Inside Mobile Marketing

WOW! That’s quite a lot of text messages, however a couple things are worth noting as a Mobile Marketer:

• 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)

With the FCC hovering in the background, the U.S. Carriers are certainly doing their best to police their own off-deck mobile marketing/commerce programs as all of the major Carriers now utilize third party program audit firms. And while the Mobile Marketing Association (MMA) continues to try and establish a set of cross-Carrier industry standards via their Consumer Best Practices guidelines, the major U.S. Carriers still have not adopted the guidelines as their de jure “LAWS’ as each major Carrier has issued addendum’s to the MMA’s guidelines. These addendums are essentially enforced by the audit firms each Carrier has contracted with.

As I’ve blogged about before, this is part of the reason why Mobile Marketing - at least from a program execution standpoint - is confusing and at times exasperating. Ensuring your mobile marketing program is compliant with the MMA guidelines, plus say 4-5 subtly different sets of Carrier rules is taxing on human (QA, account managers, engineers, etc.) and technical resources - especially when the individual Carriers make sudden, unexpected changes to their policies (as they have been known to do).

Quick note on the audit firms: program auditing is a niche industry that has recently grown to prominence within the U.S. Carrier-Aggregator-Marketer ecosystem. It is NOT a perfected science yet, as the audit teams have the tough task of educating their employees on the current set of “rules”, keeping up with ever-changing executions of 3rd-party programs and maintaining a fair and balanced interpretation of the many “grey” areas found within the many sets of policy guidelines we as an industry strive to adhere to.

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?

DEJA VU:

I swear at times I thought I was actually sitting in the 2007 MMF event as the same overarching themes and comments emanated from the various presenters. Here’s a few popular ones:

1. “We really thought it was going to be the year of Mobile”. No doubt this will continue to be said during the next couple of years as well.
2. Multiple sessions were dedicated to Mobile Banner Ads and Mobile Internet sites and how to drive traffic to them whereas SMS/MMS Advertising/Marketing was ONLY given a 15 minute slot with 4Info’s CEO Zaw Thet. This strikes me as a bit out of whack as Mobile web browsing doesn’t even come close to the reach and consumption numbers that SMS possesses currently. (M:Metrics pegs mobile web consumption in the U.S. around 13.7% and SMS usage around 48.6%)
3. Mobile education still is required at the Agency and Brand level – Admob’s Tony Northcutt did make the important point that education is especially important at the junior planner and strategist levels as many top marketing executives have already bought into the idea that Mobile will be around for the long haul.
4. Mobile metrics still need to be improved – “we still don’t know who our visitors are,” said WWE’s Rene Rodriguez referring to this company’s Mobile internet destination pages.
5. The U.S. Carriers need to share more demographic information with advertisers. Fair point, but the Mobile Social Networking panelists said they are finding consumers are proving to be very willing to share personal information when asked. It’s worth a try.
6. The Mobile Ecosystem is still too complex to navigate. Lots of players, each with a niche and each wanting a piece of the dollar bill spent on a campaign. Don’t worry, consolidation will continue to occur and processes will get straightened out over time.
7. Success with Mobile comes in the form of an integrated campaign. Standalone mobile programs will struggle due to lack of reach, consumer awareness and budget.

QUESTIONS:

1. Where were the M:Metrics and Nielsen Mobile analysts to place the mobile marketing efforts into some overall context as to what mobile users are actually doing – what the trends are, actual reach of technologies such as xHTML browsers?
2. How come the MMA did not have a representative discussing the highlights of their 2007 Mobile usage study? There is some good data in that thing.
3. For a mobile marketing forum – there was VERY LITTLE use of mobile as a direct response mechanism to poll the audience during and after sessions or allow participants to trail demo programs
4. How does T-Mobile and Verizon Wireless get away with NOT having representatives on the main Carrier discussion panels?? These guys claim they want to build better relationships with the MMA and the various industry players and yet they skip the largest North American gathering. I don’t get it.

PLEASANT SURPRISES:

1. Sprint announced via a representative during an LBS roundtable that they would begin selling access to some of their demographic information for location-based services. I am still however in the dark as to what this data may entail (e.g. sex, area of country versus city, income levels, etc..) and how it may be priced. Nevertheless it’s a good sign though from a major Carrier.
2. AT&T’s Jordan Berman stated in his slotted panel discussion that his company would be launching its self-service ad-serving solution for its MediaNet properties. Stay tuned.

NEED CLARIFICATION:

1. Verizon Wireless’ Stephanie Bauer had a slide deck that stated that VZW had 8 million mobile internet subscribers. I’m curious to find out exactly what that means…i.e. are there only 8 million VZW subs paying for a mobile internet data plan? If so, that would represent a small percentage of their overall subscriber base AND I would venture to guess a large proportion of the total are business users with smartphones subsidized by their employers.

Can this become an issue within the Mobile Channel as well? Sure it could. The obvious correlation will be with the Mobile Search players - i.e. JumpTap, Google, Yahoo, Medio and InfoSpace - and how they manage this process within their paid Search processes and systems. 

As a Mobile Marketer, I’m a bit more interested to see how “piggybacking” will impact the use of KEYWORD-driven messaging programs especially within emerging self-service mobile messaging solutions. These platforms from companies such as; TextMarks, iVisionMobile, iamota, Mobivity, and Waterfall Mobile (to name a few) allow Clients to essentially select any keyword they desire as long as it conforms to a specific character count and is not already in use on a particular shortcode (which is usually a shared shortcode offered by the platform provider).

You can see where I’m headed here, right? In theory I could set up a Cross-Carrier SMS program on a shared-shortcode on any number of the aforementioned tools using the Keywords HolidayInn, or HoldayInn or HdayInn or HolidayInn7. I then could promote my keyword(s) a variety of different ways to spur some sort of consumer action e.g. send WAP push to trigger WAP page, send SMS/MMS ad, etc.

As I write, I can see where this is more of a trademark infringement issue at play, but nevertheless as mobile keyword usage gains recognition in the U.S. and more publishers and advertisers/marketers embrace the Channel, keywords will be valuable assets that ought to be closely guarded and monitored by all those in the Value Chain.

I attended last year’s NYC event and must say it was worth the trip to the Big Apple. The abundant networking opportunities with the who’s who in the industry goes without saying, but I was more impressed with the slew of lil’ nuggets of “insider” information provided by most of the sessions/speakers. For example, the co-founder of Zumobi Dr. Ben Bederson talked about how his research at the University of Maryland revealed that the majority of handset users preferred operating their devices with one hand versus two. Coca-Cola Executive Mark Greatrex said Sprite sells 10 billion bottles per year. Scanbuy’s CEO Jonathan Bulkeley said 2D barcodes can trigger 26 actions on a mobile phone (e.g. SMS)

This year’s event is again filled with accomplished Mobile entrepreneurs and seasoned marketing & advertising executives from some of the Nation’s top companies. Here’s what I’ll be listening for:

• What is the MMA doing to exert more pressure on the Carriers to minimize their continued practice of creating new and ever-changing rules that ultimately supersede the MMA’s Best Practices Guidelines? (This is perhaps THE most frustrating issue within the Mobile Marketing space as the mad scramble to appease individual Carriers and their program Audit firms places costly demands on vendors and marketers alike to change systems, promotional materials, etc.)
• Will more brands step up and disclose their actual campaign results. (Look, everyone knows that the numbers will be low and in most cases disappointing, but we have to remember that we are in an experimental phase with this nascent channel. We can learn from each other’s efforts.. that’s how this is going to work for all of us.)
• Will the vendors, publishers, marketers dealing in the mobile advertising space talk about things OTHER than banner ads this year. It was a bit ad nauseam last year and according to eMarketer messaging advertising is expected to account for 88% of all mobile ad spend in 2008. I do see that 4INFO and Quattro Wireless have some executives on the docket discussing SMS advertising and “other” opportunities.

 

I was unable to attend the event, but judging from the various articles from those marketers and press members that did attend it sounded like both sides or rather all sides (marketers, government and consumer watch groups) all brought up valid and thought provoking points.

As a mobile marketing practitioner however, what I was looking for is the FTC’s stance on the possibility of getting more actively involved in the regulation of the industry.  IF the FTC does get involved, you can add them to the list of those drafting ‘rules’ for marketers to abide by (SEE -  MMA, CTIA, MEF and of course the Carriers).   For now, however, the FTC looks content to continue to lean on the MMA and Carriers to set the pace, but will be keeping one eye open on the space as it evolves.  (Rest assured though that if complaints start piling up they will be forced to act.)

FTC Commissioner Jon Leibowitz was quoted as saying, “In an era of broadband and information services, the FTC will be watching and is watching closely. We strongly believe, as many of you know, in self-regulation, but we are also going to police the wireless space.” 

So mobile marketers, take notice.  The industry has the feel that things will only get harder in the short term with regards to ensuring software platforms, program briefs, business processes, etc. are in compliance with ALL of the various players before a SINGLE, common-set of guidelines is established (pipe dream?).  The Carriers especially are NOT sitting back idly waiting for the gov’t to start regulating their business practices - they have tightened their screws around their interpretation of the MMA Best Practices and their own ‘addendum’s’ to the MMA guidelines.

Here’s a running a list why we haven’t seen more Cross-carrier MMS Marketing Campaigns in the U.S. to date.

• 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.