The Advantage Of Mobile Marketing

The Advantage Of Mobile Marketing Today, marketers are finding it increasingly more difficult to attract and retain their target audience. This is due in part to the impersonal one-way nature of traditional mass-media, and in part to the fragmentation of the media environment. What is more, consumers are no longer impressed with spectacular advertising campaigns and mind boggling special effects, instead they are now thirsty for information and are even willing to pay for it (Haig, 2002). Yet the picture is not all doom and gloom. The new global market of the 21st century has provided many new opportunities and cost effective alternatives for both marketers and consumers alike. For example, the emergence of the mobile smartphone has changed every aspect of our society and has become one of the fastest adopted consumer products of all time. As Chuck Martin points out, we are in the midst of a technological revolution that has far outweighed the television or the personal computer. This third screen, is revolutionizing the marketing landscape and the entire buying process. Mobile smartphones have liberated consumers from the confines of their homes, offices and traditional media environments and empowered them with information right at their fingertips. (Martin, 2011). Mobile marketing comprises many different applications ranging from SMS, MMS, short-codes and location-based services, to apps and direct mobile payment. With more and more people carrying smartphones in their pockets, marketers have the potential to catch them anywhere and anytime. Recent studies show that today there are more mobile devices in use than there are PCs and laptops together. Moreover, according to eMarketer, the amount of time people spend on their phones surfing the internet, listening to music, using apps and playing games has more than doubled in the past two years while the time spent online on computers has grown by just a mere 3.6 percent  [1]  . Nonetheless, that is not to say that traditional media is becoming less important or obsolete. However, due to its passive nature, marketing messages cannot be personalized for different target markets and often end up reaching the wrong audience at the wrong time. With multimedia-rich smartphones and other wireless devices marketers have the ability to send their consumers more personalized and relevant marketing messages wherever and whenever. Likewise, consumers are now able to search for the information they need whenever they need it. Thus, with a well-integrated marketing campaign that includes both traditional and new media businesses and brand owners can increase the customer loyalty, acquisition and most importantly their bottom-line. 1.2 Objective The objective of this thesis is to gain an understanding in the current state of mobile marketing and to identify the advantages of using a mobile smartphone as a direct marketing tool in comparison to traditional mass-media. Moreover, this thesis will examine the potential and future trends of mobile marketing and its implications for companies. 1.3 Methodology This review is based on a number of select books, journal articles, websites and other literature in the field of mobile marketing, digital media and m-commerce. The most popular and commonly cited literature was also selected. The search for relevant literature was based on many keywords including but not limited to: mobile marketing, mobile ads, m-commerce, traditional vs. new media, digital media, and direct marketing. Mobile Marketing 2.1 Definition of Mobile Marketing Before exploring the advantage of using a mobile smartphone as a direct marketing tool we must first define mobile marketing. In short, mobile marketing is a method of connecting people with advertisers via a mobile device. However, with the rising demand for information and communication technology as well as falling prices for broadband internet  [2]  , mobile marketing has become a powerful marketing tool that is shaping the way we do business.  [3]   As Eric Pfanner of New York Times describes, the power of mobile marketing comes mainly from the ability to acquire immense volumes of user-generated data by monitoring their clicks and tracing their whereabouts. Mobile marketing also makes it easier to focus the communication towards targeted audiences giving it a huge advantage over traditional mass-media which targets the public as a whole. But what exactly constitutes mobile marketing and how is it defined? According to the Mobile Marketing Association (MMA), mobile marketing is defined as a set of practices that enables organizations to communicate and engage with their audience in an interactive and relevant manner through any mobile device or network.  [4]  This definition is composed of two important components: a set of practices and engage with audiences. The first component relates to various marketing and e-commerce activities such as advertising, promotion, e-banking, online-purchase and CRM to name a few. Hence, mobile marketing is a set of practices intended at delivering a message, creating value and/or building a relationship with the customer. According to Philip Kotler, renowned professor and marketing theorist, marketing is defined as the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit (Kotler, Wong, Saunders, Armstrong, 2005). One might then say that mobile marketing is the science and art of communicating, engaging, and delivering value that is relevant to the target market at a profit via wireless telecommunication media. The second and more important component in MMAs definition of mobile marketing relates to the relationship between the customer and the marketer. With mobile devices this relationship has shifted from one-way to two- and even multi-way relationships where both the organization and the customer are responding to one another and exchanging information (Shankara Balasubramanian, 2009). Consequently, the purpose is to entice the customer to respond by either push tactics, initiated by the customer in the form of a click or a response, or pull tactics initiated by the marketer  [5]  . Additionally, Rob Stokes of eMarketer explains that there are two forms of mobile engagement. One uses the mobile phones communication features as part of an engagement strategy, and the other drives traffic to an organizations mobile website or application (Stokes, 2011). Either way, marketing messages must be relevant enough that consumers no longer passively consume, but instead actively participate in campaigns, especially in real-time, influencing the scope and the direction of the promotion or marketing message. Kim Dushinski, author of Mobile Marketing Handbook, delves deeper and defines mobile marketing as how businesses communicate with consumers on their mobile devices, with their explicit permission, at the right time, at the right place while providing relevant value (Dushinski, 2009). She calls this smart mobile marketing because not only does mobile marketing rely on the use of smart devices, but it is a uniquely tailored form of communication that it personal and of value to the individual user. More importantly, consumers voluntarily consent to receive advertising or promotional offers which in turn increases the efficiency of the marketing campaign and establishes a more effective and transparent relationship with the consumer  [6]  . To sum up, mobile marketing uses wireless and mobile communication channels for conducting various marketing and e-commerce activities with the aim of establishing deeper and more transparent relationships with individuals as well as target markets. More so, mobile-data can provide marketers and business with valuable information on customers and prospects, including their location, purchasing habits, and many other useful insights which can help them deliver value in a more relevant manner. This is specifically why it is crucial for marketers to consider engaging customers on their mobile devices. 2.2 The 6 Elements of Mobile Marketing Figure : The 6 key elements of mobile marketing Together with the internet the mobile phone has truly transformed the methods by which we communicate and share information. As mobile phones continue to evolve with better and newer features they are also helping to redefine the marketing landscape. As powerful as mobile marketing may be, many businesses are still hesitant or inept at developing strategies and allocating resources to effectively engage their customers on the mobile platform. As a consequence, many opportunities are overlooked or mismanaged. One reason may be the fragmented media environment and consequently shifting consumer habits (DAlleva Colapietro, 2012). Another reason for this incompetence may be the lack of understanding what mobile marketing is and the various forms it can take or the many different kinds of applications and tools that are involved. The model in figure 1 should ideally help marketers make sense of mobile marketing and recognize the potential of engaging customers on their mobile phones. The six elements were produced out of various ideas as well as after extensive review of the literature at hand. Mobile marketing differs from traditional marketing in many ways and the purpose of this chapter will be to discuss these differences based on six distinguishing key elements. Earlier, it was explained that mobile marketing relates to marketing activities conducted via wireless mobile devices and networks and according to Andreas Kaplan to which consumers are regularly connected  [7]  . Likewise, Alex Michael and Ben Salter note that mobile marketing uses the mobile medium for spontaneous, direct, interactive and targeted communications or entertainment between a business and its customers and may occur any time or place. (Michael Salter, 2006). Therefore, the first element of mobile marketing is direct. That is, it can generate an immediate response from the consumer. Philip Kotler et al., explain that direct-marketing is a direct form of communication where individuals and target customers are carefully selected in order to obtain an immediate response (Kotler, Wong, Saunders, Armstrong, 2005). The mobile phone allows both the marketer and the user to connect directly with each other without first having to go through intermediaries such as a pos tal service or broadcasting network (Becker Arnold, 2010). Consequently, with the mobile phone there is a high degree of synchronicity meaning that the sender and the receiver can respond to the message simultaneously (Hongcharu Eiamkanchanalai, 2009). If the consumer is interested in the marketing message they can respond straightaway by either replying to the text message, answering the call or any other form of communication available on their mobile phone. With mass media such as the TV or Magazines, interactivity is near impossible and synchronicity is therefore very low. The second element of mobile marketing is universal. This is because todays smartphones are multimedia-rich devices with a wide array of tools capable of sending and receiving content as text, image, audio and video in addition to making phone calls. Since the aim of advertising is to attract the attention of the consumer by stimulating their senses, mobile marketing is particularly effective in influencing a consumers perception. Moreover, mobile marketing campaigns can incorporate all the facets of effects  [8]   emotion, persuasion, behavior, association, cognition and perception and therefore have a more profound impact on the consumers behavior. Third, mobile marketing is in-context. Due to the ubiquitous nature of mobile phones information can be delivered in real-time depending on the whereabouts and the day-to-day behavior of the user. Therefore, being able to anticipate the location of customers when they receive the marketing messages is integral for the success of any marketing campaign. The mobile phone has become a mundane, everyday item (Michael Salter, 2006). It can be used at home, at work or while being on the move. By considering the customers location, the marketing message can eventually be tweaked to better serve the customers needs (Krum, 2010), and when it comes to local searches, mobile marketing can offer effective solutions. Thus, on the one hand, mobile marketing enables businesses to implement context-aware and targeted advertising, and on the other hand, mobile marketing allows for more personalized pull-type advertisements for consumers (Li Du, 2012). Forth, mobile marketing is personalized-marketing. Communication can be uniquely customized to meet the specific needs of individual customers or target audiences. As mentioned in the beginning of the chapter, advances in information technology and telecommunication have caused a shift from mass marketing to targeted or one-on-one marketing. This has led to a dramatic impact on marketing communication as whole (Kotler, Wong, Saunders, Armstrong, 2005). The fifth element is that mobile marketing is permission-based marketing. As previously mentioned, there are many tools and features built into mobile phones which allow the consumer to opt-in or -out of promotions and updates. The mobile phones also enables both the sender and the receiver to conceal their identity when making a call and therefore providing additional anonymity. However, this calls for stricter regulations in order to protect the privacy rights of individuals and to promote ethical behavior. As Seth Godin explains, permission-marketing is a privilege so when a customer pays attention to the message, business must treat them with respect  [9]  . Last but not least, mobile marketing is interactive. Consumers can interact with the company, the media and with each other through various applications and tools readily available on most mobile smartphones. Where traditional marketing is viewed as a one-way communication process in which the message moves from sender to the receiver, mobile marketing seeks to engage the consumer through interactive dialogue. The message is sent back and forth between the sender and the receiver throughout the entire communication process (Moriarty, Mitchell, Wells, 2012). To conclude, mobile phones have undoubtedly altered the communication process between organizations and their customers. Consequently, this poses vast challenges for businesses and marketers as traditional marketing methods are becoming ineffective and unable to keep up with shifting consumer habits. The one-size-fits-all approach of mass-media no longer applies to knowledgeable and empowered consumers backed with sophisticated technology and rich with information. Consequently, customers no longer want to be talked at, instead, they want firms to listen, engage, and respond (Kietzmann, Hermkens, McCarthy, Silvestre, 2011) as well as provide useful and relevant information. 2.3 The Rise of Mobile Marketing Mobile phones are widespread and of great importance to mankind. With the power of the internet they allow people from all around the world to connect almost instantly irrespective of time and place. But smartphones are not only communication devices. Nowadays they are being used while shopping, banking and even as technical utilities such as operating pumps from remote locations  [10]  . Mobile phones are also great for staying up-to-date on the news and for receiving alerts on personal monetary transactions  [11]  . The rising popularity of mobile phones provides many new opportunities for businesses as well as individuals. According to recent studies, they are the number one preferred communications medium (Li Du, 2012), and because they are personal and accessible at all times it is no wonder that more and more marketers are adopting mobile phones in their campaigns. With the introduction of broadband internet and innovative developments in communication technologies many industries are becoming increasingly more involved with digital media. News networks such as CNN, BBC and Reuters now offer mobile apps. Likewise, food and beverage companies like Coca-Cola, Starbucks and McDonalds deliver coupons to mobile handsets. Mobile phones have created a new breed of always connected consumers. For many people around the world the mobile phone has become a personal and everyday tool used for surfing and communicating online (Michael Salter, 2006). The mobile has also paved the path for new forms commerce that can be conducted wirelessly and on-the-go (m-commerce). As explained in chapter 2.1, Mobile Marketing refers to any method of engaging and developing a relationship with the customer in order to deliver value at a profit and which is conducted via a mobile network. Thus, users no longer depend on wired networks and personal computers, instead they now use mobile communication device such as their mobile phones or tablet PCs to conduct various e-commerce activities (Ngai Gunasekaran, 2007). Number of People with Access to a Mobile Phone Furthermore, the graph in figure 3 shows the percentage of page views coming from mobile devices globally and regionally. Several studies indicate that mobile internet will soon take over desktop internet usage. Hence, we can observe that 10.1% of all the pages viewed during May last year were from a mobile device. Likewise, mobile web penetration is strongest in Asia and Africa with 18% and 12.9% page views respectively. Throughout the world people have become interlinked with each other on their mobile phones and other devices. The near ubiquity that mobile phones have to offer is generating many new economic opportunities for the whole society. The scope of mobile devices has reached unprecedented proportions. Nearly everyone on the planet can be engaged with a mobile device. In developing countries, it may be the only way to engage someone digitally (Becker Arnold, 2010). In Kenya for instance, the mobile phone has become and vital part of cash-transfer schemes  [14]  allowing the poor in rural areas to purchase goods. In Peru, mobile phones and tablet computers have become a main source of knowledge among pupils. Likewise, various social networking sites and web apps such as Twitter or Facebook have in many ways influenced the Arab spring. Social media is no longer the domain of the liberal youth, empowering different agendas across the political map.  [15]   Mobile technologies have provided many economic and political opportunities which have helped people lead better lives and make their opinions heard within their communities. This is because mobile phones have, in many countries, become much cheaper than personal computers. As such, smartphones are often considered a persons first personal phone as well as first personal computer (Krum, 2010). Global Mobile Marketing Spending In the context of mobile marketing, eMarketer predicts that global spending is expected to rise 400% in the coming four years from $8.4 billion in 2012 to nearly $37 billion in 2016. This growth is mainly due to increasing smartphone and tablet sales  [17]  . The Number of Users/Minutes Spent on Apps per Month And with regards to smartphones, it is estimated that there are 1 billion active mobile app users worldwide spending a total of 101 billion minutes a month on apps. The facts and figures presented in this chapter aim to show the importance of the mobile medium in modern day marketing. It is clear that mobile phones have become an integral part of our daily lives. Since we spend a large portion of our time logged-in to our phones, it seems self-evident that mobile phones are the most convenient and direct channel for reaching and engaging customers at every stage of the life cycle. Whether it is to sell a product or service, deliver information, or to make life easier, the mobile phenomenon has rapidly disseminated making that which is on the opposite side of the globe seem very real and local. Businesses should not hesitate to tap into the realm of the mobile medium. 2.4 Push and Pull The main difference between push and pull marketing lies in the way a consumer is approached. While push tactics are usually initiated by the brand owner without necessarily obtaining permission from the user, pull tactics attempt to draw the consumer to the brand by offering something of value  [19]  and establishing loyalty. In traditional mass-media the same messages are pushed out to everyone including people who are not within the marketers target audience. With mobile marketing customers will, on their own terms, choose when and what they see. Melissa Rucker makes the following observation in regards to pull marketing: They choose to opt-in to your message regardless of the channel in which it is delivered, which means you have to make it has[sic!] easy to opt-in as possible. This trend toward opt-in pull marketing is partially why social and mobile marketing are a critical aspect for marketing success.  [20]   2.5 Opt-in and opt-out While mobile marketing has been around since the 90s it is still quite a young discipline and deeply rooted in traditional marketing strategies. As such, the methods used to push content through mobile networks resemble interruption marketing common in traditional mass-media. Similar to how commercials interrupt a television program or pop-up windows come into view on a computer screen, push techniques via mobiles are sometimes invasive and often happen without prior approval from the end-user  [21]  . According to Kim Dushinski, sending content via mobile devices and especially text messages to people who havent explicitly requested them is unethical and in many countries even illegal  [22]  . This calls for the need for extensive revision of traditional marketing and advertising practices with new rules and methods for engaging and interacting with consumers on their mobile phones. One method briefly discussed in chapter 2.2 is permission-based communication which allows users to opt-in or -out of marketing messages by obtaining legal authorization. For instance, signing-up online, filling out a registration form or responding to an SMS are all methods by which consumers can opt-in. Such guidelines are not only significant in protecting consumers from unsolicited messages, but promote ethical behavior and are very effective too. The real trick however, is to develop a marketing campaign that generate demand and encourages people to opt-in. Users today are bombarded with infinite spam messages, promotional offers and obtrusive pop-ups. Thus, it is important to recognize the specific needs and wants of the consumers and to create more appealing and user-friendly campaigns in order to build long-lasting and profitable relationships. 2.6 The Tools of Mobile Marketing Mobile marketing is only as powerful as the hardware permits. The advances and capabilities of mobile marketing are therefore directly linked to the mobile phone and its networks. Before launching a mobile marketing campaign it is imperative to understand what type of devices exist on the market and what tools and applications are available to best meet the needs of the customers. The purpose of this chapter is to provide a primer into the different tools commonly found on the mobile medium and to explain their application within a marketing context. But before going into much detail it would be useful to provide a short comparison between basic mobile phones and smartphones. Essentially, it all boils down to two main aspects: the Operating System (OS) and the hardware specifications. With basic mobile phones the user is often tied down to a closed operating system and without the ability to extend its features. This kind of phone connects to a so called 2G wireless radio network and provides limited functionality such as voice communication, Short Message Service (SMS) and Multimedia Messaging Service (MMS). Newer mobile phones may feature a watered-down version of the Internet such as WAP which allows for text-based Web browsing, instant messaging and e-mailing. On the other hand, according to SmartphonesAppsPedia, a smartphone is defined as a mobile phone offering advanced capabilities, often with PC-like functionality or ability to download apps.  [23]  As such, a smartphone can not only connect to 2G networks, but also newer 3G as well as Wi-Fi networks. Consequently, the smartphone integrates the features of a basic mobile phone with the features of a computer to allow the user to store personal information, send and receive e-mails, surf the internet and install programs that extend the functionality of the onboard operating system. 2.6.1 Text Messaging (SMS and MMS) Text messaging is an effective and cost efficient way to market any product or service with the ability to reach out to customers via bulk SMS (or MMS). It is one of the oldest features available on almost any mobile phone. SMS are digital messages which hold up to 160 alphanumeric characters and can be sent to and from a mobile phone. Alternatively, MMS extends the capabilities of SMS and includes multimedia content such as graphic, audio and video in addition to text messages. SMS and MMS can be sent as a form of personal communication from one mobile phone directly to another and can also be sent commercially via text messages services that relay content to multiple phones simultaneously (Dushinski, 2009). It is estimated that roughly 7.8 trillion SMS messages were sent worldwide in 2011 and this number will continue to grow throughout 2013. Furthermore, it is expected that by 2013 worldwide SMS revenue will break the $150 billion mark for the first time  [25]  . The immense popularity of SMS and MMS comes from the fact that they are straightforward person-to-person messaging service that are simple to grasp and have widespread support (Michael Salter, 2006). In the context of mobile marketing, text messaging has become increasingly popular as it provides great ways for interacting with customers and provides cheap access to information. The usage of SMS and MMS among phone users is quite high and forecasts show it will remain that way for some time to come (Michael Salter, 2006). One of the main advantages of a text messaging campaign is that it is easy to implement and most affordable as it can be applied across various mobile platforms and carriers (Dushinski, 2009). SMS and MMS marketing are particularly effective in enticing customers or potential customers to participate in a marketing campaign and in stimulating consumer purchasing. For instance, reality shows such as ÃÆ'-sterreich sucht den Superstar or American Idol prompted viewers in participating in the final votes for their favorite musical act by sending special keywords to short codes (SC). Coca Cola, on the other hand, has repeatedly run a long-term sweepstake where secret numbers are hidden beneath the bottle caps and when sent via SMS to a short code, consumers could win prizes. By responding to these campaign users are opting-in or subscribing to receive marketers messages or updates as well as allowing them to expand their database. When integrated with traditional mass media, text messages can also generate large ROI. However, mobile marketing can be challenging and if done wrong may even deter customers or potential clients. Susan Gunelius of Creative Inc. recommends following five tips for better text messing campaigns  [26]  : Brief, clear and precise communication. Customers must recognize the purpose and be able to respond accordingly. Addressing the customer appropriately and avoiding the use abbreviations and slang terms (common in spam messages) otherwise they will be ignored. Text messages should ideally enhance the user experience as soon as it is read by offering important information or something else of value. For example, real-time information based on a customers geo-location. The sender and or brand should be clearly identifiable in order to be traceable, accountable and promote ethical behavior. Making the customer feel exceptional and avoiding clutter in order to entice them to opt-in or remain subscribed to the service. 2.6.2 QR Codes Originally invented in Japan for tracking products in factories  [28]  , today quick response codes (QR) have become indispensable marketing tools we can no longer do without. QR Codes like the one depicted above in figure 7 are 2D bar codes that can be captured via a mobile phones camera and converted into text, links and image or used as vouchers among other things. The rapid rise in popularity for QR codes lies in the fact that they enable traditional mass media to become interactive and measurable since each QR code is unique and traceable. In the context of mobile marketing, QR codes can be used in a variety of ways and can be integrated into any type of media including TV commercials, print advertising, digital displays or infoscreens, business cards, mailers an