I’ve written before about mobile marketing and how companies are beginning to find ways to integrate it into their campaigns more seamlessly and effectively. Mobile marketing is just another tool that marketing 2.0 professionals can use to reach consumers where they are, rather than making them come to the brand. That said, it’s just like any other tool in that it must provide value to customers and tie back to a clear marketing strategy. This post is really about mobile marketing 101, I’ve tried to write up an outline of what the US mobile marketing landscape looks like in plain English. As one friend suggested, you may walk away with more questions than answers after reading this, but at least they’ll be about specifics.

The Unique Experience of Mobile Marketing

The experience we have with our mobile devices is unique because of the way they fit into our lives. Unlike our computers, we’re much more attached to our mobile devices, in large part, because we spend much more time with them. We carry them with us wherever we go and emotionally identify them with the safety, connection, and personal information that they provide. They are deeply personal devices which is reinforced by the fact that we’re only supposed to get calls that are specifically intended for us (thanks do not call list!). Following this, we have a significant expectation of relevance when it comes to mobile experiences.

There is also a sense of urgency that we associate with mobile devices because we think of them as a life-line. For this reason, people tend to respond to messages on mobile devices much more quickly than through other devices. There are benefits to these associations from a marketing perspective, but there should also be increased caution because people are also more sensitive in the mobile environments.

Creating experiences that contradict our associations with mobile devices will elicit a much stronger response than in other environments. One of the best examples of this that I’ve seen is how people react to telemarketers on their cell phones versus land-lines. On the land-line people are simply irritated, but on the cell phone they take it much more personally and jump to anger (especially with the do not call list in place).

Finally, the unique value of the mobile experience is really only made possible through fully integrated campaigns that allow customers to build on the experience across brand touch-points. You can read an earlier post about integrating experience across touch-points here.

Some Quick Statistics

(gathered from E-marketer and Lyris)

• There are over 250 million wireless mobile devices in the US.
• By 2013 it is estimated that every American will have a wireless mobile device.
• Mobile marketing spending is reaching to 2 billion annually.
• Mobile marketing revenue is heading upwards of 20 billion soon.
• Over 50% of US mobile users have participated in an SMS campaign.

3 Top Level Categories

Today mobile marketing programs can be categorized into three basic groups. Obviously, they can be combined with each other. More importantly, they can all be tied into the other marketing channels and platforms you’re using to create an integrated campaign.

1. MOBILE MESSAGING – today, this is by far the dominant category.
   1. SMS – Short Message Service: This is a text only message of 160 characters. More than 50% of people with mobile phones today use this service and all new phones in the US market are SMS compatible. One interesting thing to know is that most people read SMS messages within 15 minutes of receiving them and respond within 60 minutes. SMS messages can also be tied together so that long messages can be spread over several 160 character messages.
   2. MMS – Multi-Media Service: Similar to SMS only this service allows for rich media content such as images, audio, and video. This has less adoption but is available on almost any phone that has a color screen (notably, except the iPhone). Here the 160 character message size also goes out the door.
   3. MIS – Mobile Instant Messaging: This is simply a service that makes your instant messaging service (Google Chat, AOL IM, ect) available on your phone. The advantage of this is that is can SMS charges depending on your service plan because the messages are sent through the phone’s data plan rather than through SMS system. Thus, you must have a web-enabled phone to use this service.
2. MOBILE WEB – The mobile web is a service that allows users to browse the internet through their phone. Smart phones with larger screens are making the mobile web more functional along with sites that are build specifically for mobile interfaces.
   1. MOBILE APPLICATIONS – This has been the most exciting area in mobile marketing and takes advantage of custom applications that are built to run on smartphones (Apple, Blackberry, Android, ect). These applications are web-enabled so they can offer access to the mobile web along with pretty much any other mobile service.
   2. MOBILE AUDIO, VIDEO & TV -This service has the least adoption because it requires greater bandwidth than is available on most networks currently. That said there are players in the space that are trying to deliver mobile video and tv content such as Mobitv and Pandora.
3. LOCATION/INPUT BASED
   1. QR CODES – This hasn’t really hit the us market yet, but QR (quick response) codes are essentially a 2-dimensional barcode that you can scan with a camera phone. QR codes can automatically sign up could for campaigns, make purchases, and provide information about products and services. These are already in common use in Asia.
   2. BLUETOOTH – This is a short range wireless standard that many phones currently use to connect wireless headsets to phones. Bluetooth is also capable to accepting prompts that are in close proximity to the device. It’s easy to imagine how this could be incorporated into the retail experience. This type of bluetooth application has yet to exist in the domestic market.
   3. GPS – Mobile devices can be location aware through the integration of a global positioning system. Again, location based campaigns have yet to hit the domestic market but it’s clear that integration into mobile applications hold great potential.

These categories have some use today but things are quicky integrating when it comes to mobile technology services. For example, mobile video and Video and TV is already becoming available through mobile applications. Also, the US and European markets are significantly behind Asian markets when it comes to innovation mostly due to the control that mobile service providers have exerted on device manufacturers and application developers. In Asia, mobile marketing is embedded into services in a much more sophisticate way due to the more open service environment.

SMS Components

Because SMS is by far the most popular space for mobile marketing today, I want to highlight two key components of most campaigns:

1. SHORT CODES – A short code is basically a short telephone identification number (5+ numbers) which is tied to a phone or a brand. Thus, companies can buy a short code for their company or brands. There are three kinds of short codes:
   1. vanity – these are just like a vanity license plate on your car, so that you can purchase a code that spells out your company name or brand (good for one year).
   2. random – this is like asking for a random plate from your local DMV, it’s less expensive than a vanity code.
   3. shared/rented – if you don’t want to buy a code you can rent one from a wireless application service provider (I’ll explain these below)
2. KEYWORDS – Keywords are words that you can type into the body of a message that you send to a short code. These allow companies to parse the messages they are receiving as relevant to specific campaigns or topics.

When short codes and keywords are combined it’s possible to create fairly involved interactions through an SMS-enabled phone. For example, Starbucks ran a short code as part of an integrated campaign that offered a free cup of coffee to anyone that sent an SMS to the number with a specific keyword which might have been “freebie” or “bonuscup” or something like that. After they opted-in through this campaign, Starbucks could send them campaigns on an ongoing basis (or until they opt-out).

Opt-In

SMS interactions do require an opt-in just like e-mail campaigns, though they are not managed under CAN-SPAM. Instead they are enforced by the service carriers. Unfortunately, the carriers do not have a uniform policy so rules and consequences vary by carrier. There is a movement to unify this policy underway.

It’s important to understand that you can’t buy mobile lists, you have to build them. There are some tactics to get people to opt-in for SMS service that have strong parity with the types of incentives that work in the e-mail messaging space. For example, running competitions and sweepstakes has been a popular approach. The most successful approach, however, is to provide real value to customers through SMS programs.

The Mobile Marketing Players

Every mobile marketing campaign includes a variety of players. I’ll take the case of SMS first:

• THE BRAND – This is the company that wants to run the campaign.
• WIRELESS APPLICATION SERVICE PROVIDERS (WASP) – These are companies that help brands create and manage campaigns with various levels of service. They can rent you a shared short code and provide turnkey negotiation with the carriers and aggregators.
• AGGREGATORS – These companies are the primary liaison between the carriers and companies.
• WIRELESS CARRIERS – These are the companies that provide the wireless service to phones (AT&T, Verizon, Sprint, etc)

It is possible for brands to work directly with the aggregators and cut out the wasps, but typically this would only make sense if you have a significant amount of mobile marketing business and extensive experience in the space.

In the case of mobile applications, the wasps are replaced by partners such as Nokia, Palm, and Blackberry. And there’s Apple which allows companies to make application available through their iTunes Store and iPhones. Their store is unique because it is the largest single vendor of mobile applications and because they operate as a gatekeeper that requires application approval. In this regard, they use a similar model to the wireless service providers that require approval of SMS campaigns. If applications are sold, they take a cut of that transaction. There are other players in the market that are less rigid than Apple, including Nokia which allows users to download third party applications freely. Nokia is also getting ready to open an application store of thier own as an extension of their OVI platform.

A Word About Mobile Financial Transactions

Unlike in the US, mobile users in Asia are able to make purchases with their phones. And, I’m not just talking about online purchases,which we can do in the US market, but about purchases in a retail context. For example,  they can use their cell phones to buy a can of soda from a soda vending machine. When they do this the charge typically shows up on the credit section of their mobile bill, which represents phone companies getting into the credit business.

Ideally, our phones should allow up to make purchases not just to our phone bills but also to our credit cards as well, which would save us the trouble of lugging around fat wallets full of plastic. The wireless services providers are partly to blame for slowing innovation in the US, but I’m sure that the credit companies haven’t been helping out either. You could imagine that they’re not super keen to competing with additional credit companies.

Apparently there are plans under way at several large mobile companies to try and get financial transactions happening on phones in the US. I’m not holding my breath, but it’s clear that when this issue gets resolved it will significantly impact the mobile marketing landscape.

The Cost of Mobile Marketing

The cost of mobile marketing campaigns will vary greatly depending on the type of campaign you’re running. In the case of an SMS campaign, there will be the set up fee for the short code and then you’ll pay by the message. There will also be fees from the wasps and aggregators, but the most significant expense will come from the service providers who make money on a transactional basis for sending SMS messages. Obviously, if you’re using coupons or some other promotion, you’ll have to account for the value of the product discounts you’ll be giving away.

If you’re looking at creating an application, the up front costs are in the development of the application because the partners get paid based on a percentage of sales costs. There may also be some minimal set up fees to get your application up and running through the partner commerce site.

Some Popular SMS Programs

Here’s a quick list of popular ways companies are using SMS today:

• Competitions – text to win
• Events Reminders – increase event attendance/conversion, special vip rewards
• Coupons – provide promotions/incentives
• Activity/Service Alerts – transactional information, reminders, etc
• Surveys/Polls/Voting – market research, entertainment
• Trivia Games – entertainment, information serving
• Question & Answer – information serving
• Transcription – value added services

Popular Integration Opportunities

Here are some popular places that companies embed short codes and keywords.

• Billboards
• On packaging
• Online communications (e-mail, blogs, viral video, etc)
• Traditional media placement
• In store
• Customer service interaction

Thanks for reading, and let me know if I missed any basic elements! For those interested in learning more, check out The Mobile Marketing Association’s best practices guidlines here.