MAD MOVERS: Alcatel-Lucent VP Says ‘Conversational Marketing’ Drives Lucrative Calls To Action & Commerce
In brief: MSG kicks off MAD Movers, a series profiling a wide range of players across the emerging mobile marketing business ecosystem. Thomas Labarthe, Alcatel-Lucent VP Mobile Advertising, talks about the importance of permission, the evolution of advertising and the approaches that will keep mobile operators in the game. Will people-powered mobile marketing become the norm?
In April Alcatel-Lucent officially made its bid for leadership in the mobile advertising space with Optism, an ecosystem approach to mobile advertising that has been designed and commercialized to bring together mobile operators, agencies and advertisers. To achieve this Alcatel-Lucent has specifically brought together media expertise including executives from OgilvyOne and OgilvyInteractive (agencies), MTV (brand) and Blyk (the first ad-funded MVNO). The heart of Optism is the advertising platform, fully hosted and managed by Alcatel-Lucent that connects directly into mobile networks, aggregating their inventory and offering a single entry point for advertisers and marketers to book mobile media. MSG speaks with Thomas Labarthe, Alcatel-Lucent VP Mobile Advertising.
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MSG: To start off: why the focus on this breed of permission-based marketing? As I understand it, you call it conversational marketing and it’s all about combining consumer permissions and preferences using MMS and SMS to create a dialogue with people and drive results. Isn’t that a step backwards when the blogosphere is buzzing with discussions of new formats and approaches?
A: There are three main ‘branches’ of mobile advertising: mobile banners that we see in applications and across mobile websites, which tend to not be targeted and aren’t engaging due to their lack of graphics and small size. Mobile search is the second avenue, leveraging the Google model of serving ads based on keywords used. This approach is more contextual than display banners because it’s about delivering ads triggered by a person that has expressed a need. They’re searching for downloadable content or information they can’t wait to access on their PC. While there is an opportunity here, it’s also the hard truth that the space is already dominated by the Internet search companies. The third area is permission-based marketing that uses messaging to trigger a conversation, allowing subscribers the opportunity to engage in relevant conversations with the brands they want to hear from. More importantly, messaging is not a one-off. It’s the start of an exchange and provides brands and agencies a foundation on which they can build real engagement. In fact, conversational marketing quickly becomes a launch pad for more sophisticated and branded experiences on the mobile device, and more lucrative mobile Web interactions such as mobile payments, Web browsing, calls to action and location-based services.
Beyond the benefits to people, because they have opted in to receive the messages in the first place, and brands, because they have an eager audience, are the benefits to mobile operators. They are not spectators to what’s happening. They are in the middle of the action and the value-creation. While the first two branches of mobile advertising are delivered over the top of their networks, conversational marketing allows them to provide more than the pipes. They become a full participant in the mobile advertising value chain, and reap a share of the revenues generated.
MSG: Let’s focus on the consumer part of the equation first. Clearly, if you have their buy-in, then they won’t dismiss the advertising as spam. What is the opt-in process and what was the thinking that went into designing it?
A: Advertisers now request more efficient and reliable targeting options as well as the possibility to re-engage the audience and build loyalty. We believe the best way is to transparently ask people for their permission and preferences in order to build trust, engagement and long-term relationships based on value exchange. As you said, we ask first and that conversation – that respect for the individual – is at the core of our approach. Consumers opt in to ways that they can be connected with their favorite brands through relevant and engaging information that’s tailored to their specific interests and lifestyles.
To start mobile subscribers are asked two to three questions–typically around gender, age and their key topic of interest. That is, the channel of advertising they want to receive- such as sports, fashion or music. The number here is significant. If you just send 10 questions in a survey for people to respond to before they opt in, it will not happen. We have conducted global grassroots research [Alcatel-Lucent Market Advantage Research - PDF], surveying 2,200 people ages 13-25, and they told us this is what they will accept. What’s more, we found that people want simplicity. In particular, the opt-in process must be easy and intuitive. Consumers have little patience with technology shortcomings or long, involved processes.
MSG: How can you enrich this information over time to help brands to deliver even more targeted campaigns?
A: Building in preferences into the solution will be a gradual process. The solution is designed to continually obtain more detailed information about a subscriber’s interest based on the type of campaigns they respond to. Take an advertising campaign about cars that I opt in to receive because I like cars. The campaign could start off by asking me: Which I like more: a sports coupe or a sedan model? I reply back with a text that I prefer the sports car. The system notes my response. That’s a great feature of our system because it gives brands rich re-marketing possibilities. They can review the data collected on previous campaigns and target only the people who did or didn’t participate in the previous campaign, depending on what the brand business objectives are. So, if we go back to my example, I volunteered the information that I like the sports coupe. The brand knows that I like high performance cars and can either build on our conversation to send me more information about this model of car, or even reward me with a voucher for motor oil I can redeem at a nearby dealer if I go in for a test drive.
So, there is a wide variety of re-marketing options. As such, Optism will be able to provide significantly deeper demographic information a year from now as it continually collects that information into its database. I should stress that this data reflects my preferences that I have volunteered as part of my interaction with the brand campaign. We are not collecting personally identifiable information and consumers have the option to update their profiles, change preferences and permissions at any time. They can even opt-out if they aren’t satisfied with the service.
MSG: Optism is a fully hosted mobile advertising solution – but it is also focused at brokering relationships to create a business ecosystem, as you said, placing mobile operators back in the center of the action, and empowering consumers to call the shots by asking them to choose the advertising they are willing to accept. Why did you choose this multi-dimensional approach and what concrete issues is it designed to solve?
A: Mobile advertising has long been touted as a new growth area for mobile operators, but we recognized there were some serious hurdles we, as an industry, had to cross to get there. When we started this project about a year and a half ago, we spent quite some time with advertisers, brands and agencies to really understand their challenges and opportunities. Their main message to us was it needed to be easier for them to buy mobile media from mobile operators. The main obstacle is the fragmentation of the market. Many mobile operators are offering inventories, but the technical complexity of this market makes it very difficult for media agencies to buy campaigns and advertising space. There was clearly a need to simplify the buying process, and brands and agencies also wanted simplicity and scale.
In recognition of this, our main objective with Optism has been to bring scale and simplicity to permission-based marketing by enabling new targeted inventories for advertisers. We achieve scale because our solution pulls together mobile ad space from multiple operators, helping media buyers and media agencies access enough inventory to conduct targeted ad campaigns. At the same time, this opens up new revenue opportunities for mobile operators. Finally, they can benefit from a solution that helps them aggregate their advertising inventory with other mobile operators’ inventories to make sure advertisers can distribute their advertising message to a wide audience– beyond local boundaries to national and international audiences.
MSG: Put simply, it’s all about providing a central location for ad agencies to book and launch conversational marketing campaigns across mobile operators with Optism taking a middleman role here…
A: Yes. The solution fits really the heart of the mobile advertising value chain. This value chain starts with a brand or an advertiser wanting to run a marketing campaign. For that, they work with a media agency – also called media buyer – that buys the space where the campaign will be released. We also call those spaces ‘inventories’ because the space is dynamic and depends on the time and frequency element. Naturally, the media buyers also approach the mobile operators, who are the media owners in the value chain. Mobile operators have lots of media inventories to release those campaigns. And, in the end, the campaign is served to an end-user – that’s the value chain. Brand – media agency – media owner – end-user.
Concretely, our solution sits between the media buyer and the operator, the media owner, and brokers the relationship, making it simple for the media buyer to purchase those inventories. Thanks to the hosting element of our platform, we aggregate inventories or campaign spaces across several mobile operators. In other words, we simplify the ad-buying process by providing operator-agnostic inventories. As a result, media buyers and agencies have a one-stop shop to purchase those campaigns, as well to create them, launch them, and get feedback on their performance though Web-based tools that we designed together with brands and agencies for precisely that purpose.
MSG: Optism is a solution, but it also refers to the ability to broker the relationships between advertisers and operators.…
A: While building the Optism team, I had the great opportunity to bring together technical telco people with experts from media and advertisers. We purposely aimed for this mix because we wanted a team that knew the business but also understood how to create, maintain and broker business relationships. This was not really part of the DNA of Alcatel-Lucent. So we’ve hired a team of experts from the media and advertising space, including executives from OgilvyOne, OgilvyInteractive, MTV and Blyk [the first ad-funded MVNO]. We have also forged working relationships with GroupM [WPP], the IAB [Interactive Advertising Bureau] and the MMA [Mobile Marketing Association]. Alcatel-Lucent joined the MMA’s Premium Membership tier in February — a position that’s only available to a limited number of companies that have substantial influence and leadership in the mobile marketing industry – to really drive the permission-based marketing space. Our aim is to help provide standards in the presentation of preference data. That way, we can help to simplify efforts for all members of the value chain with the goal of ultimately making mobile into a credible and respected media channel.
MSG: What is the business model?
Optism is fully hosted so there is no cost to the mobile operator. Alcatel-Lucent shares the revenue with the mobile operator and the media agency, with the operator taking the larger share. So basically, we take a share of the revenue when media buyers book their campaigns. We have already signed up Orange Austria and we are working with E-Plus in Germany. We have more operators to announce in the next weeks. Our approach is also to help [mobile] networks expose their advertising assets to other parties including developers in order to monetize them – and more importantly, innovate on top of them. This goes far beyond just mobile advertising.
MSG: So let’s wrap up with your view of the future of mobile advertising — beyond just mobile advertising. What’s high on your radar?
A: It’s not just about advertising, which is why I call it conversational marketing. It’s the idea of there being a real dialogue between the brand and the user, and messaging is clearly a channel that provides a lot of scale and simplicity in the response mechanisms. Brands can build on this to introduce calls to action, ways to engage consumers beyond the campaign itself. This can go way beyond leading users to landing sites. Campaigns can connect to mobile payment systems, and we demonstrated this at the Mobile World Congress in Barcelona where we demonstrated an e-Wallet linked to Optism. Imagine being engaged in a campaign where you receive periodic vouchers from the brand, reach into an e-wallet application on the phone, and then redeem it by waving it over an NFC [Near-Field Communications] point of sale. The next step is about bringing together advertising and retail.
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Next week: Thomas Labarthe discusses the central role of the consumer in the value chain and shares some insights from the company’s Youth Lab research.
Next in the MAD MOVERS series: Millennial Media talks about key metrics and the campaigns that set the bar.
Disclaimer: Alcatel-Lucent is an MSG supporter.
