Wireless advertising has a way to go yet

When it comes to advertising, innovation and penetration are key: catch consumers’ attention, create a buzz, and watch your profits soar. Not surprisingly, marketers are always on the lookout for new ways to push their products, and mobile marketing is one new way. A recent study by Decima Research confirms what many of us already knew: Canadians are increasingly turning to wireless phones for their communication needs. A full 64% of Canadian households report having access to wireless phones, a significant jump from 2000 when 44% claimed the same. This level of market penetration is akin to the television revolution of the 1950s, or the Internet boom of the 1990s. But wireless media is unique – it follows you everywhere, translating into unprecedented consumer access. In fact, when most of us leave our homes, we take three things: our wallets, our keys, and our mobile phones. Few marketers embrace the full potential of wireless advertising, discounting the wide demographical range of users. Although 18-34 year olds are still the primary users, 72% of Canadians aged 34-55 have access to wireless phones. While Nike, MuchMusic and other youth brands play a dominant role in this emerging medium, other brands can be successful at reaching older audiences. Jambo Mobile, a Toronto-based company that develops mobile marketing solutions, has enjoyed considerable success in attracting older wireless users. Jambo’s managing director of strategy, Derek Colfer, claims that in one of their campaigns for the CBC, "65% of the people who took part were over 35 years old." Content will drive the demographic, but to be successful content has to reach the customer. Canadian carriers are reluctant to grant marketers unfettered access to their customers. Privacy issues are a paramount concern, and carriers are loath to see their communication channels turned into a forum for unsolicited promotions. Permission-based advertising is the only route available to marketers in Canada. Marketers have to compel users to visit the site, download content or text message a code. Essentially, the audience has to initiate or invite marketing content, emphasizing the need for innovative, entertaining and interactive mobile advertising. According to filmmaker and commercial director Richard D’Alessio of Kontagious, "advertising on cell phones has to be a definition of how people want to use (the device)." SMS-based marketing appears to be the driving force behind successful campaigns. SMS technology is appealing to marketers: it’s user-friendly and widely available, and device fragmentation doesn’t play a role. It does lack the entertaining features available through games and video, but that doesn’t mean it can’t be innovative. Dose, the (now) Web-based daily, captured this in a recent campaign for Nestlé SA’s Kit Kat Chunky Peanut Butter bars. Print and Web ads urged Kit Kat fans to text in the UPC codes from their chocolate bars, enter a contest and receive free downloads of games and ring tones. The campaign was quite successful in not only generating substantial text traffic, but also in showcasing mobile’s valuable positioning for marketing and contests. Carlsberg A/S took a different approach to SMS advertising by incorporating location-based promotions into their marketing strategy. Targeting beer drinkers in London, England, Carlsberg collaborated with several pubs in the city. Coasters with a text number lined the bars, and patrons were encouraged to enter a mobile contest for free beer. Customers answered a trivia question on their mobiles, received a coded response and showed their message to bartenders to collect their free Carlsberg. The immediacy of the prize helped to generate substantial buzz, resulting in a very effective campaign. But SMS-based advertising is heavily reliant on giveaways and contests, and often needs to provide users with an incentive to contact a company via text. Some marketers have found this too passive, and have made attempts to contact users through other technological means. Duncan Kennedy, executive director of the Mobifest mobile content festival, cites an example from the UK where marketers tapped into Bluetooth’s capabilities. Billboards in city squares and highways were outfitted with Bluetooth devices, sending messages to users with compatible phones. If discoverable, users would receive a message prompting them to download a marketing video. Ultimately these campaigns failed: people felt their privacy had been violated, and the campaigns were quickly dubbed "blue jacking". "Advertising is at the top of things you don’t want on your phone," says Kennedy. "You don’t want…advertising as an invasive experience." Privacy issues certainly played a role in the failure of this approach, but limited market penetration was equally culpable. Many phones aren’t Bluetooth-enabled, and only targeting those who have the technology is like running a French advertisement in an English magazine: the message is out there, but few will get it. Device fragmentation is a major challenge for marketers who want to embark on more entertaining campaigns that make use of more technologies. The myriad different phones, different models and different screen sizes creates a costly barrier for those launching video campaigns. "Compatibility is an issue," says D’Alessio, "you could spend $20,000 creating a great Flash video, but $200,000 trying to adapt it to different models." In the UK, video consumption is widespread, but in Canada less than 15% of wireless users download content, translating into a limited mobile video audience. Canadians’ reluctance to embrace all of mobile’s features creates obstacles for not only the evolution of mobile marketing, but also mobile commerce (m-commerce). Tech enthusiasts await the day when a can of pop can be purchased from a vending machine by simply pointing a phone and clicking "buy". Marketers would relish the chance to offer their products for sale directly through their ads, but widespread availability of these options is delayed by Canadians’ disinclination towards pre-payment cards and repudiation costs. Smartcards or pre-paid debited accounts such as the Dexit chip have been introduced in North America, but Canadians seem to be loath to accept them. Extensive adoption of these devices could translate into a thriving m-commerce industry, but given the low rate for even pre-paid cell phone penetrations, its unlikely Canadians will be enthused over this option. Repudiation costs, which occur when somebody claims they were erroneously charged for a product or service, are an expensive consideration for carriers. Purchases made on credit cards without signatures or identification are ripe for repudiation. According to Jason Offet, a client director with Nokia Canada, "if somebody wants to repudiate these charges, for example, a can of Coke, it’s going to cost carriers around $100." A two-factor authentication model, such as PayPal, would alleviate a lot of these costs and allow users to securely purchase items simply by clicking "buy". Potential models could require passwords before the transaction is complete; users would then have the phone and password as proof of identity. Offet is optimistic about the future of m-commerce, and expects widespread adoption in coming years. "Three mobile carriers are working on these models right now," he says. In the meantime, SMS is expected to maintain its dominant position in North American mobile advertising for at least another year. That doesn’t mean, however, that text messaging and its continuous user-initiated contact is the only option for marketers. Customer relationship management (CRM) software capitalizes on SMS technology and has evolved fairly quickly in Canada. While Canadian mobile advertising has to be permission based initially, providing customers with the opportunity to opt-in for further communications can be an effective – and profitable – marketing mechanism. CRM encompasses more than simply sending messages to users about latest offers: it can be used to effectively target lacklustre markets and generate feedback on consumer preferences. Although most users won’t opt to receive SMS marketing, the success rate among those who do can be significant. Jambo Mobile’s marketing campaign for the horror movie Cursed was quite successful in developing a strong client base for its distributor, The Walt Disney Co.’s Buena Vista Home Entertainment division. Users were offered a download of a free "howl" ringtone and, according to Colfer, "25% of people that downloaded the content opted for ongoing dialogues with the brand." As technologies evolve and users adapt, mobile marketing will arguably be the most important vehicle for advertising. Future generations will expect to see their sports highlights sponsored by BMW, Nike or Sprite, or be enticed to purchase a full music track or ringtone from the CD being hocked on their screen. Marketers, however, have to be on the front lines, taking advantage of technical developments and creating innovative content. Colfer believes too few companies understand the potential and importance of this medium: "They’ll need to start including mobile marketing as part of their strategic plan, and not just as an afterthought," he says. If they don’t, they might end up as an afterthought.

Wireless advertising has a way to go yet

News | 05/29/2006 4:00 am EDT

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