is it to increase conversion? Is it to cross-sell or upsell? Only then can you begin to tackle the tougher issues: Stay "on deck" (that is, use a single mobile carrier) or go off deck? Ally with one of the few experienced mobile marketing agencies? Choose a mobile marketing service application? What about analytics and integrating this campaign with the rest of your business?
Some regions are way ahead of the U.S. on those fronts. In Japan, people surf the Net by phone more than they do by computer. South Korean mobile bandwidths are 16 megabits per second (mbps); in the U.S., most cable modems range from six to eight mbps. It's not as simple as transporting knowledge from one continent to the other. The market has to be ripe, the dynamics in line.
Experts say that expensive phones and monthly charges for texting and Internet access are slowing America's adoption. (Americans are also more inclined to use voice minutes when traveling within the privacy of their cars.) Consequently, though interest may be high in the U.S., Strother says, the actual demand for mobile marketing is just emerging.
While the evolution of an advanced mobile society is inevitable, experts warn against waiting for technology to catch up to innovation. Companies can provide a service that appeals to early adopters, but they can also prepare for the coming mainstream audience. In other words, it might not be smart to have a service that only works with the iPhone when most people are still texting from a number pad. In such a competitive market, James Wanless, chief operating officer and co-founder of voice technologies company Talkster, has seen more than enough companies disappear before the technology caught up. Given that the mobile market is still relatively nascent, Wanless says companies should avoid focusing solely on the technology. Instead, the solution can advance as the technology evolves, becoming more sophisticated and more relevant to the end user.
Making Marketing Mobile
"It takes a certain amount of creativity, not just to gamble, but to experiment or try something new--to break through the clutter," Strother says. So far, only a handful of brands have attempted nationwide mobile campaigns. For the most part, they're the Fortune 500 companies, such as Coca-Cola and Toyota, that have the luxury of taking such risks.
Getting feedback at the point of interaction was "almost impossible" or extremely expensive with traditional methods, says Kirk Hendrickson, director of product management of mobile products at MarketTools. The key to mobile marketing is not to be trendy, but to fill in the gaps and reach consumers in places they could never be reached if they were online. Whether it's waiting on line at the store or passing by a billboard on the road, the lag time between when consumers see an advertisement and when they sit down at a computer could be just long enough for them to forget the ad entirely, or more likely, to not care enough to expend the effort.
Despite modest adoption, mobile-technology vendors have been popping up everywhere over the past decade. Despite what Strother calls a "crowded field," the complexity of the mobile space has created a multitude of challenges--and no one has fully "cracked the code." It's not as easy as merely making the Web interface mobile; vendors have to address key components such as the ability to work across the networks of various carriers and service providers, the differing phone functionalities, the individual phone plans, the requirements of the advertisers--and, of course, smaller screens. "Realistically," agrees Charles Golvin, principal analyst at Forrester Research, "[existing] vendors all have one problem or another."
And those problems persist. While Strother says that we're beyond the basic experimentation, technology providers remain in the trial-and-error phase, figuring out what works and what doesn't. Companies watching from the sidelines are learning from those successes and failures before diving in. "Over time, these things get sorted out," Strother says. "Presumably, the mediocre stuff will go away and the good stuff will last." He adds that nothing is for sure at this point, given the uncertainty of the landscape.

Customers Know Best
As vendors and marketers venture out into uncharted territories, consumers will also play a part: The smartphones and cellular devices they opt for will become more advanced and thus technologically more receptive to mobile marketing. "In two to three years, everyone will have a smarter phone," Air2Web's Jones says.
Still, having the smartest of phones means nothing if the services provided aren't appealing to the customer. For instance, more than 60 percent of the phones sold in the U.S. are equipped with a camera, but only about 30 percent of those are being used for picture sharing, says G. D. Ramkumar, cofounder of image-recognition mobile marketing company SnapTell. In other words, that's an underdeveloped market for SnapTell, which targets the users who truly believe a picture's worth a thousand words: They can transmit a cameraphone picture of a wine label and receive back a review of the wine, or use a snapshot of a DVD cover to add a film title to their NetFlix queue. According to Ramkumar, SnapTell does not require an application download; instead, images are simply sent to a designated "short code."
But another barrier to entry may be cost: Ten cents per message for a random text will make any potential customer resent an irrelevant offer. But not all offers are irrelevant: "People who want to participate [in an offer] are motivated by the potential compensation," MarketTools' Hendrickson says. What a consumer gets has to be perceived to be at least as valuable as the cost incurred by hearing about it--which means mobile advertisers need to be more upfront about the incentive.
The Internet, too, was once billed by the minute--until the introduction of fixed-rate unlimited access. Carriers are already responding to the mobile craze with the introduction of fixed-rate service plans; while market acceptance is still too early to gauge, fixed-rate plans will significantly change the way consumers interact with their phones. This past February, Verizon launched a monthly $99.99 plan for unlimited voice calls and long-distance calls to 48 states. A $119.99 plan includes unlimited messaging to anyone on any network, and a $139.99 deal adds VCAST VPak, VZ Navigator, and mobile email. Competitors AT&T and Sprint soon followed with their own unlimited plans.

Not surprisingly, the freshness of mobile has made it an attractive communication tool for younger people. As a result, marketers are looking to mobile efforts as a way to reach the influential 18-to-25 demographic compared to the above-40 generation. Raised in the Web 2.0 era, 63 percent of American teenagers--ages 13 to 17--have a mobile phone, according to a study last December by the Pew Internet & American Life Project. In addition, the Nielsen Company reports that 35 percent of "tweens"--ages 8 to 12--have cellphones. "I see a big generation gap with technique and with comfort," says Richard Aaron, president of event planning company BizBash. As a professor at New York University, Aaron is exposed to those who wouldn't live without text messaging and those who "just don't get it."
Aaron wanted to explore the realm of mobile to reach younger audiences, particularly recent college graduates. His campaign was a brief mobile survey conducted by MarketTools' Zoomerang product, which sought participant opinions about a trade show. Presented during the conference, the survey was timely and relevant--and drew an incredible response rate of approximately 80 percent. (In marketing, Aaron says, 4 percent is typically considered "good.")
That's not to say that older generations aren't catching on. Make an attractive offer and they will come. According to a study of over 2,000 American adults conducted by consulting and research firm Deloitte last October, about 62 percent of "millennials"--consumers between the ages of 13 and 24--reported using their cellphones as entertainment devices, up from 46 percent in the previous survey just eight months earlier. The percentage of consumers ages 25 to 41 using their cellphones for the same reason rose from 29 percent to 47 percent. Furthermore, the study found that 20 percent of consumers were viewing video content on cellphones daily or almost daily.
Mobile technology also extends beyond cellphones. Last October, grocery chain Stop & Shop introduced the EasyShop device in 100 of its stores nationwide. The device--which is about the size of a hairbrush--is based on marketing service provider Modiv Media's Modiv Shopper and Modiv DeliVision applications. Using the EasyShop, customers scan each item as they put it in their shopping carts. They also no longer have to wait at the deli--they can type their order into the EasyShop and be notified when it's ready. The EasyShop also knows the layout of the store: Based on the products scanned, customers will be notified of discounts available on nearby products. Stop & Shop's director of media relations Robert Keane says that the introduction of EasyShop is not meant to replace any existing forms of advertising; rather, it's an addition that aims to provide a competitive edge as customers gain a whole new shopping experience.

Mobile is only going to get more widespread, connecting people anywhere, anytime. Social networking sites such as Facebook and microblogging site Twitter have already added mobile functionality to the realm of interactivity. Air France has enabled passengers to text message after reaching cruising altitude and other European and Asian airlines are following suit, hoping to earn some extra revenue. Several U.S. airlines, including American and JetBlue, have begun testing in-flight Wi-Fi data access.
As the walls limiting the use of mobile devices get broken down, we'll see innovative new ways to involve mobile wherever we go, with the intention of deepening our interaction with the world. At a 2007 New Yorker conference, Younghee Jung, senior interaction designer at Nokia, outlined some future mobile possibilities: Mere proximity to another person could bring up a personal profile; a touch of a pizza magnet could instantly call for food delivery. But those technologies are yet to come.
Forrester's Golvin says that some of the seemingly futuristic mobile technology is already in the works: Near-field communications (NFC), for one, is a short-range, wireless communication technology similar to the wireless payment methods found in some credit cards (e.g., MasterCard PayPass) and toll booths (e.g., E-ZPass). In Japan, cellphones loaded with electronic money can be waved in front of subway turnstiles to expedite the transportation process or to pay for goods in vending machines. Japan Airlines allows passengers to access a plane ticket via phone and to check in by scanning the image at an airport kiosk. Golvin expects NFC technology to hit the U.S. around 2009, but suspects it won't become widespread for several years.
Today, two-dimensional images placed on advertisements such as billboards can be captured with cameraphones. Phones could contain software to decode the image and instantly direct the user to the landing page detailing the offer. Decoding software, however, is prohibitively expensive and not found on the average consumer phone, Golvin says. (SnapTell, for example, doesn't rely on phone-embedded software.) Worse, there's currently no standard for information embedded in a 2-D image; hence, no single software can decode every image. In addition, not all phones take pictures with sufficiently high resolution to accurately capture a useful image.
There will be "significant opportunity only when the software comes on the phone to begin with," Golvin says. Current technologies require consumers to individually download software. (Mobile coupon provider Cellfire works this way.) As functionality becomes more mainstream, Golvin says, carriers will require phone manufacturers to install the software prior to distribution.
And experts promise that the myths of advertisers following your every move will be dispelled. Ads won't just be ads, they'll be offers. "One day, people will say, 'Oh, yeah, this crazy phone of mine did know I was looking for a new suit, new tires, a new Toyota'...and you won't mind," Strother says. "The hard part is delivering it in a way that people will accept."

Still A Ways to Go
"2008 isn't going to be the year that mobile makes it big--and the longer recession looms over us, the longer mobile's emergence will be delayed," writes Peter Kim, a senior analyst at Forrester Research, in his blog. After attending the online, marketing, media, and advertising (OMMA) conference this past February, Kim summarized his impression on the current state of mobile marketing: "[It] has lots of potential, but is currently trapped in an immature adolescence, at best. Sure, we've started to notice mobile--deeper voice, more curves, whatever--but this thing ain't ready to drive a car, vote, or drink a beer yet."
Mobile, especially in the U.S., has yet to iron out all the kinks. Today's companies must experiment, watch results, and learn from mistakes and accomplishments. It may take another couple of years, but mobile will be an important part of the future. Anyone who denies this, Aaron believes, shouldn't even be running a business. "You have to learn to keep up with change. You can't be frightened by it. You can't run from it. You really have to embrace it, understand it, and work with it."

SIDEBAR: Applications of Mobile Marketing
Promote: Companies trying to increase brand awareness and attract potential customers can deliver coupons or promotional offers to a targeted demographic. With a tangible incentive, consumers will have more of a reason to explore new options.
§ Who's doing it: Toyota launched a mobile campaign to promote its FJ Cruiser as it competed in the annual off-road race, the Baja 1000. The campaign included video and banner ads that brought users to a branded microsite. Interactive material--videos, ads, driver-blogs, and images--provided by MobiTV allowed customers to further engage with the product.
Service: Especially relevant in CRM, companies can extend an existing relationship and gain a loyal customer.
§ Who's doing it: International shipping company UPS provides a mobile notification service that updates customers on the status of their packages in transit. An email notification service was available, customers didn't want to be tied to their computers.
Transact: Mobile users enjoy equipping their phones with accessories such as ringtones, games, news and financial alerts, wallpapers, and horoscopes.
§ Who's doing it: Carriers and certain Web sites provide these features. According to a study by telecom and mobile-media research firm Telephia (now Nielsen Mobile), premium SMS download purchases--ones billed directly to the mobile-phone owner--from off-portal storefronts amounted to approximately $215 million in the first quarter of 2007.

Sources: Bill Jones, president of Air2Web; Telephia

SIDEBAR: The Dos and Don'ts of Mobile Marketing
The Dos:
§ Make the offer relevant
§ Encourage instant interactivity
§ Offer something of value
§ Keep the message short and simple--every word counts
§ Build an ongoing relationship
§ Give customers the option to opt in or out
§ Work off of a targeted, well-segmented list

The Don'ts:
§ Don't get enamored with the technology--stay focused on the marketing goal.
In other words, just because Bluetooth is the hottest new technology doesn't mean you should create a campaign that involves Bluetooth. Instead, think, "What is my problem and how can I help solve this problem?"
§ Don't treat mobile as a standalone operation.
Mobile is another channel of marketing. To get the most out of the campaign, mobile should be combined with other media, such as television or print. Experts and marketers agree that mobile will not and should not take away from
any existing campaigns; rather, it will act as a supplement to enhance the overall experience.
§ Don't spam the consumer. Bluetooth and radio frequency identification (RFID) technologies make it possible to ping individual consumers based on their location. So far, it seems that consumers and carriers will not tolerate such activity; to prevent these behaviors, carriers are trying to make it difficult for companies to obtain a short code and send messages, according to MarketTools' Kirk Hendrickson.

Sources: Air2Web; MarketTools

Editorial Assistant Jessica Tsai can be reached at jtsai@destinationCRM.com.

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