Going mobile

Oct 01, 2006 9:30 PM  By

What marketing medium is smaller and more portable than a catalog yet nearly as sophisticated as a PC? A browser-equipped cell phone.

As Americans have grown increasingly attached to their cell phones, a plethora of mobile marketing opportunities are emerging. Consumers can now use their phones to keep up-to-date on online auctions, to receive shipping notifications from merchants, to be alerted of flight delays, and to receive coupon offers from nearby restaurants.

Whether cell phones will become the next major shopping channel is still to be seen, but the growing prevalence of mobile devices is proving irresistible to some marketers. “It’s another way to get to consumers. It’s the new digital billboard,” says Read Ziegler, president of Vantedge Group, an Atlanta-based market insights and analytics firm whose research points to growing mobile marketing opportunities.

Mobile marketing is particularly ripe for online merchants because their shoppers also tend to be cell phone users, notes Greg Rable, chief executive of FactorTrust, an Atlanta-based fraud protection service that sends alerts via text message when a user’s credit card is about to be charged for an online purchase. The consumer then has the option of entering “2” on his phone to decline the purchase.

FactorTrust’s novel approach to fighting fraud is based on Vantedge Group research showing that more than 80% of online shoppers say they always have their cell phones with them and that most would rather be contacted on their cell phone than on their home phones. “We live in a mobile society,” Ziegler says.

More than two out of three American adults have cell phones, according to the Pew Research Center. Some have more than one, for a total of more than 200 million cell phones in use in the U.S., experts say.

“That dwarfs online penetration and will soon dwarf television penetration,” says Dov Cohn, vice president of product marketing for Motricity, a Research Triangle Park, NC-based provider of mobile commerce solutions. “It’s the most pervasive interactive platform in the world — that’s the opportunity.”

Users are increasingly looking to do more with their cell phones than make calls. About 35% of cell-phone owners use the text-messaging feature on their phones, while 13% would like to add text messaging to their plan, according to a 2006 survey by the Pew Internet & American Life Project, the Associated Press, and AOL.

In addition, 14% reported accessing the Internet from their cell phones, while 16% would like to do so in the future. About 7% use cell phones to search the Internet for movie listings, weather, and stock quotes, with 24% who aren’t doing so yet hoping to in the future.

Text messaging is more prevalent among the under-30 crowd, with two-thirds using their cell phones to send text messages, while 38% access the Internet, according to the Pew survey. Many cell-phone users report being targeted by marketers, with 18% receiving unsolicited text messages on their phones from advertisers.

Service before sales

Using cell phones for text messaging got rolling in 2002 after short messaging service (SMS) interoperability arrived, allowing customers from different wireless carriers to communicate via text message, says Jim Manis, chairman emeritus of the Mobile Marketing Association. Businesses entered the scene in 2003 with short codes, five-digit numbers that allow the routing of an application to a handset. (See “The lowdown on short codes,” page 37.) And marketing applications have been expanding ever since.

The new-media campaigns are coming just as some forms of traditional consumer advertising, such as TV commercials, are showing signs of fatigue. “It’s becoming harder to reach people” as traditional media outlets offer declining audiences, notes Doug Rothrock, vice president of marketing and sales of Vibes Media, a mobile marketing company in Chicago. In response, marketers are “moving to innovative technology like mobile marketing.”

While video messaging and other rich applications are the latest twists, most mobile marketing efforts remain somewhat primitive in nature. Given the minute size of most cell-phone screens, marketers favor a minimalist approach. “Make it interactive, make it interesting and useful for the consumer, but keep it simple and add value in that interaction,” Manis says. “To increase response rates, it’s about giving the consumer some reason to participate and engage.”

So far U.S. marketers are using text messaging to engage consumers with services rather than ads. For instance, eBay shoppers who are watching a particular listing but don’t want to be chained to their computers now can take advantage of mobile eBay Alerts, which notify users of listing updates via cell phone. “If you’re away from your computer when an auction is going to close, it will send a text message, and you can rebid from your mobile phone,” says Ali Croft, spokesperson for the San Jose, CA-based online auction company. The system has been set up to notify users who have opted in with a text message about three minutes before a listing closes.

Using eBay Wireless, consumers also can search and bid on items, read product descriptions, and view pictures from their wireless devices, Croft says. “It’s making things even more convenient.”

Orbitz also has tapped into growing cell-phone usage with its OrbitzTLC Mobile service, which sends updates on flight times, gate changes, and the like to consumers via text message or recorded phone calls. The Chicago-based online travel company has sent more than 50 million alerts during the past two years, says vice president of brand marketing Tom Russell.

About 65% of Orbitz customers provide their cell-phone numbers to the company for notification purposes, and the alerts have become a popular value-add, Russell says. “As people continue to book with us, it has been growing.”

Orbitz in August launched Mobile Access, which enables users to surf a sripped-down version of its site from their cell phones. Users can choose from five options: “my trips,” “flight status,” “find hotels,” “contact Orbitz,” and “terms of use.” The “find hotels” feature searches the main Orbitz Website and pulls up the best five deals available at that moment, the company says.

To book a hotel or make a flight change requiring payment, Mobile Access users still must make a phone call. Orbitz does not allow for credit-card transactions via text messaging, Russell says. But Mobile Access provides real-time availability of flights and hotels, and it can be used by anyone, not just current customers.

The program’s purpose at this point is to enhance service, not generate revenue. “It is not about how can you market and send them ads on their mobile phone. This is about providing another level of service,” Russell says.

Though Orbitz is exploring other mobile applications, it is cautious about the information it will push out to cell phones, Russell says. “I am very concerned about turning that lifeline of service to our customers into a way to push advertising messages to them.”

But the fact that consumers like receiving alerts via cell phone is encouraging some marketers to explore sales applications. In a secondary component of FactorTrust’s fraud protection program, consumers who choose the free service agree to accept four special discounts or offers each month via text message from participating merchants. The offers are selected in part based on preference information the consumer supplies.

It’s one of the first blatant sales opportunities being pushed to consumers in the U.S., though the mobile marketing concept is more entrenched overseas. “In the U.K., it’s absolutely a hot-button topic,” says Alex Vlasto, senior communications manager at London-based mobile marketing company MIVA.

In London, for example, cell-phone users are accustomed to receiving responses via text messages when they dial directory assistance in search of a phone number; since March, MIVA has been offering ads in conjunction with the phone numbers provided. Between March and July, about 500,000 ads had been served to callers, Vlasto says. MIVA offers both pay-per-click and pay-per-call fee models, so advertisers can pay only when they receive a lead, Vlasto says.

Searching for applications

Text messaging isn’t the only cell-phone application marketers are adopting. Mobile search marketing is growing in the U.S. as well. An August survey of nearly 600 U.S. cell-phone users by the Mobile Marketing Association shows the category is just emerging: Three out of 10 respondents had used mobile search for the first time in the past month. Half of nonusers were interested in trying mobile search during the next few months. And 48% planned to start using mobile search at least once a week.

And while text messaging remains associated primarily with teens and young adults, that’s not the case with mobile search. According to the Mobile Marketing Association, “consumers age 45-54, college grads, and people with children at home all reported using search more than 11 times per month.”

Search ads, because they are driven by the user, avoid the nuisance factor that many advertisers worry about. “You can set these things up as opposed to slamming someone with information” they didn’t request, says Tim Solt, senior vice president of sales at go2 Directory Systems, a mobile marketing company in Irvine, CA. Go2 was launched in 1999 as the first mobile Yellow Pages directory and has since morphed into a full-fledged provider of mobile search and movie information. The company reported more than 24 million unique user sessions last year, and that has piqued the interest of many advertisers.

In a development announced in August, go2′s search results will include sponsored search listings from Yahoo! advertisers. Previously go2′s mobile search results showed basic listings from third-party providers such as InfoSpace, infoUSA, and Bell South as well as featured listings paid for by marketers on a cost-per-impression basis, Solt says.

“Advertisers in our network want to be able to reach consumers on their cell phones,” says Yahoo! spokesperson Nicole Leverich. “As long as we make it relevant, it will be useful to consumers and advertisers.” Leverich notes that Yahoo! Mail users have been able to forward e-mails to their cell phones as text messages for several years.

Ads will appear differently on go2 than they do on Yahoo!, Solt says. Go2′s mobile search is menu-driven because the company has found that’s the easiest way to navigate from a cell phone.

Consumers can find go2 through the phone carrier’s deck — the menu used to select content such as ringtones and games — under several categories, including movies, search, and shopping. Links between the categories move users from movie theaters to restaurants. Within the broad categories, menus take users to various subcategories, such as type of cuisine, Solt says. Go2, which has more than 10 million store listings, uses location-based technology to provide mobile users with listings of nearby businesses without their having to enter a zip code or a starting point. A company also has the ability to advertise when users are near one of its stores or restaurants.

A growing number of companies are paying to get premium mobile search placement, just as they do to get premium Web search placement. “Just being in the directory, that’s not going to get you noticed,” Solt says. Go2′s premium listings include priority placement in relevant categories with the logo and an offer, such as “free local delivery.” Only three priority listings appear on the screen at one time.

Rates typically are calculated according to number of stores and locations. “Everything is a custom quote at this point because everyone wants something unique,” says Solt.

Banner ads that display across the top of the cell-phone screen by themselves are another option. For example, in August restaurant chain Chili’s advertised on go2′s Movie directory with a banner ad offering a gift card. It was the only offer on that menu page. When users clicked on the ad, they received the full offer — “Give a $25 gift card, get a free $5 Chili’s card” — and were instructed to enter their e-mail address for more information.

Location-based technology makes mobile search advertising effective for regional and local businesses. And being in the right location can be a drawing card. “People aren’t going to a mobile device just to search. They are actively looking for something,” Solt says. Click-through rates vary; Solt cites 3%-5% as a standard, with some distinctive campaigns gaining click-through rates of more than 10%.

“It’s a great way to drive retail traffic,” says Leland Kroll, chief data strategist at Wired Assets, who also runs Kroll Direct Marketing in Plainsboro, NJ. For example, a restaurateur whose bookings are soft could send out a text message to clients with a special offer to entice them to visit the restaurant that week, Kroll says. “Send them a mobile coupon in order to fill those slots. Announce a special event or a personality attending the store.”

A number of mobile marketing campaigns tie in to traditional ad media such as print ads, billboards, and commercials. As part of its “What is beautiful?” campaign, for instance, personal-care brand Dove allowed consumers to use their cell phones to “vote” on which images featured on a Times Square billboard they found most beautiful. Print ads directing readers to online and cell-phone drawings are another way of integrating old and new media.

Conversely, some marketers are using mobile messaging to direct consumers into stores. Manis of the Mobile Marketing Association recalls a promotion at a Cambridge, MA, mall offering cell-phone-generated coupons for 20% off at mall merchants. Consumers brought their cell phones to participating retailers and showed them the coupon code on their phone screens.

Vibes Media’s Rockroth suggests offering an interactive scavenger hunt within a store, with different short codes leading to prizes hidden around the store. You can introduce the campaign through direct mail or e-mail announcements that encourage customers to come to the store at a certain time. “It gets people to go around the store and have fun doing it,” he says.

Handle with care

Although the Can-Spam Act of 2003 applies to some cell-phone messages (for more information, visit the Federal Communications Commission online at www.fcc.gov/cgb/consumerfacts/canspam.html), it does not not cover SMS communications. Even so, getting a marketing message to pass muster with cell-phone carriers can be a challenge, Kroll says.

No cell-phone company wants to run the risk of upsetting users, so “each telco has someone who will review and authorize the data. They want to see the sample text message that goes out,” Kroll says. And most aren’t willing to take a chance on anything that’s of a sexual nature. For example, Playboy Enterprises, which has a strong business selling adult pictures and ringtones via cell phone overseas, tried to launch a domestic mobile business in late 2004 but couldn’t make it work.

Cell-phone marketing in general has to be done carefully, even overseas, where according to MIVA, 93% of cell-phone users surveyed said they would be willing to receive text ad campaigns. Nonetheless, MIVA is careful to screen out offers it thinks will be perceived as nuisances — or worse. “If you get it wrong, it can have an incredibly negative impact on the brand,” Vlasto says.


Wilmette, IL-based freelance writer Ann Meyer has written for The Chicago Tribune and Small Business Review, among other publications.

THE LOWDOWN ON SHORT CODES

Mobile marketing got a huge lift in 2003, when business began using “short codes,” five-digit numbers that enable the routing of an application to a handset. By securing a vanity short code that’s easy to remember, marketers can easily tie in cell-phone marketing with other campaigns, says Leland Kroll, chief data strategist at Wired Assets and the principal of Kroll Direct Marketing.

Ebony magazine, for example, could use EBONY as a five-digit vanity short code, tying a mobile game or sweepstakes offer to a print ad. Short codes that spell a name or brand can prove powerful, Kroll says. “It’s like a URL — it’s their signature on the marketplace.”

The Common Short Code Administration (CSCA) opened registration for six-digit selected short codes in May, adding greatly to the available options for vanity codes, while random five-digit codes are still available. Merchants can register for them online at www.usshortcodes.com. Registration and licensing fees are $1,000 a month for a selected code and $500 a month for a random code.

Even random short codes are highly user-friendly. If consumers see an ad with an offer while sitting in an airport, with just a few keystrokes they can act on it, says Dov Cohn, vice president of product marketing for Motricity, a provider of mobile commerce solutions. “It’s real-time no matter where they are.”

The popularity of short codes tied into television programs, such as American Idol on Fox and NBC’s Deal or No Deal. In fact, many credit American Idol with convincing millions of Americans to try text messaging for the first time. Last season the show drew some 64 million text messages as Cingular Wireless customers texted the word VOTE to the short code provided for the contestant they preferred or participated in Idol trivia contests and sweepstakes.

While the Idol campaign was limited to Cingular customers, most other mobile marketing programs can be accessed by customers of any cell-phone carrier, with the carriers earning a portion of the premiums generated. Marketers often charge from $0.49 to more than $3.00 for premium text messages that can have an impact on a TV program or a live performance.

At concerts, ballgames, and other events, mobile marketing firm Vibes Media runs text-to-screen programs that allow users to send text messages to performers or athletes and see their messages appear on large screens at the concert halls or stadiums. The messages typically carry a price tag of about $2-$3, says Doug Rothrock, vice president of marketing and sales.
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