With the explosive growth in mobile devices worldwide and their ever-increasing popularity as a source of information rather than just personal communications, marketing via this technology has become a key aspect of any successful advertising campaign.

More than simply another way to reach potential customers, the unique properties of mobile technology allow advertisers to engage directly with a target audience in ways that are more interactive and more targeted than anything offered by traditional media.

This white paper outlines the basic background behind mobile marketing, the special advantages that come from using a mobile strategy, and the most popular components of a mobile campaign.

The Mobile Market

Mobile phone use in Canada, North America, and around the world is growing at an unprecedented rate. In the first quarter of 2007 the mobile marketplace grew by 135 million people, with over 250 million new handsets sold worldwide. This is equivalent to 1000 new customers every minute. Mobile penetration in Europe now exceeds 100%, with 666 million connections. There are nearly 3 billion mobile users around the world, a figure that is set to rise to over 3.25 billion by the end of 2007, giving a global penetration rate of over 50%. More than 90% of adults in the US carry a mobile phone, and the figures for Canada are similar.

Reaching Generation Y

Digital marketing, specifically mobile marketing, is a powerful way for brands to reach the all-important Gen Y demographic.  Mobile marketing communicates in their language: on-demand content, by request, using technology, such as text messaging, that they are extremely comfortable with.  It also appeals to their cynical nature. Generation Y consumers don’t want to be sold; if they like what they see they will go after it.  Further, it appeals to their spending and shopping habits, which are promotion based, often driven by games and contests, and typified by fast or instant decision making.

Marketing Through Mobile Technology

At the outset, most mobile marketing campaigns begin as an adjunct or value-added component of a larger marketing effort, leveraging traditional ad media and bringing three distinct new attributes into play:

1. A call to action that engages existing and potential customers and gives them an active role in the campaign;
2. The ability to conduct highly targeted efforts aimed at interested consumers who have selected themselves to participate in some fashion;
3. The ability to retain existing and potential customers so that subsequent campaigns begin with a base of consumers already known to be interested in the advertisers products and services and who have opted in to an ongoing relationship with the advertiser.

The heart of any mobile campaign is the ability to open a direct, one-to-one communication between your company and existing and potential customers. Typically this relationship begins when subjects send a short code via text message in response to something they have seen in traditional ad media. For instance, a print ad might include the line “Text the word WIN to 889988 to enter to win.”

When consumers respond, they’re initiating a direct relationship with the advertiser. Many studies have shown that the act of responding, rather than simply passively receiving a message as is the case with traditional media, leads to a much high retention rate among target audiences.

Thus by definition mobile marketing targets people who are motivated to interact with the company. They’re reaching out, and doing so through a medium that they consider to be hip, cool, and on the cutting edge. Moreover, the process of interaction greatly increases the chance that prospective customers will remember a product or promotion.

Mobile marketing in effect opens a dialogue between the advertiser and its customers, one from which both sides benefit. Customers gain real-time, exclusive information including regular updates on product launches, special sales, and other inside ‘scoop’ as well as coupons and the chance to enter contests or play games on their mobile devices. Advertisers deliver information directly to these subjects and simultaneously develop a database of motivated customers who have pre-selected themselves as high-value prospects for future campaigns. Information is only sent to people who have requested it, thus eliminating any sense that advertisers are ‘spamming’ their customers.

Customer contact information is also retained for future use. Each subsequent marketing campaign can and should include a mobile component which begins by targeting the existing mobile market database.

For example, XYZ Coffee Shop adds a mobile contest to its existing print campaign. The line “Text COFFEE to 889900 to win a free coffee” is added to print and bus ads across the city. The first week that the campaign runs, 1,000 interested customers send text messages entering to win a free coffee. Follow-up messages inform respondents of other promotions, advance draw winners, and the 100 grand prize winners. A dialogue has been established.

In the second week, new print and bus ads run advertising a 2 for 1 special that week and include the line “Text COOKIE to 889900 to get a free cookie with your 2 for 1 special”. This offer is simultaneously sent via text message to all of the week 1 respondents, a pool of potential customers who have already indicated an interest in XYZ Coffee. The database grows as new customers respond to the week 2 promotion. Over time, the advertiser builds up a targeted database of interested consumers who can be reached in an extremely efficient and effective manner.

Mobile Campaign Components

While every campaign is different, most mobile marketing can be divided into five general categories:

• Contests
• Coupons
• Text Alerts
• WAP Sites
• Reverse Auctions

Contests:

The most common form of mobile marketing is a text-based context. Subjects typically send a text message to a short code address they’ve seen in traditional ad media. For example, a print ad may say: “Text the word WIN to 889988 to enter to win prize X.” Sending the text triggers a two or three message exchange in which the advertiser can reinforce core brand messages as well as communicate other offers and refer the entrant to their website.

Text Alerts:

Customers who have opted in to mobile marketing, either through participation in previous promotions or by signing up via the advertiser’s website, can be prompted with specific offers, reminders to enter new contests, or other forms of time-sensitive or periodic content.

In some instances this content may not be promotional but rather reinforces a brand by communicating information of interest to the consumer, such as horoscopes, jokes, or weather reports.

Coupons:

Using traditional media, potential customers can be encouraged to send a text for a redeemable mobile coupon: “Text COUPON to 889988 for a 2 for 1 coupon.” The advertiser’s  database of mobile customers may also be used, sending the coupon directly to a highly targeted group.

WAP Sites:

A second tier of mobile content can be provided via a WAP site, essentially a small website accessible via a mobile phone. Users can be referred in to this site via traditional media, text messages, or the internet. A WAP site allows users to access a deeper level of content than would be available via text messaging. For instance, they might be able to access a catalogue of products on sale, a complete restaurant menu, a map with directions to the nearest location, and additional coupon and contests.

Reverse Auctions:

A reverse auction is a novel form of promotion that has been used to great effect in Europe and Asia and is gaining tremendous popularity in North America. Mobile users ‘bid’ on a prize via text messages, often paying a small fee each time they do so. The lowest unique bid wins the prize. Reverse auctions are most commonly used in conjunction with a larger media campaign, with text messaging being the core method through which bids are placed.

Taking your campaign viral:

Customers can also be given incentives (often more chances to win) if they forward contest details to friends. This can create a ‘viral’ effect, where the subjects of an ad campaign, that is to say the customers, drive the dissemination of marketing messages of their own accord—a high-tech version of word-of-mouth that is very effective in a mobile environment, where forwarding messages is cheap, easy, and extremely common.

Over time, the campaign creates and nurtures an ever-growing community of customers, all of who can be reached directly and who are equal participants in an on-going dialogue about the advertiser’s products and services.

Conclusion:

For the foreseeable future, it is unlikely that mobile marketing will totally supplant traditional advertising. Rather, it is a highly effective, higher targetable adjunct to a traditional campaign that can build and retain a customer base and to reach out directly and effectively to customers who have opted in to mobile communications.

The real value of a mobile campaign comes over time. As the mobile user database grows, the number of existing and potential customers that an advertiser can reach grows. Marketing messages can then be communicated to these people directly and efficiently via the relationship that has formed between the company and the target audience, a relationship that both sides perceive to be valuable and that both want to continue.