***

People are mobile, and mobile is part of who they are. But mobile is not just a device. It’s our ‘default’ state. In a networked, wired-up world where 5.6 billion people are connected to each other by a mobile device, mobile also allows us a voice —and a role —in much larger conversations. More importantly, mobile empowers us to fulfill our oldest and most important purpose: to participate in something much greater than ourselves.

Mihai draws from the work of authorities such as Alan Moore (@alansmlxl)— independent consultant and author of the new book, No Straight Lines: Making Sense Of Our Non-Linear World — to show the evolution of mobile follows a path that is predetermined by our very human and deep-seated desire to connect and communicate with the world around us.

As Mihai puts it: “We are personal and participatory to the core, human characteristics that are amplified by advances such as the Internet, mobile and social media. In my view, it is no coincidence that mobile — personal, portable, pedestrian, and now our primary means to participate in our society— has such a central role in our lives.”

It is a development he shows has profound consequences for the companies and brands that want to connect with us.

Speak to us

The signs of a shift in our attitude toward brands and celebrities are everywhere. Or how else do you explain our eagerness to communicate (and listen) to fashion brands, personalities (Lady Gaga) and extend our real and virtual networks?

Another great example is Siri, the smart digital assistant app/service available on Apple iPhone 4S devices that integrates with our personal data to offer us assistance and advice. It is fascinating that digital natives have already begun to adopt Siri into their extended family of ’significant others,’ creating and sharing Facebook pages and videos dedicated to the great jokes Siri ‘tells.’

Yes, our socialness has created a desire in us to engage in intimate conversations with brands, companies, search services and people we will never meet face-to-face. And our socialness also values entities that respond, a reaction that acknowledges our existence as individuals and validates the importance of what we have to say.

Connect the dots, and our socialness demands that communications with our ’significant others’ are two-way, not one way. But Mihai  reminds us that this is not the only rule to follow. When it comes to interactions between people and brands, marketers must also avoid delivering messages that are interruptive, irrelevant or impersonal.

To drive the point home Mihai draws from Seth Godin, groundbreaking marketer and author of Permission Marketing, and applies Godin’s thinking to text messaging and permission based mobile marketing (a phenomenon Godin could not have foreseen or addressed in the book he wrote 13 years ago).

Hard facts

But the real highlight is how Mihai uses a mix of internal Optism research and findings from mobile^SQUARED, a U.K.- based mobile engagement research firm keenly focused on permission based marketing, to bring us a new perspective on the advance of permission based mobile marketing.

Specifically, the popularity of this approach also creates the expectation among people who have opted-in to receive brand messages that brands are prepared to engage in an ongoing dialog in which they both listen intently and answer back.

The bottom line: companies and brands must choose their words carefully and the wording must be truly human.

A bit of common sense perhaps — but it’s not that simple, which is why Mihai zeroes in on the ideas presented in Nudge: Improving Decisions about Health, Wealth, and Happiness to provide marketers some much-needed guidance.

He concludes his Invited Commentary in the journal with a list of 5 best practices, providing mobile marketers a blueprint they can follow to maximize the value of their permission based mobile marketing initiatives and drive positive results.

I encourage you to purchase the IJMM (below) to read the full article. And don’t forget to check out this ‘teaser’ over at the Optism blog.

My attempt to summarize it all in one sentence:

The ideal — and, hence, most positive — interaction is transparent, truthful (don’t bribe —ever!) and based on trust. Remember that our socialness dictates that the relationship marketers build with us is more akin to a marriage than a date.

My take:

Kudos to Mihai for adapting the thinking about permission marketing and nudging to provide valuable insights into how companies and brands can (and must) approach people to ensure a desired outcome for everyone involved. And it’s not just limited to marketing in my book! If you want people to transact with you (not just interact), encourage purchases or convince customers to keep coming back, the same simple but elegant rules apply.

CHECK OUT THE NEW ISSUE HERE:

Disclaimer: News and views across the mobile marketing ecosystem is sponsored by Optism, a MobileGroove client and supporter.

Children’s books

In fact, the greatest impact is the one publishers achieve by harnessing mobile to enhance interaction and deliver a personal touch.

Gina Otto —author of the modern-day fairy tale Cassandra’s Angel—stands out as a content creator who realizes her book, an award-winning children’s story aimed at helping young people find their voices, is a life lesson that mobile can greatly enhance and amplify.

****

Despite the tiny screens, more consumers than ever before are using their smartphones to do more than ever before. Market research firm IDC reports that sales of smartphones in the final quarter of 2010 outstripped those of PCs for the first time—ever! Moreover, a milestone report from Google, in collaboration with the Mobile Marketing Association, confirms that we increasingly rely on our mobile devices to research products, make purchases, conduct transactions, and connect with social networks.

Mobile technology has also transformed how we consume content, creating new opportunities for old media. The first wave brought dramatic changes in the production, distribution, and monetization of content such as news, music, games, and video. Fast-forward and advances in mobile applications (apps), tablets, and e-reader devices herald a second wave of change. This time mobile will inject new dynamism into books, book publishing, and reading.

Some content creators—particularly those determined to simply shrink their book content for delivery on a tiny screen—will fail to reap the full benefits of mobile.

Read the rest of this column at EContent Magazine

& I invite to read all my Agile Minds columns on EContent Magazine here.

A raft of recent developments supports the observation that this device is indeed a game-changer, starting with buoyant sales numbers that have exceeded everyone’s expectations. Barclays analyst Anthony DiClemente (via All Things Digital) has upped his original estimate of 4.5 million units sold last quarter to 5.5 million. Piper Jaffray is convinced Amazon is on track to sell 10-12 million Kindle devices (Kindle and Kindle Fire), up from the initial estimate of 9 million units. Meanwhile, analyst Tavis McCourt at Morgan Keegan has downgraded his iPad sales forecasts for the quarter from 16 million units to 13 million. (Again, sales lost to Kindle Fire.)

Speculation abounds over precisely how many Kindle Fires have been sold. Amazon, of course, is keeping the real sales figures to itself. (Amazon has only said that it sold more than 1 million Kindles in December, but did not break that figure out by device.) So, we have to connect dots in recent analyst estimates to arrive at a more accurate picture.

Mobile advertising impact

November numbers from independent mobile ad and data platform company Millennial Media show serious momentum is building for the new tablet device, a trend that could spread from the U.S. to Europe when the Kindle Fire sets markets here ablaze.

Specifically, the company’s November Mix (a monthly series of reports revealing key advertising trends with a focus on mobile manufactures, devices, operating systems and connected devices based on actual campaign and platform data) states that “impressions from the Kindle Fire have grown at an average daily rate of 19 percent” since the device was launched in November.  The Millennial Media report stresses it’s not just seeing millions of impressions. “We’re seeing a monthly run rate of hundreds of millions of impressions.”

Smartphones are another story. This category accounted for 70 percent of all impressions (connected devices follow at 16 percent, ahead of feature phones at 14 percent), with Apple’s iPhone leading the pack. It generated 13.54 percent of impressions in November, far ahead of Blackberry, which came in a distant second.

Europe warms to tablet devices

Amazon’s Kindle Fire is exploding in popularity, a development that has serious consequences for developers everywhere (as this guest column from Mubaloo points out). Its affordable price, stockpile of content and tight-knit ecosystem certainly positions this device to move in on the territory so far dominated by Apple.

Aware of this other players are preparing for impact. Just this week mobile operator Orange UK has announced its own branded tablet, the new Orange Tahiti Android tablet (using the Android Honeycomb operating system that also gives users access to Android apps). The device, a re-branded Huawei Mediapad that features a 5-megapixel camera, A-GPS, Wi-Fi, Bluetooth and 3G+ support, is available from GBP 69.99 with a 2-year GBP 25 per month data plan. It is also free to users as part of a Connected 24 month plan with the San Francisco II handset for GBP 41 per month.

With major events such as the Olympics coming to the U.K., players such as Orange no doubt expect the uptake and use of connected devices to skyrocket.

And it’s not just a hunch. Orange Exposure, an annual independent study by research firm TNS into mobile usage and habits across 2,000 users (U.K., France, Spain, Poland) shows tablet devices could be cannibalizing home TV viewing and are definitely boosting mobile commerce.

Among the key findings:

• Tablet users were 50 percent more likely to purchase online than mobile users
• 60 percent of tablet users have made at least one ‘m-commerce’ transaction compared to 47 percent of mobile users
• Respondents are more likely to use smartphones to ‘kill time’ and are more likely to use tablets to ’save time’ (an average grade of 7 on 10 for both devices)

Is the tablet our new sit-back device — the one we’ll reach for to research products while relaxing on the couch?

It’s a tough one to call. However, this trend (consumers opting for their tablet over their PC) presents advertisers with unique opportunities to capture attention and engage consumers that encourage purchasing decisions.

As Bruce Hoang, group marketing director, Orange Advertising Network, put it in a press statement: “This is the first time we have included tablet usage in the Orange Exposure report and the findings are quite stark in their description of how people are using devices. Clearly, the one-size-fits-all approach for digital content across TV, PC, smartphone and tablet does not work, and this has significant implications for content producers and advertisers.”

Interestingly, a survey of 2,000 U.K. adults by YouGov found that ordinary Amazon Kindles were a holiday favorite, with one in 40 respondents receiving a e-reader as a gift (92 percent of them Kindles, or 1.22 million units). In comparison, the survey suggests 640.000 tablets were given as gifts, 72 percent or 460,800 of them iPads. Connect the dots, as YouGov has, and the stars are aligned for Kindle Fire to be key to driving tablet ownership in the U.K. in the next 12 months.

My take:

Connected isn’t a fad; it’s a hard fact. Tablets are taking off and the Kindle Fire is poised to make its mark on Europe. Are industry observers such as Greg Stuart, global head of the Mobile Marketing Association (MMA), correct when they say tablets will have a huge influence on mobile advertising? Data points and developments certainly support this conclusion. Millennial Media — which research firm IDC says is now the second largest mobile display ad network after Google and ahead of Apple —  draws from a significant number of impressions on its network to conclude impressions from Kindle Fire are on a steady growth curve. This dovetails with user research from Orange indicating tablets (as a category) are for saving time, not killing it, and conducting commerce. As a prime replacement for the PC, where many of us spend hours researching products and digital stuff we want to buy, the rise (and rise) of the tablet forces brands and marketers to expand their ‘mobile’ strategies to include a variety of connected devices if they want to connect with consumers at every stage of the consumer journey (awareness, engagement, consideration, conversion and loyalty).

Disclaimer: News and analysis of developments impacting mobile advertising and the business ecosystem is sponsored by Millennial Media.

***

My personal and professional lifestyles — mobile, multi-tasking mom and member of the Mobile Marketing Association Board, North America — encourage me to examine and experience mobile campaigns from a variety of vantage points. In my last column I showcased campaigns that demonstrated how brands are harnessing creativity to engage and entertain us. These successful campaigns impressed me —touched me — as both an individual and a mobile industry professional.

However, it’s Starbucks that has left a mark on both lives I lead with a mobile strategy (not just a campaign) that delivers precisely the mix of utility and familiarity that has allowed me to completely embed its branded mobile app in my own personal, daily routine.

Effective advertising delivers us value. Like most mobile moms I love utility (!). And, as a professional businesswoman, I doubly appreciate advertising that comes bundled with a service that makes my life just that little bit easier.

It’s a behavior that is completely in sync with recent research findings that show my demographic (mobile moms) has become a true artisan at weaving mobile into the shopping experience. The report, compiled by parenting website BabyCenter and reported by eMarketer, found that 68 percent of moms use their smartphone while shopping, which means that a mom is 15 percent more likely to rely on their phone that than the average customer. Also, 62 percent of moms use shopping apps to research or compare prices.

Women (especially mobile moms) are mobile savvy, short on time (because we run both our households and our businesses on the go) and we want our technology to keep us organized wherever our busy lives take us. Starbucks understands this, which is why it has developed and delivered an app that is more than a technology; it is a life-simplifying assistant.

And I am not the only one who thinks so. This week Apple iTunes broke the news that the coffee giant had been named the “Best iPhone Lifestyle App in the U.S.” The app, which allows mobile payments and an easy way to track rewards, is obviously a crowd-pleaser. Less than a year after Starbucks launched an app that allows mobile payments, the company reports it has hosted a whopping 26 million such transactions across Apple, BlackBerry and Android devices. As a result, one in four Starbucks card transactions is now executed via a Starbucks card and a significant portion of those are done via mobile.

Indeed, people have embraced mobile as a way to connect with Starbucks and explore experiences like mobile pay, managing their Starbucks Card and My Starbucks Rewards accounts, sending eGifts and more through Starbucks app for iPhone.

I applaud Starbucks for putting people at the center of its mobile strategy and for paying meticulous attention to what I call the Three Rs of mobile marketing: respect, reinforcement and repeating what works to gain customer trust and —ultimately— encourage customer loyalty. Like the Three Rs we know from elementary school (Reading, wRiting and aRithmetic) these must be at the foundation of brands’ mobile strategies.

Respect

Starbucks gets high marks for obeying the number one business tenet: know your audience. Making the effort to understand our needs shows that the brand respects us enough not to waste our time or try our patience. Yes, Starbucks could have released an all-singing-all-dancing app that takes dog years to load and does absolutely nothing (except ‘wow’ some mobile elite), but it knew better.

Based on a deep understanding of its customers (a demographic that wants utility, not novelty) Starbucks has purposely released an app that makes buying a no-brainer. One, it connects us to the shop we want, allowing us to find a nearby Starbucks, but also providing us details about the store such contact details, distance and whether the shop offers oven-warm food. Two, it makes paying for what we buy a breeze. A barcode is delivered to our mobile phone and the cash register is equipped to scan the code so we can go on our way. The complete system ties in with the reward system, a virtuous cycle I will explain more in the next section.

Beyond the app I am also impressed by the quality of my interaction with Starbucks, which is non-intrusive and respects me enough to give me my personal space.

After going online to accept the e-gift card I received from a friend and activate the offer (which was thankfully quite simple), I then synced it to my iPhone app. Encouraged by this positive experience (and not having been frustrated by a problem along the way) I signed up for the text messages, an action spurred by my interest as a mobile marketing professional in seeing just how well Starbucks would respect my requirement to receive service, not spam.

It’s a given —and well documented in this series about Seth Godin, the father of permission marketing — that we want advertising/marketing we control. In short, it must be on our terms (brands must ask permission in advance) and relevant to us as individuals (matching the personal preferences and information we volunteer).

Starbucks followed all the rules. It asked me to opt-in for text messages and has not bombarded me with spam. It has asked for some personal information about me, but it has also explained its motives and offered me an opt-out option at any time. This transparency has encouraged me to divulge my birth date (Starbucks needs it so they can give me a gift on my birthday —again, a gesture that shows respect for me as an individual) and location. (The app is such a help, I really do want to provide it the information it needs to help me find stores when I am on business trips, or just in an unfamiliar section of my district).

Reinforce

By making this whole process easy and seamless, and by not asking questions that would make me feel uncomfortable, Starbucks had accomplished what all brands strive to achieve. It has influenced my buying behavior (I will buy often and using my iPhone), gained access to me as an individual (I am willing to volunteer more information because the value exchange is on the mark) and encouraged me to be a brand advocate (it’s the topic of my column because I am so impressed I want to share).

Yes, I feel positive about Starbucks. But Starbucks also knows that all relationships can weaken if they are not reinforced. To this end Starbucks has mastered a cross-media approach that harnesses all channels, formats and platforms (mobile, digital, TV, in-store, press — the works) to deliver us a consistent and effective message.

Reams have been written about the central role of mobile in the marketing mix. But that is precisely the point: marketing is a mix. In fact, I agree with many of the analysts (such as Jennifer Lee, Toronto-based senior manager of the retailer and distribution practice for Deloitte & Touche) who are convinced that 2012 will be the year we move from execution (after all, we have loads of mobile marketing campaigns) to deep integration.

In my view, the brands that amplify a clear and consistent marketing message across all the consumer touch points will succeed in delivering much more than advertising. A cross-media approach (executed properly and not just blasted at us every step of the consumer journey) will deliver us an ongoing experience and reinforce our desire to engage in deeper interaction.

Repeat

Smart companies will tap all the channels at their disposal to listen, learn and delight us with their offer. Again, it appears that Starbucks has a head start on most.

As Stephen Gillett, Starbucks chief information officer and executive vice president, Digital Ventures, put it in a recent post, it’s customer feedback that helped the app become such a phenomenal success. “Since the initial regional mobile test in 2009, we’ve received a lot of customer feedback which contributed to new features being added to the app over time.”

Put another way, understanding customers is good, listening is better. And learning is best. Starbucks has done all three and replicates this approach across all media, with each channel feeding into and improving the next. Mobile was never considered to be just an add-on to an ad campaign. Instead, Starbucks embraced it as a part of a larger strategy designed to deliver us an experience that addresses our needs. Other brands would be well-advised to follow the Starbucks blueprint.

Connect the dots, and Starbucks does more than make it easy for us to buy coffee and snacks. The company encourages repeat purchases, which boosts customer loyalty, which builds trust. The outcome is the virtuous cycle I spoke about earlier, and a perfect balance between what the brand wants (sell goods/services) and what I demand (a consistent and worthwhile value exchange that I feel is suited to me). Mobile — and now Starbucks — is my constant companion on my daily journey, an enviable position that other brands can best achieve by embracing the Three Rs.

About Lisa

Lisa Ciangiulli, Director of Marketing for Alcatel-Lucent Global Advertising Solutions, where she has been instrumental in the development and marketing of Optism, Alcatel-Lucent’s powerful permission-based mobile advertising solution. In this role, and throughout her career, Lisa has spearheaded efforts to encourage cooperation between players across the ecosystem with the ultimate goal of enabling closer communication with the consumer. In May 2010 she was named to the Mobile Marketing Association (MMA) North America Board of Directors. You can follow her on Twitter (@LisaCiangiulli).

Disclaimer: News and views across the mobile marketing ecosystem is sponsored by Optism, a MobileGroove client and supporter.

The drivers are many and the impact is tremendous. The rise (and rise) of mobile retail, the advance of smartphones and connected devices, and the heightened interest among companies across all verticals (retail, automotive, finance, pharmaceutical — the works!) make it imperative for us as an industry and ecosystem to ask (and answer!) some tough questions.

How big is the opportunity really, and what are the countries/ regions to watch? What are people’s attitudes toward mobile and mobile advertising, and how are they likely to evolve? Where should mobile play in a well-executed, cross-media campaign? How are leading brands using mobile to achieve spectacular results, and what were the learnings along the way? And the list goes on….

The trends and developments on the horizon are exciting — and confusing. Brands, agencies and the entire mobile marketing ecosystem must plan for a new phase of growth and activity. And they must prepare for the wave of change, rather than be crushed by it.

Stand up and speak up

To this end the Mobile Marketing Association (MMA) is collaborating with Millennial Media, an independent mobile ad and data platform company, and MobileGroove to research and produce a comprehensive knowledge resource. This definitive work —which will include detailed market data, case studies, best practices and exclusive insights from executives and companies that have harnessed mobile to drive positive business results — is slated for release in 2012.

To ensure that this resource examines the topics and trends that are truly top of mind and correctly reflects the level of interest, activity and investment in mobile marketing the MMA is also conducting a global survey of agencies and brands (only).

The survey takes only five minutes to complete and YOUR voice matters to us.

Take our survey and share your insights.

Please note that the survey will only run until the end of December, so why not take some time to fill it out right now so it doesn’t slip your mind later?

As a special bonus, the MMA will share the results with brands and agencies that participate in the survey.

We thank you in advance for taking part in this important survey and we are proud to provide you a roadmap to navigate the mobile marketing opportunities and challenges ahead.

True to its 10-year tradition the new Netsize Guide — titled Netsize Guide by Gemalto: Truly Mobile — offers us all this and more in one comprehensive industry resource, available from today for free download.

This edition — the fourth mobile industry book I have had the pleasure to research and write the book on behalf of Netsize — charts truly new territory as we move beyond recounting the industry milestones to indentifying the three themes that will define the next phase of mobile.

TRANSACTION: We have come to rely on mobile devices at every stage of the consumer journey. From researching products (which we likely learned about through more relevant and targeted advertising delivered directly to our mobile phones in the first place) to making purchases (transactions we complete using our mobile phones or specially-enabled NFC devices), we reach for our mobile devices for assistance.

TRANSFORMATION: We recognize that mobile is much more than a portable device. These devices are also acquiring the capabilities to transform long-established business models around the content, communications and connectivity. The cloud allows us to demand — and expect —  simple and easy access to our media, content and networks anywhere, anytime. Significant progress in search, personalization and Artificial Intelligence (AI) over just the last 12 months allows us to think of our mobile phones as smart assistants, equipped with intelligence, judgment and human-like traits. And the advance of IP-based applications that enable one-to-many messaging encourage the growth of one-to-many broadcast models that revolutionize communications and disrupt telecoms strategies that placed mobile operators in control.

TRUST: We foresee that trust is what matters most in mobile, and what will define the next phase of mobile innovation and growth. Why? Because only a relationship built on trust will provide companies the access to the customer insights and information that lay the foundation for the applications, devices, services and infrastructure we want (and will come to demand).

Exclusive exec interviews

Understanding the interplay of the three key themes that define this year’s Netsize Guide equips companies across the industry to prepare for the next phase of mobile.

To drive home this point we draw from  insights and interviews with over a dozen senior executives from companies across the business ecosystem including:

• ARM, Rob Brown, Director of Marketing, Secure Services Division / @ARMMobile
• Atlas Premium Brands, Nigel Tatlock, CEO /@SportsLockerTV
• BNP Paribas, Philippe Gillet, Director, Strategy & Innovation
• CMO Council, Donovan Neale-May, Executive Director/ @cmo_council
• The Coca-Cola Company, Tom Daly, Coca-Cola Group Manager, Global Connections
• Gameloft, Gonzague de Vallois, Senior Vice President Publishing / @gameloft
• GlobalPlatform, Gil Bernabeu, Technical Director
• Informa Telecoms & Media, Pamela Clark-Dickson, Senior Analyst, Mobile Content & Applications / @PamelaC­_D
• Millennial Media, Gavin Stirrat, Managing Director, EMEA/ @millennialmedia
• Singtel, Madeline Tan, Advertising Sales, Director
• Texas Instruments, Jean-Philippe Galvan, IP Domain Director / @TXInstruments
• TrustedLogic, Christophe Colas, Marketing Director
• Yahoo!, Steve Douty, VP of Applications and Mobile Products / @sdouty

Stellar record

In its 10-year history  the Netsize Guide has built a large, loyal and global audience of mobile professionals and practitioners. In fact, a recent survey of readers —conducted by Netsize —revealed that the vast majority of respondents (75 percent) consider the book to be an essential read and gave it an ‘8′ or higher (on scale of 1-to-10).

A real crowd pleaser continues to be the wealth of market statistics and data Netsize provides the industry based on data compiled by partners such as research firm Informa Telecoms & Media. This  year — thanks to partnerships with new partners comScore and SocialBakers — the book also details operator market share, smartphone penetration, and consumer usage of mobile apps and social network Facebook across 40+ countries.

My take:

It has been a huge undertaking and the result is a 220-page must-read knowledge resource packed with detailed market data and insights from executives and companies that shape our mobile society. I am particularly proud of the thought leadership sections that identify the three key themes sure to define the next stage of mobile growth and innovation.

Indeed, a walk through our daily routine confirms the pivotal importance of trust in all things mobile (and digital). We demand relevant advertising and content, for example. However, only companies we trust with our data will be able to deliver us what we will likely appreciate. We are willing to buy goods and services with our mobile phones. (And let’s not forget that mobile is the only way to do banking in underbanked areas such as Africa.) However, it’s the companies that can ensure the integrity of our data and transactions that will be the ones we trust to deliver us secure mobile money services. We want to communicate and connect via our social networks. Never again if (like Facebook) the companies we trust with our personal information chooses to divulge this data to third parties and partners without our knowledge or consent.

Understanding the interplay of these three key themes is what makes this year’s Netsize Guide by Gemalto essential – and unique.

My warm and personal thanks to Alexander Vlasblom, Marketing Communications Director, Netsize & Trusted Logic, for great ideas, welcome inspiration and good humor throughout the process. Thanks also to Marko de Hoop, the freelance designer who worked with the team to make this new Netsize Guide by Gemalto one we can all be proud of…

Disclaimer: Netsize collaborates with MobileGroove’s Peggy Anne Salz since 2007 to research and write strategic thought leadership and collateral including the new Netsize Guide by Gemalto. You can explore these industry reports and books here.

This massive growth, with ad spend increasing over 356 percent year-over-year, confirms banks, insurance companies and credit card companies are aggressively using mobile to raise awareness of their products and services, generate leads, encourage app downloads and —significantly—engage more with people on their device(s) of choice. The vast majority (80 percent) of people accessing financial information or apps are smartphone owners, (more than double the general mobile population). Moreover, the mobile finance user is also 76 percent more likely than the general mobile user to own a tablet or e-reader device.

Watch for more stats and insights in Mobile Intel: Finance, the third in a new series of reports slated for release in the next weeks. Mobile Intel draws from  consumer research from comScore and platform data from Millennial Media to help brands understand the mobile finance users and the opportunities to engage with them on mobile.

These are some of the key findings covered in the Q3 S.M.A.R.T. report (Scorecard for Mobile Advertising Reach and Targeting), strategic intelligence aimed at helping advertisers make informed mobile media planning and campaign decisions based on network data provided by independent mobile ad and data platform company Millennial Media.

Tech sector takes off

Per the S.M.A.R.T. report a total of six verticals experienced triple-digit growth or greater year-over-year, with Technology leading the pack. The tech sector, where campaigns are focused on B2B offers such as cloud storage and consulting,  saw explosive growth of 687 percent, followed by CPG (up 378 percent).

Significantly,  Entertainment, which ranked number two in the U.S. and number one globally,  increased ad spend 145 percent year-over-year (Q32011 vs. Q3 2010). The jump confirms advertisers are leveraging mobile to drive awareness of blockbuster movies (and visits to theaters showing them), as well as create buzz around DVD releases, TV series and social media strategies.

Meantime, brands across all sectors are ramping up their use of video in mobile advertising campaigns. The report shows that the number of campaigns on the ad platform providing people the option to view a video (post-click campaign objective: watch video)  increased 78 percent in Q3 (compared with Q2) an accounted for 32 percent of all campaigns in Q3.

According to Millennial Media, a key driver is the use of video by entertainment brands to drive people to movie trailers.

Video and devices

Indeed, our growing enthusiasm for mobile video —content that shines on smartphones and pushes the envelope on tablet devices— is further confirmed by report findings that shed light on current developer and publisher trends.

Significantly, the iPad, Samsung Galaxy Tab and Motorola Xoom were the top three tablets on the ad network in Q2. Impressions on the iPad alone were up more than 450 percent for the whole of 2011.

Overall, smartphones grew 7 percent quarter-over-quarter and continued to dominate the category Smartphone, Feature Phone & Connected Devices with 72 percent of impressions. Android led the connected device and smartphone mix with 56 percent of the impressions, compared to 28 percent for Apple iOS and 13 percent for RIM BlackBerry.

Smartphone penetration continues to climb, and so does our interest (and  activity) around gaming apps. In fact, Games, which have been the number one  application category on the Millennial platform for over a year, continue to grow.

Games generated 34 percent of impressions, up from 26 percent the previous quarter. Other app categories included Music & Entertainment, Mobile Social Networking, Communications and News, which saw impressions grow 36 percent quarter-over-quarter to account for roughly 25 percent of ad impressions in Q3.

Local gets a boost

Another highlight of the new Q3 S.M.A.R.T. is the focus on targeting methods and new results that show the use of local market targeting is on the rise.

Specifically, nearly half (45 percent) of advertisers used targeting to reach their audience. Of those 66 percent made use of location to connect with people in the correct context, representing a 50 percent quarter-over-quarter increase. The balance of targeted campaigns relied on behavioral and demographic factors.

Connect the dots, and brands are buying on a national scale but tailoring their ad campaigns to drive people to local bricks-and-mortar destinations (retail outlets, businesses, branch offices). This jives with the report finding that a significant number of post-click actions centered on encouraging people to complete purchases using their mobile devices.

Get ready for holiday shopping

Finally, the new report draws from consumer research conducted by InsightExpress to help brands map out where (and how) they can use mobile in the marketing mix. Specifically, InsightExpress’ Q3 2011 Digital Consumer Portrait found that 32 percent of consumers plan to use their mobile devices to help research products by comparison shopping, while 27 percent will use them to read reviews while in the store.

My take:

InsightExpress provides us yet another data point confirming that mobile shopping (and all the interactions leading up to the purchase) is bigger and poised to be ever bigger as we enter the first full week holiday shopping season today.

But that’s just one notable trend documented in this new S.M.A.R.T. We also learn that mobile represents a mega-opportunity for brands across all verticals. Technology, for example, grew a whopping 687 percent. Meantime, financial services sector moves up the list of Top 10 Advertising Verticals to place #1 in the U.S. and #4 internationally. This is significant and underlines the perfect fit between personal finance offers and advertising delivered to our fiercely personal mobile devices. Banks, insurance companies and credit card companies see a connection, which is why they are spending 356 percent more (for the period Q2 2010 to Q3 2011) to connect with us on out mobile phones. But the real news is what we can likely expect from this vertical moving forward. Clearly, mobile is emerging an ideal vehicle to do much more than raise awareness of products and generate leads. Therefore, expect companies across the Finance vertical to become progressively more creative in their use of the mobile channel to achieve their wider business objectives: drive customer retention, encourage cross-sell/up-sell and keep customers loyal.

Disclaimer: Analysis and best practice across the mobile advertising and marketing ecosystem is sponsored by Millennial Media, a MobileGroove client and supporter.

But there’s a catch. Marketers must develop solid advertising strategies that understand who their customers are, how they use their mobile devices and where campaigns can reach them at scale.

The is where a new series of mobile advertising reports, aptly titled the Mobile Intel Series, comes in, providing brands with strategic direction and a deep-dive into the numbers and trends that matter most. The series launched with a focus on retail (read my in-depth analysis here), and continues with a look at how automotive brands can best leverage mobile to maximize spend and results.

The resource draws from network data provided by independent mobile ad and data platform, Millennial Media (accumulated from data from campaigns executed in over 250 countries and territories in 2Q 2011), and consumer research conducted by mobile measurement firm comScore.

Getting mileage from mobile

Automotive brands were among the first to truly ‘get’ mobile, as evidenced by a string of ambitious and award-winning campaigns to increase brand awareness and encourage interaction with consumers pre-sale (test drives, dealer visits, app downloads) and post-purchase (inspection, maintenance, customer service).

Predictably, ad spending by companies in this vertical has been significant, consistently placing automotive among the Top 10 Global Mobile Ad Verticals on Millennial Media’s mobile platform for the past year.

Against this backdrop, the report finding that automotive mobile ad spending increased a whopping 236 percent from Q2 2010 to Q2 2011 (increasing from an already high level) can be read as a confirmation that a vertical explosion in mobile advertising spending and awareness is well underway.

Additionally, comScore’s own review of mobile campaigns reveals that automotive display advertising increased 169 percent year-over-year, with 33, 277 automotive companies advertising on mobile in 2010, up from 19,724 the previous year.

Who is the automotive audience?

The report defines the audience of people accessing automotive content on mobile devices (phones, smartphones, tablets) as mobile auto consumers, and notes the key characteristics they share (compared to the total audience of mobile users).

The vast majority of these mobile auto users (68 percent) are males between the ages of 18 and 34, but significantly, females make up 32 percent of the audience of mobile auto users.

Mobile auto users also tend to be more affluent than the general mobile population. Specifically, these consumers overindex in both the $75,000+ and $100,000+ annual income brackets. Clearly, a significant sub-segment of the mobile auto user population can be defined as a discerning audience primed for interaction with luxury car brands via their mobile devices.

But the real news is the frequency with which mobile auto users access automotive content on their devices—regular interaction that reveals a significant audience of auto enthusiasts and passionatas.

Specifically, 21 percent of auto users accessed automotive content on their phones on a daily basis. Almost half (48 percent) accessed automotive content one to three times per month.

Worldwide, the numbers are similar. Specifically, mobile users across U.S., Europe and Japan are generally in sync, with roughly one-third accessing automotive content on a weekly basis (U.S. – 31 percent, Europe – 31 percent, Japan – 24 percent).

The report breaks down precisely how users access the content (apps, browsers, text). Interestingly, mobile apps as an entry point to automotive content and advertising show significant growth (25 percent of total access, up from 20 percent in August 2010), a trend the report forecasts will pick up speed as smartphone penetration ramps up. Indeed, analysts are bullish, with Morgan Stanley reporting last month that smartphones have already surpassed feature phone shipments in the U.S. (as of Q1 2011) and Western Europe (as of Q2 2010).

The report also maps the ‘migration paths’ of mobile auto users as they make their way across the mobile Web. It reveals a wide variety of sites and destinations (news, weather, entertainment, and so on) where automotive advertising is likely to reach and influence potential car buyers and/or people in the market for maintenance (such as a reliable shop for an oil change or new winter tires).

As the report observes: Family-centric sites are a logical fit for brands promoting SUVs, minivans and vehicles with plenty of room and features for family members.

The message to brands here: Think outside the box — and see mobile the way your customers do. Don’t just offer people fries with their fries (automotive advertising on typically automotive focused sites, for example). Women, traditionally the finance managers of the family, consume a wide variety of content, so don’t limit sites and destinations to the usual suspects.

Brands in the fast lane

How are automotive brands harnessing mobile and what campaigns goals and tactics top the agenda?

A review of campaign goals shows that automotive brands heavily invested in mobile to promote new models, drive leads for remarketing efforts, encourage people to register for test drives and increase overall brand affinity.

Significantly, brand awareness is a prime focus in the automotive sector — and one that makes business sense in my book since a car purchase is not a daily, monthly or even annual occurrence. Indeed, in a sector where the end-game is about keeping customers loyal well after purchases are made (and during the time purchases are being considered), mobile is emerging as an ideal CRM tool. Little wonder that automotive brands lead the pack in providing their audience information, apps, games and a wide assortment of mobile branded utilities to stay top of mind with their target demographic.

This was no doubt the thinking behind a recent Hyundai campaign. The case study documented in the report recounted a campaign the company ran with Millennial Media to engage with affluent Blackberry users (the audience it identified for its Equus luxury sedan). To enhance brand awareness and provide these discerning consumers a helpful service (not just advertising), Hyundai launched the Hyundai Greetings app, an app that enabled these early adopter, social savvy consumers to create customized greeting cards with a variety of themes to share with friends and family via Facebook, Twitter and email.

What strategies are automotive brands using to reach their audience (and achieve their campaign objectives)? Local marketing targeting was deployed in the majority of campaigns (43 percent), followed by demographics (35 percent) and behavioral (22 percent). Local was particularly (and predictably) popular among major brands and Tier 1 OEMs who leveraged location to drive calls and test drives, location linked calls to action that directly benefitted local dealers and regional automotive associations.

The report also noted an increase in the number of re-marketing efforts, where advertisers run persistent campaigns to engage with users from previous campaigns.

My Take:

Where is the opportunity for automotive brands? This worthwhile report is chock-full of data to help marketers answer this key question. However, the report also identifies some big question brands need to address ASAP. Take the target demographic. It was quite surprising to learn that 32 percent of mobile auto users are female. That stat should inspire brands to develop campaigns and strategies that specifically address women. In other words, don’t limit yourself. Of course, it wouldn’t be the first time companies passed up a golden opportunity because the were blinded by sexual stereotypes. The early days of the mobile gaming market saw publishers compete to wow male users with fast action games, completely ignoring the casual gaming market in the process. What did it get them? Venturebeat tells us more than half of all mobile and mobile social gamers (53 percent) are women. Will the automotive industry repeat this mistake and focus on the male demographic first and foremost? It’s a tough one to call…

The report also documents a significant increase in the number of automotive brands embracing mobile, but I sense an even bigger opportunity in mobile for companies across the automotive ecosystem (and missing form comScore’s brand list). People generally own their car for 5.5 years. Clearly, mobile auto users are not in the market for a new car every day, but they are open to offers of products and services that keep their car in top shape (oil changes, inspections, brake adjustments), or just make driving fun (tuning kits, in-vehicle multimedia entertainment systems, personal navigation devices).

Clearly, mobile reaches and influences people pre- and post-purchase. But don’t just think mobile. Brands should map out wider strategies to integrate mobile into a cross-media campaigns that draw from a wide arsenal of channels and capabilities (apps, barcodes, outdoor advertising – the works) to engage people — and keep them coming back.

Disclaimer: Analysis and best practice across the mobile marketing ecosystem is sponsored by Millennial Media, a MobileGroove client and supporter.

Rory Sutherland,

There are no easy answers, but there are some questions that will help produce them. Ask yourself: “Would this [marketing/approach] annoy me?”. That’s a good start. “There are just basic rules of etiquette. You use different media judiciously and the ability to do that intelligently is one mark of a mature and intelligent service brand.”

In his inimitable style Rory drives his point home with examples that are much closer to home. “You wouldn’t stay friends very long with someone who rang you up at 3 in the morning.” Likewise, you would not be positive about or responsive to marketing that is interruptive or irrelevant.

Attractive incentives

Rory also remind us that mobile – more than any other medium — attention “must be earned rather than bought.” What will encourage people to let brands into their daily lives and routines?

Rory segments incentives into three groups: court jester (funny), courtier (useful) and courtesan (sexy — meaning just really cool). “Broadly speaking, those are the things that encourage users to engage with brands.”

However, marketers should not limit their efforts to getting the value exchange right to properly entice/reward individuals for their attention. “I think in mobile you can be more specific….The message can be specific to a small group of people [and] it could be a message that’s specific to a small moment.” (Rory is referring here to the timely, ‘placely’ nature of advertising that can/must be aligned with a target moment or mood that we discussed in this earlier interview.)

Where do we go from here?

Rory’s answer may surprise you. In his view, the next ten years in mobile will see the rate of change slow and (hopefully) provide the industry (marketers, in particular) with a “period of reflection rather than a kind of endless frenetic excitement about what’s next.”

What matters is what’s important.

Rory tells us to “go all the way back to the value question” and the core of what mobile does best.

“Does mobile provide us with a way of serving people who are unaffordable to serve conventionally? Does mobile enable us to serve our existing customers better and to make them more loyal? Does mobile enable us to actually automate some interaction which will thereby improve the value exchange for both parties? What you’ll find is that mobile, for most businesses, will provide them with [ways] they can actually enhance the value they give their customers.”

My take:

The last sentence sums it up best. Mobile can enhance the value exchange. But let’s not only focus on marketing. The excitement (and opportunity) is around enhanced customer service and mobile relationship marketing (a term you’ll be hearing a lot more of!) Mobile Relationship Marketing (MRM) is everything it takes for companies everywhere and in every vertical to ensure continuous customer touch and interaction, sustained support and service, closer and more dependent connectivity, as well as greater insight and intimacy. Mobile elevates the ability of brands and marketers to do just that. No matter what the objectives are (promote products, gather feedback, reward us for purchases) mobile has earned its place at the table. As companies harness mobile to create more direct relationships with their customers, expect a heightened interest in the rules of engagement and the merits of asking people their permission and preferences.

Listen to the podcast with Rory Sutherland here. [16:52]

Editor’s note: Thanks for your positive feedback and my personal thanks to Rory Sutherland for the interview, and to Denise Birch for arranging it. Paul Skeldon, who assisted in podcast production, runs Videobaby Media – a one-stop-shop for high-quality, entry-level video and audio recording, editing and production for media companies looking to get a foot on the multimedia ladder. MobileGroove theme music courtesy of  Dan-O, who offers an awesome selection of free royalty free music for production purposes.

Related reading:

Ogilvy’s Rory Sutherland: Mobile Marketing Should Target Moments, Moods
Rory Sutherland: Best Use Of Mobile Is Customer Service & Feedback

Disclaimer: News and views across the mobile marketing ecosystem is sponsored by Optism, an MG client and supporter.

Fighting smart

By way of background, the first report (Fighting Smart: Using Value-Added Services To Create Lasting Customer Loyalty) — based on a survey of 120 telecom executives at major mobile operators across Asia Pacific – zeroed in on the real value in Value-Added Services (VAS) including mobile marketing, mobile payments and personalized services

The survey asked tough questions centered on how mobile operators plan to meet and beat competition from Web giants, rival providers and banks/credit card companies.

And it got some surprising answers.

The survey found that the majority of respondents (62 percent) believe a VAS strategy is critical to their business. However,  the survey also revealed that revenue generation was not the top motivation for developing and delivering VAS to mobile subscribers. The end-game is about increasing customer loyalty.

Interestingly, mobile operators in Asia Pacific are not just bullish about VAS. They are well equipped to fend off middlemen in mobile payments and commerce, with 95 percent of respondents claiming to have an advanced mobile payments strategy. Connect the dots, and operators across the region are confident they will by enabling billing on behalf of third parties including app stores and providers of virtual goods.

(For more detail, check out this earlier post on MobileGroove and download the white paper here. )

Hot topics discussed

Fighting Smart was also the topic of a recent Tweetchat  — organized by Amdocs Interactive and hosted by MobileGroove — that saw strong participation from professionals, practitioners, and edgy industry watchers (for example, @Ew4n @stephen_oman and @MyIntersperse).

Belated thanks to participants across North America including @AJWright for getting up/staying up @ 9 am GMT/ 10 am CET/ 1:30 pm IST to join in! Thanks also to @MsMobileConverg (Nora Goodman), who did a great job spreading the word. You can find out more about Nora via our new, bi-weekly #FollowFriday series profiling people with impact and insights.

The Tweetchat discussion centered on three key questions:

Q1. For operators, what’s the real business driver for value-added services?

The takeaway: You’d think new revenues would be the main answer, but (as @matt6156 pointed out in his tweets) mobile operators in Asia Pacific, where most users are pre-paid and consumers have up to five SIM cards, fighting churn is top of mind. In fact, new revenues was in third place behind customer experience and stickiness. However, @Ew4n was skeptical about the interest of European mobile operators to fight churn with better customer experiences. As he put it: The sharp focus on voice/data doesn’t count as innovation. In his view, a good first step would be one number that reaches every single device I own, or GoogleVoice integration. Instead, @Ewan complained: “Most operators I see on a day-to-day basis in Europe are doing the business equivalent of head-in-the-sand.” Meantime, @yevindra and @viragthakkar directed participants’ to discuss what can drive VAS for mobile operators when third-party apps are the crowd-pleasers. Where is the money? @viragthakkar argues “they [operators] will get revenue from data plans. In fact it’s better – they don’t need to invest in apps.” Another sure bet is APIs and @BlueVia got high marks for a strategy that helps developers — and boosts their own business in the process.

Q2. Will operators succeed where banks haven’t, making mobile payments succeed?

The takeaway: The survey reports that less than half (4 percent) of operators believed they are heading for a conflict with banks. Instead they see opportunities in serving the under-banked in countries like Indonesia. As @VikasChanani pointed out: “Bringing financial services to the underbanked is one of the major drivers of mobile payment services in India,” as well as other emerging economies. The lack of a competing infrastructure (point of sales – POS systems and credit cards) also allows mobile operators in Asia to own the value chain and play a major role in commerce/transactions. @AJWright, @Ew4n and @stephan_oman debated if mobile operators might not simply set up a special short code (‘PAY <am> <phone no>) for person-to-person transactions. This approach (similar to Anam) would effectively bypass the need for a POS reader and widespread acceptance of NFC (near-field communications).

Q3. Will operator portals matter a couple of years from now?

Overall, mobile operators are confident their portals will grow in importance over the next three years. The situation in the West is very different with many participants pointing out that portals in Europe are becoming irrelevant. @TheCommCouch complained that portals are also not personalized, a shortcoming that @AJWright argued paved the way for recommendation engines (Amazon). “Carriers [are] missing the point of portals otherwise.”

You can check out the complete exchange here.

New results preview

The Tweetchat discussion stressed the vast differences between mobile operators in APAC and the rest of the world when it comes to mobile payments and confidence in the competitive advantage VAS can deliver.

This prompted Amdocs to partner with Coleman Parks to conduct another survey around global mobile payments market trends. This time the research firm interviewed 85 telecom executives in 11 countries (U.S., Canada, Argentina, Brazil, Mexico, France, Germany, Italy, Poland, Russian Spain and the U.K.).

These new findings combine responses from the APAC survey to produce a truly global view of VAS.

Among the key findings:

The majority of operators have an active, defined strategy towards mobile payments. Asian operators have the hands-down lead with 95 percent of respondents saying they have a strategy in place (Latin American 67 percent, North America 61 percent and Europe 57 percent).

App store billing was the most popular segment on average, ranking #1 in all regions but Caribbean and Latin America Region (CALA). Bill payment was #2 on average, ranking #1 in CALA, #2 in North America (NA) and tied for #3 in the EU.  Pre-paid top-ups ranked #3, #2 in APAC and CALA, and #3 in NA and the EU.

But when asked to choose one, pre-paid top-ups ranked #1 on average, followed by bill payment, app store billing and money transfer.  Prepaid top-ups dominated APAC, app billing in the EU, bill payment in CALA, and app billing store billing and bill payment tied in NA.

Operators outside of APAC expect their share of mobile payments revenues to grow to one-third from about 25 percent today.  CALA and the EU expect 13 percent more, and NA only 4 percent.  In APAC, operators expect anywhere from 6 percent of merchandise purchases on the low-end to 15 percent of app store billing on the high.

Operators still believe they will be competitive against the banks and credit card companies. On average only 43 percent of operators believe they’re heading into conflict with banks.  NA was 35 percent on the low-end, APAC 42 percent, CALA 47 percent and EU 50 percent on the high.

Meantime, Matt does the math in a new post to highlight high-level trends across the two surveys.

My take:

Overall, the vast majority of mobile operators are convinced that mobile payments are the next big thing. While some (particularly in EU and NA) worry that traditional banks present a competitive threat, operators are also confident that the marketplace can support both parties (in peaceful co-existence). And no concern if companies and banks pair off (like Apple did when it went with credit card companies to purposely bypass the operator). Operators are prepared to cooperate in order to create mobile payments standards/services that will compete directly with initiatives from the banks and credit card companies.

Editor’s note: Watch this space for a new white paper (written and produced by MobileGroove) that provides a global view of how mobile operators see the role of VAS in their strategies around payments, advertising and personalization. To keep the conversation going we will host another #doxchat Tweetchat to discuss/debate key findings. Thanks again to everyone for joining in the last Tweetchat. Time really flew by! We have since reviewed your feedback and are looking into ways to move the discussion to a separate, dedicated chat room so we can all continue long after the hour is up.

Disclaimer: Amdocs Interactive is an MG client and supporter.

Rory Sutherland,

As Rory sees it: the proper way to measure the importance (and effectiveness) of mobile in the marketing mix is not to look at spend. The cost of developing a brilliant text-based mobile marketing campaign may be minimal, but the impact can be tremendous.

Sure, marketers should look at numbers — but the numbers that matter are the results. To drive the point home, Rory walks us through several scenarios and break-through campaigns.

A prime example Rory offers is BMW’s brilliant use of text (and picture messaging) to connect with car owners and inquire if they would like to purchase snow tires — at precisely the moment it started to snow. The campaign, which stands as a textbook example of what simple text messaging can achieve, turned approximately $60,000 spent on advertising into $45 million in revenue. In Rory’s view, the brand broke new ground with a campaign that was “timely, ‘placely’ and climatically targeted.”

In short, marketing success is not a measure of the budget you throw at it. “I think there is a terribly dangerous tendency to assume that a piece of marketing activity has an importance that is somehow  correlated to the amount of money spent on it.”

Human touch

Rory admires all approaches that do what marketing should: “produce a human reaction which leads to some form of behavior change.” On mobile – a fiercely personal device that also enables the delivery of contextual advertising –the human touch (not the technology) is key.

“We should forget that the purpose of advertising is not to produce pretty pictures, or moving images, or nice music,” Rory explains. “Those are the means. They’re not an end.”

Moreover, the fundamental objective of advertising delivered may be very different than we first assumed.

Granted marketers can promote products and increase brand awareness. But the real power of mobile may be wrapped up in all the ways it can be used to enhance customer service.

Rory offers us several entertaining examples of how (and why) mobile is central to conversations between people and businesses.

With mobile we can have real and valuable conversations with the companies we interact with. From coffee shops to hotels, the ability to interact with establishments (and their ability — even duty — to listen) enhances and improves the overall experience.

“The most intelligent use of [mobile] is closer to customer service than it is to advertising….And you don’t need a media [marketing] budget to provide good customer service, you simply do it.”

Rules of engagement

Mobile has clearly transformed the way we communicate with brands. Add social to the mix and the rules change completely.

In Rory’s view, we should not be surprised if our comments on Twitter and other information we willingly volunteer about ourselves triggers a brand response.

Rory offers uses the example of a recent stay at a quaint and charming hotel on the island of Madeira. Rory tweeted that he had arrived and the hotel ‘answered’ back to welcome him and make him aware of an event taking place. That ‘conversation’ was not opt-in, but it was a “timely, placely and relevant.”

What’s more it was “triggered” by Rory’s own actions. “If I don’t want to engage in a conversation, then I shouldn’t really be gabbing on [on Twitter] about the fact that I am visiting the hotel.”

Clearly, not all contact (and advertising) must be “consumer-instigated”, but brands must be aware of the requirement for permission and preferences.

Mobile is a real-time communications channel — and should not be abused. “It’s a channel where intrusion is actually worse — and more annoying and more disruptive -than it is in other places where advertising affects you.”

My take:

Again, an interview you shouldn’t miss. What is the state of mobile spend? We need to rethink the question. The approach may be off the mark since mobile campaigns – particularly text campaigns – might not eat up a lot of budget, but they can certainly deliver impressive results. And don’t just think advertising. Mobile can also be used to drive loyalty and improve customer relationship management.

Listen to the podcast with Rory Sutherland here. [16:52]

Next week: The series concludes with a look at what motivates people to accept marketing in the first place and what is next for the industry.

Related reading:

Ogilvy’s Rory Sutherland: Mobile Marketing Should Target Moments, Moods

Disclaimer: News and views across the mobile marketing ecosystem is sponsored by Optism, an MG client and supporter.

As Rory sees it: The real power of mobile is context. It allows brands to interact with people during  target moments (I need something now), target moods (I want something now) and target mindsets (I am considering a purchase, for example). Another reason brands need to focus on this: Google can’t.

Google may have sewn up the market when it comes to influencing our decisions when forward planning is concerned, but mobile is about immediacy.

Marketing is just the start

Rory’s message to brands: Address your audience correctly and in the correct context, and you can clinch a sale, build customer loyalty, offer enhanced services — and much more. “Communicate to people in way that is timely, but also ‘placely.’ “

But mobile doesn’t just allow brands to engage with people.

It also opens up entirely new business models, allowing companies to apply the principles of yield management to products and services we are just beginning to imagine.

Case in point: travel.

A railway company that wants to encourage people not to travel during the rush hour on a specific day might use mobile to offer people a significant discount or refund of the journey cost, if they choose a less busy time of the day to travel. Similarly, the same company could impose an extra charge, applicable to those people who insist traveling during the rush hour.

Put simply, businesses can harness mobile to “create interventions at decisive moments.” With this comes the lucrative opportunity to “actually modify behavior in real-time as it happens.”

Interview with Ogilvy’s Rory Sutherland

What is the impact of timely and ‘placely’ on mobile marketing strategies and approaches? Who are the big spenders? And why might it all be very different in mobile than any other medium?

Rory deep dives into the pivotal importance of the ‘moment’ in mobile and gives his take on the companies (verticals) that truly get mobile. Two groups of companies stand out: companies that serve people on the go, and people that serve the “time-poor and the time-pressured.”

My take:

An insightful and funny interview — and well work a listen. Rory is, of course, an expert ad man, but he is also the original advocate of Ogilvy’s 360 Degree Branding approach, which is all about focusing the optimum combination of disciplines on the brand and its needs, avoiding any bias towards a particular channel. Interestingly, Rory points out that mobile’s USP is context. It allows brands to deliver marketing that is timely, ‘placely’ — and therefore relevant to us. Smart brands that harness mobile can take advantage of opportunities linked to their business’ target moments, moods and mindsets. Engage with people at this decisive moment and the outcome is likely to be positive. The circle is likely to be even more virtuous if marketers ask people permission first, and then use this permission to inquire about preferences and ultimately deliver marketing people will genuinely appreciate.

Listen to the podcast here. [12:20]

Editor’s note: Check back for Part 2 in the three-part series next week. My personal thanks to Rory Sutherland for the interview, and to Denise Birch for arranging it. Thanks also to Paul Skeldon, who assisted in podcast production. Paul runs Videobaby Media – a one-stop-shop for high-quality, entry-level video and audio recording, editing and production for media companies looking to get a foot on the multimedia ladder.

MobileGroove theme music courtesy of the inimitable Dan-O, who offers an awesome selection of free royalty free music for production purposes.

Disclaimer: News and views across the mobile marketing ecosystem is sponsored by Optism, an MG client and supporter.

How have mobile advertising campaigns, objectives and spending evolved since Millennial Media published its first report in March 2009? We go to the source for the answers.

But first, a little background on methodology. These reports are based on actual campaign and network data from Millennial Media. The most recent report provides us insights based on data that was accumulated across 67 billion mobile impressions in 250 countries and territories. For some reports (such as the Mobile Intel report on mobile retail I analyzed here) Millennial Media has married its factual network data with consumer insights from research firm comScore. (Editor’s note: Millennial has four more Mobile Intel reports in various stages of development in the pipeline looking at verticals including Automotive, so watch this space.)

Vertical explosion

As more industry verticals embark on mobile campaigns and marketers shift their focus from one-off experiments to ongoing execution, mobile advertising (and spending) is entering a new phase of growth.

Aptly titled “Vertical Explosion,” the December 2010 SMART (Scorecard for Mobile Advertising Reach and Targeting) report from Millennial Media was the first to confirm and quantify this mega-trend.

The most recent SMART report (2Q2011) released just this week reveals that the vertical explosion is at full force. Specifically, six verticals experienced triple-digit growth or greater year-over-year.

Who are the Big Spenders?

Interestingly, the financial sector has moved out of the test phase and is making a significant investment in mobile.

Overall, the Finance vertical placed number 3 in the Top 10 U.S. Advertising Verticals and number 5 in the Top 10 International Advertising Verticals.

But the real story is the phenomenal percentage growth in ad spend (and Millennial Media assures me this is not from a low level). Specifically, spending from financial brands and institutions increased 1095 percent year-over-year.

In Q2, insurance brands heavily utilized mobile for generating leads, while banking and credit advertisers ran campaigns to raise the awareness of their products and services.

Meantime, other verticals upped activities, leveraging mobile to create awareness of brand, promotional offers and drive app downloads. Among these are Travel, which moved up on both the U.S. and International Top 10 lists, and Retail & Restaurants, which grew 956 percent year-over-year to keep the number one spot on the Top 10 U.S. Advertising Vertical ranking. The vertical also moved to the number eight position on the Top 10 International Advertising Verticals.

Local matters

Another key trend that came across in the recent report is the aggressive push by brands and marketers to use local market targeting to deliver location-linked (and therefore actionable) advertising. A major objective of these campaigns: increase awareness of local campaigns and drive customers to brick and mortar business locations and outlets.

In the SMART Q2 report we learn that the number of advertisers using targeted audience reach methods (specifically demographics and location) now represents almost half (45 percent) of the total.

This is very different from the way marketers leveraged mobile two years ago. The 50th report from Millennial Media connects the dots to confirm that brands are not just running mobile campaigns; they are leveraging the unique capabilities of mobile to deliver us offers we can appreciate because they are relevant to our daily routines and location.

Specifically, usage of Demographic Audience and Local market Audience targeting has grown from 1 percent to 20 percent.

Our mobile day and activity

Clearly, location-linked campaigns are driving results. But brands and marketers should also think about ‘timeliness’. If you thought that mobile is what we reach for when we are on the go, then think again.

Mobile is increasingly an integral part of our daily routine. Consumer research from InsightExpress and married with Millennial Media data gives a new view into our ‘mobile day’, which starts at 5 am EST (a time when people in both the U.S: and Europe are ramping up for the day’s activities).

Millennial Media has identified three categories of behavior:

• Mobile mornings (5am – 12amEST): This period is characterized by above average network spikes in content such as weather, traffic, local news, health, fitness and productivity.
• Mobile workday (9am – 7pmEST): Network traffic is ramping up as time zones come online and get down to business. During this time the content we access (and the advertising we will see) is associated with verticals including: travel & lifestyle, shopping & retail, business & finance, e-books & reference.
• Mobile prime time (7pm – 12 pmEST): We are winding down after a busy day and network traffic shows a shift to social interaction and content, and entertainment.

This dovetails with InsightExpress’ recent digital consumer portrait study. It confirms my hunch that mobile is indeed (and quite literally) becoming the remote control of our lives (to borrow a phrase here from my esteemed friend and colleague Alan Moore).

InsightExpress reveals that about 40 percent of the time we spend on our mobile devices is in the home. Combine that observation with Millennial Media’s breakdown of our mobile day and it’s clear that mobile is replacing some channels. But the opportunity is in advertising that harnesses mobile to amplify these channels. Think about the fit between mobile and TV (for voting, shopping and checking trivia, research, etc) and you can see where this is going.

Campaign actions & video

So what happens after the click? Brands are becoming more sophisticated in their choice of post-click calls to action– and the way they engage with customers.  In fact, this 50th report shows significant growth in the number of campaigns aimed at driving app downloads (up 667 percent), from a mere 3 percent to 23 percent.

Other campaign actions include:

• Visit site (up 247 percent)
• Place call (from just 1 percent to 37 percent as more verticals grasp the mobile opportunity to generate leads)
• Watch video (up 200 percent)

It seems the more things change, the more they stay the same. Mobile video advertising — an advertising format packed with interactive elements that goes one better than the TV commercials to encourage real engagement — is familiar to us — and catching on. In Q2 alone the number of customers that selected an interactive element on Millennial Media’s video ads doubled. Moreover, more customers purposely selected the replay button (2x more than any other button, by the way). No doubt these numbers will continue to grow as smartphone penetration increases and more people share what they like. Think of all the cool spots that went viral via YouTube and you can see where this is going.

4 Qs for Erin (Mack) McKelvey

Millennial Media (@MillennialMedia) is my source for a regular dose of stats and developments. However, within Millennial Media it’s Mack McKelvey, SVP, Marketing, who stands out for her ‘coverage’ of mobile industry events, insightful comments and dry wit. I caught up with Mack to delve into the data and distill the key trends.

You can follow Mack and her invaluable observations on Twitter (@mackmckelvey).

MG: 50 massive mobile reports documenting what Millennial has been seeing since March 2009. Wow! Tell me a little bit about your reports and help me navigate this huge stock of data.

Mack: Sure. Although we’ve produced numerous special reports like, “State of Apps Industry Snapshot” and “State of Mobile Advertising”,  we have three core reports: SMART, Mobile Mix: The Device Index and the Mobile Intel Series.

SMART was the first report we released and it has been tremendously well received by the advertising community, including brand marketers, agencies and the media. SMART looks at data like the top advertiser campaign goals, trends in mobile targeting, post-click actions, and deep dives into various mobile ad verticals.

Mobile Mix is aimed more at publishers, developers and mobile trend watchers: It primarily reports on key trends in mobile devices, mobile operating systems, mobile manufacturers and connected devices, like the iPad or Sony PSP.

Finally—our Mobile Intel series is an initiative we have launched in partnership with comScore.  Based on comScore’s observations — and married with our own network data and client campaigns — we produce deep vertical guides designed to help advertisers navigate the space.

MG: Let’s focus in on the 50th report. What stat and/or trend has surprised you the most, and what are the overall implications for brands/marketers?

Mack: Because this was our 50^th report, we decided to go back and look at how mobile has evolved since our first report back in March 2009. Rather than call out one stat, I’d say the trend that stood out the most was just how much more sophisticated mobile advertising has become in the past few years.

For example, we saw that in Q2 of 2011, 37 percent of campaigns gave consumers the option to “Click-to-Call.” Back in Q1 of 2009, only 1 percent of campaigns did this. This is a fascinating stat, because it shows that marketers are taking an action that is completely unique to mobile marketing, and finding ways to implement it into their campaigns.

Another great example is the rise in local market targeting. In our first S.M.A.R.T. report, under 2 percent of campaigns used local market targeting. Today, that number is up to 20 percent. Mobile has become a great channel for advertisers to reach local consumers, and advertisers are certainly reacting accordingly.

MG: You mentioned during your last webinar that we are finally past ‘Mobile 101′. Can you give some examples of how mobile has evolved?”

One of the easiest ways to see the evolution of mobile is by looking at all the different ways advertisers are executing campaigns. In terms of targeting, campaign goals and post-click actions the variety we see in the campaigns on our network is huge. This shows that advertisers are building specific campaigns to uniquely hit their objectives.

Additionally, the device landscape has changed dramatically. Connected devices like tablets and MP3 players make up 17 percent of all the impressions on our network, and advertisers are using these devices to add new levels of depth to their campaigns.

MG: Who are the biggest adopters of mobile advertising today, and how might this change in the next 12 months? Are there verticals that are more active in mobile than others?

Mack: We believe that we are actually past the “adoption” stage, and mobile is becoming a required component of campaigns for nearly every vertical. We actually saw six different verticals experience triple digit growth year-over-year, including the finance vertical, which grew over 1000 percent. In the next 12 months, we expect advertisers from all verticals to continue to find creative ways to leverage mobile for their particular industry.

Editor’s note: Millennial Media doesn’t just draw from campaign data. It also posts campaign examples that show how brands are leveraging mobile. The company frequently updates the campaign summary page on the Millennial website. http://www.millennialmedia.com/research/campaign-summaries/ .And you can check out video demos of campaigns on YouTube page at http://www.youtube.com/user/millennialmediavideo

If you would like to be considered for this series (or suggest someone you admire), then reach out to me directly (@peggyanne). Next is the series: David Berkowitz talks mocial and social commerce.

Disclaimer: Millennial Media is a friend and supporter of MobileGroove.

To participate, we recommend using tweetchat.com. Just sign in with your Twitter account at the start of the chat and enter ‘doxchat’. Tweets load quickly, and it will automatically include the hashtag in each of your tweets. You can also participate on your own choice of Twitter app, just make sure to include the #doxchat hashtag in your tweets so that others in the chat will see your tweets.

Check here to see the time zone in your region, and please spread the word!

Questions we’ll discuss during the chat include:

• Q1. For operators, what’s the real business driver for value-added services?
• Q2. Will operators succeed where banks haven’t, making mobile payments succeed?
• Q3. Will operator portals matter a couple of years from now?

So please come join us on the 10th. If you have questions, or if you want us to send you a reminder, just drop us a line at @mobilegroove or @AmdocsInc, or leave a comment below.

In the meantime, I encourage you to download the new report and share your feedback.

* * *

With over one billion people and a voracious appetite for mobile content and information of all kinds, Africa is more than a market poised for explosive growth in mobile marketing and communications. It is also a sandbox for innovation and approaches that get amazing mileage out of ordinary feature phones and simple text messaging.

Currently, countries including South Africa, Ghana, Gabon and Kenya count nearly as many SIM cards as people, and the rest of Africa is catching up. Analysts reckon this rapid penetration paves the way for every single person in Africa to own a mobile device by 2020. Granted, the vast majority of people own low-end phones, but figures show that browser use is also creeping up as more people purchase high-end phones to explore and experience the mobile Internet.

Notably, Android handsets are gaining traction as smartphone prices come down. Safaricom in Kenya, for example, has introduced a sub-$100 Android phone that has also become their best-selling phone, beating out even more basic handsets. The trend is expected to continue since Asian handset manufacturers — specifically Chinese brands — are gaining on more established players like Nokia, and driving handset innovation in the region.

As a result, campaigns are designed to appeal to two distinct audiences: mobile websites for people with Internet-capable phones and text messaging via both SMS and USSD for everyone else. USSD (Unstructured Supplementary Service Data), a cousin of text messaging, is a technology used by the network to send information (usually text menus) between a mobile phone and an application on the network. USSD allows users to request information in short codes (starting with * and ending with #), or menus from the network during the session, making it an way for mobile operators (and increasingly brands) to engage in a two-way exchange with users — without latency or any additional charge to the consumer.

“There is very little MMS use,” Jonathan observes. “There is an enormous population of people relying on SMS and a growing number of people surfing the Net using their mobile phones because that is the primary access to the Internet.”

How are brands responding? According to Jonathan, they harness SMS to deliver most marketing messages and they bypass the [desktop] Internet wherever possible. “We are seeing brands completely and exclusively focus on mobi sites now, rather than on having Internet websites, because mobile is where the users are.”

Local mobile etiquette

After working on dozens of mobile campaigns across the African continent, Jonathan and his team have learned first-hand what works and what fails in local markets.

And local is the word to remember here since adapting mobile marketing campaigns to the local language is key to success. “South Africa has 11 official languages. Nigeria has 200 languages, and not even a fraction of them are official,” Jonathan explains. “There needs to be some sensitivity in this area because when consumers are dealing with brands, they don’t like to feel that brands are an outsider entity that doesn’t live in their market or know their language.” It’s important for brands to “be careful that their tone is appropriate.”

In addition, brands have to be straightforward in their communications, laying out the terms and conditions of contests and campaigns and making sure the offer is understandable and transparent. In this environment, Jonathan stresses, opt-in is the only mobile marketing approach that works — both practically and ethically.

Accessible, affordable & relevant

Africa is also a price-sensitive market where brands must be careful not to waste people’s time or money. “The focus on any marketing effort or any mobile service project in Africa has to be to make the cost to the end-consumer as low as possible.”

For advertisers this means finding effective ways to engage people, a requirement that plays in favor of SMS.

But it’s not just cost. Text messaging allows brands to get real scale. “Scale has always been the problem in Africa, and scale is what mobile is really helping us to do,” Jonathan observes. “Achieving scale is what mobile devices are helping us to actually do for the first time.” With incredibly low TV penetration, a fractured radio audience and logistical challenges which hamper the distribution of outdoor and point of sales (POS) material, mobile phones are quickly becoming the most widespread and universal media in Africa.

Campaigns also need to be simple and straightforward, a requirement that presents marketers with significant “UX challenges.” For one, navigation has to be simple, uncluttered and intuitive. Brands also have to explain why people should interact with the ad in the first place.

“Asking someone to click to go to another page is a big ask for an African consumer because any new data they load costs them money, money that they’re not really going to be willing to pay without some idea of what’s being offered.” For this reason, Praekelt is careful to be clear about each interaction. “Marketers need to be very clear in their links… and we often accompany the links with blurbs to clarify exactly what would be gained from clicking from one page to another,” Jonathan explains. “You also need to design things in a way to keep the data load of every single page as low as possible.”

Finally, brands must keep their word — and show it. This means showcasing the winners of a competition, for example, or providing immediate feedback. Creating credibility is the issue. “African consumers don’t take anything for granted,” Jonathan points out. “Despite their propensity to engage, despite their enthusiasm, they’re not fools by any means, so we have to be very clear at every stage of our campaigns what we’re doing.”

Creating (and keeping) brand affinity

Africa, like many developing markets, is plagued by spam, a situation that has opened the door wide to permission based marketing approaches. “We observe that African consumers are far more likely to opt-in, which is why opt-in rates for campaigns tend to be much higher.” Depending on the brand, Jonathan reports, campaigns are “seeing opt-ins as high as 87 percent.”

African consumers are also far more likely to engage with digital content, and that includes content offered as part of a mobile marketing campaign. “Overall we see much higher stickiness in Africa than we do elsewhere.”

But Africa is also a market with its share of challenges.

Natural disasters and other events can upset distribution channels for weeks and months, creating shortages of product and making it tough for brands to keep customers loyal. In some cases, a factory or brewery will not be able to generate enough product to get into market, which means a region may not have stock of your product for weeks. When that’s the case, Jonathan says, conversational marketing is a must.

This exchange can start off with a free sample (a reward connected with a text campaign linked to product displays, for example) or other approaches that reach out to the consumer and ask permission before engaging. “The opt-in, incentivized by a reward like a free sample, starts the conversation, Jonathan says. “The challenge for every marketer after that point is to create enough brand affinity through a dialog to convince consumers over mobile to choose your product, even if it isn’t always available.”

Educating consumers

Mobile doesn’t only help brands stay top of mind; it also allows them to deliver vital information in spurts people can understand and appreciate.

A prime example is Unilever, a consumer brand that is working with Praekelt to communicate the health benefits of its hand wash products. In South Africa infant diarrhoea is the number one cause of infant mortality,  and the number one cause of infant diarrhoea is poor hygiene on the part of the people who were caring for these infants. Against this backdrop, Unilever aims to deliver much more than mere advertising. “The campaign for the product will make a kind of educational, low-cost information resource available to mothers and care givers,” Jonathan says.

At the other end of the spectrum, brands are increasingly harnessing an ongoing and educational approach (delivered primarily via text messages) to explain their product benefits to people who may have never used them before.

Praekelt is currently working with a client to launch an antiperspirant deodorant in Kenya.  The focus of the mobile media campaign is to educate consumers about the product, Jonathan explains. “Part of this is educating consumers as to why they should be interested in antiperspirants at all because most Kenyan women are satisfied with bathing and/or using perfume.” To ensure the product introduction covers all the bases Praekelt is making use of a wide variety of mobile interactions. These include directing people to mobi sites and asking them send a message to a short code number on pack and at the point of sale.

Sustainable and ongoing

Regardless of what the brand wants to achieve, Jonathan is convinced the campaign has to be relevant and ongoing. “With every single campaign, we are looking to attract consumers, to involve them and then to sustain an ongoing relationship with them,” Jonathan says.

Take a campaign where consumers are asked to text in a unique code found under the cap of their bottle of Guinness beer, for example.

“That’s only the first stage in the relationship, and that’s the opt-in that we require in that case. Once that interaction starts, there is immediately a push back with some mobile content that the consumer might enjoy, such as ringtones, wallpapers, fun facts, trivia, and so on. With every new interaction the brand builds up a picture of that consumer and they get to know what they are interested in, what they like, how old they are, and where they live.” At the end of a series of interactions the foundation is laid for a “more long-term relationship.”

Participation marketing & more

Where is the growth (and excitement) in the African market? Jonathan has a close watch on the opportunities at the intersection of conversational marketing and sampling.

In practice mobile marketing campaigns – delivered via text messaging or through  interaction with a physical store display – would encourage consumers to engage in more than an ongoing conversation; they would reward consumers with unique codes (delivered to their phones) that could be redeemed for sample products at pre-defined outlets.

The eagerness of people to connect with brands doesn’t only pave the way for more “participatory” approaches to mobile marketing. Jonathan expects this appetite for experiences will also impact the nature of the mobile Internet.  “It [the mobile Internet] will not be an Internet like we know it elsewhere because people [in Africa] will be far more engaged with the services available to them. They will have interactions with brands that we wouldn’t have in the developed world because consumers there crave these experiences.”

What does Jonathan see moving forward?

“I think you’re going to see a massive wave of participation-led mobile campaigns in Africa over the next two years.” One driver will be the people — an the other will be a change in mindset. The hold-up has been that brands and agencies don’t understand the spend and effort that is required to support a mobile campaign. “They may think that they just have to slap a URL or  a Facebook icon on to the ad or billboard. But by far the most cost effective and efficient way to approach mobile advertising is to engage through the mobile media itself, which means messaging – either alone or in combination with mobile banners or material at the point of purchase.”

My take:

Clearly, Africa is a market posed for explosive growth. But it’s not just the numbers that make this region a must for brands. It’s also the interest (passion) of people there to communicate with companies not once — but many times — on their mobile phones. Thus, as Jonathan points out, Africa will likely see a wave of participation marketing where users (eager to engage with brands on their phones) expect (even demand) frequent interactions with brands — conversations that are frank, relevant and permission-based.

Editor’s note: It is always a delight to connect with Jonathan, who is an authority on mobile marketing in developed markets. I am pleased to report that Jonathan will also be back on MobileGroove for a series of in-depth articles and podcasts looking at mobile marketing case studies and use cases in Africa. So watch this space!

Disclaimer: News and views across the mobile marketing ecosystem is sponsored by Optism, an MG client and supporter.

* * *

The tidal wave of interest and activity around the deal-of-the-day model popularized by voucher vendors like Groupon and LivingSocial would indicate a business model built around delivering people good bargains is a great idea.

And it would be – if we would turn the model on its head.

Groupon, Living Social and the many clones springing up around the world are following a push model in world where pull has become the rule. To borrow a page from the landmark book aptly titled The Power of Pull (written by John Hagel III, John Seely Brown and Lang Davidson): Pull puts each of us, individually and together, in the position to find and access people and resources when we need them.

What does Groupon and the others actually do? They make it possible for local businesses to pitch heavily discounted deals to customers. The result: daily emails on our PCs or smartphones that are supposedly a great match. Not quite.

Take my own personal experience. It started out with a friend, who knew I was interested in yoga, forwarding me a Groupon offer he got for a discounted lesson at a yoga center near to where I live. So far, so good.

Then I got a flood of emails for discount offers that range from irrelevant to outright ridiculous. Ballroom dancing lessons a’la Fred Astaire? Fail – full-stop! Discount on wall murals (advertised as the opportunity to have a renaissance painting of peasants)?  Doesn’t match my contemporary interior design and shows once more that the service knows nothing about me.

Hmmm. And don’t we generally regard offers that have nothing to with our profiles or our preferences as spam? Yes, we do. I personally am annoyed and now dismiss most of these deals as spam.

Out of control

Unfortunately, Groupon and other daily deals appear to have a push mindset, a model that will most likely backfire once people realize they have little control. Sure, the service asks a few vague questions about our interests and our zip code (in order to deliver somewhat relevant deals), but the service doesn’t enable us to take an active role in deciding the offers we get.

There is no feedback loop or mechanism that allows us to say ‘more offers like this, please’ or ‘definitely strike me from this category altogether.’ The service simply pumps out and pushes emails to us, and we are in no way empowered to direct it so we receive truly relevant discount offers we would genuinely appreciate.

Put simply, there is no element of pull. There is no customer engagement and we have no voice.

This is a fatal flaw in the Groupon model, and one that swings the door wide open to companies pursuing business models that understand — and have harnessed — the power of pull to engage with consumers.

Serious shortcomings

But before I examine the ways the Groupon model could work for companies (particularly mobile operators), I think it’s important to examine how (and why) the current push approach falls short from the perspective of both the consumer and the merchant.

People aren’t programmed: In addition to the fact that deal-a-day emails now resemble spam, these offers condition consumers to want only discounts when what we really want is offers that are relevant and useful to us as individuals. Yes, there will always be a few bargain hunters among us who make a sport out of pinching pennies, but this minority is hardly representative of the vast majority of consumers who want what they want – the way they want it — and are willing to pay for that extra value. (Case in point: fashion. What’s new and in style is what’s hot. It’s not just about discounts. Fashion-conscious consumers care about their clothes and pay for the perfect fitting skinny jeans, platform sandals or oversized sunnies.)

Competition on price doesn’t pay: Companies are not in business to clinch a one-time deal. (It’s not a sustainable business model and customer acquisition costs alone would spiral out of control.) Merchants want customers that come back. The chance to engage with customers (via text, for example) would turn a one-time broadcast offer (push) into an ongoing conversation with customers (pull). And there would be ample opportunity for cross-sell, up-sell and other approaches that significantly grow the lifetime value of the customer.

Interestingly, many merchants are having doubts about the real long-term value of offering 50%-75% percent discounts. Some businesses have even gone bust as a result of Groupon. As this worthwhile blog warns marketers: “Your Groupon deal could change your business. It could dismantle your loyal customer base. It could lead to the degeneration of your brand identity.”

Clearly, the Groupon model is in need of a rethink, some fine-tuning that would allow it to deliver value to both empowered consumers and merchants who want to succeed (not just survive).

Permission mobile marketing opportunity

This is where permission marketing makes business sense. For one, permission marketing is the textbook example of marketing with pull.

Permission mobile marketing requires the permission of the individual (via opt-in) first. It then uses simple text messaging to ask some personal details such as hobbies and interests, information that ensures the delivery of relevant mobile marketing messages. But it’s not just about putting people in charge of their advertising; it also facilitates a two-way and ongoing conversation between people and brands/advertisers who are genuinely interested in what they have to say.

This is very different from the model pursued by Groupon, LivingSocial and the others, one that delivers daily emails (not dissimilar to spam) which emphasize push (not pull) and one-offs (not ongoing customer engagement).

And let’s not forget the overall customer experience. The middleman (in this case a voucher vendor like Groupon) takes the lion’s share of the credit for the good customer experience the merchant delivers. As Bob Phibbs (also known as the Retail Doctor) observes in his must-read blog: “The customer loyalty is going to their pages, their offers, their friends – not yours.”

To be clear the Groupon model shifts the permission opportunity of true consumer engagement away from the brand. Instead of building your client base organically, the service sends a flood of deal-hungry customers your way – most of whom will disappear down the drain like your profits.

Close encounters

As I pointed out at the start of this column, there is a very real opportunity for a company to turn the deal-a-day model on its head and reap the benefits. It would appear that Loopt is on to this. In fact, the Wall Street Journal blog reports Loopt will launch an app this week with a new feature called u-Deals that effectively lets customers ask for daily deals from businesses.

It’s an interesting concept. However, a raft of research tells us the opportunity isn’t just open to start-ups like Loopt.

Mobile operators are particularly well suited to take a central role in the ecosystem emerging around the delivery of deal-a-day offers.

One, mobile operators already have what it takes to play a central role in the mobile marketing ecosystem, delivering opted-in inventory (subscribers) to brands that value the opportunity to engage with their target audience. In fact, that is why solutions like Optism are sharply focused on enabling mobile operators to become a full participant in the mobile advertising value chain and reap a share of the revenues generated.

Put another way, inserting mobile operators into a Groupon-like model would even benefit merchants since the operators would broker deals between merchants and customers without diluting the brand experience or taking all the credit.

Two, operators enjoy our trust. A recent survey of 2,000+ American adults commissioned by Upstream found that consumers are more likely to engage in mobile marketing from operators than third-parties. Specifically, 70 percent of smartphone owners said they were interested in being notified directly by their operators with suggestions for discounts, special offers and other personalized services. The results echo the findings of an earlier survey of consumers in the U.K. There 59 percent said they would like to be contacted by their operator with these offers.

Connect the dots, and consumers in both the U.K. and the U.S. place more trust in mobile operators than the likes of Groupon and LivingSocial. That’s good news for mobile operators, particularly if they have put permission marketing at the center of all they do.

About Lisa

Lisa Ciangiulli, Director of Marketing for Alcatel-Lucent Global Advertising Solutions, where she has been instrumental in the development and marketing of Optism™, Alcatel-Lucent’s powerful permission-based mobile advertising solution. In this role, and throughout her career, Ciangiulli has spearheaded efforts to encourage cooperation between players across the ecosystem with the ultimate goal of enabling closer communication with the consumer. In May she was named to the Mobile Marketing Association (MMA) North America Board of Directors. You can follow her on Twitter (@LisaCiangiulli).

Disclaimer: News and views across the mobile marketing ecosystem is sponsored by Optism, an MG client and supporter.

***

What matters most to developers as they learn to market and merchandize their apps? What separates successful app stores from the also-rans? Is app store consolidation inevitable?

When Netsize published its first report (Application Store Billing) in May 2010, it was the first in the space to identify and document the characteristics of a winning and competitive app store. Based on a survey of 1,000+ mobile professionals and practitioners across 67 countries, the report concluded that the four C’s - Convenience, Compatibility, Choice, and Charging are the top enablers of application store success.

Today those insights (into key developments impacting the app store space) are more pertinent than ever.

With this in mind we have launched an updated version of our app store report (also titled App Store Billing) to provide professionals and developers a comprehensive overview of the emerging ecosystem (players, profiles and business models). The updated report also incorporates key findings and figures from research by ABI Research, Chetan Sharma Consulting, Deutsche Bank, Juniper Research and VisionMobile.

More importantly, this report features our own analysis of the app store landscape, insights that provide the basis for the Netsize list of the top 70 application stores, ranked according to type (platform, device, operator, independent, directory) and monetization models (free apps, paid apps, total apps). We also delve down deeper into the survey results we collected last May to show why specific payment models and mechanisms are in tune with current app store dynamics.

App stores rule

Why is it so critical to understand the app store landscape and the capabilities of truly successful app stores? It has become clear that app stores (and the companies that manage them) are not just providing mobile applications; they are driving a new phase in our digital economy.

In fact, Developer Economics 2011 – an annual report published by market analysis and strategy firm VisionMobile that we also note in our updated edition – found that “app stores are the primary go-to-market channel” for almost half (45 percent) of mobile app developers across the eight major platforms. The landmark report, which surveyed some 900+ developers across 75 countries, found that use of other application distribution channels has consistently declined across the board.

Amazon gathers steam

A special feature of our updated app store report is the foreword provided by Wireless Industry Partnership (WIP), a company that connects developers to the resources, information and people they need to be successful. It is perhaps best known as the organization behind the WIP App Store Catalog, the most comprehensive listing of mobile app stores available.

WIP echoes our own view that competition in the app space is indeed heating up, particularly since Amazon rocked the industry in March with the announcement that it was taking on the Android Marketplace with its own app store.

So what does Amazon have going for it? And what is the blueprint for other app stores to follow?

WIP argues (and we agree) that to stand a chance of success an app store must have:

• Global reach
• Easy payment systems in place
• Merchandising expertise
• Marketing channels

Payments (and offering a choice of payment mechanisms) is a huge part of this, which is why our report compares and contrasts strategies to show why the Apple app store model is not the last word.

App store providers and developers must embrace a variety of business models and payment methods to reach their target audience. Credit card billing may popular in regions (such as North America) where Apple has carved out a significant share of the market. But the competition for top app store destination is just starting.

Free download

The App Store Billing report is available as a free download.

About Alexander:

Alexander Vlasblom is Director of Marketing Communications for Netsize, a Gemalto company. Netsize, a company enabling mobile communications and commerce, also helps device manufacturers and mobile network operators deploy application stores on a global scale, providing them with solutions for mobile authentication and mobile payment, and value added services and tools to optimize store management, billing ratios and end user loyalty. Alexander also regularly blogs on Netsize Insights, the Netsize news blog, on a range of topics including mobile payment, mobile marketing and mobile messaging.

Editor’s note: Netsize is a MobileGroove client. Netsize has collaborated for four consecutive years with MobileGroove’s Peggy Anne Salz to research and write the company’s series of white papers covering topics ranging from app store billing to mobile commerce, as well as The Netsize Guide, the-must read mobile industry almanac. You can explore these industry reports and books here.

* * *

Is there a need for permission-based mobile marketing models? Forrester Research thinks so. Its recent Q3 2010 European Technographics Media, Marketing and Social Computing Online Study found that 23 percent of respondents have received a text message that they did not want from a business. Read between the lines, and there is a very real need for approaches that ask people’s permission first, rather than just deliver intrusive spam.

Thomas is clear about the requirement for opt-in. “Mobile marketing has to be permission based,” he observes. Why? Because mobile is not “just another channel.” In his view, mobile has several “unique attributes” that demand  companies take a more personal approach to mobile marketing, one that is aligned with our requirements for personal privacy and relevancy.

Intimacy, proximity immediacy

Specifically, mobile embodies “the notion of intimacy.” Put another way, mobile is “a personal device that has become an extension of ourselves.” This characteristic turns up the pressure on brands to interact with us after we have given them permission to do so. “Mobile [advertising] has to be permission-based so that it is not perceived as intrusive,” Thomas adds.

Mobile also enables context and the delivery of advertising linked to our proximity (what’s nearby). This is why location-linked advertising is so exciting and potentially so effective.

But there are rules to follow. “You have to give consumers control,” Thomas explains. “They have to choose the degree of personal information that they share.” Additionally, companies (brands, mobile operators, app developers – the works) also have to make it clear how third parties will use personally identitifiable information (PII).

Finally, mobile is immediate. It is there at the point of inspiration, allowing people to interact with brands at that precise moment. Mobile also allows the delivery of news and information when it matters most. What opportunities does this present brands and operators? Thomas sees an important connection between this characteristic of mobile and the goal of companies to increase the size of their opt-in databases.

Sure, some people will only ever be interested in incentives that include coupons and discounts (in return for their permission and personal information such as their hobbies and interests). But there is a large segment of people that would agree to receive advertising in return for hot news about people and events. “You can easily imagine that music fans would agree to receive marketing messages in return for exclusive information about music artists or festivals,” Thomas observes.

Re-positioning for more opportunity

As Thomas sees it, permission marketing is rising up to take a central spot in the mobile marketing mix, effectively “co-existing” with other formats out there (display, in-app, outdoor) and allowing brands to build an opt-in conversation into their mobile marketing approaches. “Mobile marketing is evolving and expanding….I’m sure we will see these approaches [from mobile] introduced into the more traditional forms of marketing.”

The result is a convergence of approaches, formats and strategies — all aimed at enabling customer engagement.

Where does mobile (and the mobile operator) fit in the scheme of things? Thomas offers an interesting assessment of the opportunities if we take a big-picture view.

Mobile operators do have a role to play. But this isn’t just about mobile marketing. “This is about their [operators'] long-term – and broader – positioning,” Thomas says. “It’s all about a long-term approach where operators are re-inventing themselves to be smart enablers. This way they can play a role with advertisers. But they can also play a role with other stakeholders in bridging the gap between consumers and brands.”

The good news: this transformation (and the rewards it brings) are all within reach provided mobile operators wield the assets already at their disposal. They have a “gold mine” of customer data. And they control trusted and popular payment mechanisms (a major plus now that mobile marketing increasingly includes commerce).

The bad news: there is a huge gap between operators and agencies/advertisers – and mobile operators generally lack the business agility to broker these relationships. “There are a couple people with the operators who really ‘get’ it,” Thomas observes. But this is not enough to overcome the relationship gap.

Data doesn’t match

To complicate matters, mobile operators understand segmentation as a tool to break their vast audiences down into segments apt to respond positively to service offers such as unlimited text messaging, all-you-can eat data tariffs, and friends and family voice call packages.

As a result, mobile operators have excellent reporting tools and regional data (allowing them to sell offers and tariffs to specific consumer groups). But they lack the segmentation information advertisers require to reach their target audience.

Put another way, the issue isn’t data collection; it’s the type of data mobile operators collect. “Operators have a lot of data mining and CRM tools, and they have lots of fields that they can fill with data, but it’s not necessarily consistent for across operators and not necessarily relevant to advertiser segmentation,” Thomas explains. “So I see a big challenge here…and operators will progressively need to invest to measure what is relevant for advertisers.”

Thomas recalls a discussion with one operator who bragged about having 200+  fields to segment subscribers. “At the end of the day, it’s about not providing 200 fields but rather the 5 or 10 fields that are consistently relevant and interoperable for advertisers,” he says. Getting there is going to require operators to partner — both with other operators and with enablers that can help them accomplish this complex task.

Segmentation and loyalty

Mobile marketing may have started out with a sharp focus on promotion and brand awareness, but the real value of mobile marketing may be in the customer relationships and interactions it enables between people and companies (brands, advertisers, mobile operators).

“It’s way beyond mobile marketing,” Thomas argues. “For mobile operators, it’s part of a longer-term positioning strategy to create more loyalty and generate more value for the customer.” In this scenario the value exchange centers on the delivery of relevant advertising. (Genuinely valuable because it is aligned with the stated preferences of opted-in consumers.)

Why should mobile operators see mobile marketing as a bigger strategy to boost loyalty and encourage engagement? Thomas points out that it’s the best way for them to get back in the game — and stay there. “Operators have been bypassed by the likes of Apple in terms of the customer relationship.” Permission marketing gives operators a place at the table.

Connect the dots, and harnessing permission marketing paves the way for deeper customer engagement that goes beyond mobile marketing, allowing operators and their ecosystems partners (brands, agencies, advertisers, application developers) to make sure what they offer (advertising , apps, etc) is relevant and valuable to their audience.

My take:

Mobile marketing is an excellent opportunity for mobile operators and brands — but it’s just the beginning. Loyalty, segmentation and mobile CRM are moving up the agenda, all business objectives where the ability to engage with people on an ongoing basis is a must. Permission is a big part of this because it ensures that people accept and likely respond positively to what they get (advertising, offers, deals, content, applications etc).

Now that we understand the value of an opted-in audience, companies across the ecosystem would do well to develop approaches that build on this awareness to add value throughout the entire customer lifecycle. Companies should also focus on the incentives they offer people to opt-in in the first place. As Thomas points out (and I agree!) it’s up to mobile operators and brands to use their insights and knowledge of customer segmentation to match the right people with the right incentives. For some it will be coupons, for others it will be exclusive information. Cracking the code will help operators grow the size of opt-in databases and significantly boost the business value of this inventory.

Disclaimer: News and views across the mobile marketing ecosystem is sponsored by Optism, an MG client and supporter.

From department stores to computers & electronics retailers to luxury fashion brands, marketers are investing in mobile advertising to reach and influence people throughout the purchase funnel (awareness, engagement,  consideration, conversion and loyalty).

In fact, Millennial Media, a leading independent mobile advertising and data company, reports that ‘Retail’ was the top vertical on the Millennial mobile advertising network both globally and in the U.S. What’s more, spend by brands has skyrocketed, growing by a whopping 1300 percent for the period Q1 2010 to Q1 2011.

This development is the focus of Mobile Intel: Retail, a mobile intelligence report that draws from Millennial Media network data (data that was accumulated across 67 billion mobile impressions in 250 countries and territories) and consumer research conducted by comScore. The report is geared to brands, providing them insights to help identify key mobile retail opportunities and engage with the growing audience of mobile retail users, the segment of consumers using their mobile devices to research and purchase goods and services.

Mobile retail users

The vast majority of mobile retail users are tech-savvy digital natives between the ages of 18 and 35 for whom the mobile phone has become an indispensable part of their daily routine. However, these Millennials are not just more sophisticated; they also tend to be more affluent.

The data, which breaks down mobile retail users by income, shows that the percentage of mobile retail users is higher than the total audience in several income brackets. Interestingly, mobile retail users lead in the +$100,000 annual income bracket, providing retail advertisers — particularly those selling luxury goods — a significant audience that is likely to appreciate and respond to a mobile call to action.

All the better if this advertising is delivered with the smartphone user in mind. The report shows that smartphone penetration is on the rise, up 67 percent year-over-year. What’s more, the majority of consumers are interacting with mobile retail websites and most are using mobile browsers to access the content (and advertising) there, making it important for brands to include mobile web and in-app advertising in the mix.

Altogether, the number of consumers accessing retail content via mobile has increased 74 percent year-over-year to total over 13 million people (as of June 2010). Of the 13 million, “over 6.5 million accessed retail content on their mobile device up to three times per month, 4.2 million at least once a week, and 2.2 million consumers accessed some form of retail content on their mobile device almost every day.”

Mobile commerce opportunity

Mobile retail users are not just using mobile to help them identify and research what they want.

They are also using mobile to make purchases (through a mobile browser on application). Specifically, 21 percent of consumers surveyed by comScore said they made a purchase using their phones in the last 30 days, not including app store application purchases. What did they buy? The majority were retail or travel related with consumer electronics and clothing/accessories leading the list.

The report also lists and ranks the broad range of mobile destinations that figure prominently in the regular routine of hard-core mobile retail users, insights that give brands and advertisers a clearer idea of the content (and campaigns) that will reach these mobile shoppers when it matters most.

The bottom line: mobile retail users are everywhere. But they also tend to spend time on sites featuring weather, maps, news and entertainment. Retail brands are therefore advised to develop campaigns and strategies that reach beyond the usual list of content sites and channels. And let’s not forget the importance of timing. Advertising that takes advantage of the window of opportunity around holidays and events (such as Mother’s/Father’s Day) can pay dividends.

Brand advances

The report confirms that mobile retail users are a significant and addressable audience that retail brands should not ignore. But are they taking advantage of the opportunity?

The report provides ample evidence of brand commitment and increased spend. For one, the number of retail advertisers on mobile has doubled, reaching 6,445 in June 2010 up from 3,045 in June 2009.

This observation is further supported by data from Millennial’s ad network, which shows that vertical ‘Retail & Restaurants’ was the number one ad vertical in Q1 2011, both in the U.S. and internationally. But it’s not just about more brands spending on mobile. Network data (from Aprill 2011) confirms more verticals within retail (luxury, DIY, specialty interest) are among mobile’s big spenders.

Calls to action

The report also confirms a key message in recent eMarketer research documenting mobile marketing best practices in Western Europe. (Disclosure: I am proud to have collaborated with eMarketer on this report.)

The eMarketer report found that verticals (including retail) are not only harnessing mobile to achieve their objectives. These advertisers are also changing the nature of the game, moving from one-off promotion campaigns focused on brand awareness to on ongoing campaigns aimed at driving customer engagement.

A close examination of Mobile Intel: Retail reveals that retail brand and advertisers are indeed harnessing the action-oriented nature of mobile to drive foot traffic and spur consumer participation.

My take:

Brands and advertisers are not only waking up to the mobile retail opportunity. They are grabbing on to it with both hands, a development confirmed by an increase in ad spend as well as the number of retailers getting in on the action. At the other end of the spectrum, people are relying more on mobile for shopping ideas and assistance. comScore data  provides valuable insights into the make up of the mobile retailer user. Generally speaking, they tend to be more affluent and mobile savvy than the general audience of mobile users. Retailers (particularly those in the luxury goods sector) who don’t use mobile to connect with this discerning demographic risk leaving serious money on the table. Since mobile users are also relying heavily (even exclusively) on mobile to research and purchase goods on the move, mobile advertising should make an effort to engage with these consumers throughout the customer journey and purchase funnel (awareness, engagement,  consideration, conversion and loyalty). Finally, don’t think small. Consumers are buying big-ticket items including consumer electronics and clothing/accessories using their mobile phones. The right ad in the right context can drive foot traffic and sales.

How can brands and agencies prepare to take advantage of opportunities in this rapid growth market? What will move the dial on mobile marketing spend and activity? We catch up with Krishna Prasad, who heads up the digital division of  Dentsu India, the Indian arm of Japanese advertising group Dentsu Inc.

By way of background, Dentsu Inc. kicked off operations in India in 2003 through a joint venture with the Mogae Group. Earlier this year the company became a 100-percent subsidiary of Dentsu Inc., Tokyo, and restructured into four independent, full-service advertising agencies: Dentsu Communications, Dentsu Marcom, Dentsu Creative Impact, Dentsu MediaTech and a digital agency called  Clickstreamers. Clients in the local Indian market include automotive brands (Toyota, Honda, Suzuki), consumer electronics companies (Canon, Panasonic, Hitachi), as well as a mix of telecoms and technology providers.

Teaching brands mobile

Worldwide mobile marketing is just beginning to gain serious traction – and India is no exception. In India ad spend on mobile accounts for only a few percentage points of the total digital advertising budget, a small but growing portion of the overall advertising budget that currently hovers in the single-digits.

However, Krishna is convinced mobile spend as a percentage of overall ad spend will increase as more brands understand how (and why) mobile can help them achieve campaign objectives and engage with their audience. “The digital ecosystem is just shaping up, and brands and agencies are quickly moving up the learning curve,” Krishna notes.

To encourage this momentum and provide brands with a roadmap to navigate the mobile marketing landscape Dentsu India has launched the Mobile Marketing Discovery Program, an initiative that provides a selection of brands with insights into solutions and use cases that showcase the unique advantages of mobile.

According to Krishna, the aim is to go past the nuts and bolts of media buying and educate brands on how to “develop a comprehensive and effective marketing strategy with mobile at the center.” To this end Dentsu supported the brands with mobile marketing ideas, solutions and strategy.

Talking climate change

One of the first brands to step up and take part in the mobile discovery program was Suzlon, a leading provider of wind power and green energy headquartered in Pune. Suzlon launched its mobile campaign – focused on building brand awareness and educating the target demographic (tech-savvy, affluent smartphone users) about the power of wind energy — with Dentsu in October 2010. A major objective was to popularize the regular climate change blog written by Suzlon chairman Tulsi R. Tanti.

The campaign ran some six weeks and consisted of display ads on the mobile portal homepage belonging to Indian mobile operator Airtel, as well as banner ads on App Central, the operator’s application download page. The call to action: people were encouraged to click through and explore the views posted on the Suzlon blog.

According to Krishna, the campaign generated some 4 million impressions and a click-thru rate of just over 3 percent. “The creatives and the approach allowed Suzlon to engage users and get them interested in knowing more about the power and relevance of wind energy.” More importantly, the sharp focus on showing real results, analytics and ROI, “establishes mobile marketing as a viable medium.”

Messaging and marketing

What are the effective mobile marketing formats? It’s a hard one to call. Display is popular because it’s familiar. “In India many marketers focus primarily on a banner buy because the mobile operator portals are a popular destination among consumers.” Put another way, walled garden portals (on the way out in regions such as Europe and North America) are still big business in India, where consumer appetite for mobile content (wallpapers, ringtones, games) is skyrocketing.

Text messaging is also growing from strength to strength, a development that bodes well for mobile marketing approaches that harness SMS to connect with people (regardless of whether they do/don’t own a high-end smartphone).

Mobitude 2010 — the annual analysis of customer mobile phone usage published by mobile operator Bharti Airtel, reveals that a whopping 90 billion  text messages were sent via the operator’s network in 2010.  A high point was the Hindu holiday Diwali (festival of lights), an occasion that saw 12 billion (!) text messages exchanged in just one day.

The market is primed for SMS marketing — and brands are waking up to the opportunity — but there is also concern about the tremendous rise in the amount of spam. In fact this blog post reports that as many as 100 million spam messages are delivered to people on their mobile phones every day, a flood that can be traced to a change in how bulk SMS is bought and sold.

Naturally, excessive spam has turned people off marketing messages that simply interrupt their daily routine. But it has also created an opportunity for brands that ask permission first. “There is great potential for [text] marketing,” Krishna says. “But brands should not be spamming the consumer. It must be for the consumer to decide if they want to receive brand messages, and to tell us the brands and verticals they want to receive advertising about.”

Personally, Krishna is “all in favor” of opt-in and marketing approaches that give consumers a voice in the advertising they receive. “India has made a good start [in permission marketing], but it has a way to go.”

Relationship gap

What’s holding up progress? In a word, regulation. It also doesn’t help that multiple levels of opt-in (required by telecom authorities and mobile operators) are confusing both consumers and advertisers.

But the real barrier may be the “lack of enablers” to move the market and get brands to the “next level of mobile marketing.”

As Krishna sees it: the emerging mobile marketing ecosystem needs some guidance from enablers that understand the space – and the requirements of all the stakeholders. He added that solutions like Optism are needed to facilitate relationships between all the parties.

“Companies that understand this space well, and can also hand-hold the operators at one level and the agencies at another level are absolutely needed to jumpstart this market,” Krishna says. “This approach is essential for this market.”

What’s next?

Krishna says Dentsu will continue with initiatives and efforts (such as the Mobile Advertising Discovery Program) to help brands make the move from digital to mobile. “There’s no value in being just a middleman….It’s all about connecting operators and brands in a way that helps them reach their objectives, and it’s a role we have chosen because we understand advertisers and what they want to achieve.”

Where is the opportunity in the Indian market? Growth in smartphone penetration rates and mobile Internet usage (150 million mobile data users) are developments that pave the way for more brand interest in mobile apps.

Krishna is also “excited” about the opportunity around mobile coupons and vouchers, rewards that could add value to a variety of mobile campaigns across a range of mobile formats. “It could be SMS, it could be scanning with a smartphone — and it could be approaches that mix and match the two. Consumers are keen to sign up for this [coupons and discounts], and offering mobile coupons would deliver amazing results.”

At the other end of the spectrum, permission marketing can also deliver positive results provided it offers people what they value. “In many parts of the world TV and press are dying, but in India it’s growing. So the question becomes: if consumers already get 10 pieces of information a day, what can brands offer so they sign up for an 11th piece?”

The bottom line: Get the value exchange right, and mobile marketing — especially permission marketing — has the potential to be huge.

Disclaimer: News and views across the mobile marketing ecosystem is sponsored by Optism, an MG client and supporter.

This shift is confirmed by news today that Mobinil – Egypt’s leading operator – counts well over one million subscribers opted in to its Mobinil Ads service. The service, which leverages Alcatel-Lucent’s Optism mobile marketing solution, harnesses permission marketing to deliver users relevant advertising from their favorite brands and aligned with their preferences and interests.

By way of background, permission marketing uses question-and-answer exchanges via interactive SMS and MMS to find out more about consumers’ interests and identify the advertising they want to receive. The result is a highly-targeted, receptive audience open to hearing what brands have to say.

Demographics and preferences

Next to the one million subscribers milestone, Mobinil’s Head of  Mobile Advertising Ahmed Saber also used today’s Cristal Club local advertising event in Cairo to release new figures revealing more about the make up and interests of the mobile operator’s opted-in audience.

• Millennials in the majority: 41 percent of the opted-in subscriber base is between the ages of 15 and 24; 22 percent are between 25-34
• Cool categories: Subscribers show the highest interest in sports (30 percent), music (23 percent), fashion (23 percent) and technology (14 percent)
• Permission delivers positive results: Response rates to advertising campaigns run on Mobinil’s Mobile Ads service ranged from 12 percent to as high as 54 percent

As Saber put in a statement: “Since the introduction of our Mobile Advertising service, we have been able to further increase our relevance to end-users, brands and advertising agencies.” In addition to being “effectively able to literally put brands in the hands of our mobile subscribers,” Mobinil is also in a position to “provide brands and advertising access to – and a better understanding of – their potential customer base.”

Plans are to extend Mobinil’s mobile marketing service to millions of other customers in the coming months.

Power of permission

The increasing importance of permission marketing also came across in my recent interview with Karim Khalifa, CEO &  Co-Founder of Digital Republic, the number one digital and creative advertising agency in Egypt. In it we discussed the central role social media played in bringing about the revolution and the impact of social on mobile marketing.

In his view, the revolution in Egypt made people aware of social media tools, a new awareness that has had a positive knock-on effect on social media marketing and approaches that truly speak to the people. “The revolution has shown us the importance of a cause. A cause plus social media equals a major result.”

My take:

The pivotal role of social media in allowing people to organize protests and accelerate the revolution has also primed the Egyptian market for conversational mobile marketing. People understand the power of mobile in their daily lives, and they expect to be a part of what is happening around them. From having a meaningful dialog with their social networks to conducting a two-way conversation with brands, people want to be involved in what interests them Mobinil’s hitting one million opted in subscribers today is a significant data point that underlines the increasing role permission marketing is likely to play in the mobile marketing mix.

Disclaimer: News and views across the mobile marketing ecosystem is sponsored by Optism, an MG client and supporter.

***

Show me a world-leading company, and I’ll show you a management that understands the value of simplicity and the danger of complexity. Indeed, too much complexity can drag companies down a slippery slope that eliminates gains, interferes with efficiency and ultimately destroys competitive advantage. However, understanding that less is more (keeping it simple) generates profits, growth and tremendous customer satisfaction.

Take Google, a company that has brought the world simple search. But it’s not just the uncluttered design and sharp focus on user-friendliness that has made Google the market giant. The Google ecosystem is also simple, allowing all stakeholders to contribute — and benefit.

Another excellent example is SMS. It has become the way we connect with friends, family, community members and — increasingly — companies and brands. Why? Because everyone everywhere on the planet can type a message on a phone keypad. In a word: it’s simple.

Mobile advertising opportunities

Clearly, companies, value chains and services that are simple succeed. It’s a basic business tenet that we would do well to apply to the mobile marketing ecosystem.

First, we need to identify the key groups in the value chain. Some analyst firms have identified dozens of players; I have purposely chosen to simplify the ecosystem and break it down into three distinct groups of stakeholders: consumers, mobile operators, and agencies and advertisers.

Keeping it simple for consumers

People are inundated with advertising on their mobile phones. And this deluge of advertising — much of it spam that consumers did not give their permission to receive in the first place — is delivered via an ever-increasing variety of advertising creatives and formats. These range from traditional banners ads and in-app advertising, to brand schemes that harness augmented reality for maximum impact.

Connect the dots, and consumers are faced with too many choices. It is complex and difficult to navigate. So how do we make sure we serve the consumer, the most important link in any value chain, advertising messages they appreciate?

The key is engagement.

People get involved when they see a benefit. In mobile marketing this benefit  must be delivered within the context of what matters most to people: their lives, their experiences, their networks, and their worlds.

The most effective (and simplest) way to find out what matters most to people?

Ask.

The rules of permission marketing are simple. The consumer opts in to receive mobile advertising messages. The interaction evolves into an ongoing exchange where the consumer volunteers personal information, such as interests and hobbies, in return for brand messages that are relevant to their preferences.

The exchange is transparent (because the consumer gives permission every step of the way) and takes place in a ‘trusted environment’ where personal privacy is respected and the individual is in control. The advertising is valuable  because the consumer only receives advertising from brands and companies they appreciate. Thus, the groundwork is laid for a dialog that pairs brands with an opted-in audience that wants to hear what they have to say.

Keeping it simple for mobile operators

Mobile operators also have much to gain from keeping it simple. How can they reduce complexity and boost the advantage?

First, mobile operators require an approach that further reinforces their role in the mobile marketing value chain and allows them to reap a share of the revenues generated.

They also need to focus efforts on monetizing inventory they truly own. (Permission marketing puts mobile operators in charge, allowing them to offer advertisers access to an opted-in audience, which is a valuable inventory indeed.) Finally, mobile operators must make it simple for agencies to buy this media. (A big part of this is providing agencies the tools to manage and measure their campaigns.)

At a technology level, mobile operators are advised to rely on a trusted partner (and a managed service), rather than tackle the complexity of buying, owning, upgrading and maintaining their own mobile advertising platform. At a business level, mobile operators that have an in-house mobile advertising sales force should use it. Mobile operators that haven’t yet built up a sales house capability internally would do better to stop before they start. It’s easier to rely on existing partners — and it’s simpler than creating a sales force from scratch.

Keeping it simple for agencies & advertisers

Agencies and advertisers are under pressure to show lasting benefits and prove campaign ROI.

What’s more, they are confronted by some pretty tough questions: How should they approach mobile? How do they reach all consumers — and not just the ones that happen to own smartphones? How can they move past brand awareness to achieve other business objectives, such as increasing brand loyalty or boosting customer engagement?

Again, a simple approach holds the answers.

Clearly, brands advertisers want to deliver their message to consumers who are most likely to listen and respond. This is precisely what they get when a highly responsive, scalable and effective dialog media (that is permission- and preference-based) has been implemented to connect with consumers and continue the conversation.

Enabling simplicity

Complexity distracts companies from zeroing in on key growth areas and opportunities that generate the most profits. This is why it is imperative for companies — particularly in mobile marketing — to keep it simple.

Simplicity at all levels — in the service we deliver to customers and across the ecosystem that makes it possible in the first place — is a prerequisite for competing in market that has moved from more is better to less is more. Keeping it simple is not just a way to streamline where is counts; it’s the way to make it big.

About Hani:

Hani Ramzi is Alcatel-Lucent’s executive director of Mobile Advertising for EMEA. He has a long track record in the mobile industry where his chief responsibility has been to support telcos at the C-level, helping senior management define and execute strategy. Prior to that Hani held a variety of management roles across all regions (Americas, EMEA, APAC). Hani is based in Paris and is a frequent speaker at industry events and conferences.

Disclaimer: News and views across the mobile marketing ecosystem is sponsored by Optism, a MobileGroove client and supporter.

***

Since you’re a reader of MobileGroove, odds are you have one or more mobile devices within arms reach right now. You are pretty likely to fall into the early adopter category as well. However unless you were born since 1980 or so, you are what is known as a digital immigrant. Face it: No matter how techno-hip you are, you find yourself at the precipice of one hell of a generation gap.

The generation that is entering the workforce and increasingly dominating the consumer base is one of digital natives: those who have grown up immersed in digital technologies. So while you may consider your mobile phone an appendage, it’s an artificial limb when compared with a native’s attachment to it.

The fierce desire of digital natives to have what they want the way they want it (and delivered to the device of their choice) changes all the rules. What’s more, digital natives want to share their experiences. They gravitate to companies that allow them this flexibility, and flock to the ones that listen back.

As our employees, our customers and our community members, digital natives are moving our businesses in new directions. Based upon my work co-editing and contributing to the book Dancing With Digital Natives, I’d like to offer you three insights that will help you navigate this new territory and find your way to successful interactions with digital natives.

Privacy has evolved – and so must your approach: Consider a quote from one of the most famous digital native entrepreneurs, Facebook founder Mark Zuckerberg: “Privacy is no longer a social norm.” At first glance, this may seem like a self-serving comment from someone who profits from extreme openness. But the phenomenal success of Facebook tells a different story.

People once kept their dirty laundry tucked away in their own hampers; this gave way to a generation that would share with a therapist behind closed doors… but over time, we have seen an increasing willingness to flaunt soiled linens on national television. Today, we see a generation sharing information about every aspect of their lives in social networks.

Once we recognize the native’s natural inclination to live publicly, we can participate in ways that are consistent with our business objectives. We can also build models that leverage this openness, both in the way we structure our internal interactions and, of course, interactions with our customers.

Share the wealth: Digital natives don’t only live publically; they are passionate about knowledge sharing, not knowledge hording. Don’t think you have tackled digital collaboration just because you product development wiki, a company Facebook page or a massive Twitter following. We are still taking baby steps when it comes to understanding the knowledge sharing mentality of the digital native. A huge reason why companies that routinely restrict employees’ social media activities and businesses that resist digital natives urge to share knowledge (and add their own) are overdue for a rethink.

If you doubt this, I encourage you to consider the Haul Video phenomenon, in which consumers produce videos demonstrating products, modeling, discussing prices, trends and much more–which they freely share with anyone who’d care to watch on YouTube. Or take a look at Quirky, a place for social product development that was founded by a digital native. The shift to a knowledge sharing mentality is one of the greatest advantages to organizations. Tapping into this cultural phenomenon allows companies and brands to develop and market products digital natives will appreciate.

No hard sell: The final insight I’ll offer here (and the book offers many more, as well as examples of these traits at work): digital natives are interested in interactions, not transactions. Today, we see the rise of a customer base with a very different notion of currency from those before them. Kids today would gladly collect their allowance on PayPal, in the form iTunes gift cards or mobile money.

But it’s not about technology; it’s about communication. Digital natives are excited to do business with organizations that connect with them. This goes beyond marketing, though; we must make it possible for these natives to provide input into the products and services we offer them.

The early leader in this business model was a company called Threadless, whose community creates and helps select t-shirt designs. We can also see this style of interactive business model making inroads into automotive design at Local Motors, and in journalism as community centric media outlets leverage pervasive mobile technologies and encourage their audiences to submit their views, videos, and images from anywhere at anytime.

In summary, the rise of digital natives turns up the pressure on companies, brands and marketers to change how they do business. But don’t assume technology is the answer. Clearly, we must adapt to use the channels (mobile, interactive, social) that natives prefer. But first we have to learn to think like the native and understand that conversation and collaboration come first.

***

About Michelle:

This week marks the release of Dancing With Digital Natives. Michelle Manafy has brought together a broad range of contributors from business, entertainment, and academia to provide their insights into the ways in which this generation is transforming all aspects of business. Michelle is the Director of Content at FreePint Ltd., a publisher of sites and resources for the business information industry. Michelle speaks at a variety of events, serves as a judge for many content and technology competitions and was the editor of the book Cashing in With Content: How Innovative Marketers Use Digital Information to Turn Browsers into Buyers, by David Meerman Scott.

Follow Michelle on Twitter @michellemanafy

Disclaimer: News and views across the mobile marketing ecosystem is sponsored by Optism, a MobileGroove client and supporter.

The must-read industry report Mobile Africa 2011: Regional Hubs of Excellence and Innovation (researched and written by my esteemed colleague Madanmohan Rao) estimates the number of mobile phone subscribers in Africa has doubled in the last three years, reaching a whopping 500 million up from only 246 million in 2008. The four biggest mobile phone markets in Africa are Nigeria, South Africa, Kenya and Ghana.

In Ghana the massive increase in mobile phone usage is matched by a growing appetite for mobile marketing messages that deliver people valuable information and offers aligned with their personal preferences.

This development has promoted mobile operator Tigo to take the lead in mobile advertising. To achieve this the carrier has implemented a solution to bring personalized mobile advertising to its over 3 million subscribers. During the limited initial launch more than 40,000 subscribers opted in and used the service. At the other end of the spectrum, advertisers — local businesses as well as global brands— reported response rates ranging between 18 and 45 percent. Encouraged by these impressive results Tigo has recently decided to  open up its mobile advertising service to all its 3 million subscribers.

What message does this send brands and advertisers? How does enabling and facilitating permission-based marketing over its own network put Tigo (and its users) in control of mobile advertising? For one, the high response rates to campaigns has triggered increased interest from companies “seeking [to deliver] more effective and targeted forms of advertising,” Rosy says.

Predictably, brands are interested in addressing an opted-in customer base. But many more are excited about the potential of mobile. “[The questions] we have from these brands are about our consumer base and their preferences….We also get a lot of questions on the effectiveness of mobile advertising compared to other channels such as radio and print. While each of these have a unique proposition, the advantages of permission-based mobile advertising are clear.”

Specifically, opt-in allows the brand to deliver advertising (aimed at a specific demographic or location, for example) about products/offers the consumer has already expressed an interest in receiving. “This is powerful when you start to think about the response rates to ads –  which any ad agency will confirm is one of the most important metrics for measuring advertising effectiveness in today’s competitive world.”

How does offering mobile advertising allow Tigo to be more competitive?

In Rosy’s view, mobile advertising is a capability that allows Tigo to know and serve its customers better. “Our goal is to reach a point where we do not give our subscribers cookie cutter solutions, but get to know them so well that they feel as if the products we market to them were made specifically with them in mind.”

What’s more, Tigo wants to be able to raise subscribers awareness about products they might not even had known existed (or known they needed) in the first place. “Permission-based marketing enables us gain a deeper understanding of who our subscribers are and what they want [based on the information they provide via opt-in]…. It will help us give them the ads that would resonate with them, and also helps us create products we know they need.” More importantly, this approach means Tigo is “able to go-to-market very quickly and be the first to market with these innovations.”

Key to differentiation

For Tigo the mobile advertising service – also known as Tigo Ads — is an important element in its strategy to identify (and generate) new revenue opportunities. “We like to be at the forefront of new technologies and launch products consumers want, which are not yet available to them. In an ultra-competitive telecoms environment like we have in Ghana, this approach allows us to stand out in the clutter.”

In fact, Tigo Ads is a perfect fit with other products (such as Tigo Insurance) sharply aimed at reinforcing Tigo’s image as “the most innovative operator in Ghana,” Rosy says. “Our customers get excited about products such as these, and they realize now that by joining the Tigo family, they will not only benefit from the best promotions, but also from new, exciting products that are useful for them.”

Market landscape and requirements

What are some key characteristics of the market in Ghana and how has Tigo harnessed these opportunities to deliver value in the mobile advertising?

For Rosy, it’s all about choice.

In the Ghanaian market today, there are currently five major mobile operators — with a sixth entrant on the way. A mindset that sees the mobile phone as an instrument for voice calls is not the way to achieve competitive advantage.

This is why Tigo has a broader view of what mobile can be, and is taking steps to achieve this vision. As Rosy puts it: The mobile phone has become an important part of the lives of many people because they can now use their phones as tools to do banking or monitor their health. “With this in mind, we are broadening the spectrum of products we deliver to include a wide range of services that will make us an indispensable aid and tool in the lives of our customers. They will now have the power to do more on their phone than ever before.”

What is the power of messaging and permission based marketing?

According to Rosy, permission advertising benefits all the stakeholders. Consumers receive the kinds of ads they want — a virtuous circle that delivers mobile operators and brand advertisers the ideal audience. This pays off for Tigo because it allows the operator to “pre-determine which consumer is most appropriate for a particular type of content, as well as control which ads to send to consumers and limit any ‘nuisance’ advertising effects [spam].”

Tigo also uses its service Tigo Ads to gather and evaluate customer feedback, insights support its focus group research and allow it to develop products and services sure to strike a chord with subscribers. “With Tigo Ads, we have been able to take this [focus group research] a step further and gain even more insights….They tell us what their interests are, what they prefer to do with their free time, etc. These are all jewels of information that make us more effective at providing our customers with more relevant products and services.”

In fact, Tigo reported that a whopping 90 percent of focus group participants said they approved permission-based mobile advertising.

Key learnings

What are the rules of engagement? For one, moderation is critical. “Customers do not want to feel bombarded with messages from their telecom provider.”

Asking the right number of questions is important, but having the right tone is imperative. “A network’s ability to get a lot of useful information from customers is all based on the types of questions it [we] ask.” Tigo has learned by doing. As a result of the initial launch [with 40,000 subscribers] we have gotten better at the types of questions we ask our customers and at ensuing that we get the most relevant information back from them.”

The solution, provided by Optism, also allows Tigo to play a more central role on the value chain because it is equipped to provide brands and advertisers “access to a group of consumers whose needs we fully understand and are able to anticipate.”

She adds: “Optism also allows us to leverage an advanced technology platform that has been tested and proven in several other African markets. The product development plan also allows us to look into the future with the hope of further differentiating ourselves with features such as reward systems, coupons, and personalized advertising.” Finally, the platform is easy to use and requires “minimal technology integration effort.”

What’s next for Tigo?

Rosy tells us to watch this space. In an ultra-competitive market such as Ghana mobile operators can only win with good ideas and excellent services. For its part Tigo is sharply focused on innovation and on building the capability to provide customers services that they might never have thought of on their own. Permission marketing is – and will remain — a center stage. “This is part of the reason why we have created whole consumer understanding and products innovation teams that are geared towards understanding what our customers want, and giving it to them.”

Disclaimer: News and views across the mobile marketing ecosystem is sponsored by Optism, an MSG client and supporter.

Where is the opportunity in this rapid growth market? What is the role of the mobile operator? And why does text messaging dominate? Karim Khalifa, CEO &  Co-Founder of Digital Republic, the number one digital and creative advertising agency in Egypt, provides us the inside track on developments in the region.

Moving mobile to the next level

Karim is also co-Chair of the Mobile Marketing Association (MMA) Middle Eastern Council. In this role he supports the development of global activities and initiatives, and takes responsibility for rolling them out to local member organizations. His number one focus: ensuring local relevance and providing guidance to grow a sustainable market.

How does he plan to achieve this? By encouraging brands to “get engaged and get on board.” To this end Karim has developed a multi-prong approach aimed at the business ecosystem to involve each party and make the most of their assets.

The brands are critical to show other brands the benefits of mobile and evangelize to the media; the mobile operators are key to providing brands and agencies the insights they require through local research and data; and an extensive outreach using public relations and other methods allows the Council to outreach to the other stakeholders.

As Karim sees it: This approach – because it focuses on getting major brands and publishers on board first — will “accelerate the market and provide important momentum.”

Mobile operators & opt-in requirements

A key factor in making mobile marketing work is the mobile operator and “ensuring that they are totally present and prevalent” in the ecosystem.

This is critical when it comes to push marketing, a term Karim uses to refer to the segment of mobile advertising that includes text messaging. It’s here that mobile operators “add huge value” because of the relationships they manage. “They have the inventory, they have the mobile numbers, they have the location, and they have all the billing information.”

Mobile operators — and the brands that deliver marketing via their networks — also have a responsibility to ask permission first.

Why?

One, local market conditions clearly favor an opt-in approach. After a period of ‘over-spamming’ regulations are cracking down, introducing tougher legislation to stem the tide of spam delivered from foreign companies via international gateways in the operator networks. Likewise, Karim explains, mobile operators are also becoming “less tolerant” of spam that is sent via local aggregators through local gateways.

Spamming is “non-sustainable and mobile operators understand this,” Karim notes. “This is why the operators’ mobile advertising models are shifting to an opt-in model, rather than an opt-out model.”

Second, companies across the ecosystem are beginning to understand the benefits of conducting a conversation (via text) with consumers. “With an opt-in model you can gather information with the users’ permission, thereby making your advertising more relevant and more interesting to the user.”

Because the advertising is more relevant to the individual (aligned with the interests and topics they have provided through their responses to text messages from the brand), it creates a kind of virtuous circle.

“The people want to see more of it [ads] and that adds more value to the brand.” As a result, brands and agencies have an answer to the most important questions in advertising: who is the audience and what is their profile?

As Karim puts it: “It’s a win/win/win.  The user gets what they want to see, the client is reaching  who they want to target, and the advertising agency is making money.” These benefits mean permission-marketing is the “way the market is moving.”

Social media opportunities

The revolution in Egypt made people aware of social media tools. However, Karim says the experience has also been a boost to social media marketing and approaches that truly speak to the people.

At one level, it paves the way for cross-media campaigns that integrate mobile, online and social media. (In fact, Karim reports more of his brand clients are moving in precisely this direction.)

“The revolution has shown us the importance of a cause. A cause plus social media equals a major result. What we see now, and this is where the opportunity for brands lies, is that the cause for a brand could be a brand positioning, could be a new product launch, could be whatever it might be.” Get the alignment right between the brand and the cause, then ad social media to amplify the message. “Then you get the huge power and the momentum that you saw with the revolution.”

To be clear, the revolution came from the people. Twitter and Facebook were important enablers. However, now that people use and understand social media, it’s become a tool that brands can also leverage to create a meaningful dialogue with their audience.

Permission-marketing and effectiveness

Permission-marketing can deliver positive results for all brands across all sectors. However, there are some scenarios where opt-in really pays off.

“Permission-based marketing is very effective when we’re talking about promotions and where you’re asking for a call to action,” Karim says. It also work well when the campaign focused on creating a conversation that should end in a conversion (such as a purchase).

In cases where the end-game is brand awareness, then brands might want to integrate what Karim calls pull advertising (in-app advertising, display, search other formats that are triggered by a consumer action such as browsing and clicking).

How should agencies approach permission-marketing and what are the requirements of an effective campaign?

In Karim’s view, it’s all about the creative.

Specifically, agencies need “strong creative content and a strong creative idea” that will allows a “long-term flow” of messages (in both directions). “Creativity and the message is key and that will really drive and maintain the interest and the engagement.”

The way forward

How will mobile marketing evolve given our passion about social media and our interest in having conversations with the brands we like?

Karim believes the world will be very different in the next decade. Instead of brands selling, it will be the people deciding if and how they want to listen.

“The model is going to change and users are going to be targeting brands. I’m going to select which brands I want to talk to and the tables are going to turn,” Karim explains.

“You’re going to be the one who says I want to hear from this brand or that brand. And permission-based marketing is going to go full swing around and result in us selecting the brands we want to talk to us.”

Disclaimer: News and views across the mobile marketing ecosystem is sponsored by Optism, an MSG client and supporter.

To increase revenues, differentiate services and reach a wide and willing audience with mobile advertising, Ghana’s mobile operator Tigo has become the first in the country to introduce permission-based marketing.

The opt-in service, Tigo Ads, delivers mobile advertising aligned with preferences of its subscribers because it asks them first. The service is based on the Alcatel-Lucent Optism mobile marketing solution

In practice the service invites subscribers to share information with Tigo about their interests and demographics (age range, sex). This information ensures subscribers receive text messages (containing important news, promotions, discounts and exclusive offers) from their favorite brands.

A raft of recent research –including Tigo’s own focus groups — confirms that people are more receptive to marketing messages when they have explicitly agreed to receive the ads in the first place.

In the case of Tigo, a whopping 90 percent of focus group participants said they approved permission-based mobile advertising.

So how does the Tigo Ads service stack up?

During the limited initial launch more than 40,000 subscribers opted in and used the service. At the other end of the spectrum, advertisers — local businesses as well as global brands including Nissan and Volkswagen — reported response rates ranging between 18 and 45 percent. This is significantly more than the single-digit (less than one percent on average) response rates achieved by brands using online and digital advertising channels.

Permission and advertising opportunities

These impressive results have moved Tigo to open up its mobile advertising service to all its 3 million subscribers. “This new service is one that we are particularly excited about.  It helps our business customers reach their customers and it gives us insights into what our customers are interested in, so we can better serve that segment as well,” Rosy Fynn, Consumer Manager Tigo Ghana, said in a statement. The operator regards the service as a “true asset for all members of the mobile advertising ecosystem, because it acts as a key tool to help us to better understand and meet each customer’s needs and preferences.”

Tigo isn’t the only one to benefit from permission marketing, an approach that allows it to market its own services better to subscribers. Brands are also positive about the value of opt-in, a process that provides them with access to an audience that will accept — and appreciate — their marketing message.

“The mobile campaign we ran with Tigo Ads brought us to a wider audience than any other form of digital advertising in Ghana,” Haadi Bawah, Marketing Manager of Auto Parts Ltd, distributor of Nissan automobiles in Ghana, said in a statement. “The response rates to the Nissan Patrol campaign were extremely positive, and we gained insight into consumers’ needs that we can use to shape future campaigns.”

Nissan case study

Auto Parts Ltd, the exclusive distributor of Nissan automobiles in Ghana, wanted to generate awareness of the new Patrol SUV. To this end the company’s campaign leveraged interactive text dialogue to connect with Tigo subscribers who expressed an interest in receiving automotive advertising.

The first message asked people to identify what was most important to them when evaluating an automobile (safety, features, performance or comfort). After answering this query the conversation continued with a second text message emphasizing the aspect of the vehicle that was top of mind with that type of subscriber (information the brand knew because it was contained in the response to the initial question).

For example, a subscriber who answered that performance was what they looked for first and foremost in an SUV received a text detailing the vehicle’s powerful V8 engine. The call to action included in this message encouraged subscribers to call a local dealer for more information. (To encourage maximum response rates replying to all text messages is free of charge.)

Results:

In total 14.3 percent of women responded to the campaign, compared to 12.8 percent of males.

• 15 to 24 year-olds were most responsive age group.

• Overall, 20 percent responded to the campaign, volunteering what they look for most in a car (safety, features, performance and comfort).

As a result, the campaign also shed important light on what matters most to consumers considering a car purchase. Safety emerged as the most important factor for the majority of consumers (9.78 percent). This was followed by features (4.26 percent), performance (3.48 percent) and comfort (2.58 percent).

Interestingly, some people were so eager to engage with the company that they ignored the four options displayed on their screen (safety, features, performance and comfort) and sent text messages back to Nissan asking the price for the Nissan Patrol model car.

My take:

Another case study that confirms the high response rates achieved when advertisers use permission marketing to start — and continue — the conversation with people who want to listen. The Nissan distributor reported a 20 percent response rate, which is impressive. However, the real story is the enthusiasm of the audience (people interested in automotive advertising in the first place) for the campaign. Although the advertiser didn’t specifically request it, some people texted the company to ask the price of the SUV. It’s a reaction that doesn’t only exceed expectations; it underlines the effectiveness of mobile marketing campaigns that truly strike a chord with their audiences.

Editor’s note: What are the key characteristics of the market in Ghana? How have consumer attitudes toward mobile advertising evolved? What is the business value of permission marketing and how has this impacted Tigo’s mobile marketing strategy? These are just a few of the questions we ask Tigo in an exclusive interview later this month – so watch this space.

Disclaimer: Optism is an MSG client and supporter.

Few major brands are as sophisticated in their use of the mobile channel as Coca-Cola. To date the company has embraced a wide variety of activities and mechanisms, including apps, games, high-performing SMS campaigns, and even a music download store. At the other end of the spectrum, Coca-Cola has also reported successful mobile commerce trials involving mobile phones and specially equipped vending machines.

Coca-Cola is also one of the first to actively embrace branded apps. In December 2010 it joined with the GSMA to sponsor the Brand App Challenge, a competition in which mobile app developers created “brand apps” for a select group of global consumer brands, including Coca-Cola, with its Coca-Cola, Coke Zero and Diet Coke brands.

While Coke has been quick to jump into branded apps, some recent reports question whether applications can deliver positive results across the board.

A survey of 781 adults in the U.S. conducted by EffectiveUI on behalf of Harris Interactive found the vast majority (76 percent) of mobile app users felt that all brand name companies and organizations should have mobile apps to make shopping or interacting with them easier. However, 38 percent of mobile application users revealed they were not satisfied with most of the apps currently available from their favorite brands. What’s more, 69 percent reported that a brand name mobile app that is not useful, helpful or easy to use, results in a negative perception about the brand.

“Mobile applications are the sure fire way to extend a brand,” Rebecca Flavin, CEO of EffectiveUI, said in a statement. “It’s time for organizations to understand how to fully leverage the mobile channel and optimize a user-centered approach to drive adoption, as well as reinforce and drive brand loyalty.”

What is the business value of branded apps? Which marketing approaches deliver the best results? How has Coke harnessed mobile to encourage brand engagement and deliver effective (even location-linked) mobile advertising? We ask Tom Daly, Coca-Cola Group Manager, Global Connections.

***

Q: Coca-Cola is a mover in the mobile space. Your company is a premium member of Mobile Marketing Association (MMA) and active in promoting the benefits of the mobile channel. Why is mobile so central to your strategy?

A: You need to first understand how we see mobile. For us it’s all about idea of making mobile an “enabler of desire”. Essentially, our mobile strategy was written some 70+ years ago, way before the first cellular connection was ever made. Back then it was about putting our brands “within arms’ reach of desire”. That sentiment was expressed by Robert Woodruff, who was our chairman. That was the way we defined the company’s role as a brand marketer, and as a partner to the bottling companies that manufacture and distribute our brands and our retail partners who carry our brands.

Our task is to create desire for the brands that we create. We have a choice: we can make the mobile phone and enabler of desire, or we can make it a barrier to desire. We chose to make mobile an enabler.

Q: Desire is the end-game – making consumers want to and be able to connect with your brands. What are the recent mobile activities you have pursued to achieve this goal?

A: We use all the mobile mechanisms available. Take simple SMS. We use SMS in a campaign that allows consumers to earn free airtime. They just purchase a Coke and text the code on the packaging to receive free airtime or free text messages. Teenagers, in particular, love our brands and love their phones, so it’s a natural marriage, if you will. It’s a great opportunity to leverage consumer desire for Coca-Cola and mobile.

For the World Cup we did a great program where we let consumers express their feelings about the brands using mobile. Consumers could upload videos of how they celebrated the goals. So this is a great expression of people’s passion and energy for football, which is their same energy and passion they have about Coca-Cola. We connected the two using mobile videos.

Q: One of your most successful campaigns has been Gimme Credit [implemented by OpenMarket], which received an award from the MMA for its effectiveness and exemplary use of mobile. What can you tell me about the campaign and the key learnings?

A: Yes, that’s the campaign I mentioned that gives consumers free airtime. We have rolled it out in multiple markets and it’s been successful everywhere we’ve tried it. As a company we are testing and learning what works not in one market; but in many markets. We’ve learned that there are certain things that consumers everywhere want and Gimme Credit is success because people want free airtime and rewards for their purchases.

We’ve done something like Gimme Credit in India, the U.K. and Germany, and we’ve done it in tests in the U.S. as well. The challenge – and the opportunity – is how to get scale. The next step is to get the scale of The Coca-Cola Company and the scale of mobile technology aligned so we can really start building bigger, more broadly accessible programs. That way, by the time we get to events like the London Olympics or the next World Cup, we will have the ability to deploy these mobile campaigns on a much larger scale and on a much more global level.

Q: Gimme Credit is universally accepted, universally appreciated. But brands still have to have a local focus. What are the tensions or challenges of being a global brand and maintaining a local focus?

A: The challenge is to develop powerful core ideas for a campaign and then to localize the “art” of execution, while scaling the “science”.  One way we accomplish that is to empower a country to take the lead for certain global initiatives. For example this year’s [2010] Festive campaign is a global campaign with the digital –including mobile – led by teams in Germany. Whether you celebrate Hanukkah, or Kwanza, or Christmas, or have just celebrated Ramadan – it’s all about family and bringing people together. Coca-Cola is a part of that experience, but there’s enough that is similar to create common experiences around the world and across digital and mobile campaigns.  Broadly speaking, that’s the territory of the “big idea”. From there, we find ways to scale while at the same time enabling maximum flexibility for localization.

Q: Staying with the global push for a moment, how do you manage these, to drive global mobile services and marketing innovation at Coca-Cola?

A: It’s a disciplined process, as you might imagine. The key is to keep a clear understanding of the roll out and who is doing what. So, we may have a single lead agency for mobile, a company that is doing work at the center. The work they do and the deliverables they are responsible for are clearly defined. There may be a transition to a local agency that has the latitude to take a hand- off related to certain core ideas and assets.

We have elements that can be reused across geographies. It’s back to the idea of scaling the science and localizing is the art. Underlying it all, from a technical point of view, are well documented standards and processes.

Q: You are sharply focused on mobile and it is listed as a line item in your budget, which is quite a statement. Could you quantify for me the opportunity in mobile for Coca-Cola?

A: I can certainly share are a couple of data points with you. We serve our products 1.6 billion times a day, which means that 1.6 billion servings of Coca Cola are poured every day.  There are five billion mobile subscribers worldwide. Do the math and there is a lot of opportunity to use mobile to reach these consumers. And again, when you think that our core strategy is about enabling desire for our brands, then there is also opportunity to use mobile to reach and retain many of the five billion consumers who have mobile and may not currently drink Coke, for example.

Mobile is a line item in the budget. Mobile is included because we know we need to manage and understand mobile. Most importantly, we can not treat mobile as a standalone activity. We know that mobile works best when incorporated in a larger marketing context. So, to help us understand the optimal mix, we’re keeping track of it along with other line items. I can’t share the precise trajectory, but it wouldn’t surprise anyone to know that mobile is growing.

Download the updated Netsize Guide 2010 to read the rest of this interview.

Editor’s note: The new Netsize Guide edition includes:

• Fully updated 2010 telecommunications market data on 40 countries globally
• Quarterly trending market data covering the period Q3 2009 to Q1 2010
• 33 interviews with thought leaders from the mobile industry and other sectors, including retail, advertising, and entertainment.
• New to the updated Guide are interviews with Tom Daly, Group Manager, Global Connections, The Coca-Cola Company; Fabrizio Capobianco, Funambol, CEO; Patrick Mork, CMO, GetJar; Eric Blumberg, President, Products & Technology, Smarter Agent; and Sienne Veit, Business Development Manager, New Technologies, M&S Direct (Marks & Spencer’s).
• The results of the Mobile Trends Survey 2010, an online survey asking +1,000 mobile professionals and practitioners their views on these key themes and their insights into trends that top the industry agenda.

Please take a moment to take part in our Netsize Guide reader survey. The questionnaire will take a few minutes to complete, and your feedback will help us to stay focused on what matters to you.

Disclaimer: Netsize is an MSG client and supporter. Peggy Anne Salz is the author of the Netsize Guide.

The best response came from @iboy, who shared a “visualization of what Amazon will do to other Android app stores.” It’s a eye-opening image that should have alarm bells ringing in operator and OEM board rooms — everywhere.

Granted, it may be too early to call winners or losers, but thanks to my guests — Matt Anderson (@matt6156), active blogger and outspoken commentator on the industry who also heads up product marketing at Amdocs Interactive, and Ajit Jaokar, author, speaker and mobile app authority — we have a clearer idea of the capabilities mix (retail know-how, billing systems, consumer trust) that will likely separate the leaders from the also-rans.

I caught up with Matt for his take on the app chat and his response to some of the more exciting comments and arguments that made last week’s Tweetchat such a success.

***

Q: There was huge response to the question about the impact of the Amazon app store. You stated that Amazon is really “making an assault on the mobile payments market.” What is your reasoning here?

A: Originally; Amazon had retail apps on the iPhone, then they announced their app store for Android devices. This move prompted an  immediate reaction from Google. Google came out saying it was going  to improve discovery, enable direct billing and in-app billing. They have to make these improvements to keep developers happy versus losing them to Amazon.

Now, Amazon comes out saying it is interested in entering the mobile payments market. It has a payments division and so it can do things around allowing people to purchase any goods through the service, or enable people to gift and things of that nature. So Amazon is covering a lot of ground, not just app stores but commerce everywhere.

Q: @AjitJaokar called the entry of Amazon a game-changer and others, such as @yeswap, applauded the new distribution model. Your tweets are more cautious and you warn operators to read the writing on the wall. What is it about the Amazon model that makes – or should make – other app economy players apprehensive?

A: Yes, all players should be looking at Amazon — not just operators, but also other OEM app stores and independent app stores. Basically, if you’re in the mobile payments business, you have to watch Amazon. But the threat is different depending on where you sit. Amazon doesn’t have global reach, so the markets where Amazon is not a leader — markets outside the U.S. and much of Europe — are not regions where the operators and app stores have to be on their toes. But in markets such as the U.S. I can definitely see other app stores losing share. As far as the mobile operators are concerned, there are carriers such as Telefonica achieving success in the app space. But, overall, I don’t believe operators are going to have a real big play in app space.

Google’s strategy

Q: Let’s move to Google. @yeswap was rather convinced that Amazon has “the potential to out-execute” Google. And @iboy called it like it is with his graphic indicating that Amazon is going to eat everyone’s (app) lunch. What is the real message here and how can OEMs stay in the game?

A: I love that graphic, that was great!  In my view there’s not going to be one app store that will monopolize the market. I think there’ll be a few big ones like Amazon, Apple, the Google Android Marketplace, and, potentially, RIM’s App World. The market will consolidate resembling what we saw in the early days of mobile when a lot of smaller operators were eaten up by the larger ones. As a result, you have 3-4 major operators in each country. Why no mobile operator app stores? Because they don’t have the distribution that these big app stores have. So, if they want to be successful and get up to par with Amazon, they need to improve their merchandizing capability through discoverability of content and through recommendations. And operators need to focus on direct billing. This is what Google and Nokia are doing because they know consumers prefer to purchase an item and put it on their monthly mobile bill.

Q: And what about the mobile operator? @AjitJaokar warns that operators are only looking at Google when they should really be watching their back now that Amazon is in the app store space. @iboy also pointed out that Amazon can market blockbusters, so Google “will be happy to let them help Android grow.” Is a duopoly scenario taking shape here? And where does it leave operators?

A: I suspect that Google’s whole business model is built on advertising, so I’m sure they’re much more interested in making money off advertising than they are in selling apps. So @iboy is on the mark here. So, yes, Amazon might help Google sell more Droids and make more money off mobile advertisements.

Q: We speak about companies dominating the mobile app space from a retail perspective. We have over 100 app stores and many, myself included, think it will play out according to the rules of Retail 101, with niche app stores and app hypermarkets selling to us in peaceful coexistence. However, @james_monaghan challenges us to see this differently. In his view “the real question is whether consumers will search multiple stores for apps, or if we’re expecting one to dominate.” What is your view and why?

A: I don’t think that there’s going to be any one app store that dominates the market. It really depends on the device the users have in their hand. If they have an iPhone, they’re going to probably use the App Store. I doubt consumers will do comparison shopping with other app stores out there.  If they have a Nokia device, they’re going to use Ovi. If they have an Android device, they’ll either use Android Marketplace or Amazon, depending on the region or country, or brand affinity. Another factor is convenience. If they like purchasing things through Amazon and have an account with Amazon, it might be simpler to buy apps there than through the Android Marketplace.

Operators need to focus

Q: When it comes to the mobile operators, some ‘get’ it and others have a way to go. Many participants agreed that Bluevia offers a blueprint. And others pointed out that  mobile operators must expose APIs. (According to @james_monaghan these are: billing. location, user profile and implicit social network). Of course, @iboy was among the most outspoken and declared that “if operators don’t get off their collective asses pretty soon, they’re destined to become a commodity.” What are you advising?

A: Value-added services [VAS] is a small portion of mobile operators’ business overall. They’re making a lot of their investments in building out their 3G and 4G networks and  VAS is a way they can return the investments in these networks, create a better experience and more stickiness. So their mindshare is really on a lot of other things within their VAS business units. But they also need to focus on direct billing and Internet billing. James Monaghan made an important point: there’s a big play for mobile operators in personalization as a service to third-party app stores and mobile payments companies. Mobile operators have so much information about their customers — their location, their purchase history, demographic information. In fact, they even have more than Google does. If they expose this to third-parties, allowing these companies to better recommend goods to consumers, then the mobile operators become the Amazons. Location is useful, but operators are very late in the game and now the OEMs are really diminishing the value of what operators can charge for location as a service.

Q: Staying with the operator opportunities, you say the revenue pie will be bigger but the slices will be smaller. What can operators expect and what’s behind the numbers you offer?

A: The entire commerce market is divided into a number of different segments. First-generation is basically the traditional on-portal and off- portal business. Operators there typically get 60 percent rev share for on-portal, and 40 percent for off-portal. These are all numbers that go through our system. When you get into the application market it’s 25 percent. But I’ve seen Microsoft allow operators to take 11 percent, so let’s just say that the application market can be anywhere from 11 percent to 25 percent cut of revenues. For virtual goods, like Facebook credits, operators are getting about 12 percent rev share from the mobile payments companies. As you get into ticketing and m-commerce, it’s really a new market that’s taking shape. We don’t see these revenues going through our system yet, but I suspect that operators can’t get more than 5 percent from these new markets.

Q: Interestingly, @MrBov said that operators should expect 2x credit card share due to the higher conversion rate. he also argued that operators need to step out of support to make it viable. What are your views?

A: I agree — well, partly agree, with him. In the case of m-commerce, credit card companies traditionally get anywhere from 1-3 percent of every transaction. And then there are payment networks or other middlemen involved that will tack on another up to 2 percent. When you get into the mass market of purchasing goods, a mobile operator can charge 25 – 30 percent — just like they’re doing today in some of these segments. So, if you have competition of the credit card companies and the banks, the sheer volume of transactions becomes a critical mass. The markets will drive down the revenue shares that operators can expect to realize — otherwise people will not direct bill for that, or merchants or developers will just refuse to work with them.

Showdown with banks and credit card companies?

Q: You stated that the “battle lines are forming.” What is the fight and what’s at stake?

A: Ultimately the battle is going to come down to m-commerce. The credit card companies see the writing on the wall. They know the power that mobile operators have because they have the billing relationship with customers. This is why we are seeing them aggressively pursuing opportunities to enter the market. An example is VISA’s payWave. We see a lot of activity in Europe as well, and financial institutions are going to really fight the operators hard on who’s going to control the future direction of this market. The OEMs, to a lesser extent, have influence here as well because a number of them are embedding NFC. RIM recently said it believed that the payment [details] should be stored on a certain place on the device, and the operators argue back that it should be stored on the SIM card. It’s all about who’s going to get a piece of the pie.

Q: It was a heated Tweetchat and we ran out of time at the end just as the debate around NFC was getting into gear. What is the excitement around NFC and why is it back on the radar? What opportunity/threat does it pose players in the app economy?

A: NFC is being hyped right now. I think it’s still a few years out before NFC will be deployed in critical mass. It takes time to convince all these merchants to replace their point of sale machines with new NFC-enabled machines.  The OEMs have also got to commit to rolling out NFC-embedded handsets. That’s why operators have a window of opportunity –  if, as @iboy put it: they can get off their collective asses. Operators can stay ahead of the game. I think NFC will emerge as the standard for mobile commerce going forward. I don’t see barcodes becoming the dominant standard worldwide.

Editor’s note: Ajit and I were blown away by the response, and I look forward to inviting @MrBov and other people from across the payments space (bloggers, analysts, enthusiasts) back for another Tweetchat. In fact, we plan to make this a monthly gig starting in May —  so watch this space and please spread the word!

Disclaimer: Amdocs Interactive is an MSG supporter and client. And Matt just plain rocks!

Jon Kwan — Head Of Strategy at M&C Saatchi Mobile, a full-service mobile marketing agency whose clients include Speedo, Harper Collins and Reebok — tells us what brands really want from mobile – and why.

A raft of recent reports and ad network data show that key factors, such as smartphone penetration, mobile Internet usage and unlimited data plans, are aligned to move mobile marketing a huge step forward.

Another indicator that heralds healthy mobile marketing growth is the decision by major companies to dedicate more budget to mobile. A survey developed by Jumptap, a provider of  targeted mobile advertising in conjunction with publisher DM2 Media, points to an upward trend. The first “State of Mobile Advertising” survey (released March 2011) aggregates responses from nearly 350 mobile advertising executives including brands, agencies, publishers and technology enablers.

Among the findings: 60 percent intend to draw their mobile budget from their current online budget. An additional 20 percent said that mobile will be an entirely new line item.

I caught up with Jon Kwan to get his take on ad spending trends (and momentum) and discuss the market dynamics driving increased brand interest in mobile marketing — in all its forms and formats.

Mobile marketing microcosm

A key indicator of mobile megatrends could be the evolution of M&C Saatchi Mobile itself. Since M&C Saatchi acquired Inside Mobile last April the company has “experienced a surge” in interest and activity, with more brands requesting proposals for apps and mobile sites. First it was about the iPhone, but Jon notices that more brands are waking up to Android apps, as well as apps for tablet devices and renewed interest in mobile Internet sites.

As a result the agency has grown from just 6 people to 30 in the London offices. More importantly, the roster of brands getting serious about mobile is also on the rise. “They are recognizing or having the foresight to start carving out their presence on mobile to stay ahead of the pack [of competitors]. But they are also on mobile because that’s where consumers – their audience – is.”

Exploration to execution

Last October Paul Berney, CMO of the Mobile Marketing Association, told the audience at the MMA Forum in London that the industry had officially made the milestone move from evangelizing to execution. Does Jon see the same trend?

“Absolutely! Clients and consumers alike are much more savvy now. Some brands we have pitched in the past have come back a year later. The difference is: now they have a budget.” In fact, Jon reports “more enlightened brands are asking us to look at mobile strategy for the next three years.”

Granted, mobile may still be a small portion of brand budgets, but it is a number that is on the rise. As Jon puts it: “This year has seen a decent increase in spend, especially in mobile media.” Put another way, brands are not just dipping a toe in the water. Today “it’s more like a foot or a leg up to the knee.” However, high-profile successes and case studies are offering undeniable proof of the power of mobile. “Brands can’t ignore the transactions and just the amount of engagement that campaigns, [mobile] websites and apps generate.”

So what needs to happen to move the dial on mobile ad spend?

Jon says this is starting to happen already. Increasingly, brands are understanding that it’s not just about first-mover advantage. It’s about the hard truth that people live their lives on their mobile devices. “It’s just a natural progression. Mobile is where people are starting to engage [with brands].” The brands that “get” it are moving full-steam to connect with consumers. “There are still cautious brands that will wait, but they will spend more [in the end] because they wait.” It seems that mobile — like money — never sleeps.

Combine, don’t compete

What are the barriers and how has this changed over the last months? I recounted the arguments we hear at industry events and conferences  and asked Jon to weigh in with his real-life observations.

Is it the agencies — organizations incentivized to deliver campaigns focused on reach and frequency – who are losing the plot when it comes to harnessing the personal nature of mobile to deliver results?

Granted some agencies may still have a lot to learn about mobile, but Jon says there’s no ignoring what the client wants. “I don’t think agencies have a choice. Consumer behavior has changed and will lean even more towards mobile as people move their daily routines — everything they do and were doing online — to mobile.”

Admittedly, “the money around the average TV campaign is much more than a mobile app and promotion campaign.” But the competition for spend isn’t as fierce as it used to be. The emergence of cross-media campaigns that harness all media (from text to TV and billboards to barcodes) mean that mobile is “another string on the bow.” Agencies and their clients have a new mindset. “It’s about how to make the most of mobile and integrate it into their thinking, rather than thinking about what mobile might replace.”

Numbers that count

What about the metrics? Is a mismatch between CPM and CPC (measurements that reward a mass-market reach) hindering the development of mobile marketing?

The argument is that mobile marketing – unlike broadcast – requires the advertiser (and the agency) to tailor the message to the medium (and the audience). So it’s a different game with different rules. Should it be measured (and valued) differently?

For Jon, the metrics from the online world translate to mobile. But there is a question mark when it comes to conversion.

“In terms of the value, how we calculate the value of a brand being able to engage with a person in a personal way on their phone, is something we [as an industry] need to focus on.” But Jon doesn’t expect easy answers. “There’s a dark art to trying to put a monetary value on that level of brand engagement.”

Conversation and creatives

New devices may open up the door for more innovative and eye-catching campaigns, but mobile is much more than technology. “Tablets have these wonderful, crisp screens which allow agencies to have more creative flair. However, it’s imperative to create advertising that is relevant and engaging. Otherwise, the ‘wow’ factor will fade.”

As Jon sees it: “It’s a mistake to get too obsessed with mobile-specific technologies.” No matter the device, similar rules of engagement apply. Even if the campaign is about an app, the mindset must be cross-media. “We strategize with the client and map out how the consumer touch points can be engineered so a conversation is happening.”

The key is “not to be myopic in thinking about how else to engage merely in terms of mobile.” Jon takes a big-picture view. “We plan when they can receive an email, as well as a SMS or push message. We also recognize the value of Facebook and Twitter in continuing the conversation.”

And then there is the inherent value of a two-way exchange. “There are added benefits to the consumer of opening up this conversation… As soon as a brand launches an application, consumers can immediately pass judgment through ratings and comments. This feedback loop not only allows brands to improve their offering, it also encourages them to deliver something exceptional from the outset.”

The scenarios are many — and depend on the client and the objective. For some it makes sense to send consumers a text and then point them to a destination such as Facebook – which consumers can access on their phone — for push notification alerts. Retailers, on the other hand, might connect with an opted-in consumer to deliver a coupon. “That’s a good opportunity to send more messages and deepen the engagement.”

In the case of apps, free downloads can break the ice with consumers. “Once they have the app and engage with it, then you can communicate through that. If we want to send push notifications via an app, for example, we need an opt-in.”

The fact that the consumer downloaded an app often sends a signal that the individual is likely interested in the brand in the first place. “The consumer downloads it and then gets a message: “Tick the box if you want advertising about ‘xyz’. It’s a positive because it makes marketing easier. You have an audience downloading something about your brand that they find relevant and then you can ask if they want to know more about the brand’s latest products and services.”

No matter the format, Jon stresses, the aim is the same. “With the crowded media landscape it is important to think about how to encourage consumes to come back to a mobile application, a mobile site, or just connect with the brand on their mobile device.”

Watch this space

What is high on Jon’s radar? His answer that is aligned with the explosion of interest in mobile retail, commerce and schemes that encourage consumers to use their phones to interact with the physical world. “NFC [near-field communication] will be huge.” Why? For one, Google has purposely steered away from barcodes and is investing more effort in the development of NFC (a mobile payments capability that is built into its Nexus device, for example.)

“We’re starting to see it built in phones at the same time that retail is waking up to the opportunity,” Jon says. “It’s how these brands use it — and the level of creativity in their approaches — that will make it interesting and attractive to consumers.”

Disclaimer: News and views across the mobile marketing ecosystem is sponsored by Optism, an MSG client and supporter.

These are a few of the questions I explore in a podcast interview with Matt Anderson, an active blogger and outspoken commentator on the industry, who also heads up product marketing at Amdocs Interactive. Tomorrow (April 6, 5 pm CET/ 11 am EST ) Matt and Ajit Jaokar, author, speaker and mobile app authority, join me in a Tweetchat (#doxchat) to debate how the App Economy might play out and the impact on all the players.

Mobile payments

Matt is back from a “world tour,” a trip during which he had the opportunity to speak with mobile operators and learn how they see the market and the challenges. He reports that mobile operators are increasingly aware of the larger opportunities in mobile payment, but they aren’t the only ones.

“You’re also seeing the emergence of these mobile payment companies like BOKU and Zong that are billing on behalf of basically any merchant, any merchant out there – it could be an online merchant, anyone….So, there’s a lot of money to be made out there on buying virtual goods, and consumers prefer to direct bill or put purchases on their mobile bill. If operators don’t seize the opportunity, the profits are going to go to other people.”

Real transactions

Based on the close to 7 billion transactions that have gone through Amdocs systems since 2004, Matt can confirm the steady move to off-portal (off-deck). “What I’m seeing is: if you look at on-portal versus off-portal in terms of revenues, off-portal is growing a little bit faster than on-portal. This is primarily in the North American market where most of our billing customers are.” Why the shift to off-portal? One key driver is the success of off-portal merchants with a subscription model.

Moreover, smartphones are driving more off-portal traffic. In the U.S. it’s roughly “a little bit more 50/50 with the trend toward off-portal.” Latin America, Matt adds, is more like “60 percent off-portal.”

Direct billing

Currently, North American carriers are “more advanced” when it comes to understanding (and advancing) a direct billing strategy. Europe is also a similar story. Latin America is seeing more action, with off-portal on the rise.

Asia is diverse. In India, where mobile operators have been able to take a whopping 60 percent of revenues, the market is out of balance. “I think worldwide operators get the opportunity, I’m not sure if they get the urgency of getting into the business and asserting themselves more aggressively [in direct billing]. But they’re also going to have to pull back and share more with customers.”

Matt suggests that mobile operators will have to accept that their share of the revenue will fall. However, even 20 percent (what Amazon is charging, for example) is still a sizeable piece of the revenue pie. “The market’s huge, it’s a $327 billion market, so there’s lots of money to be made and if [operators] can get their 20 percent or whatever, that’s a significant revenue stream.”

Last Call: #doxchat Tweetchat

Come join Matt Anderson and Ajit Jaokar, author, speaker and mobile app authority, for our tweetchat on the  Mobile App Economy. Participating is easy. You just follow the hashtag #doxchat – and include it in your tweets.

WHEN: Wednesday 6 April, 11am EST / 4pm GMT

Check time in your region.

Everyone is invited and I hope to see you there!

Podcast interview with Matt Anderson

Listen to the podcast here [14:40].

Disclaimer: Amdocs Interactive is an MSG client and supporter.

The timing of this shift in strategy is interesting, and no doubt driven by two factors: the concern of individuals about their personal privacy and the desire of brands to conduct an ongoing dialogue with people who — because they opted in — are likely to appreciate the advertising they receive.

How might the privacy discussion and the rise of permission-based marketing impact advertising strategies moving forward? Where does opt-in fit in the mobile marketing mix? And how should marketers approach social media marketing on mobile?

These are just a few of the questions I put to Jeff Hasen, a brave voice in the mobile marketing industry who just last week joined the Mobile Marketing Association’s Consumer Best Practices committee, where he will focus on outlining global best practices as they relate to protecting the consumer’s private information.

Jeff is also the CMO of Hipcricket, a mobile marketing and advertising company that has implemented some 80,000 mobile campaigns centered on opt-in. The company then supports this dialogue (and a call to action) with traditional media such as print, outdoor billboards, online, email and radio/TV.

An example of this the recent campaign (with results) for Simon Malls, part of the Simon Property Group, an S&P 500 company and the largest real estate company in the U.S. The use of opt-in (to kick off the conversation) and the sharp focus on building customer loyalty (as opposed to a one-off promotion) resulted in a 34 percent conversion of consumers joining the mobile shopper club. In addition, the campaign achieved a 68 percent opt-in response off a traditional radio campaign, proving that integrating mobile in a cross-media campaign drives positive results.

As Jeff explains: “We’re big proponents at Hipcricket of a pyramid strategy… where you start with reach and that’s SMS. SMS is a beautiful bridge to the next engagement. You might be able to embed a link in an SMS campaign that would provide a richer experience, it might take them to an app or it might take them to a mobile website…Respectfully, marketers should listen to what consumers are telling us….[they] are saying that they want to be involved in permission-based campaigns.”

Listen to the podcast here. [14:48]

Disclaimer: Optism is an MSG client and supporter. Jeff Hasen contributes insights and columns to MSG

If this week’s hot news is any indication, then the industry is indeed in for a roller coaster ride as mobile payments (for everything, not just apps) becomes the next big battlefield.

Mobile Marketer tells us that American Express has taken the wraps off its Serve digital payment and commerce platform, offering person-to-person, online, mobile and traditional card capabilities in a single account.  The Wall Street Journal (via MoCoNews) reports that Google is building out its plans to push contactless payments (using near-field communications or NFC technology). Google has been talking up NFC for several months now, but now it’s also got MasterCard and Citigroup on board. And the list goes on.

So, what is the role of the mobile operator in the scheme of things? And, rather than limit the debate to the position of mobile operators in the fledgling app economy, shouldn’t we broaden the topic to talk about the opportunities for carriers in all forms of commerce?

Tweetchat – April 6

To start the discussion we are trying something new. Next Wednesday (April 6) at 4-5 pm GMT/ 5-6 pm CET we’re hosting a one-hour tweetchat about the mobile app economy and the impact on commerce when players including Amazon, Apple and Google compete for a piece of the action. (Click here to see the time in your region.)

I will host this live, online chat hosted on Twitter—all you have to do is follow the #doxchat hashtag on Twitter (and include the hashtag in your tweets). You can also participate by following the discussion directly on Tweetchat (http://tweetchat.com/room/doxchat). Joining us will be analysts, subject matter experts, folks from @AmdocsInc and Matt Anderson, head of product marketing for Amdocs Interactive, a distinct business within Amdocs focused digital commerce, mobile Internet and personalization solutions. Matt (@matt6156) is perhaps best known as the prolific and outspoken blogger over at the Amdocs Interactive blog, where he has consistently and passionately argued that mobile operators can stay in the game provided they rethink their strategy and accept a smaller cut of revenues.

Here are some of the questions that we’ll be looking at during the chat, and we’d love to hear YOUR ideas for questions or topics that you would like to hear addressed–just post them in the comments section below, or send them to @peggyanne or @msearchgroove any time before the chat.

• Q1 – What are the key content trends based on real data passing through your systems?
• Q2 – What is the impact of the Amazon app store & what does Google’s response tell us?
• Q3 – What is the role of the mobile operator?
• Q4 – What revenue share can/should operators expect?
• Q5 – With commerce poised to be THE next big thing in mobile – are operators heading for a showdown with banks and credit card companies?

Everyone across the industry is welcome to join in and participate, so please share with anyone who you think might be interested. We’d love for anyone who’s interested to join, and share their thoughts on the subject.

* * *

Join us! #doxchat

Event: Tweetchat on the mobile app economy — and beyond

Where: Twitter

When: Wed, April 6. 4-5 pm GMT/ 5-6 pm CET (Click here to see the time in your region.)

How: Follow the #doxchat hashtag on Twitter – or Tweetchat (http://tweetchat.com/room/doxchat) — and chime in!

Who: Anyone interested in the rise of the mobile app economy and its ramifications on the mobile commerce value chain. Service providers, analysts, researchers, app and payment experts, vendors, industry press. All are welcome!

So please, let us know if you’re interested, post any questions or topics you’d like to see discussed, let other people who might be interested know about the chat, and join us on Wednesday, April 6!

Disclaimer: Amdocs Interactive is an MSG client and supporter.

Each OEM is at a different stage on their experimentation with this technology. Nokia already offers several devices that support NFC; Apple is going ahead with its own NFC initiative; Google claims it will support mobile payments (via NFC) in the near future; and Blackberry has said it will support NFC in devices going forward.

At the other end of the spectrum, three of these major vendors have also indicated they want to pursue direct and in-app billing for their app stores, a strategy that will clearly grow mobile operators’ share of revenue pie.

Connect the dots, and we have a tension between two business models at opposite ends of the spectrum: NFC devices and strategies that threaten to cut mobile operators out of ticketing and mobile commerce transactions and mobile operator billing schemes for app stores that put operators back in the center of the action.

How should operators respond to the threat of NFC — and also grasp the massive opportunity around app stores?

I identify five actions mobile operators should take now (before contactless payments via NFC take hold in the marketplace).

Top of the list: mobile operators assert themselves in the growing and expanding commerce market segments now by positioning themselves as the payments gateway for any developer or merchant that wants to sell to their subscriber base. They should also experiment with mobile wallets and even take a leadership role in accelerating contactless payments to stay relevant and create new revenue streams.

Read the rest of my recommendations over at the Amdocs Interactive blog.

Matt Anderson is Head of product marketing for Amdocs Interactive, a distinct business within Amdocs focused on Value Added Services, which is the world’s leading provider of digital commerce, Mobile Internet and personalization solutions. Matt has over 13 years experience bringing products to market in the telecommunications industry. Prior to joining Amdocs in 2008, he directed marketing for Nuance’s mobile business unit, focused on market development of speech activation applications in the mobile, navigation and automotive industries. Previously he launched the next generation of T9 at AOL Wireless and was responsible for managing mobile VAS offers at AT&T. Matt also founded a start-up in the telematics business and managed marketing and sales for one of the first wireless data networking companies. Matt has an MBA from the University of Washington. You can follow Matt on Twitter (@matt6156).

Disclaimer: Amdocs Interactive is an MSG client and supporter.

Specifically, the survey of 1,100 users ages 18+ in Brazil, China, France, Germany, India, Italy, Japan, South Korea, Spain, the U.K. and the U.S. found that 65 percent of respondents in Asia and 32 percent of respondents in the U.S. and Europe would “welcome receiving personalized mobile phone ads when within a few steps of the promoted product or service.”

We want what we want

A similar split (59 percent in Asia and 32 percent) would “welcome receiving phone ads based on past purchases.” Connect the dots, and we have yet another data point that supports a much larger trend: a willingness to receive relevant mobile advertising.

Commerce and theft

Ironically, the focus of our fear may be shifting from the message (communication) to the transaction. While a significant percentage of respondents said they would like to be able to pay for goods and services using their mobile phones, the vast majority (73 percent) revealed they had significant privacy and identity theft concerns. Against this backdrop, companies now have responsibility to be transparent about how people’s purchase and payment data is collected and maintained.

Vanilla Plus expert opinion piece

Meantime, I am pleased that an in-depth analysis of the requirement for personalization over at Vanilla Plus continues to chalk up interest and downloads. In fact, the editors report in an email just last week that the Expert Opinion piece I co-authored with Matt Anderson, head of Product Marketing at Amdocs Interactive, has consistently been “top of the tree with regard to unique visitors” with nearly 900 downloads — and counting (!)

Matt and I outline the opportunities for personalized mobile marketing and targeted advertising. We conclude that mobile operators have a center role to play if they choose to do so. “First, it allows them to capitalize on the growing mobile advertising market by selling ad inventory on their portals and delivering ads via their messaging networks. Second, it enables them to sell more premium content and apps on their storefronts and capitalize on off-portal commerce by enabling personalized ads, recommendations and searches.”

The article continues with an analysis of a study in relevance in mobile advertising that measures of the effectiveness of personalized ads conducted by Amdocs Interactive. Vendor spin aside, the findings show that people will click on advertising that matches their interests and demographics.

My take:

Not rocket science really. People want what they want and they want marketers to get to the point. In a world where our measure of relevance is ourselves (recommendations and advice from our peers or just people like us, for example), it makes sense that we are not so interested in listening to messages we feel are not in tune with our lifestyles or life stages.

I invite you to download the article by clicking the icon below and share your feedback.

Disclaimer: Amdocs interactive is an MSG client and supporter.

Editor’s note: We continue today with part 2 of this series looking at the opportunities in mobile payments — and where mobile operators need to focus their efforts if they want to stay in the game.

Where is the real opportunity in mobile payments?

Developed markets are tough ones to crack, since consumers already buy a significant amount of goods and services (real stuff in real stores and digital content in the iTunes store) with their credit cards.

Still, there is a chance that consumers will prefer charging so-called first-generation content (content they are buying for the first time from independent app stores or virtual goods such as Facebook credits) to their monthly mobile phone bills.

However, the real opportunity for mobile operators is in developing markets where credit card penetration is low and the appetite for mobile commerce is high.

In India, for example, the government recently created a new agency that’s creating ID numbers for all Indian consumers that could jumpstart mobile commerce, enabling merchants to verify consumers and clear the way for them to make purchases using their mobile phones. (But even then the market will have to start with more basic billing technology such as premium SMS since less than 10 percent of Indians own a smartphone.)

What about other developing markets?

I outline the opportunities in other regions and argue mobile operators must do all they can to be the primary payment issuers for any transaction.

Read the rest of my post over at the Amdocs Interactive blog.

Matt Anderson is Head of product marketing for Amdocs Interactive, a distinct business within Amdocs focused on Value Added Services, which is the world’s leading provider of digital commerce, Mobile Internet and personalization solutions. Matt has over 13 years experience bringing products to market in the telecommunications industry. Prior to joining Amdocs in 2008, he directed marketing for Nuance’s mobile business unit, focused on market development of speech activation applications in the mobile, navigation and automotive industries. Previously he launched the next generation of T9 at AOL Wireless and was responsible for managing mobile VAS offers at AT&T. Matt also founded a start-up in the telematics business and managed marketing and sales for one of the first wireless data networking companies. Matt has an MBA from the University of Washington. You can follow Matt on Twitter (@matt6156).

Disclaimer: Amdocs Interactive is an MSG client and supporter.

According to M&S (Marks & Spencer), a leading U.K. retailer, the answer is all of the above.

Specifically, mobile has earned a place in every part of the sales cycle. From text alerts to customers on products and offers they are likely to appreciate (delivered only after customers have opted-in to receive them) to website functionality that allows them to buy what they want where they want, M&S has put mobile at the center of all they do.

What can other brands learn from M&S? Just before Mobile World Congress kicked off I caught up with Sienne Veit, Business Development Manager, New Technologies, M&S Direct.

Sienne and her team have been instrumental in developing a comprehensive and effective mobile strategy that has seen the department store chain earn worldwide recognition as a pioneer in mobile retail. By way of background, M&S unveiled a path-breaking mobile commerce site in 2010 that allows users to search, browse and buy from any web-enabled device. As of September 2010 the M&S mobile commerce site counts 1.2 million unique visitors, over 10 million page views and more than13,000 orders from site.

Mobile impacts customer behavior

Sienne reports that harnessing the mobile channel — and a well-chosen variety of advertising formats including text messages and a mobile-optimized website instead of mobile phone apps — has paid dividends.

“There’s really only one number that I can share: in the month of December [2010] we doubled our revenue from the month before…. So, I think for any retailers wanting to get into mobile, that statistic alone is great.”

Another number Sienne shares is the size of the retailer’s opt-in database. “One of the first things we did in mobile was to set up SMS broadcasts. We now have over 700,000 people subscribed or opted-in to receive messages.”

The text messages drive customers into the store. In fact, customers even contact M&S if they don’t receive the text messages and offers they think they should. “They contact us immediately and say I didn’t receive my dine-in text, please make sure that I’m on the database.  So, we’ve seen the absolute power of mobile to change people’s behavior.”

Opt-out options to consider

To date less than one percent have opted-out of M&S campaigns. But this low number is also due to how M&S poses the question. “It’s very easy to opt-out and we’ve stated the opt-out on every single message that we send you.  We have both specific opt-outs, so you can opt-out from just receiving food messages or a specific campaign, but not all of M&S. Or you can opt-out from absolutely everything, and we make that particularly easy.”

What is the benefit of giving the customer a choice and letting them opt out of specific campaigns? “It gives the consumer control and I think that they realize that this is a valuable service. We’re not spamming them; we’re giving them useful information. As long as we keep on doing that, we’ll keep our opt-out rate low.”

In addition, M&S merges the opt-ins back into its main CRM database to assist with customer segmentation and to ensure that the retailer exposes customers to the messages/offers they are most likely to appreciate.

Finally, M&S uses other media (print, direct mailing and 2-D barcode schemes) to amplify the call to action — and the request for customers to opt-in to receive alters.

Mobile in the mix

Is mobile a stand-alone? If you are ask the question, then you have a lot to learn. M&S started out treating mobile as an add-on, but it’s come to understand that mobile “has a place in every single part of the sales cycle from acquisition through to retention.”

Mobile is “still small compared to our other marketing media,” Sienne admits. But now the emphasis is on how to best integrate mobile into every campaign the retailer runs. “As you mature and become more familiar with it [mobile] and as your marketers learn more, you will see it becoming more integrated into your campaigns.”

Knickers and mobile phones

Sienne also elaborates on her excellent presentation during a recent MMA Forum in London. In it she drew a powerful analogy between M&S’s reputation for providing customers durable,  reliable white cotton underwear and the retailer’s conscious decision to introduce mobile to customers (and continue that interaction) in a responsible way.

Clearly, M&S also offers styles of underwear — thongs and lacy panties that are a far cry from the plain white knickers that customers know and trust. Likewise, marketers can also experiment and offer their customers something a little more exciting – provided they never lose site of the end-game.

It’s all about trust.

“We know that we have to offer trust as a core objective….We should never do anything bad with your data, or charge you or misuse your data. Once we’ve built up that trust –and when you as a customer are ready to move onto another device, something like mobile data — we will be there because you trust us with something a bit more exciting and inspirational, whether that be the mobile Web, mobile campaign sites or MMS.

The must-follow check list

I wrap up my interview with Sienne by asking her for her top mobile marketing do’s and don’ts.

Repeating the list here isn’t enough — so I urge you to listen to the podcast. However, here are three do’s to get you started.

1) Build trust by staying legal.

2) Be useful.

3) Have fun (!)

My take:

Of the dozens of brands and marketers I connect with on a regular basis for my work and research Sienne is one on my favorites. Check out my recent review of M&S strategy here. Her do’s and don’ts are to the point and emphasize what we should have top of mind: we are human. Introducing technology for technology’s sake is not an approach that will guarantee the interaction (or the level engagement) that brands seek to achieve. In the case of M&S, the commerce website is focused on allowing people to do what they want (search, browse, buy) regardless of their device. Put simply, people came first, not technology. In addition, text messaging (alerts delivered only after people opt in) supports other activities around the sale (such as customer acquisition, retention and customer care). As brands wake up to the tremendous opportunities around cross-media campaigns with mobile in the center, they will surely find that Sienne’s strategy offers them a valuable blueprint to follow.

Listen to the podcast here. [14:53]

Editor’s note: Thanks again for your positive feedback on this series and all the RTs. You can also follow Optism for their pick of permission-based marketing in the news (@Optism).

Disclaimer: Optism is MSG client and supporter.

Granted the App Store created an exciting (and single) marketplace for developers to create, test and sell apps to consumers. But the model also totally disintermediated operators from app revenues.

Since then mobile operators have sought to reassert themselves in the value chain by offering their own app stores, a me-too strategy borrowed from Apple that has so far failed to pay dividends for a variety of reasons.

But there is one strategy mobile operators would do well to copy down to the letter. (And it isn’t the Apple model!) Instead, operators should borrow a page from eBay, a commerce giant who made the grade by extending an API that allows others to sign up merchants on its platform. The result is a robust business ecosystem with eBay at the center of the action.

Connect the dots, and mobile operators have a lot to gain by opening up their billing capabilities to third-parties (an approach known in the industry as ‘billing on behalf of’ or BOBO).

Some mobile operators recognize the advantages of this approach, but they are not alone in understanding where the real money is.

Mobile payments start-ups and aggregators (such BilltoMobile, a direct carrier billing company with roots in Korea) also sense a business opportunity. BilltoMobile, for example, has direct billing arrangements with Verizon and AT&T — and just added Sprint to the list last week.

Are mobile operators correct in working with aggregators (effectively adding more mouths to feed in a value chain that is already in a huge state of flux?) Would it be better for mobile operators to open up their APIs and asset themselves in the value chain as the true billing experts?

I argue the later. My message to mobile operators: Don’t be a passive payment option. Cut out the middlemen and be the mobile payments platform for all.

Read the rest of my post over at the Amdocs Interactive blog.

Matt Anderson is Head of product marketing for Amdocs Interactive, a distinct business within Amdocs focused on Value Added Services, which is the world’s leading provider of digital commerce, Mobile Internet and personalization solutions. Matt has over 13 years experience bringing products to market in the telecommunications industry. Prior to joining Amdocs in 2008, he directed marketing for Nuance’s mobile business unit, focused on market development of speech activation applications in the mobile, navigation and automotive industries. Previously he launched the next generation of T9 at AOL Wireless and was responsible for managing mobile VAS offers at AT&T. Matt also founded a start-up in the telematics business and managed marketing and sales for one of the first wireless data networking companies. Matt has an MBA from the University of Washington. You can follow Matt on Twitter (@matt6156).

Disclaimer: Amdocs Interactive is an MSG client and supporter.

But why limit that approach to storefronts and app stores?

Mobile operators can refine this approach to insert themselves at the center of our social media exchange, a trusted position that is the cornerstone of a sustainable business.

The advance of smartphones (and their new importance as a social media tool) turn up the pressure on mobile operators to get involved in that exchange. Offering a content locker that aggregates their subscribers’ social media accounts and contact lists, is an excellent first step.

But it’s more than storage. Mobile operators can also add value by enabling users to share content (stored in the locker) or allow customers to recommend content they’ve purchased to their friends.

It’s easy to imagine a scenario in which mobile operators harness artificial intelligence to automatically display and recommend content to consumers based on where people in their social networks browse and shop – on and off-portal.

Read the rest of my post on the Amdocs Interactive blog.

Matt Anderson is Head of product marketing for Amdocs Interactive, a distinct business within Amdocs focused on Value Added Services, which is the world’s leading provider of digital commerce, Mobile Internet and personalization solutions. Matt has over 13 years experience bringing products to market in the telecommunications industry. Prior to joining Amdocs in 2008, he directed marketing for Nuance’s mobile business unit, focused on market development of speech activation applications in the mobile, navigation and automotive industries. Previously he launched the next generation of T9 at AOL Wireless and was responsible for managing mobile VAS offers at AT&T. Matt also founded a start-up in the telematics business and managed marketing and sales for one of the first wireless data networking companies. Matt has an MBA from the University of Washington. You can follow Matt on Twitter (@matt6156).

Disclaimer: Amdocs Interactive is an MSG client and supporter.

Mobile operators are now struggling to find their place in a value chain that is stacked in favor of the handset makers and OEMs that run the app stores. Sure, mobile operators can launch a competing app store. But the chances of success are limited. (In fact, we have yet to see a carrier leave its mark on the app landscape.)

So if distribution isn’t going to be operators key leverage point going forward, what is?

Operator assets

The answer becomes obvious when we examine Google’s strategy. The Internet giant recently admitted that it isn’t satisfied with the number of paid app purchases via the Android Marketplace. The solution: increased resolve to pursue carrier billing relationships (similar to the ones already in place with T-Mobile & AT&T).

Nokia knows this already. It recently reports that efforts to bring carrier billing to its own Ovi store have been paying off big for developers. In fact, Nokia claims that carrier billing has increased Ovi store application sales by more than ten times (!)

Connect the dots, and it’s clear that mobile operators have a hugely important role to play in this new app value chain provided they adjust their strategies.

Command and control

Rather than compete head-on with app store players (and make huge investments to build in-house app stores, for example), mobile operators should focus cultivating the assets that add real value to the equation. This means enabling payment (direct billing) and providing app merchants/developers with anonymized customer data.

In short: mobile operators have to focus on what they really control.

Read the rest of my post over at the Amdocs Interactive blog.

Matt Anderson is Head of product marketing for Amdocs Interactive, a distinct business within Amdocs focused on Value Added Services, which is the world’s leading provider of digital commerce, Mobile Internet and personalization solutions. Matt has over 13 years experience bringing products to market in the telecommunications industry. Prior to joining Amdocs in 2008, he directed marketing for Nuance’s mobile business unit, focused on market development of speech activation applications in the mobile, navigation and automotive industries. Previously he launched the next generation of T9 at AOL Wireless and was responsible for managing mobile VAS offers at AT&T. Matt also founded a start-up in the telematics business and managed marketing and sales for one of the first wireless data networking companies. Matt has an MBA from the University of Washington. You can follow Matt on Twitter (@matt6156).

Disclaimer: Amdocs Interactive is an MSG client and supporter.

Who better to ask than Martin Wilson? Martin recently published a critical look at companies’ obsession with delivering iPhone apps  (a condition he terms iSyndrome). In it he also urges companies to think through their decision carefully because an iPhone app doesn’t deliver the same value to every customer segment.

For a start, it ignores much of the youth demographic and fails to reach many regions across the globe for whom a simple feature-phone is the only phone. The reaction to his post and how comments via Twitter (and retweeted by mobile experts and influencers including Tomi Ahonen) was tremendous.

I caught up with Martin to ask him to update us on iSyndrome and discuss the wider implications for mobile marketers. In 2008 Martin founded Indigo 102, a leading independent consultancy built on a passion to drive the mobile internet environment. Martin has just come out of stealth mode with a new venture sharply focused on helping clients with branch networks publish content in a consistent, branded and managed manner across platforms to engage consumers.

Control freaks

So is the value chain broken?

It’s a tough one to call, but Martin (based on his first-hand experience inside mobile companies and first-hand experiences dealing with marketers) points out that biggest challenge for many is to “understand and recognize that there is a value chain in the first place.”

Another problem is the “continued obsession with control.” As Martin puts it: Many providers within the value chain are just simply trying to control all aspects. “I think the whole opportunity for the value chain is to recognize that partnering will bring the best of breed solutions to the market and it has to be the way forward, for the directory publishers, media owners, ad networks through to the operators.”

What is iSyndrome?

• iSyndrome: a symptom, characteristic, or belief, that building an application = mobile strategy.

What are the signs?

• Where you see individual and organizations following oversimplified mobile strategies focused on short-term results rather than long-term value, you see a company stricken by iSyndrome.

What is the solution?

There isn’t one. It depends on variety of factors including the nature of your business, your target audience/customer base and the priorities you have set in your business plan. But we can say that a mobile strategy requires a company to do much more than transfer a fixed online service to mobile (squeezing content or services onto a small screen, for example).

Martin argues that an app alone is not the answer. He also reminds us that recent reports document a massive percentage drop-off in the use of mobile apps once users have downloaded and installed them on their devices. In short, the novelty wears off.

“The other challenge in the iPhone is [developers] build these showcase services that are just not sustainable. They put all these very cool features in, such as augmented reality, but at the end of the day the mass audience can’t use them.” The upshot: disjointed development and isolated investment. “And very little strategy and strategic thinking that’s been applied to it.”

What works?

Marketing via an app misses a large part of the audience. However, marketing that adds value (using messaging to put contextual inventory in front of people who have opted in, for example) is on the money.

Anything short (such as non-contextual messages) can short change users. “When they are mobile, immediacy is often critical. So if these elements [such as banners] are slowing down the experience, they do hinder and they can actually be quite harmful.”

As Martin sees it: messaging covers all the bases.

“Apart from its natural usage as a peer to peer communication tool, I view the core opportunity around notification and permission-based marketing.” It’s also extremely important for marketers to balance how they integrate messaging in the scheme of things.  ”It’s not a broadcast capability; it’s very much permission-based and incredibly powerful.” The right application can “add significant value to the consumer and enhance the brand expectation or the experience for the individuals that are receiving them.”

Is 2011 the year of the mobile Web?

Let’s just say we’re going to see more emphasis on mobile. in the U.K. alone less than 3 percent of organisations have a Web and online presence that can be viewed on a mobile phone. “That has got to change.” Martin reports more companies are weighing the pros and cons of an app strategy vs. a Web strategy, and choosing the later.

To this end Martin founded The Mobile Web Company (no surprises there!).  The aim of this  specialist mobile marketing and services company is to support organizations, allowing them to deliver a “consistent, relevant and managed mobile Web presence that will offer value to an audience.”

My take:

Apps or Web? It’s a discussion that will be with us for along time. In fact, it’s the topic of a recent panel I moderated during the phenomenally successful M-Days in Munich ( a record 3,000+ visitors). There we came to the decision that it’s not either/or. It’s likely both depending on your business objectives. But that is precisely the point. It is a decision companies and brands should discuss and make based on what they want to achieve and the audience they want to reach. But a presence – on the phone or on the Web is not enough. The combination of context and conversation - adding messaging to the mix in the form of an opt-in notification, alert or an exclusive tip about offers/events that match the information the person has volunteered – is where the value is.

Listen to the podcast here. [14:30]

Editor’s note: Stay tuned for more from key players in the mobile marketing ecosystem, including marketing agencies (Hipcricket) and proactive brands (M&S). Until then – thanks again for your positive feedback on this series. You can also follow Optism – and their pick of permission-based marketing in the news and the handle is @Optism.

Disclaimer: Optism is an MSG client and supporter.

Interestingly, the findings of this survey dovetail with previous research from the Alcatel-Lucent Youth Lab. In November the Mobile Marketing Association (MMA) formally recognized the key importance of this research (and the role of Alcatel-Lucent for its work in this area). The MMA presented the company with the Academic Of The Year Award for the path-breaking research it has undertaken to uncover new information about youth attitudes toward mobile marketing.

Specifically, the lab surveyed some 2,200 digital natives aged 13 to 25 across 11 countries. It has also used this one-on-one interaction with Millennials to explore their sensitivities around opt-in and their views about privacy, profiling and receiving advertising that is aligned with preferences they volunteer, such as hobbies and interests.

In-house youth expert

Today’s analysis takes a different approach. Jaymie Wahlen — Optism’s Youth Advisor and youngest addition to the team — connects with her peers and report her findings.

Among these:

• Respondents would feel isolated and anti-social if they had to spend a weekend without their mobile phone.
• Text messaging is the native language of Digital Natives
• Privacy is important – but the willingness to share personal information outweighs concerns about the consequences (provided Millennials feel they have control over the data they volunteer)
• They also prefer to have control of their mobile advertising (through opt-in) and would offer personal information (hobbies, interests) to receive ads specifically tailored to their tastes

Read the rest of this insightful post over at the Optism blog.

Disclaimer: Optism is an MSG client and supporter.

A recent poll conducted by research firm Ovum (and commissioned by Amdocs) reveals the vast majority of service providers and operators can read the writing on the wall.

A whopping 73 percent of respondents said they plan to expand their prepaid offerings to include services that are traditionally offered only to postpaid customers.

In addition, nearly half of the service providers polled said they needed to make moderate to large changes to their business and operational support systems in order to answer the technical challenges involved in expanding prepaid services.

The research is based on qualitative interviews of senior executives from 19 service providers in Europe, North America and Asia-Pacific, collectively serving hundreds of millions of subscribers. Interviews were conducted between August and November 2010.

As Ovum sees it: “Greater availability of high-end devices such as smartphones, along with services like messaging, mobile broadband and applications, are increasing customer expectations from prepaid wireless services.” Ovum forecasts prepaid will grow from 75 percent of total connections worldwide in 2010 to 77 percent by 2015.

MetroPCS boosts usage with personalization

But it’s not just about a need for payment choice, convergent charging and innovative offers that effectively move pay-as-you-go prepaid customers to monthly plans. This shift also turns up the pressure on operators to think of new ways to maximize revenues from value-added services (VAS) and encourage prepaid users to explore (and purchase) content and apps on offer.

MetroPCS is using personalization to drive prepaid customers to use more services (thus creating the conditions that will allow the operator to increase stickiness and spend).

Specifically, MetroPCS is rolling out a new portal that leverages artificial intelligence to dynamically adapt the content displayed to users on their mobile devices to their individual tastes.

For more on how MetroPCS’ is using personalization to get more mileage out of its prepaid customer base, check out my post over at the Amdocs Interactive blog.

Read the rest of the post here.

Matt Anderson is Head of product marketing for Amdocs Interactive, a distinct business within Amdocs focused on Value Added Services, which is the world’s leading provider of digital commerce, Mobile Internet and personalization solutions. Matt has over 13 years experience bringing products to market in the telecommunications industry. Prior to joining Amdocs in 2008, he directed marketing for Nuance’s mobile business unit, focused on market development of speech activation applications in the mobile, navigation and automotive industries. Previously he launched the next generation of T9 at AOL Wireless and was responsible for managing mobile VAS offers at AT&T. Matt also founded a start-up in the telematics business and managed marketing and sales for one of the first wireless data networking companies. Matt has an MBA from the University of Washington. You can follow Matt on Twitter (@matt6156).

Disclaimer: Amdocs Interactive is an MSG client and supporter.

The explosion in mobile purchases also plays squarely in favor of mobile operator billing. In fact, operator billing may be the “missing link that allows a significant increase in commerce involving physical goods and services.”

This is the conclusion of Real Goods, Real Commerce & Real Results: The positive future for mobile operator billing platform, a new white paper from Tego Interactive,  a company delivering digital strategy and execution to startups, brands, service providers and network operators through converged Web and mobile solutions.

Real experience, real lessons

Drawing from several recent projects and trials Tego Interactive has undertaken with its partner 24GMedia, a next-generation mobile payment and application service provider, the white paper provides insights into what consumers and merchants expect from mobile commerce.

The paper examines the evolution of consumer attitudes toward mobile commerce and identifies the payment mechanisms that will allow companies and merchants to satisfy customer requirements.

The bottom line: there is a wealth of opportunity in commerce strategies that integrate payment at the point-of-sales (POS).

Moreover, consumer and customer requirements also play in favor of mobile operator billing, a mechanism that is gaining serious traction now that many of the technology and attitude hurdles have been removed.

But the pressure is on mobile operators to continue the momentum — and understand that mobile commerce is not a space where it is wise for them to demand the revenue shares they know from mobile content transactions, for example.

As Alfred DeRose, Tego Interactive Managing Director, put it in a statement: “Moving forward, more mobile operators must rethink their revenue share models and join together to enable commerce and shopping across all their networks combined.” The aim must be to “enable easier integration at the point-of-sale, allowing a more seamless mobile commerce that encourages consumers to buy in-store using their mobile phones.”

CheatSheets in the pipeline

The white paper is the first in a series of white papers and business how-to “CheatSheets” Tego Interactive will be producing to provide companies across the mobile ecosystem insights into mobile commerce and payments, and strategies to achieve mobile retail readiness.

To this end Tego Interactive has teamed up with MSearchGroove to create and market Thought Leadership to put in context the massive media shift that is taking place and how mobile companies can take advantage of new opportunities on mobile.

To support this effort Tego Interactive is also deepening its partnership with MSearchGroove to showcase insights and research related to mobile commerce and mobile website strategy and optimization.

Click here to download the full report.

Disclaimer: Tego Interactive is an MSG client and supporter. In addition, Tego Interactive has proven to be a highly proficient and invaluable partner to MSearchGroove.

From alerts about course materials and exams to invitations to join mobile forums and continue class discussions, mobile is front of mind with an increasing number of institutions and educators.

BTW: A great way to keep up with this exciting progress is simply to follow #mlearncon (as I do) on Twitter. That’s where the discussion that began around the awesome conference (of the same name) organized by eLearning Guild continues.

University of Louisville embraces SMS

The University of Louisville (UofL)– a state-supported research university located in Kentucky’s largest metropolitan area with a student body that exceeds 22,000 – knows the challenge of connecting with students  - and came up with a solution using mobile.

As Elizabeth Fitzgerald, coordinator of communications for UofL’s office of admissions, pointed out in her campaign submission: “Prospective students typically aren’t accustomed to checking their email regularly. We needed a solution that would allow us to quickly and easily contact all of our incoming students.”

The institution decided that using text messages to engage with incoming freshman was the best approach.

Although its overall goal was to increase the level of student engagement by using a medium that is largely embraced by a college-age demographic, UofL did not have a any measureable objectives at the outset. The campaign was more about finding out just how text messaging might fit in with some of their more traditional outreach efforts such as direct mail and email.

What did the UofL do?

Beginning in June 2010, UofL sent text message blast (using a service called Call-Em-All) to send text message blasts to some 500 incoming freshman who had opted in to receive information on campus events, contests and more.

What was the incentive?

Kudos to UofL for encouraging opt-ins by including information about how to receive text message updates in all materials sent to incoming freshman. Additionally, UofL created subgroups for its texts message recipients based on their geographic location. These subgroups were broken out by city and region.

An example: One text message blast offered incoming freshman a week of free campus parking if they responded with a text citing the three things that they were most looking forward to during the upcoming school year. The UofL reports the flood of responses was astounding. As Elizabeth put it: “Students love to text and we found that it’s the fastest way to get a response.”

In the future, UofL plans to use text to reach out to prospective students with information on campus visits, application deadlines, and more.

My take:

University students are tech savvy, so institutions (and any other companies that want to connect with them) have to get smarter about their use of mobile in communications campaigns. Kudos to UofL for not limiting its campaign to apps or smartphones. Text is the one guaranteed way to reach the masses and opt-in is the best practice that will trigger a response.

The UofL campaign dovetails with what I hear from the Millennials (around the world) as part of the ongoing series of virtual round table podcasts I have produced in the last year cooperation with Optism. Specifically, they want to be asked first and they are eager to engage in a conversation provided if offers them value.

Which brings me to incentives and the opt-in database UofL could build as a result of this first bold experiment with mobile. Although 500 students may sound small, I join with my colleagues (Kim and Linda) is pointing out that the potential is there to grow this number significantly. UofL is off to a good start and should now turn its attention to identifying the right incentives. There are lots of possibilities – and they range from tickets to university events to advance access to services (such as placement in a favorite dorm).

And let’s not forget the option to include marketers in the conversation. Opt-in paves the way for a potentially valuable exchange for both parties. Even better if there’s a good match between the brand and the message. My fireside chat with Rory Sutherland, Ogilvy UK Vice Chairman, has left an huge impression on my thinking. Specifically, he argues that branded utilities and life-simplifying services are underrated. (Weather updates brought to you on your mobile phone by a maker of cold medicine, or 30-minute dinner recipes sponsored by a Philadelphia Cream Cheese).

So will people value advertising if it is somehow connected with services and stuff that promises us less stress/more convenience? I can imagine incoming students would answer in the affirmative!

Millennial Media SMART report milestones

Another feature in this month’s podcast was Under The Radar where we discuss reports and developments (that you may have missed) having a huge impact on the mobile space. Linda brings us a summary of reports about how universities are using mobile and Kim urges us to download the Mobile Marketer’s Mobile Outlook 2011, the must-read report published by my esteemed colleague Mickey Khan over at Mobile Marketer.

What’s am I watching? I’m excited about news and reports that show the advance of mobile marketing.

The most recent SMART (Scorecard for Mobile Advertising reach and Targeting ) report from Millennial Media confirms and quantifies this mega-trend. (By way of background, Millennial Media delivers us monthly and quarterly insights on key trends in mobile advertising based on the company’s actual campaign and network data.)

Put another way, more verticals are leveraging mobile more to drive customer engagement.

Specifically, the financial services category grew an eye-opening 802 percent year-over-year (for the period Q3 2010 vs. Q3 2009). Meantime, Retail and Restaurants jumped up 745 percent, and Telecommunications was right behind with 719 percent growth. Travel was up 411 percent, Armed Forces was up 372 percent and Entertainment up 315 percent.

The report also lists the kinds of campaigns and calls to action that are becoming more popular among marketers in these verticals. Granted, most campaigns are focused on promoting the brand. However, many are coming online that are sharply focused on driving new customer acquisitions.

Expect to see mobile used for more than marketing. Think engagement, CRM and loyalty.

Listen to this month’s podcast over at The Mobile Marketing Review.

Disclaimer: Optism is an MSG client and supporter.

To drive this point home I recount observations from my most recent trip to India. I also summarize a raft of recent reports from leading analysts that describe (and quantify) the market for value-added services (VAS). Gartner, for example, predicts that the VAS market, including data, will grow from $3+ billion in 2010 (or 15 percent of the total mobile revenues) to $5+ billion in 2014 (or 21 percent).

Innovation, not commoditization

Interestingly, the opportunity might be in delivering urban users more innovative VAS content. While entertainment content (such as Bollywood and Cricket) have traditionally led VAS growth to date, there are signs that demand for innovative apps will grow as conventional content becomes a commodity.  Consumers are also accustomed to receiving free content in return for accepting  advertising, an established behavior that plays in favor of ad-funded content schemes.

So, how can mobile operators address the market opportunity?

More importantly – why is a more flexible revenue share model key to success in India (and elsewhere)?

My post over at the Amdocs Interactive blog list the four “do’s” mobile operators are well-advised to make part of their modus operandi.

Read the rest of the post here.

Matt Anderson is Head of product marketing for Amdocs Interactive, a distinct business within Amdocs focused on Value Added Services, which is the world’s leading provider of digital commerce, Mobile Internet and personalization solutions. Matt has over 13 years experience bringing products to market in the telecommunications industry. Prior to joining Amdocs in 2008, he directed marketing for Nuance’s mobile business unit, focused on market development of speech activation applications in the mobile, navigation and automotive industries. Previously he launched the next generation of T9 at AOL Wireless and was responsible for managing mobile VAS offers at AT&T. Matt also founded a start-up in the telematics business and managed marketing and sales for one of the first wireless data networking companies. Matt has an MBA from the University of Washington. You can follow Matt on Twitter (@matt6156).

Disclaimer: Amdocs Interactive is an MSG client and supporter.

What’s more, this is in tune with the way we live our lives and organize our daily routines in this new social-media-driven world in which we have come to expect (even demand) regular, frequent contact and information on people, things and events that matter to us.

Put another way, we want brands to talk to us (on our terms) and we want to talk back.

But it’s not enough for brands to introduce themselves after we’ve opted in and follow-up with a one-off message or campaign. They have to honor our invite with the commitment to continue the conversation. More importantly, they have to conduct themselves in a way that is perfectly aligned with the rules of engagement.

In my column this week on the Optism blog, I outline the ground rules marketers need to follow to achieve an effective (and ongoing!) dialogue with consumers.

My advice: Once you’ve made the commitment to develop an effective conversational advertising strategy, you need to plan it out. Unlike traditional marketing campaigns that might last four or six weeks, a conversational advertising strategy should encompass a much longer period from six to 12 months.

Read the rest of this viewpoint here.

Disclaimer: Optism is an MSG client and supporter.

Read between the lines and Amazon is out to take on Android Marketplace and cut out mobile operators (by copying Apple’s payment approach that allows consumers to purchase apps using a credit card stored on file, and so removes mobile operators from the revenue split altogether).

However, the real capabilities that make Amazon a formidable competitor are its complete control over pricing and it’s keen focus on personalization. After all, it’s Amazon’s recommendations that have helped the online retail giant cross-sell and up-sell consumers on bundles of related content (such as books, films and music). And its this successful approach that could solve the biggest issue facing app stores everywhere:  content discovery.

What can we expect from Amazon and what lessons can mobile operators learn? My post over at the new Amdocs Interactive blog highlights the problems and solutions that should be top of mind.

Read the rest of the post here.

Matt Anderson is Head of product marketing for Amdocs Interactive, a distinct business within Amdocs focused on Value Added Services, which is the world’s leading provider of digital commerce, Mobile Internet and personalization solutions.  Matt has over 13 years experience bringing products to market in the telecommunications industry.  Prior to joining Amdocs in 2008, he directed marketing for Nuance’s mobile business unit, focused on market development of speech activation applications in the mobile, navigation and automotive industries.  Previously he launched the next generation of T9 at AOL Wireless and was responsible for managing mobile VAS offers at AT&T.  Matt also founded a start-up in the telematics business and managed marketing and sales for one of the first wireless data networking companies.  Matt has an MBA from the University of Washington. You can follow Matt on Twitter (@matt6156).

Disclaimer: Amdocs Interactive is an MSG client and supporter.

For large operators with established storefronts (like AT&T), the tie-up with Google  means an increase in revenue because the carrier has effectively (and wisely) positioned itself to perform billing on behalf of a third-party storefront (this strategy is also known as BOBO). And this is in addition to the carrier’s benefit from selling content on its own.

For smaller mobile operators or new entrants, BOBO also makes business sense. It allows them to capitalize on the app store craze (and sell apps) without having to invest in their own storefronts.

But BOBO is more than a smart strategy; it’s an approach analyst houses argue mobile operators must pursue if they want their piece of the $35 billion pie.

Read the rest of this post here.

Matt Anderson is Head of product marketing for Amdocs Interactive, a distinct business within Amdocs focused on Value Added Services, which is the world’s leading provider of digital commerce, Mobile Internet and personalization solutions. Matt has over 13 years experience bringing products to market in the telecommunications industry. Prior to joining Amdocs in 2008, he directed marketing for Nuance’s mobile business unit, focused on market development of speech activation applications in the mobile, navigation and automotive industries. Previously he launched the next generation of T9 at AOL Wireless and was responsible for managing mobile VAS offers at AT&T. Matt also founded a start-up in the telematics business and managed marketing and sales for one of the first wireless data networking companies. Matt has an MBA from the University of Washington. You can follow Matt on Twitter (@matt6156).

Disclaimer: Amdocs Interactive is an MSG client and supporter.

It’s good to note the new term (“Conversational Advertising”) because its a marketing approach that will grow importance in 2011, driven by people’s desire to control their personal data and the aim of brands and agencies to establish an on-going dialogue with consumers and brand advocates.

Social media outreach may be part of the mix, but the advantages of being able to deliver relevant and welcome marketing messages to an audience that has effectively agreed to pay attention can far outweigh any buzz a brand can inspire on Twitter.

With this in mind I caught up with Nick Lane, mobileSquared Chief Analyst, to talk about the report and the outlook for conversational advertising in the three key markets: the U.S., the U.K. and India.

Talk to me – often!

As Nick sees it: conversational marketing is the most effective approach because it reaches engaged and delivers a higher response rate. In his report he notes that “encouraging the brand to regularly communicate with the consumer ensures that the brand remains ‘front of mind.’”

The initial opt-in provides the first level of communication (which can then be enhanced by third-party intelligence based on the person’s mobile usage and behavioral traits). But it’s the person’s response during the conversation with the brand that provides the best (and most up-to-date) information. “In effect, this third stage is  real-time consumer profiling. And when applied to the power of messaging, becomes the ideal channel for brands and businesses [to interact with people].”

However, Nick observes that brands and agencies don’t yet have the mindset to get the mileage they can out of this approach. “Consumers have told a brand that they want to hear from them. If you’re a brand, you say ‘right, we’re going to run this campaign, it can last for six weeks.’ With conversational advertising, it has to be ongoing. You have to think of the approach and the kind of strategy as a 12-month play.”

In other words, this is a relationship and people want more than a one-off campaign. “As a brand, you have talk to them and gradually you’ll encourage the interaction and the engagement. And as that progresses, you’ll get more and more information which means when … you’re going to launch a particular product, you can really target how you’re going to approach this person.”

Agency pay-off

In Nick’s view, conversational advertising is a long-term commitment. However, agencies have to shift their mindset before they can reap the benefits. Put simply, agencies don’t yet see the pay-off from conversational advertising since the “actual percentage of spend per campaign a creative agency would receive is minimal.”

In reality the spend with the creative agency is quite significant.

Do the math. Sending out several messages a week/month to all the people who have opted in over an entire year is a sizeable budget indeed — and good reason for agencies to start thinking about how to use messaging to start and continue a conversation. “It’s about creating the social networking, the 24/7 mindset, rather than the we’ll just do a campaign for six weeks.”

Mobile operators value-add

Should mobile operators also see conversational advertising as an opportunity? Nick believes it is THE opportunity, provided operators use the opt-out model to encourage an opt-in database.

More importantly, conversational advertising is a format the operator owns.

As Nick puts it: “We’re not just talking about one message. We’re talking about a two-way exchange between a brand a customer over the operator’s network. So, we talk about apps circumventing the operator in terms of revenues. This is an activity that is running 100-percent over an operator’s network.” That goes for all operators — not just major players with million of subscribers. In fact, a tier-3 operator with a niche audience would potentially even have more success since its audience is already segmented for a brand campaign. (Thinking here of the fit between a youth-focused mobile operator and a sports or fashion brand, for example.)

What do the numbers say?

MobileSquared forecasts that conversational advertising will be worth a little over $2 billion by 2015.

In the U.K., for example, the market in 2010 was worth $14.9 million, and will increase to around $671 million by 2015.  In India, the market will be worth approximately $238 million by 2015. (India is a market where opt-out is the norm, so Nick warns that encouraging consumers to opt-in could be more of a challenge than it would be in  developed markets.) “If the whole permission based marketing industry [in India] can get it right, then that $238 million in 2015 could be incredibly pessimistic given the size of the audience.”

Nick leaves us with another number from his forecast . In the U.K. he reckons there will be “21 million opt-ins by 2015, and that’s through operators alone.”

My take:

Messaging is part of the mobile marketing mix because anyone can do it. Conversational advertising is one better because brands have the green light to communicate with an audience that can – and will — answer back. But let’s not limit our discussion to brands — or even advertising for that matter. The same approach can be used by businesses to increase interaction and improve CRM. There are many scenarios where having a conversation with people can pay off — both for the company and the consumer. This is important to keep in mind as we enter into 2011 — a year where social media has become THE focus for brands and businesses. But rather than investing resources in learning how to effectively broadcast a brand message to the masses via Twitter, for example, companies would do well to invest their effort in enabling an on-going conversation with their audience using mobile.

Listen to the podcast here. [13:10]

Disclaimer: Optism is an MSG client and supporter. MSearchGroove is a mobileSquared media partner.