Mobile Commerce for the Holidays

Agenda
Device Trends: Mobile Phones as Gifts
Integrating Mobile into the Retail Shopping Experience
Using Mobile to Drive Incremental Store Traffic
Conclusions and Recommendations
Q&A

Poll 1 This holiday season, will you use your mobile phone to compare prices or product information? Poll 1

Future smartphone brand Base: People who say they are very likely to likely to buy a multimedia handset

Strong demand for advanced OS devices is driving the growth of that segment, at the expense of others How Likely Is It That Your Next Mobile Phone Will Be a Multimedia Device with a Data Plan? Total Device Volumes (in Thousands) 32% 27% 9% Source: Yankee Group Anywhere Consumer: 2009 U.S. Survey Suite, Wave 1-6 Very Likely 16% Likely 16% Unsure 29% Not Likely 21% Very Unlikely 18%

As smartphones go, so will feature phones WiFi CDMA EVDO revA 3G HSPA ARM1176JZF 620MHz Qualcomm MSM7201A 528 MHz Processor Device Samsung Instinct Qualcomm MSM7600 528 MHz Blackberry Bold Storm Connectivity Palm Pre N97 “ Smart” feature phones will drive significant volume Apple 3G iPhone HTC G1 Laptops Netbooks 3G Smartphones 2G Phones MIDs

Monetizing mobile services Base: People with a mobile phone Communications-centric, not entertainment-centric

Number of paid applications Base: People with a smartphone who have downloaded apps
60% have not paid for an app
16% have paid for one app
10% have paid for two apps

U.S. smartphone app store revenue will exceed $4.2 billion in 2013

Agenda
Q&A

Poll 2 How do you plan to use your mobile phone to compare prices or product information? Poll 1

Case study: Starbucks 2-D bar code application
Starbucks 2-D bar code: fill prepaid card and pay at the point of sale (PoS) with a bar code
Run all authentication through PoS infrastructure
On a pilot basis, available at just 16 stores in the Silicon Valley and Seattle areas
Replacement for lost/stolen phones
Launched a 2 nd application nationwide to check balances and reload
Average Apple App Store rating of 3.5 stars with 2,165 ratings

Technology challenges facing mobile coupons
The quality of the camera phone is a determining factor
Screen distortion can be a problem
Multiple code types require multiple application readers
Accessing coupons at the PoS, whether through SMS or WAP, must be instantaneous

Drivers and inhibitors for mobile coupons
Key Drivers
Consumer income level skews to the higher end
Availability of data packages
61% of SMS, MMS packages
22% have data plans and can search and download coupons through the mobile Internet
Personalized coupons see higher redemption rates, and mobile enables that
QR codes are a zero-cost approach, with no licensing costs from the patent holder
Key Inhibitors
What happens when a campaign is run and the advertiser wants to change vendors? Who owns the codes?
Requires a national clearinghouse model, similar to number portability
Integration at the PoS
Cost of redeeming coupons
Queue management
Consumer understanding of the code types

Evolution of mobile coupons

Mobile coupon interest increases with annual household income The higher the income, the higher the interest in mobile coupons. Regardless of whether the consumer is sent an MMS, SMS or a bar code.

Consumers don’t care about the mobile coupon delivery method, as long as it’s free Base: Anyone who would consider mobile couponing

The mobile coupon market remains small until 2013
Advertisers and merchants are wading slowly into the mobile channel
Merchants are quite concerned about redemption at the PoS
Integration into a loyalty program is expensive and time consuming; should you just invest in Near Field Communication (NFC)?
Market isn’t open; there are too many closed code types and app readers
Millions

Agenda
Q&A

Poll 3 If you plan to visit a mobile Web site to compare price or product information, where will you go? Poll 1

Driving incremental store traffic
Main question: Is this going to help me sell more widgets?
Link consumers to:
Location
Reviews
Real-time promotions
Content /video
Focus on perishable items such as concert tickets, sporting events and food
Deal of the day
Approaching storm (can drive foot traffic)
Technical challenges
App developers must have access to location
Mobile content delivery networks (dedicated pipes) are necessary if you want to download video and ensure QoS
3G/4G network certainly impacts the customer experience
Align retailer and manufacturer interests
Price comparisons are not what the merchant wants, but maybe the manufacturer doesn’t mind if the consumer visits another store for a cheaper price

Mobile codes provide more than coupons Loyalty Programs Personalization Device Detection Location Mobile Campaigns
They require limited upgrade to infrastructure if PoS redemption is not required
Handsets from Nokia, Pantech, Samsung, LG, etc., are shipped with code readers
They avoid consumers having to enter long URLs; great for in-store opt-in campaigns
Can provide coupons, content, video, etc.
Can integrate inventory, location, directions
The cost of embedding them in a poster, newspaper, etc., is essentially $0 (vs. $$$ cost of integrating NFC chips into a campaign)
Access mobile Web pages, download content, engage with mobile advertising, find a location, etc.
Extremely popular in Japan but haven’t expanded further

Case study: IKEA’s use of SMS
Customers text to a predetermined short code
Customers scan the SMS from their handset when they arrive at the store
Customers print a paper coupon to use at the checkout PoS
IKEA sees a 10-45% response rate through the bCode campaigns
Key user demographic is females aged 18-49; secondary demographic is families
Scan and redemption data are offer-specific, store-specific and user-specific
Campaign management
Offers can be configured online and deployed in real time
All reporting data is available online in real time, and for CSV exports
All touch-screen interactions are Adobe Flash-compatible, allowing for a variety of rich multimedia interactions in-store
Adobe Flash content can be updated in real time via online tools

Push vs. pull: bar codes or SMS?
Push messages are best through SMS because consumers have already opted-in through another channel
Asking consumers to remember a short code can cause fallout in a “pull” scenario
Contrast: Highly successful for voting, e.g., American Idol
Cost of MMS/SMS should not be borne by consumer
SMS/MMS is a common format used around the world (want lowest common denominator to reach prospects)
Use SMS short codes as a way for consumers to opt-in
Pull interactions should be handled through an application
Should be as easy as possible for consumers to obtain content
Hybrid approach of SMS and bar code scanning is best
Sales/transactions should not occur yet; push only information or free content
Linking consumer pull activities with coupons should not occur at the PoS
Consumers can opt in through a pull mechanism but discounts should be received via a monthly statement
Pull Push

Agenda
Device Trends: Mobile Phone as a Gift
Q&A

Conclusions and recommendations
The time is now: Mobility should be integrated into your 2009 holiday season
Launch SMS for push and 2-D bar codes for pull campaigns
Do not charge consumers to receive MMS/SMS messages if they do not have a messaging bundle
Create time-sensitive and personalized campaigns, but don’t try to combine offers and sales directly through the mobile channel

Q&A
Look for these reports from Yankee Group
Available from shop.yankeegroup.com or through our client Web portal
‘ Tis the Season: Mobile Retailing Will Transform the 2009 Holiday Shopping Season by Christopher Collins
Bundle Up for the Holidays by Dmitriy Molchanov
Yankee Group's Mobile Coupon Forecast: Integrating Mobile Into the Retail Shopping Experience by Jon Paisner
Forecasting the U.S. Mobile App Gold Rush by Carl Howe and Andy Castonguay

Jon Paisner, senior analyst Andy Castonguay, director Upcoming Yankee Group webinar: 2010 Predictions – Dec. 15, 2009 Register at www.yankeegroup.com Thank you!

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Mobile Commerce for the Holidays

by Yankee Group on Nov 17, 2009

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