The Rise of Mobile Marketing
The mobile channel offers an exciting opportunity for marketers--one that most have yet to fully embrace. One avenue to pursue is the creation of a branded mobile offering,in which the marketer creates a portal dedicated to its product, service, or brand. With constant access to each customer, branded mobile portals can build interactive relationships by identifying consumers not only in terms of personal identity, but also in terms of commercial behavior, geographic location, and social and communication patterns. The rewards for companies that capitalize on these possibilities--deeper engagement with consumers, increased brand loyalty, and enhanced customer lifetime value--are not to be missed.
Roman Friedrich Florian Gröne Klaus Hölbling Michael Peterson
The Rise of Mobile Marketing New Opportunities for Consumer Companies and Mobile Operators
This report was originally published before March 31, 2014, when Booz & Company became Strategy&, part of the PwC network of firms. For more information visit www.strategyand.pwc.com.
Contact Information Berlin Florian Gröne Senior Associate +49-30-88705-844 [email protected] Düsseldorf Roman Friedrich Partner +49-211-3890-165 [email protected] Munich Michael Peterson Partner +49-89-54525-640 [email protected] Vienna Klaus Hölbling Partner +43-1-518-22-907 [email protected]
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The mobile channel offers an exciting opportunity for marketers—one that most have yet to fully embrace. One avenue to pursue is the creation of a branded mobile offering, in which the marketer creates a portal dedicated to its product, service, or brand. With constant access to each customer, branded mobile portals can build interactive relationships by identifying consumers not only in terms of personal identity, but also in terms of commercial behavior, geographic location, and social and communication patterns. When consumers sign up for a branded mobile channel, they get access to a variety of distinct offerings that can include exclusive content as well as applications, games, special opportunities, incentives, and emotional experiences—all of which reinforce the value of the sponsoring brand far beyond its standard uses. The rewards for companies that capitalize on these possibilities—deeper engagement with consumers, increased brand loyalty, and enhanced customer lifetime value—are not to be missed.
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A Powerful New Platform
Of all the opportunities for marketing made available by new media, the mobile platform perhaps holds the most potential. Indeed, the use of mobile devices represents an unprecedented and unparalleled shift in how consumers use media. But the mobile channel’s growth as a marketing and advertising vehicle has been so fast that some of the world’s most sophisticated marketers have yet to determine how to fully embrace it—not for lack of desire, but for lack of experience. New business models for mobile marketing are turning the mobile phone into a marketer-exclusive platform. Marketers can create mobile portals dedicated to their business or brand (giving their message exclusive airtime with their best customers), a choice of tailored handsets (to match the brand), preloaded applications that drive further contact with the brand, and any number of other developing technologies that drive home the exclusivity of the message. Take the case of mobile phones branded by Bild, the largest massmarket newspaper in Germany: The mobile device belongs to the customer to use in whatever way he or she chooses. But everything about it— from the message on the screen to the games and gimmicks on the portal to the no-frills rate plan—says “Bild” in a loud (but consumer-friendly) voice.
The technology chain is relatively simple: A company offering services or products contracts with a mobileservice provider to create a mobile brand. The mobile brand speaks to customers—loyal users who identify with the sponsor, as well as new audiences drawn by the simple value proposition of better service at a lower price. The result? More powerful customer relationships and new revenue streams. A European football team connects with its most ardent supporters via a mobile service that provides not just player information and game statistics but also the chance to purchase tickets, T-shirts, and memorabilia. A discount convenience store reinforces its image as a place for quick, inexpensive service with a branded low-cost mobile offering. Customers who want to buy more minutes can just stop by the store—where they might be drawn in by, say, the store’s new cereal promotion (communicated via text message, of course). Although most U.S. marketers have been slow to respond to the mobile challenge, the Polo Ralph Lauren Corporation— that most American of retailers—is giving tech-smart fashionistas the chance to shop by phone. It can talk directly with its best customers over its own dedicated (and branded) mobile service.
The result? More powerful customer relationships and new revenue streams.
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Reaching the Segment of One
For marketing managers, the omnipresence of ever more personalized digital media means that consumers are better informed, more demanding, and more focused on individual needs than ever before. In trying to reach this “segment of one,” marketers find that traditional metrics like gross reach pale in comparison with such informed measures as digital net reach and cost per transaction. Mobile channels, in particular, allow game-changing marketing plays that address individual customer needs and interests. And, by doing so, they also maximize net reach impact. In its potential to shape and monetize the customer relationship, there are five ways in which mobile outperforms all other marketing channels and platforms (see Exhibit 1, page 4). • C ustomer Access: The mobile channel provides virtually continuous access to consumers via voice, messaging, or portal platforms. The Internet has an
access advantage over other channels, but it is not exclusive or entirely transportable. Mobile is exclusively available to the primary users—not just in fixed locations, but wherever they go. • C ustomer Insight: The mobile channel gives companies access to a wide range of consumer data, including demographics, communication and social patterns, and—with consumer consent—even geographic movement patterns, thanks to GPS or network cell information. Once mobile commerce gains traction—and it is only a matter of time before it does—businesses can add shopping history, online store preferences, and spending patterns to the list. • C ustomer Dialogue: Although mobile channels do not offer the multimedia home theater experience that many PCs provide (and mobile channels will obviously never match screen
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size), their content-rich, real-time visual and acoustic platform can be uniquely tailored to an individual consumer. Families, co-workers, and friends share computer use. The mobile phone is a distinctly personal device that reflects the use and interests of its primary user. And like the Internet, the mobile
phone is truly interactive, allowing consumers to respond by click, voice, text, or multimedia message. • Customer Emotions: A consumer’s choice of a mobile device often is a strong lifestyle statement. (Just ask the thousands of people who have stood in line to buy the next
generation of iPhones.) Because of that emotional statement, users are highly attached to their mobile devices as not only essential tools but familiar parts of their everyday lives. Because the mobile channel enjoys a universal always-on presence in people’s lives, it is a powerful platform for advocates,
Exhibit 1: Major Channels’ Potential to Reach Customers
Mobile TV, Radio, Print
Catalogue, Direct Mail
PC-based Internet Retail
IV. Emotions Source: Booz & Company
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believers, and supporters of a certain topic, product, brand, or way of life. In short, people get excited about their mobile phones in a way they never do about the PC or the TV. • C ustomer Transactions: There are few physical boundaries for mobile devices. And that mobility means that direct click-through, e-commerce applications, or mobile payment solutions are easily available to consumers no matter where they are. In markets such as Korea and Japan, customers can purchase goods from the windows of a store that closed to foot traffic hours earlier; the same may soon be true in Europe and the United States. If travelers are late for a flight, they can make up time by checking in from a cab on the way
to the airport. And merchants can respond to consumer interest in an e-commerce venue by instantly updating prices or pushing new offers. These five dimensions of the mobile customer’s relationship provide a distinct context for marketers who must present a unique value proposition to connect with their customers. In highly competitive markets, in particular, consumers are becoming accustomed to end-to-end brand experiences that stretch across the physical and digital world. Mobile channels, with 24/7 access to a unique consumer, can build interactive relationships by identifying customers not only in terms of personal identity, but also in terms of commercial behavior, geographic
location, and social and communication patterns. Most important, interaction within the business or social environment can occur immediately through the multimedia capabilities of a mobile phone. By creating a relevant user experience, mobile devices give consumers more of what they want while providing marketers with a powerful platform for multitiered, next-generation marketing campaigns. Because it can literally put a product or service in a prime prospect’s hands, the mobile platform is a channel that can immediately enhance a brand’s value. It adds immediacy, relevance, timeliness, access, and unique customer insight. And, with those advantages, it offers marketers new opportunities to boost (and measure) their return on marketing investments.
In highly competitive markets, consumers are accustomed to brand experiences that stretch across the physical and digital world.
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The Parameters of Mobile Branding
Depending on how they want to reach their customers and on their strategic objectives and positioning, marketers can use branded mobile offerings in a number of ways to generate value, first for consumers and ultimately for the bottom line. It is important to remember that there is no one-size-fits-all formula for mobile platforms. Each product or service has specific brand-building needs that will shape the nature of its mobile offering. And the deep toolbox available allows marketers to pick and choose what best suits their short- and long-term objectives. In its most basic form, a branded mobile play would look to do little more than reinforce brand recognition with classic push advertising and enhanced brand visibility. Such a program would give a prequalified audience easy access to special offers and promotions via e-mail, portal, and SMS/MMS tools. Although revenue sharing—new income driven by incremental network traffic, mobile usage, and data downloads—is an easily quantifiable asset of a basic channel, revenue diversification in itself is not a compelling reason to move into mobile media. Consumer insight and engagement are the hallmarks of an advanced tier of mobile models. By creating a multimedia user experience targeted to subscribers’ specific needs or interests, this next-generation platform generates business value in a number of ways. For instance, marketers can cross-sell or up-sell their products and services using customized content offered by online media and mobile applications. Such incentives encourage customers to accrue usage-based points that they can redeem for brand-related products or services.
Or marketers might use the digital channel to respond to loyal customers’ behavior patterns with rewards triggered by certain behaviors: “Spend 45 minutes browsing stock information on our financial-services mobile channel and receive a discounted stock trade offer.” Brand-centric content and interactive applications can build brand loyalty with videos and product demonstrations, as well as through games and competitions. Such easily accessible content can also manage desired channel migration to lower-cost offerings: “Purchase your airline tickets through our branded travel mobile offering and check in with discounts, free calls, or loyalty points.” Master-class mobile models fully tap into the platform’s potential by using digital channels to build interactive, collaborative customer programs that enable transactions. Think of a branded credit card with an interactive communications device attached and you can begin to imagine the possibilities inherent in product and service transactions enabled via mobile devices. Collaborative programs—user forums, user-generated content, mobile focus groups, and digital beta testing, to name a few—further increase the relevance of the content. For superior credibility, master-class platforms can offer such location-based mobile services as region-specific content, sightseeing or shopping guides, and even train connections that leave from the customer’s current location in the next hour. From a business-management perspective, these platforms can call on subscribers with real-time queries: “Call or text us free to tell us what you think of our new gizmo.” Such collaborative approaches to product development can cut the costs—and turnaround time—of innovation.
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Cutting-Edge Mobile Opportunities
In a previous generation of media consumption, one of the most difficult challenges was moving readers from one daily newspaper to another. Habit—not quality or relevance of content—was the key reason for consumer loyalty. And so it is in this new generation: An offering has to be convincingly superior to make customers change familiar habits. To persuade a customer to move to a branded mobile service, a marketer must find positive answers to a number of daunting questions, each of which invites more specific considerations: Does the branded mobile channel create genuine value for the brand’s consumers? • What can the branded mobile channel add to the customer experience that existing marketing channels cannot?
• Is there a robust pipeline of ideas to tailor enough content, applications, games, tools, campaigns, and promotions to keep the user interested? Does the mobile channel align with the brand’s core values? • Can we rule out potential damage to the brand, such as misaligned mobile and offline offerings, insufficient network quality, and inadequate data-delivery connections? • Can the mobile offering be tailored well enough so that it becomes aligned with core brand values, on the one hand, and customer expectations, on the other? • Will the service be aimed at the mass market or exclusive? Or will it draw on both options, offering
An offering has to be convincingly superior to make customers change familiar habits.
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discount pricing that still provides exclusive brand or content messages to generate consumer insight? • Will the pricing program reinforce the overall perception of the brand? What is the economic significance of the branded mobile channel? •C an the program reach sufficient scale to realize the expected benefits? •W ill the branded experience be strong enough to get word-of-mouth and viral community endorsement
and avoid the potential brand damage of a less-than-satisfying mobile experience? Is the business capable of providing a branded mobile service? • Can the organization deliver the required content and applications to implement and support the branded channel? • Can the organization deliver effectively? Can it keep the pipeline filled with viable, engaging content, campaigns, and promotions?
• Are there realistic options for outsourcing noncore activities and complementing in-house resources? It is essential for any enterprise to carefully evaluate its responses to this full list of questions; however, the business (or brand) best suited for a mobile channel typically is characterized by a strong presence in its customers’ everyday lives; a brand or product to which customers have an intense emotional attachment and for which there is a solid network of consumer advocates; and a customer base whose loyalty is grounded in a deep sense of community.
Is the business capable of providing a branded mobile service?
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The Feasibility of Mobile
Marketers have any number of reasons to be reluctant to break with tradition and jump on the mobile bandwagon. Marketers are not technologists. And, as a subset of communication technology, mobile services is not a field in which anyone expects marketers to be specialists. Until recently, a branded mobile offering required marketers to spend a good share of their time and money devising ways to run back-end processes— such as portal platforms, billing systems, and digital customer-care procedures—which often led to failure and frustration. The good news is that building a branded mobile offering no longer requires a major up-front investment. Marketers can provide the brand and content, and a service provider can do the rest of the work. The business models for delivering mobile services have evolved over the last five years or so, most quickly in Asia, followed by Europe and then the United States. What began as an investment-heavy model dominated by a few integrated players is now a more open, dynamic market with specialists at virtually every step of the value chain managing different aspects of technology and audience development. The first wave of value chain dis-integration introduced new players that used excess network capacity from mobile network operators (MNOs) as a platform for virtual players (mobile virtual network operators, or MVNOs), whose primary focus was delivering no-frills, low-cost telephony
services in increasingly competitive markets. At that early stage of development, differentiation of consumer experience was minimal or nonexistent. As we described above, its “basic” purpose was to put the brand in front of the customer in a passive (but friendly and favorable) manner. Today’s mobile service player landscape is very different. The vertical dis-integration of the mobile value chain and the increasing commoditization of network services translate into far more differentiation than MVNOs were able to provide even just a few years ago (see Exhibit 2, page 10). What does this mean for marketers? For starters, they can relax: Becoming a mobile player is no longer too risky or expensive. They do not need to go out and buy a whole new set of tools; there are partners eager to provide reasonably priced services at every stage of the new value chain. More specifically, mobile plays no longer require businesses to become network operators, virtual or otherwise. Entry barriers have been lowered across the board: Capital expenditures are close to zero, and economically viable services allow brand sponsors to efficiently approach smaller target groups. The new service provider ecosystem allows marketers to take a calmer, less expensive launch-and-learn approach to mastering mobile channels. The presence of a rich variety of service providers opens the customerfacing end of the value chain to a
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broad range of players. Concerned about mobile network infrastructure, handset design and configuration, portals, application development, back-end processes, content management, and preconfigured advertising campaigns? Outsource it all or pick the pieces you want to control directly. With next-generation mobile platform development, marketers have complete flexibility in deciding how much or how little they want to be involved in the more upstream aspects of the mobile play. And that allows them to go back to basics and do what they do best: embrace the customer, in this case with a unique mobile offering.
The upswing in mobile is just beginning, even in the world’s most technologically savvy markets. The blogosphere is buzzing with rumors of branded mobile services sponsored by the likes of social networkers Facebook, LinkedIn, MySpace, studiVZ, and XING. And, from a more traditional perspective, the barriers to entry are low for any brand-driven business across luxury niches or broader mass-consumer segments—media and entertainment; fashion; retail; membership-driven organizations, including sports or charities; financial services; travel and leisure; even automotive.
Exhibit 2: The Evolution of Mobile Operators’ Business Models
Equipment & Device Manufacturing
Application Application Development Service Provision & Hosting Content Development Portal Service
Customer Care & Billing
Sales & Marketing
Customer Proposition & Branding
Original Equipment Manufacturer
Mobile Network Operators The Old Days 1990–2004 Resellers Mobile Virtual Network Operators Virtualization 2004–2007 • Increasing Customer Segmentation • Increasing Differentiation of Offerings • Increasing Specialization Along Value Chain • Decreasing Entry Barriers and Capital Expenditure Requirements
Channel Enablers • Mobile Virtual Network Enablers • Application Developers • Managed Service System Providers • Multimedia and Advertising Agencies Branded Mobile Channel
Source: Booz & Company
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The Time Has Come
Consumers have long recognized the convenience and comfort of mobile devices. And, at last, the barriers that limited mobile consumer experiences have been removed. A feature-rich generation of attractive mobile devices like the iPhone (with touchscreen commands, crisp displays, and intuitive entry modes), BlackBerry, and others has arrived, and the devices now commonly include GPS navigation, MP3 players, cameras, and various other multimedia features. High-speed connectivity, including broadband and 3G, is widely available to the vast majority of people in developed markets. As usage-based tariffs are replaced by attractive flat rates, regulators are also cracking down on roaming and termination fees. And cost has disappeared as a major roadblock for data-rich multimedia services. Further, as a social driver in the move to mobile services, the broad acceptance of the medium across regions and cultures demonstrates that the devices have become lifestyle icons that consumers decidedly want.
Most particularly, they want the access that mobile devices provide to seamless customer experiences that can link them to other parts of their offline and online lives. Finally, branded mobile channels now offer marketers in consumerfocused businesses a rich tool with significant potential to build brands and generate value. For the first time in the history of the mobile channel, entry barriers have been lowered sufficiently to make branded mobile plays not only conceptually attractive but economically feasible. With the elimination of financial and economic barriers, marketers finally have the chance to leverage the new business model and address the opportunities of mobile marketing: real-time access to customers, deep insights into consumer behavior, and value generation for customers. The rewards for those who capitalize on these opportunities—deeper engagement with consumers, increased brand loyalty, and enhanced customer lifetime value—not only are clear, but are not to be missed.
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Mobile Manual: A Six-Point Checklist for Marketers Although each branded mobile offering has its own characteristics, any marketer interested in the medium needs to address six steps for a successful program. Develop a pipeline of content that can bring the channel to life and keep its buzz going: Recycled offline offerings usually do not work. The mobile offering demands a pipeline of tailored, differentiated, exclusive components. A small team needs to focus on ongoing marketing execution (digital marketing, nextgeneration campaign management) and third-party management. Design customized content that reinforces the core brand values and engages targeted customers: To avoid damaging the brand (and losing customers), there must be alignment among brand, customer characteristics, and the mobile proposition. To differentiate a marketer’s product from a spate of discount offerings, brand and mobile offerings should match up in terms of the device’s design and features and the pricing model—including whether it is low-cost or premium, delivered for a flat fee or subsidized by advertising. Review the business case and verify value-added components and benefits: Examine customer loyalty levels, user uptake, penetration, growth projections, targets, critical scale and break-even points, and possible cannibalization or cross-fertilization of the non-mobile business. Outsourcing operations can minimize investment as well as financial and operational risk. Align the configuration of the mobile service value chain with core business capabilities: Define the proper level of outsourcing in noncore activities (infrastructure operations, business support services, portal management) and focus on delivery capacity in core value-added activities (marketing, content development, campaigns, advertising). Support the integration of the mobile offering with such customized applications as unique messaging tools. Pick a service provider whose offerings match your brand’s needs: The service provider can make or break the user experience. For content-rich interactive offerings, one of the critical issues is access—not just capacity but also control, security, customer data integrity, privacy, property rights, content control, and the reliability of content partners. Launch branded mobile offerings with an orchestrated, high-impact program: Compelling content and applications can make a powerful impression from Day One. Test before you launch. Optimize events with special sales, promotions, and quick trial-and-error programs that invite engagement. Orchestrate messages across other channels, including traditional broadcast outlets; proactively stimulate mobile uptake by promoting special mobile content or offers via nonmobile channels.
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Olaf Acker, Florian Gröne, and Klaus Hölbling, “Beyond the Mass Mailing,” Booz & Company, March 2008: www.booz.com/ global/home/what_we_think/reports_and_white_papers/icdisplay/41901862 Christopher Vollmer, Always On: Advertising, Marketing, and Media in an Era of Consumer Control, McGraw-Hill, 2008: www.businessfuture.com/fbs/alwayson/26655293
About the Authors Roman Friedrich is a partner with Booz & Company based in Düsseldorf and is the head of the European communications, media, and technology practice. He focuses on the strategic transformation of leading telecom organizations in the European mobile, fixed-line, and Internet markets. Florian Gröne is a senior associate with Booz & Company in Berlin. He focuses on improving operating models and developing technology capabilities in marketing, sales, and customer service for telecom organizations and other IT-driven businesses. Klaus Hölbling is a partner with Booz & Company in Vienna. He specializes in marketing, sales, and customer service capabilities for the telecom, high-tech, and transportation industries. Michael Peterson is a partner with Booz & Company in Munich. He specializes in strategy development, particularly in marketing, sales, and other customer-facing activities, for communications and technology companies.
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