ten trends that will affect the future of mobile marketing

8/6/2019 Ten Trends that Will Affect the Future of Mobile Marketing

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7 billion people live on our planet.

5.2 billion of them use mobilephones. Its not surprising that

these phones are fast becoming

one of the most popular channels

for marketers to reach consumers.In this white paper, MichaelLevinsohn, Founder, President

and CEO of Lenco Mobile Inc.,

identies and discusses ten trendsthat will aect how brand owners

use mobile phones to engage and

interact with their customers.

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1. More and more advertisingdollars will be allocated to mobile

Brand owners are beginning to consider

mobile as a more serious marketingchannel. They have significantlyincreased the advertising dollars spent

on this channel. According to technologyresearch company Gartner, the amount

spent on mobile advertising in the UnitedStates in 2011 will be $701.7 million,

growing to $5.79 billion in 2015.

The approach has shifted from the waitand see of previous years to we have

to have a mobile strategy.

The rationale behind this is simple

mobile is measurable, something thattraditional above the line media hasnot been able to demonstrate to big

spending brand owners.

Mobile also oers additional advantages

over traditional media, such as theability to

a potential customer, when and

where it has the highest chance of

converting.

campaign in hours if need be, as

opposed to days, weeks or longer

for other media channels.

Wireless carriers have been inuential

in driving the enormous growth of the

mobile phone industry, by becoming

major advertisers across all media

sectors. According to Advertising

Age magazine, AT&TTM and Verizon

Communications spent $5.4 billion

advertising across all media categories

in 2010. Carriers recognize the value of

this investment. It brings in subscriber

revenue. Reducing customer churn

- the number of subscribers they

lose to another carrier - is a key

initiative for each one of them: they

will invest more advertising dollars in

retaining subscribers.

2. Brand owners will start using rich

media such as MMS messaging and

mobile apps to communicate with

their customers

Mobile phones have evolved as a

marketing channel since the early

messaging. Atrst it was used to notify

customers about retail oers. Then it

transactions such as a message from

a bank that a credit card payment had

taken place at a retailer. In spite of the

simplicity of the medium, the messages

were highly eective because they wereimmediate. In 2010 mobile subscribers

Portio Research Ltd. this generated

$179.2 billion in messaging revenue

This is forecast to reach $334.7 by 2015

will start using rich media to deliver

better quality messages to thei

customers; we will see an increase in


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the use of MMS messages to delivermarketing oers. The increase in the

volume of MMS messages will also beaided by the fact that wireless carriershave recently increased the permittedsize of MMS messages from 100kb-

300kb up to 500kb and sometimeseven 2MB. This will enable advertisersto send more innovative messages toconsumers.

There are several reasons for the movetowards MMS messaging.

Outside of the United States, thereis already a significant market fo

MMS messages on an Application-to-Person (A2P) basis. This is a singlemessage sent to many subscribersIt differs from a Person-to-Person

(P2P) message which is a unique

message sent from one individuato another.

Imagine you are a brand owner who

wants to introduce a new motovehicle.

send it to a targeted, opted in

base with a call to action askingrecipients to click on a link whichis in the MMS message.

embedded URL, and receives alink to a mobi site.

video to the subscriber.

subscriber is oered a voucher ocoupon.

voucher and redeems it for a testdrive in the new vehicle at the

nearest dealership.This process has huge benefits fo

the advertiser.

ecient marketing process.

will be world class, because

messages will be delivered inhigh resolution video format withhigh quality images, creating a


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positive impression of the brandsbeing promoted.

Time sensitive oers can now be madeto mobile subscribers using LocationBased Services. If the offer is not

redeemed within a pre-dened time

has become more efficient, brand

owners will start using rich media,delivered via mobile phones to engage

to see significant use of rich mediamessages on mobile phones in themonths ahead.

Another factor aecting the growthof rich media message usage is thespeed at which data can be delivered to

mobile phones. Data can be deliveredat speeds of up to 100 Megabits Per

Second (Mbps) on a fully deployedand stable Long Term Evolution (LTE)wireless network. At theses rates, it willtake less thanve minutes to download

a full length DVD to a mobile phone.Initially, carriers in the United States

around 2-5 Mbps uplink and 5-12 Mbpsdownlink time. While this is slower than

the eventual capacity, higher speednetworks will enable video streamingand the delivery of larger, rich media

les to mobile phones.

Two questions that always arise aroundMMS messaging are the perceived cost

and the ability of mobile phones inthe United States to receive an MMSmessage.

Cost is an issue because subscribers pay

for incoming calls and data usage. Thiswill change. In future, when a brandsends an MMS message to a customer

via their mobile phone, the carrier will

bill the brand not the subscriber. On acost per message basis, MMS messagesare proving to be very cost eectivebecause the conversion rate for high

quality MMS messages is far better than

It is a mistake to assume that instantmessaging solutions will outperform

MMS messaging as a marketing channel.Smart phone penetration in the United

the active subscriber base. That means

the United States are feature phones.Feature phones lack the functionality of

smart phones: they cannot download

and run apps in the same way - but theycan receive an MMS message. A well-

prepared mobile campaign will cater

for all makes, models and operating

As far as apps are concerned, there isno question that they have a role to

play in mobile marketing, especially

when integrated into social media. Butthe biggest limitation with apps right

now is that brand owners have to invest

heavily in letting their customers know

they have an app.. This requires a carefulcost-benet calculation. Since less than

two percent of all mobile subscribers

are actively using apps, marketers stillhave to use other means of mobile

messaging to reach their customers.

3. Wireless carriers will invest

heavily in technology that enablesthem to deliver rich media

services to their subscribers

Wireless carriers around the world arefacing very similar challenges: minutes

of usage the time that we spend

talking on our phones is going up,

but the revenue per minute of timespent talking, is declining, in some areas

faster than others.

In developing markets, where around

the average monthly bill in many cases isless than $10 per subscriber, per month.

As a result, carriers are looking for ways

to increase their Average Revenue PerUser (ARPU). The way to do this is tooer interactive, rich media products

and services.

The challenge in developing markets is

the lack of mobile internet infrastructure

to deliver rich content to mobile devices.Rich media technology platforms are

invest the capital when there is a valid

business case for doing so.

In more developed markets, such as the

United States, where the ARPU is closer

to $50 per month, and where smart

phone penetration is much higher

carriers can justify the investment in

new generation delivery platforms such

as Long Term Evolution (LTE).

4. Consumers will start opting in

to oers from brand owners

The mobile phone has changed forever

the ways brand owners engage with

consumers. However, the single biggest

challenge facing brand owners revolves

around permission-based marketing

Governments around the world are

enacting legislation that specically sets

out the basis on which brand owners can

engage with consumers and use theidata. Since mobile phones are seen as

far more personal than email, the leve

of scrutiny surrounding mobile access

will be far higher.

of interesting mobile advertising

campaigns, but what is lacking in the

United States right now are databases of

opted in mobile subscribers who have

agreed to receive advertising oers via

their mobile phones.

Mobile subscribers will accept oers

about products and services that are of

interest to them. The key to building a

database of customers who are willing

to provide their personal information

will be to ensure that the offers are

relevant.

be delivered when and where

they need them. This is one of themajor advantages of mobile as a

marketing channel.

One note of caution about marketing

to opted in databases. It is critical to

check suppressionles before targeting

a database. This will ensure that brand

owners are not targeting subscribers

who have chosen not to receive oers

via their mobile phones. Failing to do

so will carry signicant penalties.

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5. Penalties for spam messaging

will be severe

The dierence between online spam

and mobile spam can be described as

follows. While we do not want junk mail

at least we can choose to throw it away.

But when the mailman walks through

our front door, into our lounge and

starts opening the mail and reading

it to us, that is unacceptable. Firstly,

he is trespassing and secondly, we do

not want him deciding what mail we

should read.

Online spam is the equivalent of the

in our lounge or on our mobile phones

is mobile spam.

Online it is very dicult to police the

enormous volume of unsolicited

messages that are delivered each

day. Tracking an IP address and then

the law is an almost insurmountable

task. The internet is a multi-national

communications network that is open

to use and abuse by all and sundry.

The mobile world is dierent.

Wireless carriers are the custodians

tasked with policing access to their

networks. The penalties for not enforcing

the regulations will be high. As a result,

eort on ensuring that access via their

networks is not abused.

Value Added Service providers, who

wish to sell products and services

via mobile devices, will adhere

to stringent checks and balances

and their offers will be vetted well

in advance.

6. Data and analytics will be

the key drivers behind mobile

marketing

Mobile marketing generates signicant

quantities of data: analytics tools to

understand the data and to improve

the quality of the oers we receive, will

become key components of a mobile

marketing strategy.Analysis can provide data about when

and where an oer was taken up; the

redemption of that oer can be tracked

across multiple channels. This is a vast

improvement over traditional broadcast

media where oers are made to large,

loosely targeted audiences based on

sometimes questionable demographics.

Mobile oers the ability to develop

highly personalized marketing oers for

individual customers based on their pastpurchasing behavior. The more data

that is generated and evaluated, the

more rened those oers will become.

Brand owners can use sophisticated

data and analytics tools to carry out

predictive behavior modeling, which is

the art of determining in advance how

a customer will behave given a set of

dened variables.

Based on their analysis, brand ownerscan develop increasingly personalized

oers for their mobile subscribers. The

major assumption underpinning the

importance of data and analytics in the

mobile world is that it costs far more to

acquire new customers than it does to

on the industry, it can cost between

four and five times more to secure

new customers than it would to retain

customers who are already loyal toa brand.

The biggest users of the data and

analytics tools in the mobile world wil

be the wireless carriers themselves

The monthly churn rates for the top

ten carriers in the United States vary

will add tens of millions of dollars to

their protability when they improve

retention levels. By using predictive

behavior modeling and developingeective campaigns, carriers will soon

start improving the conversion rates of

campaigns delivered via mobile phones

7. Brand owners will look to one

specialist service provider for

guidance and advice in the

mobile space

Mobile marketing introduces a layer of


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overcome in the online world. Besides

the obvious challenge of not having a

database of opted in mobile subscribers,

brand owners are faced with technical

Historically, mobile marketing the

message campaigns and apps delivered

to smart phones. In the near future,

rich media messages will be delivered

to mobile phones via wireless carriers

and via the internet. They will be in the

form of high quality, engaging video

messages.

The process required to create and

requires interaction with a number of

players, from advertising agencies, to

digital marketing companies, mobile

aggregators and the wireless carriers

themselves.

To make it more complicated, prior to

sending a message via the wireless

carriers network, the brand owner will

have to submit the message to the carrier

for approval, a process that currently

takes up to eight weeks. This is an

anomaly in an otherwise highly ecient

market place. Over time this process will

be streamlined.

Brand owners who wish to reach mobile

subscribers are already looking for a

single, trusted service provider, who can

and delivering mobile messages.

lies in the vast array of mobile phone

operating systems and dierent screen

sizes. Rich media messages delivered

to mobile phones will for the most part

have to be customized. The one size

ts all approach will not work. A videomessage created for one handset will not

necessarily work for another. In order to

superb, messages have to be created and

delivered across multiple handsets and

multiple operating systems.

The most ecient and knowledgeable

mobile marketing service providers

will win.

8. Advertising agencies will be

under pressure to present acohesive mobile strategy which

can be measured by their clients

The famous statement Half the money

I spend on advertising is wasted; thetrouble is I dont know which half, isattributed to John Wanamaker in the

1800s and reects the uncertain resultsof traditional marketing. Advertising via

mobile phones changes that statement

Now brand owners can determine an

accurate Return On Investment (ROI)

for each dollar spent on a mobileadvertising campaign. And, because

it is now possible to measure results

precisely, brand owners will pupressure on advertising agencies to

deliver acceptable returns and toprovide substantiated information

about mobile advertising campaigns.

This will ultimately lead to performance

m a r k e t i n g c a m p a i g n s w h e r eadvertising agencies are paid a fee

on performance. This thinking is notnew and comes from the world of CPA


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or Cost Per Acquisition marketing onthe internet. Previously it was just not

possible to implement these ideas untilsophisticated mobile devices made it

9. Smaller businesses will startto use the mobile channelbecause it is cost effective and

gives them an advantage overmult i -nat ional brands w ithdeep pockets

Small retailers will become major usersof the mobile channel, simply becauseit is more aordable and measurable

than any other channel.

The online concept of hyperlocal willbe further enhanced through the useof mobile phones. For a relatively small

investment of a few thousand dollars,a small business owner can build adatabase of opted in customers andtest the success level of their oers.

Traditional media does not allow thisbecause it is a broadcast mediumdesigned to operate at scale and reach

large audiences.

The mobile channel is cost eective forsmaller businesses because:

oers to those customers.

and sent in a few minutes, comparedto traditional media where the lead

time for a radio, print or televisioncommercial can run into weeksor months.

sensitive oers that can be adjusteddepending on the success of a

campaign. If they want to send

out an oer that is valid only for aspecic date and time, they can do

so. This is the most eective formof marketing possible: reaching theright customers, with an oer they

want to receive, at the time whenthey want to receive it.

oer in a very cost eective way. Anoer that is addressed to a customerby name and is relevant will always

perform better than a generic oerto an untargeted audience.

10. Mobile payment will becomemainstream

There are very few functions that wecannot perform on our phones already.

of mobile subscribers used their mobilephones for a payment application in

by 2014.

But there is a lot of groundwork to belaid before we can take our phones toWalmart to pay for groceries.

Banks and the card issuing associationshave invested billions of dollars in

providing safe, secure payment solutionsfor their customers. Together they have

a vested interest in ensuring an orderlymarketplace for both consumers andretail merchants. They will play a central

role in defining the mobile paymentlandscape. Besides the technicalcomponent of processing mobilepayments, they need to address issues

such as risk management and moneylaundering. Tracking payments in one

geographic region is complicated

enough; but tracking payments acrossborders and in different currencies is

set it up.

Wireless carriers will have a signicantsay in the mobile payment industry

because many of the payments aregoing to be carried across their networks

Many payments that are now madeusing debit and credit cards will in time

be made using mobile phones andother Personal Digital Assistants (PDAs)

A key consideration will be how tointegrate these mobile payments

by retailers today. In order for thenew mobile payment solutions to

operate eciently, they will have towork seamlessly with point of sale

software, which in many cases alsoruns the loyalty program application

for retailers. Mobile payment platforms

and loyalty programs is the ultimategoal for the payment industry and

will lead to the biggest benefits foconsumers. As with any technicainnovation, it will be challenging to

identify and then implement the mostappropriate solutions, but over time, thiswill happen.

In the mobile payments industry, Nea

Field Communications (NFC) will requirecommon standards between devicesand participants. A number of NFCbased payment solutions are being

tested, and in time the key role playerswill also agree on these standards.

The mobile payment opportunity iso big that eventually everybody wil

agree on a business model that makessense, but there is still some way to go

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About Lenco Mobile Inc.

Based in Califronia, Lenco Mobile Inc. is an award

winning mobile marketing company with oces in

Australia, South Africa, Singapore, Korea, Mexico,

Colombia and the United Kingdom. The company

provides mobile marketing services and solutions

to a wide range of multinational brands, includingseveral of the worlds leading wireless carriers.

Lenco Mobiles technical platforms enable wireless

carriers to improve the eciency of their messaging

infrastructure and reduce the total cost of ownership

through revenue share arrangements. Lenco Media

Inc., a wholly owned subsidiary of Lenco Mobile

Inc., has pioneered the delivery of online and

mobile in-stream advertising, using our proprietary

UniversalPlayer.

Copyright 2011

Lenco Mobile USA Inc.

All rights reserved.

For more information, please contact us at:

Address 345 Chapala Street

Santa Barbara,

California 93101

Phone 805.308.9199

Email [email protected]

Website lencomobile.com

radioloyalty.com

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