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The Rise of Mobile Marketing


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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. 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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The Rise of Mobile Marketing

  1. 1. Perspective Roman Friedrich Florian Gröne Klaus Hölbling Michael PetersonThe Rise ofMobile MarketingNew Opportunitiesfor ConsumerCompanies andMobile Operators
  2. 2. Contact InformationBerlinFlorian GröneSenior Associate+49-30-88705-844florian.groene@booz.comDüsseldorfRoman FriedrichPartner+49-211-3890-165roman.friedrich@booz.comMunichMichael PetersonPartner+49-89-54525-640michael.peterson@booz.comViennaKlaus Hö Booz & Company
  3. 3. EXECUTIVE The mobile channel offers an exciting opportunity for marketers—one that most have yet to fully embrace. OneSUMMARY 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.Booz & Company 1
  4. 4. A Powerful Of all the opportunities for market- ing made available by new media, The technology chain is relatively simple: A company offering servicesNew Platform the mobile platform perhaps holds or products contracts with a mobile- the most potential. Indeed, the use of service provider to create a mobile mobile devices represents an unprec- brand. The mobile brand speaks to edented and unparalleled shift in how customers—loyal users who identify consumers use media. But the mobile with the sponsor, as well as new channel’s growth as a marketing and audiences drawn by the simple value advertising vehicle has been so fast that proposition of better service at a some of the world’s most sophisticated lower price. The result? More power- marketers have yet to determine how ful customer relationships and new to fully embrace it—not for lack of revenue streams. desire, but for lack of experience. A European football team connects New business models for mobile mar- with its most ardent supporters via a keting are turning the mobile phone mobile service that provides not just into a marketer-exclusive platform. player information and game statis- Marketers can create mobile portals tics but also the chance to purchase dedicated to their business or brand tickets, T-shirts, and memorabilia. (giving their message exclusive airtime A discount convenience store rein- with their best customers), a choice forces its image as a place for quick, of tailored handsets (to match the inexpensive service with a branded brand), preloaded applications that low-cost mobile offering. Customers drive further contact with the brand, who want to buy more minutes can and any number of other develop- just stop by the store—where they ing technologies that drive home the might be drawn in by, say, the store’s exclusivity of the message. new cereal promotion (communicated via text message, of course). Although Take the case of mobile phones most U.S. marketers have been slow branded by Bild, the largest mass- to respond to the mobile challenge, market newspaper in Germany: The the Polo Ralph Lauren Corporation— mobile device belongs to the customer that most American of retailers—is to use in whatever way he or she giving tech-smart fashionistas the chooses. But everything about it— chance to shop by phone. It can talk from the message on the screen to the directly with its best customers over games and gimmicks on the portal to its own dedicated (and branded) the no-frills rate plan—says “Bild” in mobile service. a loud (but consumer-friendly) voice.The result? More powerfulcustomer relationshipsand new revenue streams.2 Booz & Company
  5. 5. Reaching For marketing managers, the omni- presence of ever more personalized access advantage over other channels, but it is not exclusive orthe Segment digital media means that consumers entirely transportable. Mobile isof One are better informed, more demand- ing, and more focused on individual exclusively available to the primary users—not just in fixed locations, needs than ever before. In trying to but wherever they go. reach this “segment of one,” market- ers find that traditional metrics like • Customer Insight: The mobile gross reach pale in comparison with channel gives companies access such informed measures as digital to a wide range of consumer net reach and cost per transaction. data, including demographics, Mobile channels, in particular, allow communication and social patterns, game-changing marketing plays that and—with consumer consent—even address individual customer needs geographic movement patterns, and interests. And, by doing so, they thanks to GPS or network also maximize net reach impact. cell information. Once mobile commerce gains traction—and it In its potential to shape and monetize is only a matter of time before it the customer relationship, there are does—businesses can add shopping five ways in which mobile outper- history, online store preferences, forms all other marketing channels and spending patterns to the list. and platforms (see Exhibit 1, page 4). • Customer Dialogue: Although • Customer Access: The mobile mobile channels do not offer channel provides virtually the multimedia home theater continuous access to consumers experience that many PCs via voice, messaging, or portal provide (and mobile channels platforms. The Internet has an will obviously never match screenBooz Company 3
  6. 6. size), their content-rich, real-time phone is truly interactive, allowing generation of iPhones.) Because visual and acoustic platform can be consumers to respond by click, of that emotional statement, users uniquely tailored to an individual voice, text, or multimedia message. are highly attached to their mobile consumer. Families, co-workers, devices as not only essential tools and friends share computer use. • ustomer Emotions: A consumer’s C but familiar parts of their everyday The mobile phone is a distinctly choice of a mobile device often is lives. Because the mobile channel personal device that reflects the use a strong lifestyle statement. (Just enjoys a universal always-on and interests of its primary user. ask the thousands of people who presence in people’s lives, it is a And like the Internet, the mobile have stood in line to buy the next powerful platform for advocates,Exhibit 1:Major Channels’ Potential to Reach Customers I. Access Mobile TV, Radio, PrintV. Transactions II. Insight Catalogue, Direct Mail PC-based Internet Retail IV. Emotions III. DialogueSource: Booz Company4 Booz Company
  7. 7. believers, and supporters of a to the airport. And merchants can location, and social and communica- certain topic, product, brand, or respond to consumer interest in tion patterns. Most important, inter- way of life. In short, people get an e-commerce venue by instantly action within the business or social excited about their mobile phones updating prices or pushing new environment can occur immediately in a way they never do about the offers. through the multimedia capabilities of PC or the TV. a mobile phone. These five dimensions of the mobile• ustomer Transactions: There C customer’s relationship provide By creating a relevant user experience, are few physical boundaries for a distinct context for marketers mobile devices give consumers more mobile devices. And that mobility who must present a unique value of what they want while providing means that direct click-through, proposition to connect with their marketers with a powerful platform e-commerce applications, or mobile customers. In highly competitive for multitiered, next-generation payment solutions are easily markets, in particular, consumers are marketing campaigns. Because it can available to consumers no matter becoming accustomed to end-to-end literally put a product or service in a where they are. In markets such as brand experiences that stretch across prime prospect’s hands, the mobile Korea and Japan, customers can the physical and digital world. platform is a channel that can imme- purchase goods from the windows diately enhance a brand’s value. It of a store that closed to foot traffic Mobile channels, with 24/7 access adds immediacy, relevance, timeliness, hours earlier; the same may soon to a unique consumer, can build access, and unique customer insight. be true in Europe and the United interactive relationships by identify- And, with those advantages, it offers States. If travelers are late for a ing customers not only in terms of marketers new opportunities to boost flight, they can make up time by personal identity, but also in terms (and measure) their return on market- checking in from a cab on the way of commercial behavior, geographic ing investments.In highly competitive markets, consumersare accustomed to brand experiences thatstretch across the physical and digital world.Booz Company 5
  8. 8. The Depending on how they want to reach their customers and on their strategic Or marketers might use the digital channel to respond to loyal custom-Parameters objectives and positioning, marketers ers’ behavior patterns with rewardsof Mobile can use branded mobile offerings in a number of ways to generate value, triggered by certain behaviors: “Spend 45 minutes browsing stock informa-Branding first for consumers and ultimately for tion on our financial-services mobile the bottom line. channel and receive a discounted stock trade offer.” It is important to remember that there is no one-size-fits-all formula Brand-centric content and interactive for mobile platforms. Each product applications can build brand loyalty or service has specific brand-building with videos and product demonstra- needs that will shape the nature of tions, as well as through games and its mobile offering. And the deep competitions. Such easily accessible toolbox available allows marketers to content can also manage desired pick and choose what best suits their channel migration to lower-cost offer- short- and long-term objectives. ings: “Purchase your airline tickets through our branded travel mobile In its most basic form, a branded offering and check in with discounts, mobile play would look to do little free calls, or loyalty points.” more than reinforce brand recogni- tion with classic push advertising Master-class mobile models fully tap and enhanced brand visibility. Such into the platform’s potential by using a program would give a prequalified digital channels to build interactive, audience easy access to special offers collaborative customer programs and promotions via e-mail, portal, that enable transactions. Think of a and SMS/MMS tools. Although rev- branded credit card with an interac- enue sharing—new income driven by tive communications device attached incremental network traffic, mobile and you can begin to imagine the pos- usage, and data downloads—is an sibilities inherent in product and ser- easily quantifiable asset of a basic vice transactions enabled via mobile channel, revenue diversification in devices. Collaborative programs—user itself is not a compelling reason to forums, user-generated content, mobile move into mobile media. focus groups, and digital beta testing, to name a few—further increase the Consumer insight and engagement are relevance of the content. For superior the hallmarks of an advanced tier of credibility, master-class platforms can mobile models. By creating a mul- offer such location-based mobile ser- timedia user experience targeted to vices as region-specific content, sight- subscribers’ specific needs or inter- seeing or shopping guides, and even ests, this next-generation platform train connections that leave from the generates business value in a number customer’s current location in the next of ways. For instance, marketers can hour. From a business-management cross-sell or up-sell their products perspective, these platforms can call and services using customized content on subscribers with real-time queries: offered by online media and mobile “Call or text us free to tell us what applications. Such incentives encour- you think of our new gizmo.” Such age customers to accrue usage-based collaborative approaches to product points that they can redeem for development can cut the costs—and brand-related products or services. turnaround time—of innovation.6 Booz Company
  9. 9. Cutting-Edge In a previous generation of media consumption, one of the most dif- • Is there a robust pipeline of ideas to tailor enough content, applications,Mobile ficult challenges was moving readers games, tools, campaigns, and promo-Opportunities from one daily newspaper to another. Habit—not quality or relevance of tions to keep the user interested? content—was the key reason for con- Does the mobile channel align with sumer loyalty. And so it is in this new the brand’s core values? generation: An offering has to be con- vincingly superior to make customers • an we rule out potential damage C change familiar habits. To persuade to the brand, such as misaligned a customer to move to a branded mobile and offline offerings, mobile service, a marketer must find insufficient network quality, positive answers to a number of and inadequate data-delivery daunting questions, each of which connections? invites more specific considerations: • an the mobile offering be tailored C Does the branded mobile channel well enough so that it becomes create genuine value for the brand’s aligned with core brand values, consumers? on the one hand, and customer expectations, on the other? • hat can the branded mobile W channel add to the customer • ill the service be aimed at the W experience that existing marketing mass market or exclusive? Or will channels cannot? it draw on both options, offeringAn offering has to beconvincingly superior to makecustomers change familiar habits.Booz Company 7
  10. 10. discount pricing that still provides and avoid the potential brand • re there realistic options for A exclusive brand or content messages damage of a less-than-satisfying outsourcing noncore activities and to generate consumer insight? mobile experience? complementing in-house resources?• ill the pricing program reinforce W Is the business capable of providing a It is essential for any enterprise to care- the overall perception of the brand? branded mobile service? fully evaluate its responses to this full list of questions; however, the businessWhat is the economic significance of • an the organization deliver the C (or brand) best suited for a mobile chan-the branded mobile channel? required content and applications to nel typically is characterized by a strong implement and support the branded presence in its customers’ everyday lives;• an the program reach sufficient C channel? a brand or product to which customers scale to realize the expected benefits? have an intense emotional attachment • an the organization deliver C and for which there is a solid network• ill the branded experience be W effectively? Can it keep the pipeline of consumer advocates; and a cus- strong enough to get word-of-mouth filled with viable, engaging content, tomer base whose loyalty is grounded and viral community endorsement campaigns, and promotions? in a deep sense of community.Is the business capable of providinga branded mobile service?8 Booz Company
  11. 11. The Feasibility Marketers have any number of reasons to be reluctant to break with services in increasingly competitive markets. At that early stage of devel-of Mobile tradition and jump on the mobile opment, differentiation of consumer bandwagon. Marketers are not tech- experience was minimal or nonex- nologists. And, as a subset of commu- istent. As we described above, its nication technology, mobile services “basic” purpose was to put the brand is not a field in which anyone expects in front of the customer in a passive marketers to be specialists. Until (but friendly and favorable) manner. recently, a branded mobile offering required marketers to spend a good Today’s mobile service player land- share of their time and money devis- scape is very different. The vertical ing ways to run back-end processes— dis-integration of the mobile value such as portal platforms, billing chain and the increasing commoditi- systems, and digital customer-care zation of network services translate procedures—which often led to fail- into far more differentiation than ure and frustration. MVNOs were able to provide even just a few years ago (see Exhibit 2, The good news is that building a page 10). branded mobile offering no longer requires a major up-front investment. What does this mean for marketers? Marketers can provide the brand and For starters, they can relax: Becoming content, and a service provider can do a mobile player is no longer too risky the rest of the work. or expensive. They do not need to go out and buy a whole new set of tools; The business models for delivering there are partners eager to provide mobile services have evolved over the reasonably priced services at every last five years or so, most quickly in stage of the new value chain. Asia, followed by Europe and then the United States. What began as an More specifically, mobile plays no investment-heavy model dominated longer require businesses to become by a few integrated players is now network operators, virtual or a more open, dynamic market with otherwise. Entry barriers have been specialists at virtually every step of lowered across the board: Capital the value chain managing different expenditures are close to zero, aspects of technology and audience and economically viable services development. allow brand sponsors to efficiently approach smaller target groups. The first wave of value chain dis-inte- The new service provider ecosystem gration introduced new players that allows marketers to take a calmer, less used excess network capacity from expensive launch-and-learn approach mobile network operators (MNOs) to mastering mobile channels. as a platform for virtual players (mobile virtual network operators, or The presence of a rich variety of MVNOs), whose primary focus was service providers opens the customer- delivering no-frills, low-cost telephony facing end of the value chain to aBooz Company 9
  12. 12. broad range of players. Concerned The upswing in mobile is justabout mobile network infrastructure, beginning, even in the world’s mosthandset design and configuration, technologically savvy markets. Theportals, application development, blogosphere is buzzing with rumorsback-end processes, content of branded mobile services sponsoredmanagement, and preconfigured by the likes of social networkersadvertising campaigns? Outsource Facebook, LinkedIn, MySpace,it all or pick the pieces you want to studiVZ, and XING. And, from acontrol directly. With next-generation more traditional perspective, themobile platform development, barriers to entry are low for anymarketers have complete flexibility brand-driven business across luxuryin deciding how much or how little niches or broader mass-consumerthey want to be involved in the more segments—media and entertainment;upstream aspects of the mobile play. fashion; retail; membership-drivenAnd that allows them to go back organizations, including sports orto basics and do what they do best: charities; financial services; travel andembrace the customer, in this case leisure; even automotive.with a unique mobile offering.Exhibit 2:The Evolution of Mobile Operators’ Business Models Equipment Network Enabling Application Application Customer Sales Customer Device Operation Technology Development Service Care Marketing Proposition Manufacturing Provision Billing Branding Hosting Content Portal Development Service Original Mobile Network Operators Equipment The Old Days • ncreasing Customer I Manu- 1990–2004 Segmentation facturer Resellers • ncreasing Differentiation I of Offerings Mobile Virtual Network Operators • Increasing Specialization Virtualization Along Value Chain 2004–2007 • ecreasing Entry D Channel Enablers Barriers and • Mobile Virtual Network Enablers Capital Expenditure • Application Developers Requirements • Managed Service System Providers • Multimedia and Advertising Agencies Brand-centricity Branded 2007– Mobile ChannelSource: Booz Company10 Booz Company
  13. 13. The Time Consumers have long recognized the convenience and comfort of mobile Most particularly, they want the access that mobile devices provide toHas Come devices. And, at last, the barriers that seamless customer experiences that limited mobile consumer experiences can link them to other parts of their have been removed. offline and online lives. A feature-rich generation of attrac- Finally, branded mobile channels tive mobile devices like the iPhone now offer marketers in consumer- (with touchscreen commands, crisp focused businesses a rich tool with displays, and intuitive entry modes), significant potential to build brands BlackBerry, and others has arrived, and generate value. For the first time and the devices now commonly in the history of the mobile channel, include GPS navigation, MP3 players, entry barriers have been lowered cameras, and various other multime- sufficiently to make branded mobile dia features. High-speed connectiv- plays not only conceptually attractive ity, including broadband and 3G, is but economically feasible. widely available to the vast majority of people in developed markets. With the elimination of financial and economic barriers, marketers As usage-based tariffs are replaced finally have the chance to leverage the by attractive flat rates, regulators new business model and address the are also cracking down on roaming opportunities of mobile marketing: and termination fees. And cost has real-time access to customers, deep disappeared as a major roadblock for insights into consumer behavior, and data-rich multimedia services. value generation for customers. The rewards for those who capitalize on Further, as a social driver in the these opportunities—deeper engage- move to mobile services, the broad ment with consumers, increased acceptance of the medium across brand loyalty, and enhanced customer regions and cultures demonstrates lifetime value—not only are clear, but that the devices have become lifestyle are not to be missed. icons that consumers decidedly want.Booz Company 11
  14. 14. 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, next- generation 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 of- ferings, 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 mini- mize investment as well as financial and operational risk. Align the configuration of the mobile service value chain with core business capa- bilities: Define the proper level of outsourcing in noncore activities (infrastructure operations, business support services, portal management) and focus on de- livery 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 mes- sages across other channels, including traditional broadcast outlets; proactively stimulate mobile uptake by promoting special mobile content or offers via non- mobile channels.12 Booz Company
  15. 15. ResourcesOlaf Acker, Florian Gröne, and Klaus Hölbling, “Beyond theMass Mailing,” Booz Company, March 2008: Vollmer, Always On: Advertising, Marketing,and Media in an Era of Consumer Control, McGraw-Hill, the AuthorsRoman Friedrich is a partner Klaus Hölbling is a partner withwith Booz Company based Booz Company in Vienna. Hein Düsseldorf and is the head specializes in marketing, sales,of the European communica- and customer service capabili-tions, media, and technology ties for the telecom, high-tech,practice. He focuses on the and transportation industries.strategic transformation of lead-ing telecom organizations in Michael Peterson is a partnerthe European mobile, fixed-line, with Booz Company inand Internet markets. Munich. He specializes in strat- egy development, particularlyFlorian Gröne is a senior asso- in marketing, sales, and otherciate with Booz Company in customer-facing activities, forBerlin. He focuses on improving communications and technol-operating models and develop- ogy technology capabilities inmarketing, sales, and customerservice for telecom organizationsand other IT-driven businesses.Booz Company 13
  16. 16. The most recent list of Worldwide Bangkok Madrid Dubai South Americaour office addresses and Offices Brisbane Milan Riyadh Buenos Airestelephone numbers can Canberra Moscow Rio de Janeirobe found on our website, Asia Jakarta Munich North America Beijing Kuala Lumpur Oslo Atlanta São Paulo Hong Kong Melbourne Paris Chicago Mumbai Sydney Rome Cleveland Seoul Stockholm Dallas Shanghai Europe Stuttgart Detroit Taipei Amsterdam Vienna Florham Park Tokyo Berlin Warsaw Houston Copenhagen Zurich Los Angeles Australia, Dublin McLean New Zealand Düsseldorf Middle East Mexico City Southeast Asia Frankfurt Abu Dhabi New York City Adelaide Helsinki Beirut Parsippany Auckland London Cairo San FranciscoBooz Company is a leading global managementconsulting firm, helping the world’s top businesses,governments, and organizations.Our founder, Edwin Booz, defined the professionwhen he established the first management consultingfirm in 1914.Today, with more than 3,300 people in 58 officesaround the world, we bring foresight and knowledge,deep functional expertise, and a practical approachto building capabilities and delivering real impact.We work closely with our clients to create and deliveressential advantage.For our management magazine strategy+business,visit to learn more aboutBooz Company.Printed in USA©2008 Booz Company Inc.