Dialing Into Mobile Marketing

Mobile marketing has at last emerged as an important part of the marketing mix. Through a confluence of technologies and standards related to mobile devices, including 3G networks and data packages, the mobile channel can now enable large-scale marketing activities capable of engaging consumers in unprecedented ways.

According to a new Aberdeen benchmark report on mobile marketing (currently available for free download), Best-in-Class companies are increasing their focus on mobile marketing as a percentage of their overall marketing mix, with 71 percent indicating that their mobile marketing activities are integrated with their other marketing tactics/media buys. More to the point, one-quarter of Best-in-Class companies, up from 17 percent less than 12 months earlier, indicate that mobile marketing now accounts for more than 10 percent of their overall marketing budget.

It’s no surprise that mobile marketing is winning a greater share of the marketing budget, given the business benefits. When the right strategic and creative approach combines with the right analytic capabilities, the mobile channel can be a highly effective way to cut through the clutter and elicit positive consumer responses to a company’s “call to action.” In many cases, these responses culminate not in just one-time interactions or product purchases but in long-term customer relationships.

By delivering an array of messages, offers, coupons, games, sweepstakes and access to exclusive content that many consumers deem valuable, and by engaging them in meaningful interactions on an ongoing basis, mobile devices can serve as an effective channel for improving the customer experience and driving increased customer retention.

Yet mobile marketing has until recently been uncharted territory for many companies, with relatively few of them able to tout a significant track record of experience. In fact, only 19 percent of survey respondents indicate that their companies have implemented mobile marketing for more than two years, compared to 22 percent of respondents that report that their companies have made their initial forays into mobile marketing only within the past six months.

From PlayStation Games to Pepperoni Pizza

One such company is Best Buy, the world’s largest consumer electronics retailer and an innovator when it comes to serving up highly relevant marketing messages, store recommendations and product offers through the most effective channel, based on individual customer preferences, behaviors and personal profile data. For Best Buy, the mobile channel represents the next big frontier.

“The needs and behaviors that customers engage in when they are on the move and using their mobile devices are very different from when they are sitting at home or at work in front of a computer or opening mail or watching TV,” says Matt Smith, vice president of marketing. “The mobile channel gives us the ability to bring some new tools online to solve specific customer needs and to lace various vehicles together.”

The company made its initial foray into mobile marketing earlier this year with the introduction of an iPhone app called “Best Buy’s Weekly Deals.” The free app gives consumers access to special offers and discounts as well as to customer reviews. A new app, called “Best Buy — Gamers Club,” focuses on gaming content. The app invites gaming enthusiasts to register for an account, after which they can save items to their shopping list and share them with friends.

While it’s too early to assess the business value of Best Buy’s iPhone apps, Smith hints that these are only the beginning of what’s to come. “We want to use mobile pieces of technology to help customers solve needs in the moment, whether it’s related to stock availability, price check, access to special deals, access to other content they’ve requested, or even a storage locker of past purchases to ensure compatibility with new purchases,” he says.

Importantly, companies that engage in mobile marketing don’t necessarily need to receive millions or even tens of thousands of opt-ins in order to justify the effort. Depending on the nature of the business and campaign objectives, just a few hundred qualified responses may be sufficient to impact the bottom line.

Just ask Joe Markoff, owner of an Oggi’s Pizza franchise store. “Mobile marketing integrated with our print mailer has become a key part of our marketing and advertising mix,” he says. “The introduction of mobile coupons has significantly increased my business during slow periods.”

So, while mobile has a mass-market reach, it is not the mass market on the other end. Rather, it is an individual with specific wants and needs that a company can help fulfill and pains it can help alleviate.

Technology Catches Up to the Hype

Developing and executing a mobile marketing campaign typically involves a wide range of technology enablers, from SMS messaging solutions and mobile Internet hosting and delivery services for transmitting content (including mobile coupons) across disparate mobile networks and the thousands of types of mobile devices, to dynamic ad delivery platforms that deliver targeted ads to a publisher’s mobile content based on a set of predefined criteria.

Nearly three-quarters (73 percent) of survey respondents for the new Aberdeen report agree that the most important catalyst for mobile marketing adoption is the vastly improved functionality and usability of mobile devices. The increasing popularity of smartphones with large screens, full keyboard functionality and advanced video display capabilities is ushering in a new era of mobile interactivity, although these phones still account for only a small percentage of total mobile devices currently in use.

While SMS remains the most widely used messaging vehicle for mobile marketing, Aberdeen research shows that MMS is also gaining in popularity. In fact, 37 percent of Best-in-Class companies, compared to 11 percent of Laggards, currently use MMS to support content that includes video, photos and graphics. Increasingly, marketers are taking advantage of the proliferation of MMS-enabled cellphones to launch social media marketing campaigns that incorporate consumer-generated content.

Bluetooth technology, which allows users to interact with kiosks, billboards and other types of digital signage at a short range, is also gathering steam. According to Aberdeen research, 29 percent of Best-in-Class companies, compared to 12 percent of Laggards, currently use Bluetooth, allowing consumers to download applications and content, including wallpaper, ringtones and games, to their mobile devices. More companies are also experimenting with location-based services, which received significant hype early on given the promise of delivering relevant messages to mobile subscribers based on their geographic location within the cellular network.

Making the Business Case

Consumer brands are finding it increasingly easy to make the business case for investing in mobile marketing. In fact, according to Aberdeen research, 65 percent of Best-in-Class companies, compared to 13 percent of Laggards, are currently satisfied with their average marketing ROI on mobile marketing campaigns. By contrast, only 40 percent of Best-in-Class companies, compared to 8 percent of Laggards, are currently satisfied with their average ROI on traditional media, such as TV, radio and print.

The fact that Best-in-Class companies are 1.6 times more satisfied with their ROI on mobile marketing versus marketing through traditional media helps to explain why 62 percent of companies are increasing their budgets for mobile marketing even as they continue to reduce or completely eliminate programs in response to current business conditions.

As marketing via SMS, MMS, and location-based services becomes increasingly popular, powerful and acceptable to consumers, companies are coming to view mobile devices as essential advertising and marketing tools for reaching consumers on the go. Consumer brands that have yet to jump on the bandwagon may wish to consider doing so soon. Increased marketing ROI may be only a phone call away.

Jeff Zabin is a research fellow in customer management technologies at the Aberdeen Group.

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