The Business Case for Mobile Marketing

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This article is quite long, if you’re looking for mobile marketing case studies, I have linked each brand name to the relevant section:
Orange Wednesdays, Snickers, Lucozade, Colour Catcher, BMW, Fanta and Sprite, Shelter, Walkers Crisps, Carling, Barclaycard, Comic Relief, Wagamama, Marks and Spencer, Ocado and Amazon.

There are many barriers that appear to prevent brands and advertising agencies from using mobile marketing. The lack of data, benchmarking or measurement makes it hard to see the real business case for mobile marketing. Yet mobile clearly has potential. The following article shows how mobile marketing has increased response, sales, transactions and improved brand engagement and awareness.

The questions I often hear from brands or agencies tend to go like this: ‘if we include a shortcode in a TV ad how many people will respond’ or ‘what are the response rates for mobile marketing for specific sectors and in specific demographics’? These questions are hard to answer. It is certainly true that mobile marketing lacks historical data around sectors and demographics. However, it could also be argued that data about response rates is similarly hard to quantify in other marketing channels.

The situation for mobile is improving though. Data from specific campaigns is giving marketers a better understanding of the mobile channel and industry studies, such as the upcoming IAB/DMA research into SMS marketing are beginning to shed more light on the sector. There are also research companies, such as Comscore who are adding to the pool information on mobile user activity. In fact since the introduction of Mobile Media Metrics the mobile web is probably the most accurately measured digital channel.

On a technological level measuring mobile marketing isn’t that hard, but there are no standards across the sector, and different platform providers offer different measurements. When it comes to looking at the impact of mobile across a range of direct marketing channels then measurement is more problematic. For example, text to call is a simple yet effective way to increase response rates from advertising, particularly TV and outdoor. I was speaking to a DM agency about a successful text to call campaign that they ran. It was to get people to make donations to a national UK charity where a text to call number was shown in a series of TV adverts. The response was good, with an increase of over 60% against adverts shown without text to call. However, they were unable to measure the effectiveness of the different TV channels because the call centre only recorded the time that they first spoke to the caller, rather than the keyword used in the initiating SMS. As a result it was impossible to identify which advert had generated which response and it prevented them from tailoring the time slots accordingly. It isn’t difficult to track the origin of the SMS, but the call centre had never seen a need for it and their systems simply couldn’t handle that data. There is an example from Colour Catcher below, where tracking response rates to TVRs was done successfully, allowing them to fine tune their campaign. For anyone looking at a mobile marketing campaign the lesson here is to choose your platform provider carefully.

The good news for mobile marketing is that many companies have taken the plunge. Although they are not always willing to share their results, there are numerous case studies to demonstrate that mobile marketing works.

One Campaign We All Know About

If you’re in the UK, then think about a mobile marketing campaign you’ve heard of. Let’s make that a bit easier. Think of a day of the week. Maybe Wednesday? Now think of a colour. I hope it was orange. And hopefully you are now thinking of Orange Wednesdays. The mobile network operator’s campaign has been running successfully for six years now and it is firmly in the public consciousness. The concept is simple: a free cinema ticket to any Orange customer who takes any friend, on any Wednesday. It is redeemed by texting to a shortcode; something that over 14 million people have done. This has given a strong boost to Orange’s customer retention, and has firmly associated the brand with film going. And Wednesdays. The reason that Orange chose that day of the week was simply because it was the quietest day for cinema audiences and therefore the best time to offer their customers free tickets. However, since the campaign has been going, Wednesday has become the most popular day to visit the cinema outside of the weekend. In fact some film premieres have been moved back to Wednesday rather than Thursdays due to the popularity of that day. That is in part due to the Orange customers, but more significantly the mobile marketing campaign has changed the broad public perception of that day of the week and film going. Mobile marketing has effectively changed consumer behaviour.

Low Cost, High Response

Mobile is a relatively inexpensive medium. Take SMS for example. The cost to send a text message is around £45 per 1000. Even though that is more than sending emails, the read rates for SMS are 95%. True, many mobile users don’t need to open their SMS to actually see it, but that doesn’t detract from the fact that most people read their text messages. What’s more they usually read them immediately. Email fares less well, with 17-25% of emails actually getting read. So although the cost per email is less, the response rates make SMS a compelling option for some campaigns. Email, of course, has its own advantages: it can provide much more information than SMS, it can be media rich and opening rates (rather than just delivery rates) can be measured. However, for some brands and services, SMS can generate a much higher response because of the immediacy of the call to action.

Away from their film campaign, Orange have created a direct marketing channel by offering customers free premium content in return for receiving limited, targeted marketing offers. As customers have opted-in to receive only what they are interested in, they regard it less as marketing and more as useful information. As a result, Orange Shots have reported response rates from the channel. A recent Snicker’s campaign featuring ring-tones with Mr T saw 39% of those who received the message downloading their content. Who wouldn’t want Mr T as their ringtone? And who isn’t going to show it off to their friends? It makes for a nice piece of brand engagement.

The high response against low cost has been of benefit to a number of brands. Lucozade, for example ran a campaign in 2008 giving away free bottles of their fizzy drink. It ran across a number of channels, including mobile. The mobile campaign used an SMS response which delivered a voucher code to the user’s phone which could be redeemed in shops. There was also a click through link from the SMS to a mobile site. Of those who received the SMS, 10% clicked through to the site, an excellent rate when compared to other channels. More significantly, 35% of the requests for vouchers came from the mobile channel, yet only 1% of the marketing budget was spent on it.

Working Across Media Channels – Mobile at Its Best

Colour Catcher is not the coolest product on the market. They are sheets, made by Dylon, that you throw into the wash to stop colours running. It has a bit of a naff image, thanks in part to some cheesy pan-European creative. Worse still, many people just didn’t think it would work. In order to challenge that perception the brand offered a free sheet for anyone to test. Promoted through their TV advertising, the sample could be ordered by sending an SMS to a shortcode. A Yahoo study in 2010 (Yahoo APPetite) found that over 80% of people in the UK watch TV and access mobile media at the same time. So, the mobile is right there with the TV viewer, and text offers the most immediate response mechanism. Colour Catcher expected to send around 4,000 samples in response to their adverts. They ended sending 34,000 samples during the first wave of advertising.
Unlike the campaign I mentioned at the start, Colour Catcher segmented the audience and response by using different keywords for the inbound SMS. From that they were able to track and refine the responses against TVRs. The highest response rate was in the North West of the UK and the lowest were in London and the East Midlands. The result was that in the second round of adverts, they were better targeted and 105,000 samples were sent out. And the samples resulted in increased sales: over 300% against baseline during the campaign and 60% increase post campaign.

Increasing Sales

The car manufacturer, BMW, has been one of the most forward thinking in their mobile marketing. One campaign in Germany focused on the requirement for drivers to use winter tyres in the snow. Customers who bought a car from BMW that year were sent an MMS reminding them about the tyres when winter began. The MMS showed a picture of the model of car they bought, in the colour they bought it with the winter tyres on. They sent 120,000 messages and the result was a 30% uptake. That’s actual sales, not responses. That equates to sales of $24 million from a marketing budget of less than $50,000. What’s interesting about this example is that it shows two key elements to mobile marketing: it needs to be personal and relevant. Mobile phones are amongst the most personal items we own. On the whole we don’t share them and they are with us all the time. So, the most successful marketing campaigns on mobile are those that engage with those facets.
The current Sprite and Fanta campaigns have also had a high level of uptake. Their approach is to offer something that every young person wants. Money. Or at least, the next best thing, phone credit. Purchasers of Sprite and Fanta text a code to a shortcode shown on the tab of the can. They immediately receive 50p phone credit (or 50p on their subscription bill). Hardly surprisingly the first campaign saw over ½ million redemptions. The phone credit is a big attraction, but the success is also down to the simplicity and the immediacy of the campaign. You don’t have to send off for a voucher, or go somewhere to redeem it, or wait a week for the credit. It works because you can get the 50p right there and then. Figures haven’t been announced for this campaign yet, but all the indications are that it has made a significant addition to sales.
It’s not just cars and soft drinks that have been able to use mobile to increase their sales. Some charities have been very successful at it. Shelter, the UK homeless charity relies on direct debit donations for some of their income. Many of these direct debits are made through street collectors; typically the collectors are good looking out of work actors. Unfortunately many people cancel their direct debit without making a single payment. They obviously enjoyed their conversation with the actor, but were less committed to the charity. In order to reduce the first payment ‘no shows’ Shelter sent reminder texts to donors. Rather than harassing the donors into giving though, what they did was to tell stories about how they have helped homeless people. These stories were highly personal and relevant. The result was a reduction in first no shows by 30% and an income increase of 6%. As with BMW, the campaign tapped into the personal, relevant and immediate nature of the mobile channel.

Changing Consumer Behaviour

Orange have already shown how mobile can change consumer behaviour on a macro level, but there are other examples where this has been done on a micro scale. The crisp manufacturer Walkers, has been using mobile as a marketing channel for a few years. A campaign in 2009 used a text response number as part of a rolling competition. The company gave away an ipod every hour to people who texted a code on shown on their crisp packets. One of the things that Walkers did was not just notify the winners but they also sent a response message to the losers. On one day they sent a message to the losers: ‘Did you know that 34% of the winners yesterday came from Barbecue Beef?’. The following day 78% of the entries came from that very flavour. Whilst that particular example didn’t have any specific impact on the brand overall, it shows how the immediacy of mobile can be used to direct customers to specific products or offers.

Increasing Brand Engagement

For many the perception of mobile marketing is as a response and acquisition tool, but many brands have used mobile as a brand engagement channel. The numerous reality TV shows have shown that text voting is popular, and brands have been using it as a customer survey and feedback mechanism. If you make a customer service call to T-Mobile in the UK, it will be followed up with a text-based satisfaction survey. Walkers Crisps took the customer survey concept even further. In 2009 they ran a competition for customers to vote for their favourite new flavour, from a whacky range of choices submitted by the public (Cajun Squirrel was one of them). The campaign started with TV advertising, followed text and online to for the vote itself. The SMS response was massive, with over a million people voting from their phones. In fact most people in the UK will have heard of the ‘Do Us a Flavour’ campaign, because it caught the public imagination to the extent that the winning flavour was announced in news bulletins. For those who don’t remember, the flavour that won was Builders’ Breakfast. The immediacy offered by mobile allowed the brand to both engage with the public and at the same time create massive PR valued at over £4 million. As a result, sales of their crisps rose by 14% in 2009.

For many brands, apps and iphone apps in particular are the favoured way of mobile brand engagement. One of the earliest pieces of brand engagement from a UK brand on the iphone was from Carling. Based on a US app, the Carling ipint offered users a simple game to play from which they would fill and drink a virtual pint of beer. It quickly become the most popular free app in the store. The genius behind the branding though was that the only reason to have the app was to show off to your mates, whether they had the iphone or not. It wasn’t the kind of thing that you were going to sit and do on your own on the sofa at home.
Barclaycard have had even greater success with their Waterslide game. As one of the first companies to use contactless payment technology, their TV advertising used dramatic images of a man using a waterslide built around a city. This concept was then taken onto mobile in the form of the iphone Waterslide game. The app is relatively simple, but highly engaging, where the user navigates down the waterslide by tilting the phone and collecting points on the way. The game has seen nearly 10 million downloads from the app store making it the most successful brand app ever. The Barclaycard app is far from perfect. The branding is very light, and there are no options to continue the customer journey. It is also worth keeping in mind that just 5% of free apps are opened once or never at all. Nonetheless this doesn’t detract from the significant brand value gained from 10 million people downloading the app.

Mobile as a Transaction Tool

Marketing is one thing, but for many brands it’s all about the buying. Increasingly mobile is becoming the medium for transactions. Premium SMS has been around for a long time, but is limited in both what it can be used for and the low payouts that vendors receive. In the UK it has also been the subject of a number of scandals, particularly where TV voting has been concerned. However, where there is user trust, the potential of premium SMS payments has been realised. Charities, in particular have achieved good results with this. The 2009 Comic Relief campaign had an option to donate by text option. Users could send an SMS to give £5 to the charity. The campaign was greatly helped by the fact that the government waived the VAT and the networks gave a 100% payout to Comic Relief. As a result they raised nearly £8 million through SMS donations.
However, we are seeing other more trusted forms of payment coming through on mobile. In 2009 Wagamama, the noodle chain put an app into itunes which allowed customers to order take-aways through their phone. Significantly, for the first time, this app included payment by credit card, and along with it the facility to store that information. Apple has taken it one stage further and is now allowing in-app payment through the itunes store, so users don’t even need to re-enter their card details. For now these are focused on app upgrades from free to paid versions, but it won’t be long before users will be able to pay for all kinds of things.

As mobile users get used to the idea of paying through their phone, then the possibilities for brands to create applications for transactions becomes easier to realise. In 2010, Marks and Spencer became the first UK high street retailer to launch a full mobile site. The site is simple and intuitive with all the functions you would expect from a good site: browse and buy 24,000 products, find my nearest store and a quick purchase button for customers who have registered their card through the site. Much to the surprise of Marks and Spencer, the transaction values in the first month were high. Rather than spending £5 or £10, people were buying beds and spending nearly £1000 through their mobile site. Since then, purchases up to £3000 have been made through the site. Ocado have focussed on the mobile apps to deliver their mobile commerce, which is a good route given their customer demographic. The evidence is in the fact that their iphone app accounted for nearly 5% of their orders. Ebay have used both apps and the mobile web for transactions. The app has been so successful that people have bought boats, Bentleys and even a $350,000 Lambourghini through their phone.

Amazon CEO Jeff Bezos said, ‘The leading mobile commerce device today is the smartphone’ and so he should. The online retailer has revenues of over $1 billion per year from mobile transactions. A friend of mine used to go into Borders and find books he liked. He’d then order them for less from Amazon from his phone, in the shop. No wonder Borders went bust! The next development in mobile transaction are contactless payment phones. With it, mobile users will see transaction as a normal, safe way to make payments. When it comes to mobile retail in particular, all the evidence is that the customers are there and willing to buy.

Putting it Into Practice

So there you have it. Brands in sectors including FMCG, high street and online retailers, banks, automotive manufacturers, entertainment, telecoms companies and charities have all benefitted from mobile marketing. They have seen increased response rates, increased sales, improved customer relationships, created better brand engagement and greater brand awareness all through the mobile marketing channel.

In spite of all these great examples of successful mobile marketing, that of course doesn’t guarantee that other campaigns will necessarily live up to it. There are no guarantees with any marketing campaign regardless of the channel, but there are enough examples to show that mobile is a successful and engaging media channel. There is a lot to developing good mobile marketing campaigns: understanding users, understanding how personal the medium is and developing engaging concepts. Most of all, it needs to be consistent the business objectives and brand strategy. Not only that, but as with any new channel, marketers need to be prepared to fail and to hone their campaigns. That is exactly what the brands mentioned in this article have done. When other brands do this too, they will see that mobile marketing works.

More info: How to Build The Perfect Mobile App, Time for Retail to go Mobile

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3 thoughts on “The Business Case for Mobile Marketing

    [...] the only high street retailer to have a complete mobile site with transactions. We already know that Amazon do well from their mobile site and app (they do $1 billion annually through mobile), and similarly Ocado’s iphone app [...]

    [...] there some highly creative and successful mobile messaging campaigns. In my article, The Business Case for Mobile, I give a number of examples – Orange and Walkers Crisps are two obvious ones. They have run [...]

    Quora said:
    January 27, 2011 at 9:00 am

    Are SMS campaigns more effective than email as a marketing tool? Or are they just a fad?…

    First of all, it depends on what you mean by effective. If you mean purely on response rates, then SMS has the greater potential to generate much higher uplift than email. Here are a few reasons why SMS can be more effective: Read rates are 90% plus co…

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