Wireless carriers haven’t cracked the mobile marketing code

Mobile marketing is quickly gaining prominence in the world of advertising. One of the only new channels to arise recently, it has evolved into a way of reaching out to customers to generated brand awareness. Figures representing the potential for mobile marketing are instructive. More than 350 billion text messages are sent worldwide each month and according to the Yankee Group, 15% of these are commercial or marketing messages. In the US alone, Ovum predicts spending on mobile advertising to increase from $45 million in 2006 to $1.3 billion by 2010, and carriers want their share. Carriers have a great deal of influence on the industry. Before a marketer can launch a mobile campaign, it has to secure a short code. The Canadian Wireless Telecommunications Association is the gatekeeper for short codes, and is well aware that carriers are loath to open the flood gates to unsavory advertisers and risk losing customers over security and privacy concerns. Mobile marketing provides Canadian carriers with two sources of income: additional traffic and premium advertising content. Revenue-sharing protocols are already in place for premium marketing campaigns, where a customer pays to vote for a song, download a ringtone, or enter a contest via SMS. Every time a MuchMusic fan votes for their favorite video, carriers receive a percentage of the $0.75 fee. "There’s no standard rate," says Jambo Mobile’s Derek Colfer. "So Rogers could be getting a higher percentage than say, Telus." Most SMS-based campaigns however, don’t require customers to pay a fee to enter a contest or opt-in for promotional messages. Generating a strong customer base and brand awareness are often the driving forces behind mobile marketing campaigns, leaving carriers dependant on revenues from text messaging and downloading rates. "Ultimately carriers make money on the traffic," says Nokia Canada’s Jeff Offet. The more subscribers send text messages and download content, the more carriers can expect in their coffers. "All carriers love mobile marketing. Since they charge per message, mobile marketers are customers using their pipes," explains Joe Gorelick, VP of POP Solutions, a mobile marketing company with offices in New York and California. "Moreover, since some 24% of people who receive a mobile marketing message will forward it, the viral nature of the medium translates into profits for the carriers from increased messaging use." Yet, as the principle connection between companies and consumers, many experts believe carriers want more than the revenue derived from traffic – they simply haven’t found an appropriate revenue model. Carriers have, however, found a way to make mobile marketing work for their brands. Acquiring rights to events and entering into brand partnerships affords carriers the opportunity to offer subscribers exclusive content, while harvesting valuable information on their clientele. Rogers Wireless banked on this strategy for the 2006 FIFA World Cup. In an attempt to hit as many soccer fans and wireless users as possible, they created SMS and video subscription packages, as well as pay-per-view options. The content was only available to Rogers subscribers. These types of campaigns allow carriers to offer a benefit to their subscriber base, while enticing others to join their network. The European telecom giant Orange has fully embraced the potential for mobile marketing. In a recent campaign, Orange offered its subscribers two-for-one movie passes. Orange customers would send a message to a short code and receive a coupon for redemption. A follow-up SMS message was sent each week, reminding customers of the campaign and to ensure continuous dialogue with customers. "Orange strengthened their relationship with notoriously churning subscribers as felt they received something personal and of real value," Gorelick tells Report on Wireless. "Orange received reports of redeemed coupons, indicating number and type of movies watched, preferred location (cinema), et cetera. This is very valuable customer data." Customer relationship management is an integral part of mobile marketing. It allows the carrier and marketer to find out who the customer is, and offer them targeted and relevant promotions.Canadian carriers are able to benefit from mobile marketing beyond traffic and premium content revenue. By using their own networks, they can not only offer their subscribers exclusive content and promotions but develop personalized relationships with their customers. Offering discounts to more general venues such as movies, or concert halls will enable carriers to learn their customers’ preferences beyond their phone usage. Armed with this knowledge, carriers can then further customize their plans. A 42 year old professional who loves heavy metal bands may be enticed into downloading particular ringtones at discounted prices; the 21 year old student may opt for a Lost wallpaper; and the 55-year-old might download SMS curling updates, if the price is right. Mobile marketing is providing carriers with unprecedented avenues for revenue growth, many of which have yet to be explored, or realized.

Wireless carriers haven’t cracked the mobile marketing code

News | October 6, 2006

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