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Mobile Marketing Becoming Cheaper, More Prevalent

December 22, 2008 I dislike making predictions (not that that has ever stopped me, of course), but I suspect that in 2009 one of the biggest movements in advertising and marketing (to the extent that anything will be big in 2009) will be mobile marketing. Mobile marketing is hardly new, as this story indicates:

Earlier this year, more than 1,000 customers showed up at participating CompUSA stores to redeem coupons for 10 percent discounts on PDA accessories....[T]he coupons in question were saved onto the customers’ PDAs, and all they had to do to cash them in was show the coupon on their PDA screen to the cashier.

Sounds impressive and cutting edge, but that story was from 2001 (in the short-lived Cross Media magazine). Indeed, the idea of advertising and marketing to mobile devices wasn’t far behind the actual advent of those devices. One early concept was based on the idea that a user is walking past a Starbucks and as he does so, a coupon for that Starbucks is beamed automatically to his cellphone. The snags in actually implementing this have ranged from devising the technology to deploy this kind of marketing, to treading carefully and not creating the mobile equivalent of telemarketing, to understanding that incoming calls come out of the user’s own minutes—and who wants to pay to receive ads? So the evolution of cellphone plans and flat rates has (and is continuing) to facilitate mobile marketing. The same exists with text messaging; mobile carriers charge often extortionate rates for text messaging, which also makes the idea of receiving texted ads highly unappealing.

The idea of mobile marketing is to find the sweet spot that balances an enticing offer with a minimal intrusion into the user’s life. After all, no one wants to have to interrupt a proper phone call to receive an ad.

Perhaps even more seriously, one new application for mobile marketing of a kind is paid advertisements in automobile GPS devices. That is, short ads appear on GPS device screens that can ideally direct drivers to specific advertised locations. These ads are designed to only be triggered when a car is stopped; you don’t want to be distracting drivers with ads, which can be a traffic hazard (people talking on cellphones while driving—which study after study has found to be as bad as drunk driving—are enough of  a menace).

Still, as the barriers to mobile marketing continue to fall, it is becoming more and more prevalent. Advertising Age tells us that “It’s getting cheaper to advertise in mobile as cost-per-impression ad rates hits single-digit pricing in some cases.” To wit:

According to industry executives, mobile CPMs, or the cost to reach 1,000 consumers, now average about $15 compared with the average earlier this year of $20 to $25. And with the out-of-the-box, $40 to $50 CPMs of last year more or less history now, pricing is beginning to normalize.
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As more advertisers leverage mobile and remove its mystique, the market will get more adept at pricing, and arbitrary pricing will give way to a broad range of CPMs that vary in their targeting granularity. “The industry has matured quite a bit in the last couple of quarters to become a more efficient marketplace,” said Lars Albright, VP-business development at ad network Quattro Wireless. “One of the trends we're seeing is that the range has expanded and you can have everything from a low CPM all the way up to a mid-30s CPM.”

What are the top mobile marketing applications?

Games and iPhone applications continue to command a sizable share of the new inventory. Sports-themed sites in the vein of NFL and ESPN have multiplied, as have sites that cater to Hispanics, a group that over-indexes in mobile.

It is still pricey (compared to online) to avail oneself of mobile marketing because there are higher returns, thanks to the lack of clutter. Ad Age says that the click-through rate for mobile is about 1.5% compared to 0.15% for online.

In some ways, the line between mobile marketing and online or e-mail marketing will blur. For example, users can get their e-mail delivered right to their iPhones or other smart devices, as if it were the home or business computer. What difference is there, then, between e-mail marketing and mobile marketing? The same goes for general online advertising, which can be see on Web sites accessed by a Web-enabled smartphone. Again, no differently than if it were a home computer.

However, mobile marketing is taking a new tack by featuring custom applications for mobile devices, along the line of the widgets I posted about a couple weeks ago.

Some things to keep in mind when thinking about mobile marketing:

• Is it valuable? To be effective, the message must provide some value to the user—a coupon, a discount, or some offer that has a tangible value. If it’s a widget or some other type of application, does it solve some problem or serve some purpose for the user?

• Is it intrusive? You are reaching people in one of their more private methods of communication—their cellphones. We all know how much people dislike telemarketing (especially if you read Carl Hiaasen novels), primarily because it is intrusive. Online pop-ups and other ads get in the way of accessing Web content. Any mobile marketing implementation that thwarts the user’s ability to make a call, send a text message, or otherwise use his or her phone will last about two seconds.

• Is it engaging? There is a difference between engagement and intrusiveness. The former allows the user to define his or her level of interest in the message and engage with it if they desire. Intrusiveness foists the brunt of the message on the user whether they want it or not. Engagement is key, as we have written about often in this space.

Mobile marketing can be effective, but at the same time we should be aware that it has the potential for clutter just as every other medium and platform. Understanding the nuances of how people interact with their devices can go a long way towards preventing what could very well be a backlash against mobile marketing à la do-not-call/do-not-mail/do-not-e-mail lists which are popular because consumers often equate marketing with “stalking”—and bad marketing can seem that way. As marketers, we need to be conscious of how our messages—alone and in the context of everyone else’s message—are received by our potential customers.

Posted by Richard Romano on December 22, 2008 | Comments (0)