Mobile Marketing as Enterprise Imperative: Strategy, Not Tactic
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1 JULY 2, 2010 Mobile Marketing as Enterprise Imperative: Strategy, Not Tactic By: Tony White
2 THE OPPORTUNITY Recent evolution in the mobile applications market now offers enterprises new opportunities for reaching customers in ways never before possible. In the past 18 months, a number of independent market forces have converged to enable goods-andservices providers to market to specific customers, at specific times, at specific locations. Importantly, such targeted messaging draws on a richer-than-ever set of consumer information, including not only detailed demographics from implicit (inferred) and explicit (user-provided) profiles, but also real-time, location-based data. Mobile devices, namely smart phones, now have sufficient computing power and screen real estate to effectively and conveniently replace laptops a majority of the time. Already, they have become the primary device for and calendaring 1, and as they supplant laptop-based Web clients, built-in GPS capabilities will foster opportunities for achieving competitive advantage via time-and-place aware, native mobile applications. With the right user permissions, organizations can easily use real-time, location based services to enrich the customer experience and themselves by a definite, if yet difficult-toquantify margin 2. Though we are still in the early stages of mobile application provisioning and mobilebased marketing, a dramatic acceleration in development of both proprietary corporate mobile applications and mobile versions of Websites 3, along with a commensurate surge in mobile-focused usage patterns by consumers, bears witness to the shift away from laptops and toward mobile devices. Savvy enterprises have already begun to execute extraordinarily powerful mobile marketing campaigns. In January 2010, 61.5% of our clients reported developing their mobile applications in-house 4, but based on recent conversations, Ars Logica believes that this number will fall as the feature-functionality of commercially-available packaged offerings ramps up considerably in Q3 and Q4 of this year. Over the next 24 months, a continuation of this pattern will result in the software vendors who deliver the most heavily benefit-laden mobile applications dominating the market in their respective categories (enterprise content management, customer relationship management, business intelligence, salesforce automation, and so on). 1 Over the past six months, 65.4% of Ars Logica s clients have reported using mobile devices as the primary means of checking e mail and scheduling meetings. n=26. 2 A large retail customer of one Ars Logica client is currently developing an ipod application that will allow in store customers to take a photo of bar codes and immediately access product information, pricing, competitors pricing; place the item into a persistence enabled shopping cart; get n otifications when the items goes on sale; purchase the item; or add the item to a wish list, which can be shared with friends and family. 3 Based on interviews of the customers of 33 Web content management vendors from January to April 2010, Ars Logica found that 38.6% of respondents had developed (or were in the process of developing) in house, native mobile applications; and 76.5% offered Website versions optimized for mobile. n= Based on survey data from Ars Logica s clients, September 2009 February n=26. 1 Copyright 2010 Ars Logica. All Rights Reserved.
3 Marketing in a New Era How Mobile Marketing is Different As marketers know, assembling robust data sets about prospective and actual customers remains key factor and a key hurdle in converting the former into the latter. Demographics remain necessary, but seldom prove sufficient. Past behavioral information, including the circumstances under which it occurred, also usually helps, but is similarly difficult to collect, analyze, and monetize. Now assume that you can add time- and location-based information to whatever data you ve already gathered about a prospect through opt-in campaigns, implicit profiling, list purchases, and other multichannel methods. That is, you know when your prospective customer either is (in real time) or will be (based on a pre-determined itinerary) at the airport, rental car agency, hotel, etc. With five minutes reflection, you will understand how device-generated information about physical proximity to your or your partners goods and services exponentially boosts your marketing power. This is one of the fundamental differences between mobile marketing and pre-mobile marketing. FIGURE 1 Opportunities and Challenges of Mobile Marketing Mobile technologies have evolved, but mobile strategies still involve difficult choices. Below is a summary of opportunities and potential pitfalls. OPPORTUNITIES Heightened brand loyalty Dramatically higher sales conversion rates with time-and-location data Improved cross/multi-channel marketing Information sharing across partner networks for promotion optimization CHALLENGES Security Consumer irritation from perceived privacy violations Over-communicating/promoting Platform support decisions (BlackBerry, iphone, Android) Source: Ars Logica, Inc. Source of Information: Ars Logica clients, interviews of WCM/CMS buyers Remote time and location sensitivity provides marketers the opportunity to capitalize on two old adages, combined: Timing is everything, and Location, location, location. Mobile marketing now allows vendors to reach buyers not only anytime and anywhere (potentially annoying), but at the right place at the right time (always welcome). Alliances, associations, bureaus, and other collectives representing numerous enterprises such as airports, shopping malls, travel and tourism boards, and hotels, who 2 Copyright 2010 Ars Logica. All Rights Reserved.
4 in the past offered little if any marketing benefit to their constituents, now find themselves in a position of extreme cross-channel marketing power. Mobile marketing especially enables premium-experience providers and companies with access to data sets that span a wide range of consumers, such as: Travel and tourism bureaus. Once simply collectors of promotions from municipal or regional businesses, travel bureaus are now beginning to craft effective, multi-constituent, cross-channel, mobile marketing campaigns. Banks and credit card companies. Perhaps the ultimate repositories of consumer data, banks and credit card companies are in an enviable, the sky is the limit (creatively is really the limit) position regarding mobile marketing strategies. For elite cardholders, trivial examples would include offers of automated enrollment at the elite level of a partner hotel s loyalty program when the customer arrives at the hotel, or an invitation to use a partner airline s first class check-in counter when a ticketed customer arrives at the airport. More generally, financial services firms would certainly recognize the added value of mobile communication as a more timely, and therefore more relevant, touchpoint for high-net-worth and institutional investors. Aggregators of online behavioral data and real-time location information. Web advertising portals and online analytics providers commonly assemble extraordinarily rich and actionable user information. As with banks, their ability to create mobile killer applications is a function of their vision. The information and technology are available. At its core, marketing is simply the behavioral psychology of selling. Since human behavior is always time and place dependent, mobile marketing represents the current ne plus ultra in flipping the collective binary buying-decision switch from no to yes. CURRENT REALITY Although mobile applications and devices now empower enterprises to seize the abovedescribed opportunity, most are not taking full advantage of the new possibilities. Travel and tourism bureaus with first- or second-degree access to mobile user information and subscription-based corporate clients numbering in the thousands often maintain the status quo of overlooking four-dimensional data about the circumstances under which their customers customers spend. Airlines frequently provide travel information 3 Copyright 2010 Ars Logica. All Rights Reserved.
5 regarding travelers itineraries, but neglect to request permission from users to collect real-time positional information, and thus relinquish sales opportunities for themselves and their partners. Cross- and multi-channel marketing agreements between hotels, airlines, rental car agencies, retailers, entertainment venues, and countless other enterprises fail to recommend procuring user permissions for their mutual benefit. Smart companies are capitalizing on the promise of mobile marketing. Airlines and airports are moving beyond mobile boarding passes, flight status updates, and airport shopping options. Leaders now provide estimated travel times to the airport from users real-time locations and assemble promotional offers from airport vendors based on their proximity to travelers departure gates. And a few (very few) premium hotel brands have so effectively optimized their Web marketing campaigns for mobile devices that they essentially provide guests a second concierge service. FIGURE 2 Mobile Device Usage Increasing Dramatically Ars Logica conducted a survey asking clients, What percentage of the time do you use a smart phone or mobile device, instead of a PC, for /calendaring, Web activity, or running native applications? (n=26) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 85% 81% 65% 65% 58% 54% 50% 31% 27% 23% 12% 8% E mail & Calendar Web Activity Native Application projected Source: Ars Logica, Inc. Source of Information: Ars Logica clients, interviews of WCM/CMS buyers 4 Copyright 2010 Ars Logica. All Rights Reserved.
6 THE CHALLENGES The anytime, anywhere nature of mobile marketing also poses significant challenges. Historically, getting consumers to ingest information was a major hurdle. Now, relatively easy mobile access to customers threatens to encourage overselling, leading to consumer irritation and potential opt-outs. So marketers must make difficult decisions about how often to send promotions and which particular offers to make. That is, even with detailed historical behavioral information, adequate demographic information, explicit profile information, and a community of partners with whom to make joint offers, how do marketers decide between the permutations of possible promotions? Privacy also remains a huge issue for mobile marketing. Even though mobile users are getting used to granting wide-ranging permissions in their license agreements, marketers still risk crossing the line between value-added service and customeroffending privacy violation. With the tremendous opportunity of mobile marketing comes substantial risk, the chance of success improving with the strength of the brand. Consumer perception is that trustworthy brands will not misuse information and even further, that they have not misused information, even given behavior similar to a less trustworthy brand. Five years ago, consumer attitudes regarding Web/device privacy were markedly more conservative than they are now. However, social computing phenomena (Facebook, for example) have dramatically loosened users positions on exposing personal information, and Ars Logica expects this trend to continue. Over-reliance on technology in the absence of a well-articulated mobile strategy represents another significant risk for mobile-marketing newcomers. Certainly, delivering mobile-friendly, device-specific versions of Web marketing campaigns always adds an important consumer touchpoint. But mobile enablement of a Web presence does not equate to leveraging the additional user information available from welldesigned, native mobile applications. As mentioned above, several airline and hotel brands have done a commendable job of customizing and extending their Web initiatives to reach consumers through the now-critical mobile channel. The relevant caveat, however, is that technology does not solve marketing problems. It automates marketing solutions, sometimes rendering possible marketing scenarios that were previously impossible. Lastly, the marketing advantage that already accrues to companies with rich data sets will be magnified by mobile marketing. Any piece of consumer information becomes potentially actionable with the addition of time (especially real-time) and place data. Thus, Vendor X with 100 data points on a given customer would be far more likely to convert him or her than Vendor Y with 5 data points, by a factor of approximately Copyright 2010 Ars Logica. All Rights Reserved.
7 The factor shrinks to far less than 20 without time and place information. For even with 200 data points, Vendor Y would not know when best to make the offer. Given the exponential mobile marketing opportunity afforded by additional consumer information, strong partner networks that include information-sharing agreements assume extreme importance. RECOMMENDATIONS Ars Logica urges its clients (and anyone else who will listen) not to treat mobile as simply a bolt-on to existing Web marketing strategies, but rather as technological evolution capable of differentiating them from competitors to much the same degree as Web marketing itself. That said, the question arises of what practical steps clients should take in developing their mobile strategies. We recommend that clients begin by asking themselves questions such as the following: How aware is your IT organization of the security risks presented by mobile marketing and communications? Has it conducted a comprehensive security audit based on specific enterprise mobile usage scenarios? Mobile content is enterprise content, and the same retention, compliance, and privacy regulations apply to it. Some companies have not adequately planned for mobile datainterception, viral-intrusion, and firewall-breaching attempts. How mobile-ready is your enterprise content? That is, can content within your business applications be presented effectively on mobile devices? Some of our clients have found that while content managed within their Web CMS repositories may be mobile-ready, they lack the content-transformation technologies capable of delivering mobile-compatible content from other enterprise systems. Although an enviable position to be in, only a few of our clients currently have a virtual technology layer that unifies content for mobile delivery. Ars Logica recommends evaluating the tools and technologies that will get you to that point. Should you build mobile applications yourself (or parts of them), or are there vendors whose offerings satisfy the majority of your requirements? Most companies will find that a combination of commercial products will be required to execute an overall mobile strategy. While most organizations can benefit from mobile marketing in some fashion, those who maintain detailed user profiles of their customers, have strong partner networks with which to assemble compelling joint offers, and depend heavily upon the mobility of their 6 Copyright 2010 Ars Logica. All Rights Reserved.
8 customers for their livelihood, must consider mobile as one of their most strategic marketing channels. To be sure, the business goals for mobile marketing will vary widely from company to company and across industries, and these differences will shape the strategy itself. (We will discuss vertical-specific mobile strategy considerations in upcoming research, and in consulting projects.) But despite differences between and among clients, we urge them all to treat mobile not as just another channel, but as a critically-important strategy that spans a range of enterprise technologies and encompasses the lion s share of corporate sales, marketing and communications initiatives. 7 Copyright 2010 Ars Logica. All Rights Reserved.
9 Services Advisory Services To address clients content management-related questions and problems that arise throughout the year, Ars Logica offers unlimited direct analyst access through its Analyst Anytime advisory services. These annual, subscription-based services provide guidance by phone or within 24 hours on a wide range of issues. The number of inquiries submitted throughout the year is not limited. Contact Tel: Fax: Arlington Street Suite 500 Boston, MA Consulting Ars Logica s expertise in Web content management and related technologies such as digital asset management, records management, marketing campaign management, search, and portals, gives us the open-ended ability to help clients on a wide range of projects, including: Building the internal business case for WCM Assessing technology and software requirements Analyzing WCM products and vendors Selecting and assembling WCM software solutions Crafting a Web strategy Running corporate educational seminars Ars Logica also assists WCM vendors in developing product roadmaps, and we and present our view of the WCM market at industry conferences and end-user events.
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