Mobile Marketing, February 2010 by Mobile Marketing Magazine

Issue One | February 2010

News | Views | Analysis

“The money’s over there”

Is the time right for Location-based Services?

Smooth operators How the networks are monetising subscriber data

I’ll tell you what I want We reveal the services people want on their MOBILE phone

Secondguessing Google

What are the Big G’s plans for mobile?

“GO MOBILE“ MIG Boss Barry Houlihan’s rallying call to brands

Sir Martin Sorrell on mobile: “We need collaboration!”

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contents

It’s Showtime!

Cover story

Technology

Welcome to the first ever print edition of Mobile Marketing magazine, the first of many more to come. This is a very proud moment for me and everyone involved with the title, and it’s great to be launching at the mobile industry’s premier event in Barcelona. And as first issues go, we think this one is something of a corker. We’re delighted to have a piece from WPP CEO Sir Martin Sorrell, in which he outlines his hopes and aspirations for mobile as a marketing channel. We also have a piece from mobile marketing guru Helen Keegan, explaining why she feels brands are missing a trick by not harnessing the raw power of SMS. And we have an interview with Mobile Interactive Group CEO, Barry Houlihan, in which he explains how the company has achieved such tremendous growth over the past six years, and outlines the firm’s future strategy. You want more? How about an update on the state of the mobile advertising market. Plus a look at Google’s intentions in the mobile space. The latest on NFC (Near Field Communications) technology, and on QR Codes. An in-depth look at the latest big thing, Augmented Reality. And news about our new awards programme for the mobile marketing industry, the Effective Mobile Marketing Awards, or the EMMAs as we’re calling them. In addition to all this, we also examine the growing trend among mobile operators to open up their subscriber database to advertisers. And we look at the mobile marketing opportunities presented by this year’s World Cup football tournament in S. Africa. Like we said, a corker. Enjoy the issue, enjoy the show, and once the madness of Mobile World Congress is at an end and you’re back sitting comfortably at your desk, don’t forget to check back into mobilemarketingmagazine.com regularly for your daily fix of news, views and analysis from the mobile marketing world. And look out for our brand new site, going live in the next few weeks.

16 Raising the bar

10 Reality check

David Murphy Editor

Mobile Interactive Group CEO Barry Houlihan outlines the factors behind the company’s success and rapid growth since its launch in 2004

Augmented Reality is the latest big thing on mobile, but does it have the potential to generate revenues?

Thought leadership 5 Come together WPP CEO Sir Martin Sorrell shares his hopes for the mobile channel, and issues a rallying call to the big players to collaborate

34 Off-deck Helen Keegan asks why brands don’t make more of one of the most powerful mobile tools at their disposal - SMS

Business models 6 Work in progress Mobile advertising has had a lot of hype to live up to, but is finally gaining real traction, and attracting big brand advertisers

13 Honourable intentions? With its planned acquisition of mobile advertising network AdMob, we look at Google’s plans for the mobile space

24 Whatever happened to NFC? Near Field Communications could revolutionise mobile payments and ticketing. So where is the technology at and how long before all mobile phones are NFC-enabled?

28 “The money’s that way” After many false dawns, are the right conditions in place for Location-based Services to be a hit with consumers, and generate money for those providing them?

32 Cracking the code QR Codes offer a shortcut to the mobile Internet and branded mobile content, so why is the technology taking so long to catch on?

The real world 18 Game on for mobile This summer’s football World Cup in S. Africa offers brands a great opportunity to run mobile campaigns. We look at how advertisers can tap into the buzz around the event

26 Subscription sales Mobile network operators around the world are taking their first tentative steps in opening up their customer database to advertisers

30 Application overload There are more apps and more app stores than the world really needs. So what does this mean for application developers, brands and consumers?

22 “I’ll tell you what I want” We reveal the results of exclusive research carried out by Lightspeed Research for Mobile Marketing into what consumers want from their mobile

Editor: David Murphy - mail@davidmurphy.org Commercial Director: James Winter - sales@mobilemarketingmagazine.com Contributors: George Cole, Gareth James. Design: Nathan Taverner, The Page Design Consultancy Ltd - info@thepagedesign.co.uk Special thanks for help on the magazine and, over the past five years, the website to: Jo Murphy, Jonathan Bass, George Cole, Mick Rigby, Jay Seaton, David Smith, Paul Kingett, Martin Conway, Paul Martin, Nathan Taverner, James Wilson, Mary Lamb, Tony Lamb, David Daniel, Ashley Norris, Chris Price, Glenn Sturgess, David Hobbs, Chris Perrett, Eulogy, Nelson Bostock, MiLiberty. Mobile Marketing is published by Dot Media Ltd., 15 Loraine Gardens, Ashtead, Surrey KT21 1PD. www.mobilemarketingmagazine.com

February 2010

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thought leadership

Come together By Sir Martin Sorrell, Chief Executive Officer, WPP

obile is, depending on which way you look at it, the most intriguing or the most perplexing medium. Over the short-term, it is quite possibly the most over-hyped marketing channel I’ve ever come across. Yet taking the long view, it could well be the most under-hyped, the least regarded. For the past decade, the development of mobile marketing has been delayed by

network of mobile antennae (relatively recently) and handsets became available, people were queuing around the block to purchase a device. What happened next was significant - they looked at the Internet for the first time in their lives. In Cuba, wireless devices leapfrogged PCs as the primary way of accessing the Internet. In China, you have over 700m people on mobile, 500m of them

“While competition spurs innovation, we also need to see collaboration. This is the only way for the medium to realise its potential.” industry fragmentation, lack of co-operation and technical separation. As we cross the medium term threshold, and the mobile industry comes together once again in Barcelona, there are rumours that things are changing, but progress remains frustratingly slow. The mobile channel needs collaboration by the industry if it is to realise its long term potential. We have to have a common system, and the technology needs to have enough bandwidth to deliver the message.

Emerging markets Opportunities in emerging markets will give mobile a boost both technically and commercially. When Cuba built its first

on one network, China Mobile, growing at the rate of 8m new subscribers a month. In India, there are 425m mobile subscribers, growing at the rate of 12m a month, and in these markets, the mobile will eclipse the desktop PC in the medium to long term as the preferred way of accessing the Internet. We have also seen the rise of the iPhone, which, according to the analyst, Nielsen, is now the most popular handset in the US. There are around 50m iPhone devices in the world (including iPod touches) compared to about 950m PCs globally. Apple announced on 5 January that more than 3bn applications had been downloaded since the launch of the

App Store 18 months previously. This is a significant number, considering that it dwarfs the sum total of Internet users globally, which is around 1.5bn. The iPhone and its App Store are clearly beginning to deliver volume, and they work well together because everything operates on a common system. The problem is - as always with Apple - that the system is a closed ecosystem, only available via Apple; but the company’s innovation pushes the boundaries, and sets the standards that competitors need to meet.

Mobile applications Early on, mobile advertising and marketing was all about banners on the mobile Internet and SMS text messages. Both of these have significant medium term potential in emerging markets and long term potential globally. But in developed markets, wireless devices are now mini PCs or Macs, and mobile applications have materialised as the emerging ad format. Apps offer the opportunity to create truly engaging content. Advertising delivers experiences. Google, never to be underestimated and more powerful now than it has ever been, is focusing on the mobile space with the planned acquisition of AdMob, the launch of the Nexus One Smartphone and the Android operating system and Android Market. Apple is rumoured to be unveiling a fourth version

February 2010

of the iPhone and recently acquired mobile ad network Quattro Wireless. Microsoft will be entering the fray too. Some sort of big battle is, I’m certain, on the cards. While competition spurs innovation, we also need to see collaboration. This, rather than full-scale warfare, is the only way for the medium to realise its potential. The reason why the compact disc was so successful in the 1980s and ‘90s was because the entire industry standardised around the so-called ‘Red Book’ format. DVD, another successful carrier format, was hugely popular for the same reason. I’m not sure it will happen, but I would like to see collaboration between industry players like Google, Apple and Microsoft, handset manufacturers such as Motorola and Nokia, along with the networks, to create the kind of infrastructure that we need as advertisers.

Apple’s iPhone has been singlehandedly responsible for creating the mobile applications revolution

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business models

Work in progress It’s been hyped almost beyond belief, but as David Murphy discovers, mobile advertising is delivering results and beginning to attract mainstream brands

hen Google announced in November that it was to acquire the mobile advertising network AdMob for $750m (£468m), it was as if the efforts of all those who have been trying to create a mobile advertising business for the past five years had been vindicated overnight. Google’s dramatic entrance into the mobile advertising marketplace gave the sector instant credibility, and even those with most to fear

from a competitor of Google’s stature agreed that it had to be a good thing. Perhaps not surprisingly, Apple was not far behind, making its move in January, with the acquisition of rival mobile ad network, Quattro Wireless. So what is it about mobile advertising that attracted first Google and then Apple’s attention? According to Paul Berney, European Managing Director of the Mobile Market-

ing Association, it could be that after several years of hype, the medium has actually proved its worth. “If you take the seven or eight largest mobile advertising networks and look at the number of impressions being served up, then you’re looking at something like 50bn impressions per month,” he says. “That’s a pretty big number.” One of the reasons why brands are turning to mobile

advertising is simply because it delivers results, according to Robert Thurner, Commercial Director at mobile marketing agency, Incentivated. “If you get the planning right, the results can be fantastic,” says Thurner. “With online banner ads, you’re looking at a clickthrough rate of around 0.003 – 0.005%. With mobile banner ads, it’s comfortably over 1%, so looking at it in pure response terms, it’s a very good way of getting people to click through.”

Phenomenal growth Christian Louca, UK Managing Director at mobile marketing agency YOC, says that 2009 started slowly for mobile advertising, but that the second half of the year saw things pick up dramatically. “We saw phenomenal growth in the second half of 2009,” says Louca. “I think the recession was partly to blame for the slow start, but as we started to come out of it, things improved significantly.” Xen Mendelsohn, Product Marketing Manager at Comverse Mobile Advertising, tells a similar story. She says: “2009 was a good year for mobile advertising. That does not mean Left: Brands are waking up to the potential to reach out to people via their mobile phones

February 2010 www.mobilemarketingmagazine.com

that sales cycles were quick or that it was easy, but even though advertising budgets elsewhere were declining, online saw an increase in budgets and more brands added mobile to increase the effectiveness of their campaigns.” In the early days of mobile advertising, the medium was dominated by companies selling mobile content such as ringtones and wallpapers. For such businesses, a banner ad on a mobile website linking to its own site, from where consumers could buy their wares, made perfect sense. But these companies are now being joined by more mainstream, household-name brands. “The bigger brands will dwarf the content players over the coming year, as mobile finds its way on to more budgets,” says Julian Theys, an Analyst at research firm, Screen Digest. “It’s not dissimilar to what we saw online. Ten years ago, you had all the websites advertising on each others portals, but I think now that this era of mobile services advertising one another is nearing an end, because of the increased credibility that a company like Google or Apple lends to the medium.” Naveen Tewari, CEO of mobile advertising network InMobi, believes that there are two key factors that are driving the adoption of mobile advertising by mainstream brands. He says: “Firstly, mobile advertising technology is advancing rapidly, to allow more impactful and creative ads. Display ads, rich media ads, and even

“70% of the market is still response-driven” Stephen Upstone, Velti video ads are growing rapidly as the preferred medium, outpacing text ads and mobile search in the process. “The second point is that mobile is the largest media channel in many emerging markets around the world,” he continues. “Global brands now understand this opportunity and are aggressively ramping up mobile advertising spend as a result. Yamaha recently used InMobi to introduce a new motorcycle to a male, youth audience. The campaign included a video review of the motorcycle that could be downloaded and the performance of this campaign was astounding.” By and large, the brands that are using mobile are typically running direct response advertising, where a click on a banner takes the user to the brand’s website or, ideally, mobile website. If the brand does

not have a mobile site, click to call is another option open to them. “I would say that 70% of the market is still responsedriven,” says Stephen Upstone, VP, Sales & Business Development, Europe, at mobile marketing firm Velti. Upstone notes also that in some instances, the mobile is being used not only to get further information about the product or service in question, but to actually make the purchase. eBay recently revealed that eBay buyers and sellers had generated more than $500m of transactions via mobile during 2009. Almost 6m people have the eBay iPhone application on their phone, and shoppers are making around 750,000 unique visits a day to eBay via mobile apps.

In-app advertising Another prime use of mobile advertising which really took off in 2009 is to drive consumers towards mobile applications. With 3bn apps downloaded from the Apple App Store alone in the first 18 months after its launch, and more than 100,000 different apps available through the store, discoverability of mobile apps is a major issue for brands and app developers. One of the ways that brands are tackling the problem is by advertising their own app within other peoples’. “BSkyB have some very popular apps for Sky News and Sky Sports, and there is a lot of demand for that inventory,” says Upstone. “Sky is a premium brand and they have a high volume of inventory, so it’s an advertiser’s dream. It means brands can promote their own iPhone app to an audience made up exclusively of iPhone users, and we see between 30 and 100 times more engagement by iPhone users than on traditional sites.” Mobile social networking sites such as Flirtomatic are also proving popular with ad-

February 2010

While banner ads are most popular on mobile, other options, such as ingame advertising, are also available

vertisers, according to Adhish Kulkarni, Managing Director of Buongiorno Marketing Services UK. He says: “We are seeing a huge rise in social networking-related advertising. Brands think that is interesting and once we can target users with coupons relating to their current location, this is where we will see more brands getting involved. They are still waiting for the technology to catch up with what they want to do, but they have taken to mobile apps like ducks to water, so I think the advertising will inevitably follow.” Banner ads remain the most popular form of advertising,

Above: Ads for apps within other apps are proving popular as a way of driving downloads Left: Ad-funded person-to-person messages are popular in some parts of the world

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business models

In addition to advertising on mobile, many brands are using mobile as a response mechanism to ads in other media

though they are by no means the only option. Russell Buckley, Vice President, Global Alliances at AdMob, believes video advertising on mobile will be big going forward “We launched a video ad unit in the last quarter of 2009, and

tising-funded person-to-person messages are popular in Asia Pacific and Europe. These enable the user to send a free text message, with the cost of the message paid for by a brand whose advertising message appears on the text.

“We launched a video ad unit in 2009. The interest from advertisers has been phenomenal” Russell Buckley, AdMob the interest from brand advertisers has been phenomenal,” he says. According to Buckley, two other areas of interest to advertisers are Location-based Services, (LBS), and Augmented Reality, which enables mobile users to see information on their phone about products, services, shops and restaurants close to their current location.

Ringback tones Other types of mobile advertising are popular in other parts of the world. Consumers in India, for example, are very keen on ringback tones, where they pay to have a piece of music played to anyone who calls their mobile number while they wait for them to answer the phone. Comverse’s Mendelsohn says that adver-

‘Please Call Me’ messages are popular in S. Africa, Egypt and Nigeria, according to the MMA’s Berney. These enable a ‘pay as you go’ mobile user to send a free message to a friend asking them to call them, because they have no credit left on their own phone. The cost of the message is picked up by the advertiser. “In S. Africa, 98% of mobile users are pay as you go, which helps to explain the popularity of this type of service,” Berney tells Mobile Marketing. Berney is clearly pleased by the progress made by mobile advertising over the past couple of years. He accepts, however, that there is still work to be done, in three key areas. The first of these is education, of brands, agencies

and consumers. The second is in the field of measurement metrics and insight. “Agency planners and brands need the ability to measure how their campaign is performing in real time, and they need to know why they should be using mobile as opposed to, or indeed alongside, other channels,” he says. “We also need a universal currency for how ad impressions are measured, and third party verification. This will give advertisers more confidence about what they are spending their money on.”

Mobile Internet Many of those on the mobile advertising coalface would like to see more brands committing to mobile with a dedicated mobile Internet site that their mobile ads could link to. YOC’s Louca says he is frustrated when he clicks on a mobile ad and is taken to a brand’s full website that does not load or render properly on his phone, while Scott Seaborn, Head of Mobile Technologies at Ogilvy Group UK, says his mantra for 2010 is that every single company should have a mobile Internet site. But Incentivated’s Thurner believes this is set to happen. He says: “We will see more demand for mobile Internet sites, which in turn will prompt demand for more advertising, because there’s no point running an ad campaign unless you’re taking the traffic somewhere. Then from the consumer’s perspective, flat-rate data plans and better handsets mean that more people are being encouraged to use the mobile web, which means more traffic, which of course, is good for brand advertisers.” Who knows, if what Thurner says turns out to be true, mobile advertising may not only live up to the hype with which it has been saddled for so many years, but might even surpass it.

Mobile in emerging markets By KF Lai There is a significant amount of buzz in the marketing industry about the potential for mobile advertising in developing countries. Mobile technology has exploded across the globe, with the number of mobile users growing much faster in developing countries than developed ones. The lack of fixed-line infrastructure in many developing countries and the subsequent reliance on mobile technology is the most likely reason for the surge in uptake of mobile phone services. The combination of lowcost handsets and lower mobile data charges in countries such as Kenya, India and Thailand has changed the way people communicate, providing advertisers with real success stories. This huge network of mobile users across the developing world gives advertisers a fantastic opportunity. For many consumers with no fixed line Internet their mobile is the only interactive media they have. Delivering consumer interactivity will be a key driver for those brands looking to lead in these new markets. KF Lai is CEO of mobile social network, Buzz City.

February 2010 www.mobilemarketingmagazine.com

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technology

REALITY CHECK Mobile Augmented Reality looks almost too cool to be true, but does it have long-term revenue potential? By Gareth James

“When we showed the ipointer to the guys at Bing, they said it was like right-clicking on a building” Chris Frank, IST

magine a world where your phone becomes, quite literally, a window on the world. Where by merely holding it up towards a building, statue or other landmark, you could pull down information on it, and on the surrounding environment, including shops, restaurants and other points of interests, complete with ratings and recommendations from other people who had used them. Welcome to the wonderful world of mobile Augmented Reality (AR), which some are predicting could be huge in the years to come.

Google Goggles Google recently made its mobile AR debut with the launch of its Google Goggles visual search app for Android phones, and the analyst, Juniper Research, recently predicted that the market for mobile AR services would reach $732m (£455m) by 2014, a phenomenal increase from less than $2m in 2010. Juniper says that revenues will be derived from a combina-

Now you see him: Augmented Reality apps can add 3-dimensional characters to photos of real people

tion of paid-for app downloads, subscription-based services and advertising, as the number of AR-enabled phones increases dramatically in the short term. In order for AR to work on a phone, it not only needs to know where it is, but also, which way it is pointing. This requires a digital compass, and while a few phones, such as the iPhone and some Android handsets, are equipped with such a tool, the vast majority, as yet, are not. Juniper believes that initial service adoption will be driven by AR location-based search, but that the first substantial revenues will be derived from AR-enabled games, bolstered by revenues from mobile enterprise solutions from 2012-13 onwards. Meanwhile, the analyst says, AR advertising is expected to be increasingly attractive to brands and retailers as the potential user base increases, with AR ad networks able to charge higher CPC (cost per click) and CPM (cost per thousand) rates, because of location relevance. One company which has already attracted a lot of attention in this space is the Dutch firm, Layar, whose mobile AR browser of the same name for Android phones - an iPhone version has been withdrawn while a few issues with it are addressed - provides a platform on which developers can add layers (or ‘layars’) of content. At the time of writing, there

are around 300 layars, with hundreds more in development. Users only see layars that are relevant to their country, and the company encourages developers to create ‘hyperlocal’ layars to keep the content as relevant as possible. Users can also search for layer types of interest to them, and select which layars they want to see, such as layars related to history or architecture for example, so that they are not bombarded with too much information.

3D objects The latest release of the Layar browser, V3.0, enables 3D objects to be placed within an environment. One developer has created an Augmented Reality Beatles Tour, in which the Fab Four are superimposed on places they made famous, such as the zebra crossing close to Abbey Road studios. The Dutch Architecture Institute is using Layar to show 3D models of how a building that is currently under construction will look when it is completed. Layar Co-founder Claire Boonstra believes that brands will be interested in using this type of capability to engage with their customers in new and fun ways. “You could imagine a beer brand placing gigantic beer bottles, so you hold your phone up, see the beer bottle, walk inside and you’re taken to a whole new world, where

February 2010 www.mobilemarketingmagazine.com

The developer, Augment Reality, has created an Augmented Reality Beatles tour for the Layar browser

there might be a pop concert taking place,” says Boonstra. “The reality is that it’s an empty canvas, and you can add anything that you think is relevant and fun. Any third party with interesting content can create an experience that makes use of the Layar platform and there’s no cost to use it.”

In-store kiosk While Layar is a mobile-specific startup, German firm metaio is approaching the mobile AR space after six years spent working with brands such as BWM and Lego on AR applications for websites and kiosks, used in store and at promotional events. An in-store kiosk designed for Lego, for example, enabled a child to pick up a box of Lego and hold it in front of a screen. When they did so, they saw an image of themselves on the screen holding the box, with an animated 3D model of one of the objects that could be made with the material in the box, such as a helicopter, appearing on top of the box. Metaio launched junaio, its free mobile AR app for the iPhone, in November, and in the first month, attracted 6,000 users. “junaio is all about going out into the real world

and getting relevant information displayed on your phone, so when you find yourself in a strange city, instead of using a web browser to get information, you just take out your phone and see the points of interest around you,” says junaio Product Marketing Manager, Lisa Murphy. junaio relies on Google local search results to generate the information, but in addition, users can generate their own content, by tagging a location or a restaurant, and leaving a note for other users to say that this is a good place to eat, or even recommending a particular dish. The junaio platform can also link out to Facebook and Twitter, adding to its social media credentials. In addition, junaio also has a catalogue of 3D images that users can add in to their current local environment, and Murphy says that movie companies such as Universal have begun to experiment with product placement of movie characters in to junaio. “It’s a non-invasive way of having fun with the characters and generating some buzz,” she tells Mobile Marketing.

Point and search In the US, Chris Frank, CEO of Intelligent Spatial Technologies (IST) is pushing the company’s iPointer app to network operators, search companies, and other businesses where location is a key element, such as estate agents and tour companies. Frank describes iPointer as “a point and search tool

Left: Junaio enables users to update their status and modify and comment on other users’ ‘scenes’ Right: Augmented Reality apps make it easy to find nearby bars, cafes and restaurants

with an Augmented Reality engine in the background”. He says he remains unconvinced that people will want to stand on street corners holding their phone at arms length and turning around to find out what’s around them using an AR app. With iPointer, by contrast, you merely point the phone at a building and retrieve the information.

Primal gesture “Pointing is a much more primal gesture, much cleaner and more elegant,” says Frank. “When we showed this to the guys at [Microsoft search engine] Bing, they said it was like right-clicking on a building, and that’s a great description of the technology.” Frank says the iPointer is taking time to develop because it needs to be accurate. “We want anyone to be able to pull their Smartphone out of their pocket, point it at a building and get the right information, whether they’re in downtown Manhattan or London, or in a village in the Swiss Alps, and that’s difficult to do,” he says. To achieve this, IST is busy aggregating millions of 3D models of buildings – it is aiming for 92m in N. America alone. “We’re tapping into lots of different databases to bring it all together,” says Frank. “We’ve done 70 cities and five full states. For the cities, you need to be highly accurate because there are so many buildings, but when you get into suburban areas, you don’t need to be quite so accurate.” Frank believes that the cleaner interface offered by the iPointer will be easier to monetise, and prove more attractive to investors, than the typical AR browser, which he says runs the risk of becoming cluttered with content. But the analyst community is not yet convinced about the revenue potential for mobile AR. “We have a less optimistic view

February 2010

of it,” says Sharifah Amirah, Principal Analyst at Frost & Sullivan. “The commercial utility is not proven. It’s a function of end user usability, but what it boils down to is, is a user willing to pay and what value does it give them? That remains to be seen.” And Scott Seaborn, Head of Mobile Technologies at Ogilvy Group UK, while admitting that he can see the appeal of mobile AR as a local search tool, says that he is worried about fragmentation.

Augmented Reality can make things that are not really there appear as if they are

“Visual search is hugely interesting, because it’s not based on hypertags but on mapping images in the real world and connecting the physical and digital worlds,” he says. “When you add location and devices that know where they are and which way they are pointing, then you have what we have been calling ‘Google on crack’. “But we need collaboration, a single system, one single point where everyone can access visual search. If you combine that with Google Streetview, things could become pretty interesting, but at the moment, it is just so fragmented. This is why QR Codes [mobile barcodes that link to the mobile Internet] have never taken off, and if we’re not careful, the same thing will happen with mobile Augmented Reality.”

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Analytics is Key

Advertorial

Ray Anderson, CEO of Bango, argues that brands need to turn to mobile analytics to build customer engagement and increase campaign ROI Mobile advertising is fast becoming an integral part of many brands’ digital marketing strategy, with more companies now recognising it as an effective platform with which to reach to reach millions of customers worldwide and generate revenue. According to the analyst Juniper Research, global spending on mobile Internet advertising in 2009 was $500m (£308m).

Bango, the results were surprising - 27% admitted to not measuring their campaigns, with only 17% saying they use a mobile-specific analytics tool.

However, in this competitive market, as any brand would know, it is no longer just about reaching customers, but about engaging and building relationships with them, through effective targeting, relevance and personalisation.

✔ Unique visitors count, not just visits ✔ Which ad placements are delivering the best conversions and which ones aren’t ✔ ROI across all ad campaigns and networks ✔ Comparison of campaign value and conversion rates with landing pages

Mobile advertising offers clickthrough rates ten times higher than traditional online advertising, and it offers marketers the unique ability to effectively target a broad demographic of consumers. Mobile also offers the best data available to target and personalise the offering and to measure campaign ROI, so this is why it is becoming so important for brands to know what happens after the user clicks. This is where the use of mobile metrics plays a key role. Metrics give brands a deep insight into their customers’ behaviour, by showing them how they interact with their site or ad campaign. But in a recent survey of over 100 brands, agencies and content providers carried out by Mobile Internet HP Advert:Layout 1

26/1/10

For brands to succeed in building customer engagement, they need to realise the importance of using a mobile analytics tool. One which clearly shows them:

Only this way they can fine tune their mobile advertising proposition, ad placement and the complete visitor experience, and more importantly, build customer engagement and maximize their ROI. To help brands understand what to look out for when implementing mobile campaigns, Bango has published a white paper: ‘Increase your Campaign ROI with Mobile Analytics’. It can be downloaded from: www.bango.com/campaignanalyticswp Ray Anderson is CEO of Bango, a provider of mobile billing and mobile analytics services. ray@bango.com 17:39

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business models

It made its name on the web, but now mobile is very much in Google’s sights

Honourable intentions? Google has been remarkably quiet about its plans for AdMob, but George Cole has canvassed plenty of opinion elsewhere

hat do you do when an 800 pound gorilla gatecrashes your party? Many in the mobile advertising market may well have asked themselves this question when Google announced plans to acquire AdMob for $750m (£460m) late last year. Google has spoken little about its planned acquisition, although Susan Wojcicki, Vice President of Product Management at Google, says that: “Mobile advertising has enormous potential as a marketing medium and while this industry is still in the early stages of development, AdMob has already made exceptional progress in a very short time.” On Google’s website, the company blandly states that: “Mobile advertising is a rapidly growing and competitive space, and Google and AdMob are

currently specialising in different areas. Though Google offers many forms of mobile advertising, its focus to date has been on mobile search ads, while AdMob’s focus has been mobile display ads and in-application ads.”

Google claims that the deal was “similar” to mobile advertising acquisitions made by AOL, Microsoft, Yahoo, and Apple - last month, Apple acquired Quattro Wireless for $275m.

Win-win situation Google paints the AdMob acquisition as a win-win situation for all: “The deal will bring new innovation and competition to mobile advertising,” it says, “and will lead to more effective tools for creating, serving, and analysing emerging mobile ad formats. Google adds that the AdMob tie-up will: “benefit developers, publishers, and advertisers by improving the performance of mobile advertising, and will provide users with more free or low-cost mobile apps.”

Google made headlines with its launch of Latitude on mobile, but that looks like small beer compared to its deal to buy Admob

February 2010

Google’s AdMob purchase is just the latest development in the company’s move into the mobile world, following the launch of its Android operating system and Android Market, plus the arrival of the Nexus One Google handset. So what does all this activity mean for the mobile advertising market and why is Google investing so heavily in this sector? The move is a logical one, according to Shailendra Pandey, Senior Research Analyst, Mobile Content and Applications at Informa: “Last year in the UK, the online advertising industry was worth more than the traditional advertising industry. Google knows that in 10 years’ time, the same thing will happen with mobile advertising - there will be a shift from web advertising to mobile.”

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business models

Google notes that mobile advertising accounted for just 0.4% of the advertising spend in 2009, adding that it currently makes little revenue from mobile advertising. However, it also adds that mobile advertising has “excellent prospects”.

Favourable reaction Reaction to Google’s move has generally been favourable. Julien Theys, an Analyst at research firm Screen Digest says: “Big names like Google and Apple are adding credibility to the mobile advertising market, and that attracts advertising clients. It will encourage people to invest in mobile advertising.” Mick Rigby, Chairman of Yodel Digital, says: “My overall view is that it’s a positive move. When big players come into the market it initially frightens everyone, but Google and Apple are putting the mobile advertising sector on the map. There’s only so much that mobile agencies can do to jump-start the sector. Chief Executives and ad managers will now see that mobile is set to become an important market.” Ben Tatton-Brown, Managing Director of RingRing Media, which is itself in the process of being bought by Amobee Media Systems, says: “We work with both AdMob and Quattro, and I’m delighted for both of the teams. It’s great news for the mobile market.” But TattonBrown wonders how the moves will change the mobile advertising landscape: “At present, there is a choice of platforms when I spend money with AdMob, but will I be restricted to Android handsets in the future? And will Quattro only deal with the iPhone? It will be fascinating to see how things develop.” Oliver Gunasekara, Global Alliances Head of North America at Symbian Foundation, also thinks that Google’s strategy will raise the profile of mobile advertising, but warns: “There’s always a danger that

when there’s a dominant player it takes advantage of its position.” And Mark Slade, Managing Director of 4th Screen Advertising, thinks the Google and AdMob tie-up will energise the mobile advertising market: “Two or three years ago, there was a lot of hype around mobile, but the global ad recession stunted the growth and brands became cautious and less willing to explore new channels. This will help heighten interest in mobile amongst brands and agencies,” he says.

It’s a sign of how seriously Google views mobile that its first hardware device is a phone, the Nexus One

Nexus One But is Google’s move into mobile advertising good for everyone? The launch of Google’s Nexus One handset and Apple’s purchase of Quattro has led some industry commentators to talk of a war between Google and Apple, but Screen Digest’s Theys describes this battle as a “sideshow”, saying: “Google has the mobile operators in its sights, because its major concern is that mobile remains a closed environment. Google wants to open up the market so people aren’t locked into contracts.” Informa’s Pandey agrees: “Google’s biggest competition is the operators.” Mobile

operators in developed markets are in danger of simply becoming pipes for voice and data, by adopting a strategy of flat rate tariffs, adds Pandey. “Voice and messaging are commoditised, and tariffs are being reduced,” he says. “If you simply become a pipe, you lose the ability to make additional money on top of your commoditised services. If operators don’t control the mobile sector and play a bigger role in services, they will lose money to the likes of Google and Yahoo.” But all is not lost to the operators, as Yodel’s Rigby points out: “Carriers are still important and it’s up to them now to embrace the opportunity,” he says. “Companies such as O2 and Orange are putting a lot of resources into their sales departments to push their mobile offerings.” Pandey says operators can utilise the billing relationship with their customers and notes that: “In the emerging markets, the operators have a stronger grip on their customers and are providing applications and Internet access. It gives them more control over the advertising space.” Pandey thinks that a service like Vodafone 360 – which brings together a subscriber’s phone, email, chat and social network contacts – can help strengthen the relationship between operator and subscriber. But can the Google juggernaut be stopped? Symbian’s Gunasekara says the global mobile advertising market is highly fragmented, and Google will have to work with many players. But he adds that he would not be surprised if, at some time in the future, Google took a more aggressive stance and began subsidising the price of the Nexus handset with display adverts. “Google is about getting eyeballs for its ads and using the intelligence it collects to tailor its ads,” says Gunasekara.

Many iPhone owners use Google Maps, but Apple and Google are shaping up for a mobile advertising battle

“Big names like Google and Apple are adding credibility to the mobile advertising market, and that attracts advertising clients” Julien Theys, Screen Digest

February 2010 www.mobilemarketingmagazine.com

AWARDS

business models Introducing the

s EFFECTIVE MOBILE MARKETING AWARDS

“

Efficiency is doing things s right; effectiveness is doing EFFECTIVE the right things MOBILE

”

MARKETING Peter Drucker, AWARDS Marketing/Management Guru

The EMMAs recognise the most effective mobile marketing activity across several categories, including advertising, APPS, CRM and mobile website development.

Call for Entries

Coming Soon!

We’re not interested in the biggest, the prettiest or the bestpublicised mobile campaigns or projects. We just want to find the most effective ones. Because if brands are going to be convinced to go mobile, the thing that’s going to do it for them is the sure and certain knowledge that it’s a marketing medium that delivers results. We’ll be announcing full details, together with the call for entries, soon on www.mobilemarketingmagazine.com In the meantime, it’s time to start asking your clients for permission to talk about the great work you’ve been doing for them.

Brought to you by

And if you’re interested in sponsorship opportunities around the awards, please contact: sales@mobilemarketingmagazine.com

February 2010

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business models

Raising the bar David Murphy talks to Mobile Interactive Group (MIG) CEO, Barry Houlihan about the firm’s explosive growth

he last 18 months has been a time for knuckling down and looking after what you have. With budgets under threat, and brands reluctant on the whole to try anything new, companies in all sectors have largely been content to survive, rather than thrive. Set against this backdrop, Mobile Interactive Group’s (MIG) performance over the past three years has been little short of remarkable. In 2006-07, the company posted revenues of £29m. The following year, income rose to £39m, and in 2008-09, turnover almost doubled to £68m. Given the ongoing, unfavourable economic climate, you could be forgiven for asking how such growth has been achieved.

Game changer MIG CEO Barry Houlihan says it helps that the current recession is one in which the world has experienced the Smartphone explosion. “Apple launched the iPhone at the start of the recession and it has been a game changer,” he says. “We have seen a big spike in mobile payments, because now we can provide these capabilities to companies like Spotify and Flirtomatic, who are much more interesting and innovative than the traditional mobile content players.”

It’s typical of Houlihan to attribute at least some of the credit for MIG’s growth to external influences, but there’s no doubt that his own vision, together with that of his Co-founders, Anthony Nelson, Marcus Kern and Nick Aldridge, who left O2 with Houlihan to set up MIG in May 2004, has played a large part too. From day one, MIG has set its sights high. In 2005, it won a contract with ITV to manage the broadcaster’s entire portfolio of mobile services, including the delivery of new mobile technologies and applications. Within the first 12 months, it had completed the launch of ITV Mobile in conjunction with ITVi; managed the thenbiggest text vote in history for The X Factor; and overseen the production of ITV’s entire mobile video content range.

“This is what premium advertising is all about - deeper and more integrated publisher deals” Barry Houlihan, MIG

Mobile payments MIG’s ability to handle mobile payments was a key factor in the ITV win, and it remains an important part of the MIG offering. “In the next few months, we’ll have some big news in this area,” says Houlihan. “There’s not much I can say right now, but this is going to be huge.” There’s more to MIG than mobile payments, however. Indeed, Houlihan and his team

For the homeless charity, Shelter, MIG built a WAP site to increase donor retention

set out to create an integrated mobile agency that could handle all aspects of a client’s mobile needs. Mobile marketing is the remit of New Toy, with m-commerce, messaging solutions and interactive platforms being the focus of Mobile Interactive Technology (MIT). MIG provides strategic direction at a group level on how each business works with and advises brands on their mobile and digital needs. “Our message to brands is to move everything towards mobile engagement,” says Houlihan. “Brands that don’t go mobile will suffer.” Indeed, Houlihan says his mantra to brands in 2009 has been that they need to make their websites look more like mobile sites, because in the future, more people will access online content via a multitude of mobile devices than via a PC. Mobile advertising is handled by 4th Screen Advertising, whose publisher clients include network operators O2, Three and Virgin, plus media brands such as FHM, ITN and The Guardian. “The mobile advertising market is red hot right now, and the structure of the group has enabled us to become a significant player in that market with 4th Screen,” says Houlihan. “It has enabled us to drive mobile advertising

February 2010 www.mobilemarketingmagazine.com

effectively into our existing customer base, who were already using us for mobile payments, and for mobile marketing content and delivery.” Houlihan adds that 4th Screen’s business is around 90% CPM (cost-per-thousand) based, so firmly at the premium end of the market, in comparison to CPC (cost-perclick) networks.

Intelligent solutions He believes the future of mobile advertising lies in offering more intelligent, joined up solutions. For the mobile music recognition service Shazam, for example, 4th Screen Advertising has struck a sponsorship deal with O2. When a consumer uses the Shazam iPhone application, they are served a dynamic ad, served through 4th screen’s proprietary ad serving engine MPression, which tells them if the artist whose song they are trying to identify is playing live at any O2 music venues. If the artist in question is not touring, an ad is served for another artist in the same music genre who is. “This is what premium advertising is all about - deeper and more integrated publisher

A CRM campaign for Rimmel included a mobile Internet site where customers could order free samples and download free content for their phone

deals,” says Houlihan. “It’s where the CPM model beats the blind network model, and it’s what marketing directors believe that mobile advertising should be all about; the ability to link the customer to something relevant. This is what mobile should be able to deliver, and now that it can, we expect to roll out multiple campaigns like this one in multiple territories.” As interest in mobile advertising has grown, so more brands have seen the wisdom in developing mobile Internet sites. To cater for this demand, MIG launched Kilrush in May 2009. Kilrush’s technology enables brands to create and publish their own mobile sites, and then monetise them through mobile advertising, search engine optimisation, and billing services. The company has generated just under £1m to date, and is set to release a mobile application SDK (Software Development Kit) that will enable brands, particularly media brands, to build their own mobile apps. “We are advising clients to cover all bases,” Houlihan tells Mobile Marketing. “It’s great to have a site that renders for an iPhone, or an iPhone app, but you also need a presence on the mobile web to reach out to people using a wider range of mobile phones.” The final piece of the MIG offering is Jigsaw. This is MIG’s digital agency, which, on the back of a very successful 2009, is opening offices in N. America and Canada this year. “Our approach of linking mobile and digital has resonated with big brands such as Walkers, O2, RTE, Nestle, ITV and more,” says Houlihan. “Jigsaw takes a collaborative approach and understands the multifaceted touch points a brand needs to communicate with its consumers, incorporating web design, mobile,

MIG Timeline 2004 May - MIG founded.

2005 June - Wins ITV contract June - Delivers world’s largest charity ticketing solution via SMS for ‘Live8’ 1st year turnover £250,000, 10 staff

2006 Feb - MIG launches 4th Screen Advertising June - Barry Houlihan wins London Region Ernst & Young Entrepreneur of the Year award Sep - Launches MIGPay Accredited Payforit solution MIG created a mobile campaign for the Central office of Information as part of a drive to counter knife crime

apps, technical build, e-CRM, analytics and much more. By utilising these skills, Jigsaw has built some of the largest loyalty campaigns, most recently the award winning Walkers - Do us a flavour.”

Collaboration

2007 Feb - ITV launches WAP billing with MIGPay Feb - MIG secures 3-year contract to provide mobile interactive services to The O2 Arena March - MIG wins ‘Innovative Business of the Year’ at Fast Growth Business Awards 3rd year turnover - £29.9m, 26 staff

Looking ahead, Houlihan says that MIG will continue to expand organically, and through local partnerships. He says the company is well ahead of its planned targets to globalise the business and will announce the opening of new operations in N. America, Canada, S. Africa and Asia in the coming months. But he adds that the ethos of integration and collaboration between the group’s individual businesses will remain. “The alignment between the MIG businesses has been a massive factor in our success to date,” he says. “It’s enabled us to create leadership in certain markets such as media, broadcast, and with mobile operators. We will continue to invest heavily in our technology and our people, and we’ll continue to foster a culture where innovation and smart thinking are rewarded.”

February 2010

2nd year turnover - £22m, 16 staff

2008 March - MIG launches crossplatform digital agency Jigsaw Aug - MIG launches experience design agency, New Toy Sep - MIG ranked No.1 in Microsoft Sunday Times Tech Track 100 Oct - O2 appoints MIG to deliver core content alerts platform for its 18.7m customers Dec - MIG opens two new development centres 4th year turnover - £39.1m, 70 staff

2009 March - MIG’s MIDAS platform delivers 4.75m interactions, raising £7.8m for Comic Relief May - MIG launches Mobile Interactive Technology and Kilrush July - 4th Screen Advertising launches new Smartphone Ad Format - ‘iSlide’ Oct - Shazam selects 4th Screen Advertising for European mobile advertising contract 5th year turnover £68m, 120 staff

www.mobilemarketingmagazine.com

the real world

Game on for mobile This summer’s Fifa World Cup™ football tournament offers a host of mobile marketing opportunities, but brands other than official partners must be careful not to imply any sort of official association with the event, says George Cole

ootball is more than just a game – it’s a global marketing phenomenon. And it doesn’t come much bigger than the FIFA World Cup™ 2010, taking place in S. Africa this June. With a global television audience measured in billions and the vast amount of interest it generates in hundreds of countries, it’s little wonder that the World Cup has many brand and marketing executives licking their lips in anticipation. But what mobile marketing opportunities does the tournament offer? David Lane, Managing Director of the mobile content and applications company Bright Al, thinks the time is now right for World Cup football and mobile marketing: “This World Cup will be pushed by the iPhone. The industry has changed, and the traditional mobile content of games, ringtones and wallpapers has been joined by iPhone applications,” he says.

February 2010 www.mobilemarketingmagazine.com

Lane adds that clubs know the importance of getting content and information out to fans, and that the mobile phone is a viable communication channel for this purpose. Saverio Romeo, Industry Analyst, Telecoms Europe at Frost & Sullivan, agrees with this sentiment. “An event like the World Cup is definitely a moment in which the mobile space can receive some sort of push in terms of developing applications, he tells Mobile Marketing. There are opportunities on the app store side for doing marketing campaigns on the phone, with the user downloading applications relating to football and S. Africa.”

Revenue opportunities Peter Giblin, director of Future Sight Mobile, helped co-produce the M-Football conference, which was held in London last month. The aim of the conference - which was hosted by Camerjam - was to see how the World Cup could act as a catalyst for the mobile industry to get involved and take advantage of the marketing and revenue opportunities that are on offer. “There are 4bn handsets out there and mobile Internet usage is rising. More and more people are accessing the Internet via their mobile phone in order to get information.” says Giblin. He cites the example

of S. Africa, where 10% of the population access the Internet via a fixed line connection, compared with 45% who access the web via their mobile phone. “The World Cup will see lots of people wanting to access scores and stats via their mobile. It’s a question of being creative and using your imagination to take advantage of this scenario.” But Sean Pashley, Chief Communications Officer of the content and interactive marketing services company Starfish Mobile, warns that anyone hoping to take advantage of World Cup 2010 by running a mobile marketing campaign on the back of

February 2010

“FIFA doesn’t own the term ‘football’ and if you can’t use ‘World Cup 2010,’ there’s still room for manoeuvre” Sean Pashley, Starfish Mobile

www.mobilemarketingmagazine.com

the real world

The Green Point soccer stadium in S. Africa will host matches in this summer’s World Cup tournament

“Data roaming is a problem. I hope the operators are thinking of offering a special tariff for S. Africa whilst the World Cup is on” Savio Romeo, Frost & Sullivan

it, needs to be careful: “FIFA has an iron fist when it comes to licensing and rights, and only the official sponsors - like your Coca Colas and adidas are going to be able to play in the space of using the title of World Cup 2010 or the variants it has registered,” he tells Mobile Marketing. “FIFA has registered dozens of words and logos, such as ‘Africa 2010’ and all the host city names followed by 2010. FIFA also pursues an aggressive policy in protecting its rights, whether it’s unauthorised use of logos or ambush advertising.”

Room for manoeuvre Even so, Pashley believes that there are plenty of opportunities to take advantage of football’s high profile this summer: “FIFA doesn’t own the term ‘football’ and if you can’t use ‘World Cup 2010,’ there’s still room for manoeuvre. You just need to be imaginative and take legal advice.”

Goal and results alerts are likely to prove popular during the World Cup

Starfish Mobile is in a fortunate position of working with S. African mobile telco MTN, which is an official World Cup sponsor. Starfish has developed football trivia games for MTN. The games have two purposes: to generate revenue and to create a database of user profiles. “Some of the games include profile questions, such as, ‘Which team do you support?’” says Pashley. “Telcos often don’t know much about the person at the other end of the line. The profile questions mean they have a customer database they can use after the World Cup.” The football trivia games have proved popular, attracting millions of entrants in S. Africa alone. Mike Dunphy, Managing Director of MD Media Consulting, believes that the World Cup brings two main opportunities for the mobile phone industry. “Most people will offer content to make money rather than market themselves,” he

February 2010 www.mobilemarketingmagazine.com

21 FIFA will come down hard on any rogue brand that tries to imply an official association with the event

says. “People may have to decide whether to make money or to market themselves.” Giblin agrees: “The question is: is it about increasing brand awareness or making money from the mobile Internet?” Dunphy thinks that most money is likely to be made from the World Cup via unofficial services: “The challenge will be whether fans care if the content is from official or unofficial sources.” Although Dunphy sees some marketing potential for the World Cup, he warns: “The World Cup is only on for a short period of time and so it’s a high risk if something doesn’t come off. Nobody should think that the World Cup will solve their mobile football marketing needs.”

Text alerts Nevertheless, Dunphy sees some mobile services hijacking the World Cup in an effort to generate revenue. He gives the example of offering fans

a free England flag wallpaper, in order to drive users to a service, and then trying to upsell them to a premium service that has little, if any, connection to the World Cup. Goal text alerts will generate revenue, he adds, as will premium score services. These involve downloading an app, which allows users to watch scores as they change, and extract a subscription charge of around £2 a month. “The legacy of the Internet is that people expect content to be free, so you have to think what you are going to offer for free, and what will be a premium service,” says Future Sight Mobile’s Giblin, “You have to be creative and understand how people want to interact with their mobile – and what they are willing to pay for.” Bright AI’s Lane notes that: “People are happy to pay for content as long as it’s easy to buy and priced reasonably.” He cites the example of

English football club Everton’s subscription service, which provides content such as wallpapers and podcasts: “We’ve been surprised by the number of people who have been willing to pay £25 upfront for a year’s subscription.”

Data charges But all this presupposes that many people will use their mobile phone for accessing the Internet. Giblin warns: “Much will depend on how much operators charge for data. There is a public perception that it’s expensive to use data services on your mobile.” Frost & Sullivan’s Romeo adds: “Data roaming is a problem. I hope the operators are thinking of offering a special tariff for S. Africa whilst the World Cup is on. Because you can have all the fantastic mobile marketing campaigns you want, but if data roaming pricing remains where it is now, none of it will have any great traction.”

Everton FC’s iPhone app has proved popular with supporters

Brands will be looking to use the mobile channel to tap into the excitement around the World Cup

February 2010

www.mobilemarketingmagazine.com

the real world

“I’ll tell you what I want”

Checking email is one of the most popular activities on mobile phones

Mobile Marketing commissioned Lightspeed Research to find out what applications and services people like and want on their phones. By Gareth James

laying games is the most popular activity on mobile phones after voice and text, according to the results of exclusive research carried out by Lightspeed Research on behalf of Mobile Marketing. Lightspeed surveyed 1,000 consumers in the UK via an online panel in January 2010. 41% named gaming as the activity they engaged in most on their mobile after voice calls and texts. Web browsing was close behind on 37%, followed by Instant Messaging (31%), email (27%) and photo-sharing (26%). The research also asked respondents to name the one application or service they would most like on their phone. Rather than choosing from a pre-populated list of options, we left respondents to put anything they liked, which explains some of the more obtuse answers, such as an application to unlock the car or house; a laser gun; and a minute-by-minute horse racing price checker. App developers, what are you waiting for? The most popular answer in this category was the Internet, cited by 46 respondents, with another 10 asking for “free Internet”. Other popular answers were GPS (24), satnav (19) and email (15). Maps were mentioned by just six respon-

70% would be prepared to put up with ads if the application was free dents, but added to the GPS and satnav numbers, you could make a case for saying that people want to use their phone to find their way around.

Ad-funded apps Be careful what you charge for these services though. When asked what they would be prepared to pay for the service they chose, 42% said nothing, with 13% saying they would pay up to 50 pence and 12% up to £1. More encouragingly, 18% said they would be prepared to pay over £5, and a remarkable 70% said they would be prepared to put up with advertising if it meant that the application or service was free. “This is very interesting and very important for people creating apps,” says Lightspeed Marketing Director, EMEA, Ralph Risk. “A very high percentage of the apps people download are free, so this is a new revenue stream that developers should look at.”

The research findings hold little cheer for mobile operators. Only 9% of respondents said that the choice of applications or services offered by the operator influenced their choice of operator. 20% said their choice of handset had been influenced by the apps and services on the device, and 24% said they had been influenced both by the handset and operator.

Mobile services When it comes to accessing mobile services, 22% said they preferred to do so via the phone’s browser, with 8% preferring applications, though 27% said they didn’t mind and 43% said they do not access mobile services. “I think the low number of respondents who said they prefer apps is a factor of people’s familiarity with the

web,” says Risk. “With an app, there may be some nervousness about what they are downloading, how much it will cost, and whether it will in some way invade their privacy. As apps become more standard, this will become less of an issue.” Mobile web users are in a slight minority, with 46% of respondents saying they use their phone to access the Internet and 54% saying they don’t. 72% of those who do go online on their phone spend between one and 10 minutes on the web, with 29% saying they access the web from their phone several times a day, 11% once a day, and 25% every few days. Perhaps surprisingly, the majority of mobile web users (68%) said they know how much it costs them to access the web on their phone, though that still leaves 32% admitting that they don’t.

The apps and services people use on their phones 7% 6%

Games Web browsing

18%

41%

Instant messaging Email

21%

Photo-sharing 37%

26%

Social networking Maps

27%

31%

Location-based services Mobile coupons/tickets Other

February 2010 www.mobilemarketingmagazine.com

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technology

WHATEVER HAPPENED TO NFC? David Murphy talks to Visa’s Mary Carol Harris about the future for contactless mobile payments using NFC (Near Field Communications) technology

he idea of paying for goods at the checkout by simply swiping your NFC-enabled mobile phone in front of a reader is one that is naturally appealing to retailers hoping to speed people through the tills, and, one would imagine, to consumers as well. And behind the scenes, a lot of work is being done to make this vision of the future a reality. But after some notable successes, such as the O2 Wallet trial conducted in London between November 2007 and May 2008, things seem to have gone a little quiet on the mobile NFC front. Mary Carol Harris, Head of Mobile at Visa Europe, says that trials of the technology have confirmed that there is a strong customer proposition to put contactless payment technology on mobile handsets. “Some of the initial security concerns people have when they first use it wane over time, the more they get used to using the phone as a method of payment,” she says. For this reason, payment limits, though relatively low - £10 in the UK, €20 in France – tend to be raised the longer a trial

goes on. A trial in the US, for example, started with an upper limit of $25, which was subsequently raised to $75. According to Harris, the three main areas that are left to address are what she describes as the “acceptance infrastructure”, the mobile handsets themselves, and of course, the business model.

where banks, mobile operators and technology providers all get their slice of the cake. She adds that while the banks are looking at NFC, it’s only one piece in a mobile jigsaw that also embraces mobile banking and customer service.

Education process

Ambitious effort “We are seeing a number of different things in the market, such as bilateral arrangements between individual banks and operators,” says Harris. “Then in France, there’s a more ambitious effort where all the banks and mobile operators are trying to move the market forward together. This is obviously slower, because it needs a lot of agreement and individual negotiations, but there is a collaborative effort to put in place the technology and standards to move the technology forwards.” Harris concedes, however, that “none of this has been cracked yet,” and says that those who stand to benefit from mobile NFC are trying to work out how to create an ecosystem

“THE REALITY IS THAT CONSUMERS ARE NOT GOING TO SWAP OUT THEIR PHONE FOR ANOTHER ONE PURELY BECAUSE IT HAS CONTACTLESS TECHNOLOGY ON IT” Mary Carol Harris, Visa

For consumers, contactless payment, whether its via a phone or a contactless card, is still a relatively new phenomenon, though Harris says the education process is beginning, as credit and debit card issuers begin to replace old cards with new, contactless ones, and some providers take a conscious decision to swap out customer cards that are still valid for some time yet, with contactless versions of the cards. “Some banks are targeting customers in certain areas, so they might look at customers based in London, or who use their card a lot in London’” says Harris. “And when they send a contactless card out, they tend to take the time to explain what the technology is all about.” Harris estimates that there are currently around

February 2010 www.mobilemarketingmagazine.com

5m contactless debit and credit cards in circulation in the UK. This, though, is where the acceptance infrastructure comes in. For the contactless element of these cards to be any use to the people who have them, there needs to be an installed base of chip & pin terminals capable of working with them. Early readers were standalone units which attached to the existing chip & pin terminal, but over the past few months, some of the larger terminal manufacturers, such as Ingenico and Hypercom, have begun to integrate the contactless technology within their standard chip & pin devices. “A solution like that is much more interesting to the larger merchants,” says Harris. The final piece of the jigsaw, from a mobile perspective, is the handsets, and here, Harris concedes, there is work to be done. “We do not have a lot of phones right now, and the reality is that consumers are not going to swap out their phone for another one purely because it has contactless technology on it,” she tells Mobile Marketing.

Bridging technologies NFC-enabled devices are available from Nokia and Samsung, but these are currently thin on the ground. While these become available, a number of what Harris calls “bridging technologies” have emerged, that essentially retrofit NFC technology on to an existing handset. These range from NFC chips that can be stuck onto the back of a handset, to Micro SD memory cards equipped with an NFC antenna, to other accessories, such as phone covers, or something that slots into the charger socket, and in the process, endows the handset with contactless capabilities. “The wider industry should not be afraid of embracing these solutions, because they are keeping some momentum in the market, and ultimately,

A consumer uses an NFC-enabled mobile to access the Underground system as part of a 2007 trial in London

they will help us along the road to a world where every phone has contactless integrated in it,” says Harris. So how long before we are all swiping our phones to pay for our skinny lattes and X-Factor compilation CDs? Harris believes it will be a little while yet. She says: “The next 18 months will see a mixture of trials and small scale deployments, but it’s a big step from there to a more realistic deployment scenario, because when industries collide, there’s a lot of work to do in terms of process, customer support and troubleshooting, and I’m not sure that the trials that have been done to date have delved deeply enough into these issues.” On a more positive note, she says that by this time next year, there will be a lot of NFCcapable chip & pin terminals in the UK, with many more due in preparation for the 2012 London Olympics, of which, incidentally, Visa is a sponsor, with contactless figuring prominently in the company’s

plans for leveraging its sponsorship of the event. “I think we will see some early pre-commercial services by the end of the year, and

more ramp-up in 2011, but if you’re asking when will it be any product, any phone and any bank, that will take a few years longer,” she concludes.

Nokia is one of the few handset makers to have released an NFC-enabled phone

February 2010

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business models

Mobile operators around the world are making it easier for brands to target their customers on their phones

SUBSCRIPTION SALES Mobile operators around the world are opening up their customer databases to advertisers. David Murphy reports

obile operators have sometimes been accused of merely paying lip service to mobile marketing. With their traditional revenues from voice and text dwarfing those from mobile advertising and other mobile marketing activities, there’s a school of thought that says that it’s really not something that’s worth investing too much time and effort in, not until it can prove its long-term worth at least. If there’s one sure sign that things are changing in this

respect, it is the number of mobile operators around the world who are now opening up their customer database to advertisers. Customers are invited by the operator to opt in to receive marketing messages on their phone, incentivised by the promise of free talk time or texts, or simply by the chance to receive offers that are relevant to their declared interests. “There are lots of operators doing this across Europe and globally” says Stephen Upstone, VP, Sales & Business

Development, Europe, at mobile marketing firm Velti. “In the mobile advertising game, permission and preference are becoming strategic value lines for the operator, as they join up the knowledge of what the customer wants and what they are prepared to receive.” Velti supplies a mobile marketing platform to enable operators to manage the process, and Upstone says the company deployed the platform with eight different mobile network operators during 2009.

Saverio Romeo, Industry Analyst, Telecoms Europe, at Frost & Sullivan, says there are good reasons why mobile operators are going down this route. “Operators in Western Europe are constrained, they are operating in saturated markets and churn is scary thinking for them,” he says. “The intelligent use of their customer database as an analytical tool is quite new to the industry. It enables them to reduce churn and empower marketing activities, so it is something they have to do.”

February 2010 www.mobilemarketingmagazine.com

This sentiment is echoed by Dr. Vinod Vasudevan, Group CEO of mobile marketing technology provider Flytxt, who has first hand experience of the mobile operator business, gained over the past 20 years.

Declining revenues He notes that operator revenues have been flat in the US for the past couple of years, and that even in India, where operators have been reporting quarter-onquarter revenue increases since 1994, the last two quarters have seen declining revenues. “There was a time when you could value a mobile operator by assigning a dollar value to each subscriber, but this equation does not work any more,” he says. “Adding more subscribers does not give them additional revenues, and that has led the operators to focus on how they can get more revenues out of their existing subscribers.” As a result, he says, operators have taken their traditional expertise in slicing and dicing the data they have about the network in order to manage it most efficiently, and applied the same process to their subscribers. “We are seeing significant renewed effort among operators now to build operational data stores and data warehousing solutions,” he says. “Until recently, data was archived by operators for legal compliance; now it is to enable them to understand subscriber behaviour.”

Poster child If there’s a poster child for this type of activity, it would have to be the Turkish operator, Turkcell, always one of the most innovative of operators, which launched its opt-in database in 2005. As of December 2009, there were 9m people on its database. Consumers are targeted not only based on demographic information, but also on their needs and declared interests. “The permission database application creates a win-win situ-

ation for all parties involved,” says Turkcell Head of Mobile Marketing & Advertising, Melis Turkmen. “The consumer wins credit and airtime by joining the permission database and also receives relevant advertising messages with great offers and benefits from advertisers. It also offers a cost-effective communication solution to the advertiser in terms of return on investment, high response rates, accountability, real-time response rate information and decreased acquisition cost.” Turkmen adds that because subscribers receive marketing messages that they are interested in, response rates are high, averaging 9.2% and peaking at a remarkable 25%. “The permission database consumers and

response rates are analyzed frequently,” says Turkmen. “If consumers do not respond for a specific category, then they are not contacted on similar categories. We also analyze our consumers, and if they do not respond for a specific category or sector in a certain time, we do not contact them for the same category again for a specific period of time.” In 2009 alone, Turkcell ran 590 mobile marketing projects with 400 brands across 29 different industries. The operator offers members of the database an easy opt-out mechanism via SMS, the web or a call centre, and carries out customer satisfaction surveys each year. “The results are exceptionally positive,” says Turkmen. “Consumers are highly satisfied. They are aware of our products and want to continue to be a part of our permission database.”

Personalised advertising

“Consumers are highly satisfied. They are aware of our products and want to continue to be a part of our database” Melis Turkmen, Turkcell

Last December, the UK operator, O2, launched its offering, which is called O2 More. Shaun Gregory, Managing Director of O2 Media, says that O2 More is a key step in the development of the operator’s mobile advertising offering to brands. “We believe that mobile advertising has been slow to deliver on its promise, but O2 More will take it beyond the banner, delivering truly personalised advertising for the first time,” says Gregory. “O2 More will allow us to match customers’ opted in preferences with the data we hold on them to deliver highly targeted advertising. The benefit for customers is relevance, and for advertisers, the ability to target individuals so specifically.” Customers are incentivised to join O2 More by the promise of ‘deal-based’ advertisements, offering them money off items that O2 More knows they are interested in. So if a customer says that they are interested in sports and O2 knows that they

February 2010

Mobile operators are waking up to the revenue potential of mobile advertising.

roamed in Switzerland over the winter, they could be offered a deal on a skiing holiday through O2 More. There is a limit of one message to each customer per day, and early advertisers on the service include brands such as adidas, Cadbury Gifts Direct, Interflora and Blockbuster. You could be forgiven for thinking that the last thing consumers would want would be to be targeted with ‘push’ advertising on their mobile phone. But as Turkcell already knows, and O2 and others are finding out, if you’re transparent about what you are offering, and don’t overdo things, people are happy to receive it, much to the delight of brands everywhere.

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technology

“The money’s that way” After a few false starts, Location-based Services are finally beginning to make their mark, though the business model is still often unclear, says George Cole

ome things seem so obvious that you wonder why they haven’t become part of public consciousness. Take the mobile phone. It’s small, it’s portable, it goes everywhere with you. As such, it’s an ideal device, you might think, for delivering Location-based Services (LBS). As Jo Wall, Proposition Manager, Mobile Advertising at Acision, puts it: “A mobile phone is so personalised - you don’t share it like you would a computer. The ability to combine marketing with location has all the hallmarks of being a marketer’s dream, she says.”

Unrealised potential

Westminster Council uses LBS to help people find their nearest loo

Even the biggest supporters of LBS would admit, however, that its market potential is so far unrealised. But the signs are that this is about to change. Chris Lennartz, Vice President of Product Marketing at Airwide Solutions, says: “After all the hype, we are entering a more realistic phase.” Gartner forecast that consumer LBS subscriber numbers would double in 2009, from 41m to 95.7m, with revenues rising from $998.3m (£613.8m) to $2.2bn. A growing number of handsets are GPS-enabled, and more and more LBS services and apps are being launched. For example, TMobile and deCarta are rolling

out LBS in the UK, Germany, Austria and The Netherlands. There are LBS apps that tell you whether your friends are in the vicinity or how to find the nearest public toilet. So has the time finally come for LBS? “Ten years ago, satnav was a highly specialised market, now it’s mass market. The LBS market is going to be very large. The scale is now there in terms of the number of consumers with devices and their appetite to use them for LBS,” says Andrew Little, Director of Marketing Solutions at Navteq. Jamie Moss, Senior Research Analyst, Mobile Content and Applications Team at Informa, says all the pieces of the LBS jigsaw are coming into place: “Chipsets with GPS built in are cheaper and so more handset manufacturers are putting GPS into their phones. And networks are location-enabled.” deCarta and Samsung have formed a partnership that will allow developers to add maps, location-based search and routing instructions to any application designed for the new generation bada Smartphones. “Handset manufacturers are making location a standard part of their platforms. Users expect to be able to search for things or get guidance,” says deCarta CEO, Kim Fennell.

February 2010 www.mobilemarketingmagazine.com

LBS can be incredibly useful if you find yourself in unfamiliar surroundings

But a big challenge is being able to make money from LBS, says Moss. “Point-to-point navigation services can rarely be monetised, unless you’re providing updated information. And advertising on a mobile has yet to be fully accepted.”

Free offerings What is more, making money from LBS has been made even more challenging by various free offerings from Google. The search engine giant began by offering Google Maps, then Google Maps for Mobile, and in the US, it has launched a turnby-turn navigation service, Google Maps Navigation, plus Near Me Now, an LBS for GPSenabled iPhone and Android handsets. Little wonder then, that Fennell describes Google’s increasing presence in the LBS market as: “disruptive”. Annette Zimmermann, Senior Research Analyst at Gartner, says that LBS services using a subscription-based business model will struggle, and even more so with the arrival of Google‘s free services. “Operators have been slow to offer compelling services and a good price for the average consumer,” says Zimmermann. Although some operators have bucked this trend (in the US, Verizon’s VZ Navigator LBS costs $9.95 per month and has around 4m subscribers), Zim-

mermann believes that many LBS offerings will be funded by advertising - Nokia is rumoured to be developing an ad-funded LBS. LBS opens the way for targeted advertising linked to a consumer’s location, but Acision’s Wall warns that there is a fine line between push advertising and spam. However, Zimmermann says: “Our research shows that people are ready for push advertising, especially if they are offered something, like a voucher or coupon.” She quotes the example of the Aloqua mobile application in Germany, which pushes ads linked to the consumer’s interests and location. And even with Google’s free offerings, there’s plenty of opportunity to make money from LBS, says Robert Thurner, Commercial Director of Incentivated. His company has developed a number of well-received LBS services that include Sat Lav, which locates the nearest public toilet in central London; and Cabwise, a licensed minicab finder – more than 100,000 people use it a year. Thurner says: “The entry-level is low for LBS – you don’t need a Smartphone or even a WAP phone – text will do.”

Navigation and mapping are two of the most popular services on mobile

“Point-to-point navigation services can rarely be monetised, unless you’re providing updated Information” Jamie Moss, Informa The trick is to make your service scalable, so that the content matches the handset’s capability. Thurner says LBS can help advertisers reach their target audience more effectively: “You can send targeted ads that are location- and time-specific. There’s less wastage than with the conventional scatter-gun approach.” de Carta’s Fennell believes that localised mobile advertising will eventually fund a wide variety of LBS offerings.

Mass market services Acision has worked with Singapore Press Holdings to develop Rednano LOCATE, a free application that is downloaded to a handset and provides information linked to the user’s location. Lim Kok Leong, Acision’s Director Market Development (APAC), says: “It’s the first telcobased service – it’s not operatorbased. It’s a cross-platform, cross-carrier LBS. The key is to make your service mass market for advertisers.” Mobile operators could play a key role in how the LBS market develops. Airwide’s Lennartz says: “Our Open Services Framework makes it easier for operators to offer features like location. And some operators, like Orange, are opening up their APIs to developers. It’s a way of increasing their revenue stream.” Informa’s Moss agrees that it makes sense for mobile operators to offer their APIs to third party developers to create LBS applications. There’s a lot of excitement over the potential to use Smartphone capabilities for LBS. Acrossair uses Augmented Real-

February 2010

ity technology on an iPhone to provide users with directions to the nearest tube (underground) station, using the handset’s video functionality. But some think that combining LBS with social networking will be a compelling combination for many consumers. Foursquare offers an app for iPhones and Android handsets that allows user to tell their friends where they are. Rummble’s LBS creates a personal profile and points of interest based on the user’s feedback, and links to their social network. Iome describes its Plotstar service as a: “Locationbased digital lifestyle service.” Phil Eames, Iome’s CEO, says: “Offering LBS around discovery is not enough. With our service, users can use location to help them plan their social lives and share this information with their network of friends.” By the looks of things, perhaps after several false starts, the time may finally have come for Location-based Services.

More than 100,000 people use the Cabwise service every year to find a licensed taxi

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business models

APPLICATION OVERLOAD As the number of mobile platforms, application stores and mobile applications increases, developers are having to make tough decisions about which to develop for, and how to promote their apps, says Gareth James

ver the past two years, the mobile world seems to have gone app mad. The credit for that, of course, goes to Apple, its iconic iPhone, and its massively successful App Store, which has seen well over 3bn downloads since launch. “There’s no doubt that the iPhone was a game-changer,” says David Mannl, Head of Creative and Co-founder of application developer Mippin. But despite all the headlines it has grabbed, there is more to mobile than the iPhone, and other handset makers have been keen to create their own application ecosystem, complete with their own app store. The network operators have launched app stores too,

Brands are using apps, like this SEAT driving game, as a way to engage with consumers

in search of a slice of the app action. So is all this choice good or bad for mobile users? Ronan de Renesse, Senior Analyst at research firm Screen Digest, believes the availability of apps on different platforms is good for consumers, but says the explosion in the number of app stores may now have gone too far. “It’s now reached a level at which it becomes confusing, because for a single device, you could have access to the same app on several different stores, and I think this is going to become confusing for the consumer,” he says. But Andrew Bud, Executive Chairman of mobile transaction network mBlox, disagrees.

He says: “I’m always suspicious when people say you must not give people too much choice or they will get confused. That would mean we shouldn’t have more than one supermarket chain, all that nasty competition. Competition is always good, and the store that offers the best products and above all the best discovery tools in the most user-friendly and simpleto-use way will win.”

Rounding error For many brands and app developers of course, it wouldn’t matter if there were 100 different mobile platforms and as many app stores; the only one they are interested in is the iPhone. Sometimes it almost seems as if the iPhone is the answer, whatever the question happens to be. mBlox’s Bud admits that this puzzles him. “It’s fascinating because on one hand, there is no doubt it has changed for ever the conception of the phone in consumers’ eyes, but at the same time, statistically speaking, the iPhone is a rounding error. To the first approximation, the iPhone does not exist,” he says. But while Apple has had things pretty much its own way since the launch of the App Store, many in the developer community believe the com-

“Statistically speaking, the iPhone is a rounding error. To the first approximation, the iPhone does not exist” Andrew Bud, mBlox petition is about to intensify. “It’s just a matter of time for Android,” says Tom Hume, Managing Director of application developer, Future Platforms. “It’s not the mass market yet, but it does enable you to go international quite easily, and you don’t have the same issues you do with Apple, who can be very harsh in rejecting applications.”

February 2010 www.mobilemarketingmagazine.com

more platforms to develop for, including Blackberry, Symbian and, the most recent addition, Samsung’s bada platform. It leaves developers with some tough calls to make, and can mean a lot of time spent porting an app developed for one platform over to another.

Too many platforms

Mippin’s award-winning Buzz Deck app, seen here on an Android phone

Another app developer, David Lane, Managing Director of Bright AI, agrees. He says: “Where Android will take off is the next billion mobile users. Will they be using a $400 ‘must-have’ device, or any device they want using Google’s open source Operating System? Because it’s open source and can run on any device, Android will open up to a much larger audience.” From a development perspective, however, it’s about more than just the iPhone versus Android. There are many

Movie companies are using iPhone apps to promote new releases

“Different platforms offer developers different things, but we are getting to a point where we simply have too many platforms, and it’s not clear what benefits a number of them offer,” says Patrick Mork, VP Marketing at independent app store, GetJar. According to Mippin’s Mannl, the approach his company takes to cope with platform diversity is to make the mobile web the core platform and then create native apps for the iPhone or Android. “Those two platforms are chosen based on the demand from publishers and our own expertise,” says Mannl. “The experience on a browser on S60 devices is good enough to say that’s all we need to offer.”

Discoverability But platform fragmentation is not the only issue that brands and developers face in the mobile app space. The sheer number of apps and of app stores means that it’s increasingly difficult to bring an app to consumers’ attention, let alone get them to download it. It’s one thing to get it past Apple’s strict approval process and listed in the company’s App Store, but with another 100,000 apps alongside it, there’s no guarantee anyone will ever know about it or find it. “Discoverability is key,” says GetJar’s Mork. “You can have all the content in the world, but if customers can’t find it or download it, then it’s a very poor consumer experience, and that will kill their expectations of apps as a service.”

Ben Cussack, Creative Director at Mobile Interactive Group, uses technology blog and review sites to generate buzz around new apps the company has created. “Planning is really important,” he says. “You have to try to get maximum exposure across the press and blogs to get into Apple’s Top 25.” Cusack says the initial burst of activity should run for five days to push the app up the rankings. After this, the activity can be scaled down as the viral effect kicks in, then ramped up again as the app starts falling down the rankings. Another tactic increasingly used by app developers is to advertise their app within another app. This is popular because it guarantees a captive audience of people already using an app on the same platform. It seems likely going forward that developers are going to have to hone their PR skills, and increase their ad spend, because the appetite for apps shows no signs of diminishing. But mBlox’s Bud questions how many are actually making any money for the developers or brands behind them. “There may be 100,000 apps in the Apple App Store, but I would be surprised if more than 500 of them made any money at all,” he says. “The massive choice of apps is all about adding marketing value to the iPhone.” Jamie Moss, Senior Research Analyst for mobile content and applications at Informa Telecoms & Media expresses a similar sentiment. He says: “The thing to remember when you talk about the success of the App Store is that it is in essence a branding exercise designed to boost sales of Apple’s core products. Around 25% of the apps in the app store are free and 75% paid for, but despite that, more than 90% of all downloads

February 2010

App Appeal Top 20 app downloads globally in December ‘09 Facebook Mobile eBuddy Nimbuzz Mig33 Opera Mini Google qeep Snaptu Bluetooth File Transfer FULL Google Maps (featuring Latitude) eBuddy Lite Messenger KD player RockeTalk Bistream BOLT Air Fighter Evan MP3 Player Dictionary NetQIN YouTube Web Ringer

Source: GetJar from the App Store have been free. So the bulk of downloads are not generating revenue. What they are generating is fantastic headlines that give the impression of success and boost sales of the iPhone, iPod touch and desktop Macs.” If what Moss says is true, Apple is playing a very clever game. But it’s one that, so far, a lot of big-name brands seem happy to take part in.

Magazines like OK! have released iPhone app versions of their titles

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technology

CRACKING THE CODE

QR Codes look like the perfect way to drive traffic to mobile Internet sites. So why aren’t more brands using them? David Murphy investigates

“QR Codes have not emerged because of the gross incompetence of the majority of marketing directors, who don’t see a fabulous asset when it’s staring them in the face” Howard Furr-Barton, Baber Smith

f you were a mobile marketing evangelist trying to convince a reluctant brand manager of the power of mobile as a marketing channel, you might well turn to a QR Code as exhibit number one. Take your cameraphone, point it at what looks like a random assortment of black and white squares and lines, press the button, and within seconds, you’re taken to a mobile Internet site, where you can find more information about the brand in question, perhaps even download some free content for your phone. The codes can be included on press or billboard advertisements, on websites, and other marketing collateral. Even the most hardened brand manager would find it hard not to be impressed by the power of the technology, you might think, especially when the alternative way of arriving at a mobile site is to tap out a long URL on the phone’s keypad. And yet, despite the seemingly obvious appeal of QR Codes, they have so far failed to take off in many parts of the world. They are immensely popular in Japan, where zapping mobile barcodes has been a way of life for consumers for many years, but in much of the rest of the world, it remains a technology whose day is yet to come. All of which leaves QR Code enthusiasts feeling frustrated.

“QR Codes are like the red button on conventional media, and I genuinely think it’s a travesty the way marketing directors have not deployed them,” says Howard Furr-Barton, Head of Mobile and Innovation at integrated marketing agency, Baber Smith. “It’s like being offered a car with ABS and airbags at no extra cost, and they turn it down because they don’t understand what it can do for them. QR Codes have not emerged because of the gross incompetence of the majority of marketing directors, who don’t see a fabulous asset when it’s staring them in the face.”

Despite mainstream attempts to promote QR Codes, such as this one in The Sun, they remain an underused mobile asset

Isolated examples It is possible to find examples of QR Code and other mobile barcode usage - there are several variants, and not all readers can read all codes - outside of Japan. In Italy, news magazine Panorama uses QR Codes to give readers instant access to a range of rich, multimedia content such as real-time survey results, video clips, movie trailers and audio films. The initiative is designed to increase readership, redirect readers to the Panorama mobile site and also attract advertisers. In the UK, Pepsi ran a successful QR Code campaign to promote its Pepsi Max brand, printing QR Codes on 400m

QR Codes provide a link between the offline and online worlds

February 2010 www.mobilemarketingmagazine.com

cans and bottles, which linked through to free mobile content, including music and videos (for more on this, see panel, right). And the retailer, Marks & Spencer, which is hardly known for blazing a technology trail, turned to Datamatrix codes last year with an innovative promotion that saw the codes printed on 11 types of fresh natural juices in the company’s ‘Food To Go’ range. The promotion ran for eight weeks, and anyone who scanned the code was taken to a mobile site that offered consumers a different product discount code every day.

The iPhone and Android phone may be trendy right now, but the majority of people have feature phones, and if they download one app in their lifetime, it’s a lot, so for those people, it needs to be installed and visible on the handset.”

“As easy as SMS” Diane Strahan, Vice President of Mobile Services at Neustar, agrees that for QR Codes to really take off, the reader needs to be on the vast majority of handsets. “As soon as we get this, it will be as ubiquitous and as easy as SMS,” she says.

Guinness is one of the brands that has experimented with QR Codes

QR codes are big in Japan, but their success has not been replicated elsewhere

So if some big brands are prepared to see what the technology can offer, why are more not embracing it? Part of the problem is reach. Almost all mobile barcode promotions require the mobile user to download a barcode reader to their phone in order to enable them to interact with the campaign. A few phones have a reader pre-installed, but this is the exception, rather than the rule, and as Mendy Mendelsohn, CEO of 3GVision, which makes the i-nigma barcode reader, concedes, despite the success of Apple’s App Store, most people do not download applications to their phone. “The iPhone is the nonstandard situation, where you have people downloading apps out of their noses,” he says. “Usually, people do not download apps.

Strahan is confident that this will happen, pointing to the fact that both Nokia and Blackberry now have readers on some of their handsets, and that late last year, handset maker Sony Ericsson committed to preloading NeoMedia’s NeoReader barcode scanning application on its devices. The other half of the equation is education. Not only do most people not know what a QR Code or other mobile barcode is, but to make matters worse, when barcode readers are installed on phones, they are often buried deep in the menu system, so that the phone’s owner remains blissfully unaware of this capability. Strahan agrees this needs to change, but believes it will, as phones evolve, and as consumers get used to mobile barcodes.

“We all had an SMS client on our phone, we just discovered it a little bit late, and as discoverability increased and we started using it more, carriers made it easier, and the same will happen here,” she says. “Today, it’s a client you have to get to on a menu, but really, it is just a function of the camera, and as such, in the next few years, you won’t need to find it in the menu.”

Widespread adoption Both Strahan and Mendelsohn agree that mobile operators are critical to the widespread adoption of mobile barcodes. Mendelsohn notes the very proactive role taken by Japanese operators, in particular, NTT DoCoMo, in preloading barcode readers on the handsets they offered to their customers, and in educating them as to what they were all about. “In the UK, the main obstacle to adoption is the operators,” he says. “This is where it is stalling.” But he expects this situation to change, with operators asking handset makers to pre-install the readers in order to encourage people to go online with their phone, so generating data revenues. Babel Smith’s Furr-Barton, however, is not convinced that QR Codes have much of a future, in the UK at least. He says: “I’m almost resigned to the fact that it’s not going to happen in this country, and it’s our loss. We had the ultimate tool to engage people at zero cost, and when you look at how you can track the performance of a QR Code campaign and see which ad in which paper, or on which bus stop had the best response, it’s a real shame to see it slipping away.” Despite Furr-Barton’s pessimism, there’s time yet, of course. Location-based services were being touted as the big thing in mobile almost a decade ago, and yet are still very much in their

February 2010

MAXimum Response Pepsi turned to QR Codes in 2008 in order to engage with its target audience of 18-24 year old consumers for its Pepsi MAX brand. The company’s agency, Graphico, created a campaign that used QR Codes printed on 400m packs to link consumers to mobile content, including images and videos of the actress, Kelly Brook, and free mobile games. The content was available for download via a dedicated Pepsi MAX mobile Internet site that the QR Codes linked to. The activity was supported by an advertising campaign that ran across Sky Sports, The Sun, MSN, Vodafone Live and other key media. There was also a strong social media element to the campaign, with consumers encouraged to share the content via social networking sites. In the first month of the campaign, the Pepsi MAX mobile site received a total of 131,426 visits, of which more than half were unique visitors, while the company’s website received 234,000 visits. This was the highest monthly total of the year. infancy today. QR Codes may not have caught the public imagination just yet, but as even basic phones become ever smarter, and the number of pre-installed barcode readers increases, they may yet have a part to play in satisfying the modern-day consumer’s seemingly insatiable desire for instant information.

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thought leadership

OFF-DECK Mobile specialist Helen Keegan offers a personal view of the mobile marketing world

hat is it about SMS that brands don’t get? It’s as old as the hills, but remains as popular as ever with mobile users, as the ever-increasing number of person-to-person text messages proves. There’s something about the short, tothe-point, no-nonsense nature of a text message that we all seem hooked on. It’s something a certain social media service called Twitter has tapped into with great effect. Yet when you look at big brands and the way they market themselves and communicate with their customers, text messaging seems to be just too dull or too old or too uncool to make it on to their radar.

iPhone app What every big brand needs, or so it seems, is an iPhone app. You can almost hear the frenzied cry from the marketing director. “We gotta do something on mobile. The iPhone’s pretty cool. Let’s have an iPhone app. Hey presto! Problem solved.” That’s absolutely fine if your target audience is creative directors, media types and gadget freaks who always have to have the next big

thing. And the other 98% of the mobile population? Who cares about them? The fact is, we don’t all own iPhones. In fact less than half of mobile users own Smartphones of any type. And while some of us routinely use our phones to surf the mobile web, around two thirds of us, in the UK at least, don’t. So tell me please, budget-holders, what use is an iPhone app, or an Android app or a Blackberry app or a Nokia app, to them? By contrast, SMS is something every phone can handle. But when was the last time you had a text message from a brand telling you your order was on its way? Or just saying thank you for your custom? I had one a couple of months ago when I bought a new memory card for my phone from Mobymemory.com. A couple of hours after placing the order, the text arrived on my phone, thanking me for the order, and advising me that it had been sent out to me. There was a code to enable me to track the shipment online, and a phone number to call if I had any questions about the order. Nothing revolutionary, but welcome all the same.

CRM tool I can’t tell you how good that little text message made me feel about Mobymemory.com, and how much it stuck in my mind as a great example of customer service done well. And I’ve lost count of the number of people I’ve told about it, with the implicit recommendation to buy any memory cards they may need from the firm in the future. Yet when I think of my dealings with much bigger and better-known retailers and other brands over the past couple of years, with the exception of one or two airlines, I can’t think of a single instance where any of them has used SMS as a CRM tool in this way. And I still can’t for the life of me work out why. For sure, you won’t find many awards for best use of SMS. You won’t see any 96-sheet billboards promoting a text message customer service initiative. And you certainly won’t feature in Apple’s App Store. But here’s the thing: you might just retain a few more of your existing customers, and better still, encourage them to become not just loyal to your brand, but advocates for it. Not bad, in 160 characters or less.

February 2010 www.mobilemarketingmagazine.com

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