Branding critical for mobile operators

March 7, 2008

Jay Seaton is chief marketing officer of Airwide Solutions

Mobile operators face exciting opportunities to increase revenue and market share by offering innovative infrastructure solutions that allow national and regional advertisers to deliver targeted messages to mobile subscribers.

Mobile marketing today is a largely untapped revenue stream, but it offers tremendous opportunities for mobile operators to create partnerships that allow advertisers to cost-effectively communicate with customers and prospects.

There are several factors that have converged to make now the time right for more advanced and pervasive mobile marketing – if mobile operators are prepared to handle the new business models this opportunity can create.

One of the broad, general trends impacting network readiness for mobile marketing is the advent of Mobile Messaging 2.0.

This next-generation of messaging technology is transforming the one-size-fits-all short message service (SMS) into user-defined, rich media messaging where users have much more control over how they communicate with others. It incorporates an emerging set of principles that will guide operators in the development of mobile messaging networks.

At its heart, Mobile Messaging 2.0 is a fundamental shift away from "network-defined messaging" to "user-defined messaging" that has the potential to benefit everyone.

In addition, it is well established that online marketing has created major revenue streams in related markets, and mobile operators can leverage insights from these experiences.

For example, Google has been able to leverage its primary search capabilities to create huge new revenue streams, and "free" email services such as Google's Gmail and Microsoft's MSN Hotmail embrace advertising and generate new revenue streams from promotions delivered through free email services.

Brand is key
Mobile operators can not only create new revenue streams via advertising, they can also leverage mobile marketing to cross-sell and up-sell existing subscribers to increase average revenue per user levels.

Mobile marketing creates opportunities to deliver high-value information that improves subscriber loyalties and encourages them to increase their reliance on and utilization of mobile platforms.

Operators can also leverage their own infrastructure to promote their own merchandise and service offerings to the end consumer, therefore in effect becoming customers of their own mobile marketing platform.

Mobile operators have traditionally focused on building the value of their own brands so they can increase revenue and profits while building longer-lasting relationships with subscribers and reducing churn.

But to succeed in the race to develop mobile marketing partnerships, for the first time mobile operators have to change the existing paradigm of branding to become a valuable channel that motivates brand marketers to shift budgets from traditional print, television and radio advertising to mobile marketing campaigns.

Last year, Airwide Solutions commissioned Vanson Bourne to survey 50 leading brand names about their plans for mobile marketing.

We found that 89 percent of major brands surveyed plan to market via text and multimedia messaging to mobile devices by next year, and that nearly one-third plan to spend in excess of 10 percent of their marketing budgets on mobile marketing campaigns.

Within just four years, over half of the brands surveyed expect to spend up to 25 percent of their total marketing budgets on mobile marketing.

Recognizing the prevalence of mobile text messaging, 40 percent of brands have already deployed SMS campaigns and 18 percent have deployed multimedia message service (MMS) campaigns.

Agency is also customer
But there are obstacles that operators must overcome to capitalize on the business opportunities enabled by mobile marketing.

Despite enthusiasm to adopt mobile marketing, growth is still inhibited by the lack of supporting information to manage and optimize marketing programs.

More than half (55 percent) of responding brands were unsure how to reach specific target audiences via mobile campaigns, 58 percent were unsure about how to implement and measure an SMS campaign and 61 percent were unsure how to implement and measure a mobile marketing campaign.

Independent research firms also forecast growing opportunities for mobile marketing.

Informa Telecoms & Media forecasts that mobile advertising spending will hit $11.35 billion by 2011. Across the five countries for which it measures mobile content usage, M:Metrics found that text messaging responses to mobile advertising was as high as 29.1 percent.

There is a real and growing need for mobile marketing, and those operators that build the infrastructure to support mobile marketing campaigns will prosper at the expense of network operators that do not prepare adequately for the growth of mobile marketing campaigns.

Mobile network operators can avoid the commoditization of becoming bit-pipes by delivering the infrastructure necessary to support high-value multimedia mobile marketing services. The key is to remember that the target audience changes when supporting mobile marketing services.

Mobile operators are accustomed to viewing the subscriber as the customer, but with mobile marketing, marketing agencies are the paying customers that compensate network operators. They require documented results and the ability to measure campaign success so they can evaluate marketing expenses and focus on campaigns that deliver increased sales and enhanced brand value.

Jay Seaton is chief marketing officer of Airwide Solutions, Burlington, MA. Reach him at .