Fly-by-night mobile players burning advertisers

January 25, 2010

Shira Simmonds is cofounder and president of Ping Mobile

By Shira Simmonds

Every first-year business student, aspiring entrepreneur and average consumer knows that competition in an open marketplace is a core value of capitalism and supports a free economy.

But in emerging new industries such as mobile marketing, upstart providers offering bargain-basement prices and substandard service can hurt not only our individual businesses, but our entire industry.

Mobile marketing, with its technological sophistication and as-yet-unimagined applications, is still misunderstood by most of the advertising world.

Those of us out there in the trenches every day trying to convince advertisers of the benefits of a mobile marketing campaign know how important these two key elements are:

 Educating our clients about how and why mobile marketing works
 Providing expert client service and support

Yet while we are focused on creating increased awareness for potential clients and a positive experience for existing clients, new mobile marketing companies are springing up, offering deeply discounted pricing and bare-bones services.

In a brand new industry such as ours, this creates a negative impression for advertisers who are just beginning to explore the unknown territory of mobile marketing.

As a result, the offerings of established, full-service companies become devalued because advertisers begin to see it as a cheap product.

Fool service
Here is how this scenario might play out.

Let us say the XX Company wants to drive sales for a specific retail product, such as laundry soap, by offering a coupon via mobile marketing. It is seduced by the low prices promoted by mobile marketers offering a bulk package of messages for pennies per message sent, and no additional fees. What is wrong with this picture?

The lack of a solid marketing plan for starters.

Typically XX Company would get an allotment of messages without an effective plan or way to use them. Is there an accessible, knowledgeable expert advising XX Company about how to realize the most benefit from this campaign? Who is explaining the dos and don’ts of text messaging for marketing? 

Some of these unsupported campaigns make glaring mistakes, such as leaving out the company name to indicate who is sending the message or asking the consumer to go online when the goal is to drive store foot traffic.

These campaigns might even ask consumers to text a keyword to a word (PIZZA) as opposed to the numeric short code (74992). These are simple errors that most of us in the industry can recite in our sleep, and they are easily addressed by a company that knows the business.

Many of these low-priced packages supply the platform without the services of a skilled manager who can study the product, the audience, the budget and other factors to provide assistance and guidance in order to create an effective campaign.

So XX Company tries to manage the campaign in-house with no education or support. Once the company realizes that the campaign failed, it is lost to mobile marketing forever, firmly believing that mobile marketing is ineffective.

This is how perfectly good advertisers end up getting burned and giving mobile marketing a bad rap.

To be fair, there is another possible scenario that does not involve substandard services, but produces the same result for the industry.

In this situation, a viable mobile marketing company offers full-service programs for an extremely low price just to establish itself as a market leader.

The company works to get as many major brands on board as possible, by severely under-pricing pricing the technology and service. At the end of the year it will either raise its prices – I know of one company that did this and slapped existing clients with a tenfold increase – or it will sell their now-valuable company to the highest bidder.

It is a great business strategy for generating case studies and building a company’s client portfolio, but it compromises the ethics of our entire industry.

These strategies are natural processes in the business world, and competition is expected and healthy.

Depreciation appreciation
We know that technology products are destined to become cheaper and most widely distributed over time, but usually this happens later in the evolution of a product or a technology.

Mobile marketing is still in its early phase, so to introducing this kind of cost- and quality- cutting so early in the game does not bode well for what the industry will look like in five years.

More importantly, it is devaluing the technology and service of mobile marketing.

As a media buyer in my previous life, I recommended and bought traditional media such as print, radio and television as well as online digital buys on behalf of clients.

I have never come across a media channel that delivers an immediate, one-to-one ad that is trackable and viral, and bottom line, generates one of the highest returns and drives immediate foot traffic to the point of sale. When used correctly, this type of media is extremely valuable and should be priced accordingly.

In a perfect world, all our companies would come together to create pricing standards and educational guidelines for brands and advertisers.

The Mobile Marketing Association is making strong efforts to accomplish content guidelines. But unethical competition has the potential to thwart our industry before it even gets off the ground.

So I would like to suggest that mobile marketers find a way to work together as a unified group – perhaps via the MMA – to establish parameters that define and secure the value of mobile marketing. It is not an issue that only affects our individual companies. It affects our entire industry and, now, while we are still in the early stages, is the best time to act.

Shira Simmonds is cofounder and president of Ping Mobile, a mobile marketing firm in Englewood Cliffs, NJ. Reach her at .

Comments on "Fly-by-night mobile players burning advertisers"

1. Hans Hegge says:

   January 28, 2010 at 10:22am

   Shira,
   
   Your article was spot on. We come across pricing pressure more and more because people think they can be "set up" and then walk away. We both know this is not the case, this is why it is so important to integrate across other medias. We started Text Ripple in late 2006 with our main focus being customer service. You are on the right track with this article.
   
   Again nice work on getting this out there!
   
   Hans Hegge
   Partner
   Text Ripple, Inc
   

2. Noel Chandler says:

   January 25, 2010 at 6:27pm

   Thanks for the article, Shira! I definitely agree that some of the "bottom feeders" don't help the industry, but they exist, so selling value is our best tool (and it always will be anyway).
   
   At Mosio, a number of our clients have tried other ways and services, then come to us. This ends up being great because we're then speaking with a more educated customer who is willing to listen and learn. For now, though, that's not usually the case, so we maintain the mantra "sell services, not messages" and it definitely makes a difference.
   
   That said, I think there are small things mobile agencies and companies can do to establish and maintain credibility (I'm in total agreement with Amy B regarding the live person surprises):
   
   Does the company offering text messaging let you text them?
   
   If the agency builds mobile websites/applications, do they have one for their company? In other words, do they eat their own dogfood?
   
   Some might argue that's not important, but if it isn't, how are we supposed to convince potential clients that they need to mobilize?
   
   Thanks again for the great piece and keep fighting the good fight.

3. Paul Willerton says:

   January 25, 2010 at 3:27pm

   Your first paragraph is, unfortunately for most mobile companies (established or just starting) the bottom line. What you're asking for beyond that is unrealistic and won't happen. Competition will continue to shape this market. Brands that choose low prices and sub-par service will get just that.
   
   Drawing protective boundaries around pricing, etc., particularly on products and services created within our own country, is not only too hard to govern (how do you blow that whistle?) but simply doesn't work.
   
   Top mobile companies will prove themselves out over time by ethics, performance and price. The choice on who to go with should only become more clear for advertisers.

4. Amy B says:

   January 25, 2010 at 12:05pm

   Great points Shira. I’ve been in mobile for over 4 years and have seen dozens of companies come and go. The ones that remain standing all stand firm on their pricing and offer top notch service, which in this dynamic industry can be very hard to find. I can’t tell you how many customers call us and are surprised to “actually speak with a live person”. It amazes me how many businesses try to compete in this market using a personal cell phone and no customer support. At TellMyCell, we work with both types of customers: while some require a little “hand holding” and need guidance on how to run a mobile campaign, the majority prefer a more DIY solution. For small businesses just looking to get into mobile, an expensive agency-style solution is impractical. The key is having a knowledgeable team available for questions, guidance and support.
   
   TJ – Interesting idea, but I’m not sure of the legality of companies like us coming together to fix pricing; however, there is something to be said about the companies that offer “unlimited” deals. More often than not, the companies we’ve seen come and go offered unlimited services or bottom barrel per text rates.
   

5. TJ Kirgin says:

   January 25, 2010 at 9:12am

   Right on! I too am a former media buyer turned mobile marketer and I agree wholeheartedly with what you have said. When I started Anchor Mobile 3 years ago as a division of our ad agency in St. Louis, we had planned to add mobile to our offerings.
   
   Now however, we have grown to be a distributor of mobile technology platforms to many start up mobile firms large and small. Our systems allow them the ability to set they're own pricing, however we encourage them to NOT to price the value out, just to be competitive.
   
   I recently joined the MMA and would love to petition them to start a group chaired by you to begin the process of setting standards for price and service within our industry.
   
   I have over 50 mobile companies that turn to Anchor for guidance.
   
   https://www.anchormobile.net