Inside Mobile Marketing

• If you look at data from either comScore/MMetrics, Nielsen Mobile regarding the percentage of U.S. subscribers that actually send at least 1 text message within a month, than these aforementioned numbers are essentially generated by approximately 50% of the total wireless subscribers in the U.S. (Note: Jupiter Research states that approx 62% of wireless bases uses text messaging)

• These numbers are DOMINATED by peer-to-peer messages versus messages generated through participation in a shortcode program (aka Application-to-peer). comScore/MMetrics has stated the following:

Just 6% of teen mobile users responded to a poll or contest via short code–i.e., voting for an “American Idol” contestant–in the past month, slightly higher than the overall population (4.5%) but still not a critical mass. Even fewer teens responded to a text-message ad (1.6%), in contrast to the 2.4% of overall mobile users. And just 1.5% of teens responded to an offline ad that directed them to text a short code in.

• Also — VeriSign’s wireless aggregation business stated that A2P, such as news alerts, ring tones, promotional video clips, and enterprise messages sent to mobile users rose sharply in Q2 2008, from approximately 186 million messages in Q1 2008 to approximately 249 million (A2P) messages in Q2 2008, an increase of close to 33 percent. NOW, Verisign processed a total of 52 BILLION messages in Q2 2008 - which would mean that less than 1% of these SMS being sent were A2P or marketing-based (in some sort of fashion)

Props to reporter Diane Bartz for this story! Nothing like a Senate subcommittee to stir the pot and place the U.S. Carriers on notice ;-). I am not well versed on how these sub-committee processes work so I won’t comment on that angle.

However…..On the Carrier side of the business, perhaps these price increases are being used to ‘influence’ subscribers to sign up for a recurring messaging bundling where revenue recognition is greatly enhanced?? Are these higher prices designed to ‘milk’ the increase in SMS traffic all of the Carriers have experienced year over year??

While text messaging functionality may be ubiquitous on today’s U.S. installed handset base, not everyone is using SMS nor is every wireless sub signed up to a text messaging plan. Mmetrics/comScore peg the number of active (sends at least 1 message per month) at around the 50% mark.. other analyst firms come in around that figure as well. Yes, frequency of use does differ across demographic profiles e.g. Gen Y are heavy text users -72% text at least monthly according to Forrester Research. PLEASE ALSO KEEP IN MIND that the overwhelming majority of the text messages being sent are Peer-to-Peer (P2P) versus Application-to-Peer (A2P) aka Mobile Marketing programs.

Regarding a messaging plan - I have seen where Jupiter Research estimates that 2/3 of all wireless subscribers belong to some sort of text messaging plan. (I’d like to confirm with each U.S. Carrier what they actually see)

Interesting, but certainly not a shocking prediction given the rapid adoption of smartphones here in the U.S. and the increase in promotions from the Carriers for low-cost, flat rate data plans. However, there are a couple of things to consider when thinking about whether or not Mobile Email will be a next BIG thing that marketers will need to pay close attention to with regards to optimizing the consumer experience on a handset.

First of all, email users will need a data plan of some sort and Nielsen Mobile recently pegged the percentage of consumers with an unlimited data plan at 14%. The research firm also stated that 95 million (37%) subscribers paid for mobile internet access either as part of a subscription or transactionally and that 40 million subs were active users of mobile internet (used at least once in a given month).

There is an important distinction to make within the aforementioned numbers in that they don’t represent (at least I don’t think they do) those consumers accessing email via emails readers from say Good or Blackberry versus their mobile browser. It’s safe to assume that most corporate users are accessing email via a reader versus a browser, but as MMetrics noted, the smartphone penetration rate is close to 7% within the U.S.- This number isn’t exactly huge, but there is data that supports that these users are heavy users of email via their devices.

From an overall addressable market, MMetrics stated that 13.1% of wireless subscribers had used email on their phone during a specific time period and Nielsen Mobile stated that eMail was the second most visited category (on the mobile web) after Portals. Again, were not talking huge numbers, but significant enough to warrant a closer look at the consumer experience.- (NOTE: as of May 2008 Yahoo! had 14 million unique visitors to their mobile mail page according to Nielsen.)

I did some quick testing of some HTML emails via my Yahoo! email account on Nokia’s S60 browser, Palm’s TREO 750W browser and an Openwave browser via Verizon’s popular LG VX8300 handset. On each browser HTML gets stripped out and the rendering is not easy on the eyes to say the least. I even tried GMAIL on the Treo browser and some of the hyperlinks within an HTML newsletter were rendered inactive. On the reader side, trying to read HTML emails via a Blackberry reader or Palm reader produced equally frustrating results.

From a marketer’s perspective if you are targeting an on-the-go business crowd or a demographic that utilizes smartphones, it may not be enough to assume that handset OEMs, browser developers, internet email providers and email reader vendors will utilize tools and transcoding tricks to properly render your campaign emails properly. Your message may be lost and deleted before the consumer ever has the chance to re-read your email on their PC.

That said, there are some companies such as Pivotal Veracity that offer to optimize your emails for the various device types and email readers. (This company has some interesting comparison shots of how html emails render across a handful of different devices including Blackberry, Palm and Windows Mobile.)

Quick Anecdote: when attending industry events such as CTIA or MMA or presenting to advertising agencies it is always fun to watch a decent number of users fumble around on their smartphones when you ask them to participate in a demo via SMS. They have gotten so used to sending short emails back and forth between other smartphone-toting colleagues that TXTING is now an afterthought.

So what’s the hold up? One of the major hurdles to overcome is the ability of the wireless Carrier’s existing billing systems to process FTEU messages. Generally speaking, all messages sent through Aggregators for off-deck marketing programs are either tagged at a Standard or Premium rate and are processed accordingly by the Carriers. Technical changes need to be made by both parties - especially on the Carrier’s side.

In addition to technical enhancements, I suspect the Carriers need to map out the business processes for these FTEU programs. At a high level, the current process for off-deck messaging programs works like this: The Carriers receive messages via their Aggregators. These messages are “tagged” as either Premium (if they carry a charge) or Standard Rated. In either case, the Carrier is responsible for billing the consumer and/or debiting the user’s message allotment if the consumer has a messaging plan. For Premium programs, the Carrier will send the Aggregator a record of successful billing attempts and will pay the Aggregator their negotiated share of revenue. The Aggregator then pays the Marketer their share of revenue. Everyone is happy.

For Standard rated programs, the Aggregator more often than not simply tallies the number of messages processed via their gateways to the various Carriers and charges the Advertiser/Marketer the pre-negotiated messaging delivery fees. (NOTE: I am aware of only one major U.S. Carrier that currently charges their Aggregators for Standard rate messages (MTs only) once a specified threshold is hit. Another major Carrier has stated it is well within their rights to charge for Standard MTs, but has yet to enforce this.)

The FTEU business model poses some interesting challenges and questions. A possible scenario will have Advertisers/Marketers negotiating FTEU message delivery rates with their Aggregator (assume the Carriers will have special rates for Aggregators as well for these programs). Unlike the current Standard rated process, the Aggregator may be forced to reconcile these FTEU messages with the Carriers especially if the Carriers are charging per MT and/or monitoring the delivery of these messages on their end - all of which requires manpower and system changes.

QUESTIONS FOR FUTURE: what happens when Advertisers want to run FTEU programs that establish a 2-way dialogue with a consumer - who will pick up the tab for messages sent by consumers (MOs)? What happens when Marketers start inserting advertisements in their FTEU messages and the Carriers want a cut of the advertising revenues?

SIDE NOTE: I am aware that one of the major Carriers is working on their FTEU business model now and we would hope to see something from them by the end of 2008.

This should prove to be an interesting development within the Mobile Marketing community especially as premium off-deck revenue continues to decline and the demand for Standard rated messaging programs continues to increase. There’s already enough “tension” between content providers, brands, advertisers and aggregators with the collective group of Carriers over revenue share splits, message delivery costs, compliance regulations and potential MMS MO delivery costs. Now throw in the idea that each Carrier may possibly want a cut of the advertising revenues for messages traveling over their networks and you’ve got a bit of a maelstrom.

It will also be interesting to see the impact this pending development will especially have on the Mobile advertising players, mobile marketing providers that power Std. rated programs and of course the advertisers footing the bill for any ad campaigns. Suddenly the relatively high CPM rates mobile has commanded for SMS ads seem like a necessity with all extra hands in the cookie jar.

INITIAL QUESTIONS:

• will each Carrier outlay their own set of payment and reconciliation policies?
• will MMS carry different policies due to higher costs?
• will the Carriers share demographic information to improve targeting of ads?

When you take into account that the 3G version of the handset is expected to arrive sometime in June and the Company’s expansion plans to penetrate additional global markets, it’s not hard to fathom that Apple will indeed achieve its well publicized sales target of 10 million units by the end of 2008. This is certainly great news for mobile marketers as it will continue to apply pressure on handset OEMs and mobile marketing vendors to improve the usability of their current products and solutions.

While the iPhone is very slick (yes I will probably want one too when the 3G version arrives Stateside) it is not without its flaws from a Mobile marketing perspective. Here’s a running list to date:

1. No MMS. Consumers can take pictures, but cannot send them via MMS. I am betting that MMS will be added via a future software update, but as it stands today this missing feature precludes iPhone owners from participating in MMS marketing programs. (although a marketer could allow users to send entries via email if they wanted)
2. No video recording. For mobile marketers thinking of leveraging user generated video content (UGC) programs in the near future - you can forget the iPhone bunch.
3. No Flash support in the browser. I guess we can say that it’s not really like surfing the internet on your PC. Also - the YouTube application is NOT using Flash video, but rather H.264 streaming video.
4. No downloadable 3rd party content other than from “App-Store” application (this even precludes ATT’s Media deck). Off-deck Ringtones, games, applications are not able to be downloaded to the iPhone. Apple’s recent announcement to allow 3rd party developers to create applications for the iPhone still must have their creations vetted by Apple and distributed via the “App-store” application on the handset - (Walled Garden of a different flavor). WHY is this an issue for marketers? Let’s take a TV-based pSMS sweepstakes program as a use case in which a television program charges a consumer for participating in the sweeps program. When a premium charge is involved, many Carriers are requiring that something of value be delivered to a mobile consumer after they participate. Something of value can be a ringtone, wallpaper or factoid. iPhone users would only be allowed to get something of value via SMS. This may not sit too well with some consumers as the industry is still reeling from class-action lawsuits that take this matter into account. ANOTHER issue for marketers is that they have YET ANOTHER content development and distribution process to adhere to. The resources, time and costs required to execute a widespread marketing campaign across the iPhone as well as other established (albeit fragmented) platforms such as BREW can be daunting to say the least.
5. No WAP Push. This commonly used method to distribute content and/or trigger to open a mobile internet page on GSM Carriers will not work with the iPhone. (NOTE - Mobile marketers can however send URLs embedded within SMS messages to trigger the opening mobile internet pages - content providers still out of luck however with downloads.)
6. No bluetooth marketing. The iPhone currently only allows bluetooth audio - i.e. headsets to be paired with it, thus bluetooth marketing techniques will fall on deaf ears.
7. No GPS. LBS mobile campaigns will have to rely on other methods to identify an iPhone user’s location such as Cell-ID triangulation, WIFI location- which the iPhone uses (SEE SKYHOOK WIRELESS) or via radiowaves. SEE below - what if WiFi broadcast terminals are not in a user’s vicinity???
8. EDGE data network. For those marketers that do not create optimized mobile internet pages for the iPhone, consumers browsing the web via EDGE can run into some longer than desired page load times - and anytime a consumer has to wait for something to load - especially on their phone - the marketer runs the risk of losing that consumer. Let’s face it.. WiFi is not as ubiquitous as we would like to believe it is.

So there you have it. I’m sure most of this list will be moot in the near future perhaps even in June with the expected arrival of the 3G version, but as it stands today Mobile Marketers should consider these points when creating tactical marketing programs that target iPhone users.

• Carriers have been slow to open up MMS infrastructure for off-deck A2P applications 
• Aggregators - usually waiting on the Carriers - have then had to configure their gateway interfaces to manage the new message format.
• MMS infrastructure has cost the Carriers a good deal of investment dollars. Thus the costs to run MMS campaigns are ultimately higher than SMS.  Not all Carriers - SPRINT specifically - have stated that they are NOT interested in powering Standard Rated MMS marketing campaigns over their network at this time. This means negotiations will ensure as to what payment terms will change their mind to let a particular program run over their network.
• MMS costs those consumers without a full data plan or a big bucket of messages more per MO & MT than SMS - sometimes as high as 25 cents per message.  PLUS because MMS requires a data connection - data charges can accrue as well for the consumer.
• There have not been a lot of turnkey tools announced for marketers to build out SMIL-based MMS programs.  Plus, I can’t imagine there even a lot of developers in the U.S. that very skilled in developing rich MMS campaigns yet using XML-based SMIL.

The good news is that all of the Tier 1 Carriers and the many aggregators supplying them with off-deck marketing programs are moving (some faster than others) to get their systems set-up to launch MMS MO based programs.  This will certainly spur more Social Networking an i-journalism programs -  SEE CBS Mobile’s recent launch of their EYEMOBILE website - in which users can upload video from their mobile phone via an MMS shortcode.

What really excites me as a marketer are the MMS MO use cases that come from the Image Recognition Technology camp.   The two big U.S. players in this space are MOBOT and SNAPTELL and both companies offer advertisers the ability to “mobilize” their existing traditional print, outdoor signage, packaging, even TV ads (although technical issues are inherent here) by simply allowing a consumer to take a picture of say a company logo OR an entire print ad in a magazine and send it to a shortcode via MMS.   The company’s servers then identify which marketing program the image is aligned with and triggers an appropriate MMS MT or SMS or WAP Push.  This means that marketers don’t need to modify their existing creative other than to insert some sort of call-to-action for consumer to snap a picture and send it to a specific shortcode.  This technology basically enables advertisers to insert a direct response mechanism in their traditional ad units. 

In terms of marketers creating Application-to-Peer based MMS campaigns - the tools are slowly emerging. PLEASE NOTE that dealing with MMS is trickier than SMS in that not all handsets support the same MIME types that may be included in an MMS deck - such as audio and video formats.  ALSO - the U.S. Carrier networks may have different guidelines on MMS running through their network such as the maximum payload size of each message (I believe usually capped around 300K per msg).. ALL OF THESE MEANS MORE TESTING will be required both on the part of the vendor and marketer to ensure the user experience is as consistent as possible across a wide variety of handsets.  I’ve experimented with a self-serve MMS composer toolset from Massachusetts-based CellySpace.  Pretty slick app, but as the website indicates it is still in BETA and there of course some bugs to be worked out.