Mobile marketers react to economic slowdown: Part IV

By Staff reports

November 18, 2008

Is mobile recession-proof?

This is the fourth part of a series that looks into how mobile marketers and their clients are reacting to the economic slowdown. For some the next year looks bleak and for others, the economy may be an opportunity for the industry.

Mobile Marketer's reporters got in touch with the various companies that make up the mobile ecosystem and asked them one question: How are you and your clients reacting to the ongoing economic slowdown? Here is what some respondents had to say.

Val Christopherson, president of Global Results Communications, Irvine, CA
As a PR firm specialized in mobile, we've heard rumblings about the economy and resulting budget evaluations within our client base.

What we are experiencing isn't a situation of cutbacks as much as it is a focus on the bottom-line result and getting the most bang for the dollar spent.

Budgets are still there, money is still being invested. However, where the investment is being made is in action-oriented areas within the mobile sector.

For PR Firms, it's a time in which we're experiencing 'outsourced' growth, while balancing the program elements to have a direct, immediate impact on our client's business goals.

Corinne Nosal, director of corporate communications at Virgin Mobile USA, Warren, NJ
We have limited ad campaigns this holiday - they are focused on direct and what our retailers do and mainly handset focused.

As a consumer products business, dependent on retail strength, Virgin Mobile USA is of course impacted by current economic challenges.

Our plans without annual contracts make quality wireless accessible to lower-economic demo groups, as well as those not able or willing to use credit cards to purchase wireless service.

We started seeing evidence of the impact on our customer base earlier this year.

Nielsen reported that 12 percent of prepaid customers overall - from Q4 study- were citing low monthly prices as reason for using prepaid verses 8 percent of postpaid customers to whom prices are important.

Of Virgin Mobile disengaged customers, former and current inactive, close to 30 percent cited economic hardship as main reason for leaving or lower usage.

Of those who cited economic hardship, 80 percent have stopped using wireless service temporarily or permanently -- these are people making choices between, for example, wireless service or gas in their cars.

Overall, 10 percent say they are worse off than they were six months ago.

Starting in Q1 this year, we've been seeing more switchers -- 58 percent of our new customers with previous wireless service are coming from postpaid, up from 53 percent in Q3.

Less of our new customers are coming in as regular credit card users, another indication, possibly, of economic challenges.

Alex Moukas, CEO of Velti, New York
In such uncertain times, mobile presents an excellent opportunity for brands to execute activity through a media channel that works harder for your money, providing much more accountability than the alternatives.

Despite the economic climate we're finding that our market place is still growing -- as Velti is -- and that the innovators out there understand the benefits that can be achieved. So the smarter money is coming our way. But this won't be the norm across the whole industry.

The stark reality is that the tough economic environment will reduce the mobile pack and only the fittest will survive.

Many VC-backed or seed companies, which make-up a majority of the market, will see their funding dry-up. Established mobile companies that are currently profitable can weather the economic downturn and will likely be the winners in this scenario.

Ultimately, 2009 could spell consolidation for the mobile landscape.

Still, there are bright spots as marketers re-evaluate marketing dollars that would normally go to traditional media channels by shifting a larger percentage to digital and mobile metrics-driven strategies.

In an economic slowdown, mobile delivers what other channels struggle with -- measurable results - which will be increasingly important with ROI and accountability top of mind for all marketers.

For brands that are keeping a close eye on the economy, mobile is an opportunity to engage with a core audience of customers, establish brand loyalty and drive consumer action.

Mobile Marketer's Giselle Abramovich, Dan Butcher and Mickey Alam Khan did the reporting for the "Mobile marketers react to the economy" series.

If you are interested in providing your thoughts on the economic slowdown, email .