By Brian Kilcourse, Managing Partner
11/6/2007
In our 10/23 Retail Paradox Weekly, I briefly commented that “Although mobile commerce in any flavor hasn’t really hit hard in the U.S. market quite yet, ‘the times they are a-changing’.” Of course, the underlying observation is that other parts of the globe are seeing adoption of customer-activated mobile commerce solutions, ahead of the U.S market. As often happens when we publish opinions, we get feedback either corroborating or contesting what we say. In this case, I received an e-mail from Mike Butler of the London-based marketing company McDonald Butler to introduce me to a UK firm called i-movo (www.i-movo.com) that is doing innovative things with the SMS messaging capabilities of modern cellphones.
I spoke to i-movo’s CEO, David Tymm, to discuss his company’s solution. David is certainly no stranger to retail and marketing solutions, as his prior experiences at Blue Martini, DEC, and Sybase attest, but he thinks he and the rest of i-movo are onto something potentially big. As our discussion was based on RSR’s observations that SMS seems to be an accepted form of direct-to-consumer marketing in the UK, David shared several case studies that document i-movo’s digital voucher capabilities. i-movo is using SMS to target vouchers (coupons) to consumer cellphones. Customers can redeem these vouchers at the point of sale simply by supplying the voucher number to the cashier. The i-movo system tracks voucher redemption, ensuring validity and also tracking where the voucher is redeemed, and by whom. There is almost no integration cost to implementing the capability, and very little training involved. The retailer’s POS system uses existing credit card payment infrastructure to validate the voucher number and return a message to the cashier. In one example i-movo provided, BP enabled 2500 terminals at its Wild Bean Café outlets literally overnight.
In another case study example, i-movo was used at over forty Martin McColl test stores to encourage purchases of the Daily Mail, the venerable (and nowadays, occasionally controversial, daily newspaper). Customers that buy competitive papers or who don’t buy a newspaper at all were given a leaflet at the point-of-sale inviting them to register via SMS to receive a voucher for a discount when purchasing the Daily Mail (the discount is good for 14 days against the purchase of The Mail). The Financial Times must have been impressed – they also offer digital vouchers redeemable at Martin McColl stores to attract new readers.
According to the solution provider, redemption rates are excellent – over 35% for The Mail and almost 18% for the Financial Times (which unlike The Mail refrains from salacious headlines such as “My years with him were torment, says girl who ran away with her math teacher” that tend to drive a wide readership). According to Tymm, “A lot depends on the value of the offer and also the time an offer is open for redemption - as our redemptions are tracked in real-time, we can make this window as narrow or wide as the campaign requires. Notwithstanding all of this, 11% to 15% is a realistic range for most promotions.” Most U.S. retailers would think they’d gone to heaven with redemption rates such as the ones i-movo boasts. Current FSI (“Free Standing Inserts” in your Sunday paper) redemptions are less than 1%, while direct mail coupons have a rate of between 3 and 4% and in-lane coupons such as Catalina have an approximately 8% rate, according to industry sources.
So, how real is SMS-delivered digital couponing? “Pretty real” is the obvious answer. When will the U.S. see it? With such television shows as American Idol using SMS as the vehicle to vote for winners, it seems inevitable that push advertising is a logical next step. A recent Mediamark consumer study showed that over 84% of U.S. households have at least one cell phone, and 14% only have cell phones (no land lines). Although the over-40 set may find mobile messages annoying, the next generation of consumers likely has no such qualms. Marketing media are closely associated with consumer behaviors, and the worldwide volume of SMS messages is expected to reach 8 trillion in 2008.
“Timely and relevant” is how David Tymm sums up the appeal of mobile marketing;“the mobile channel makes it economic to break your target market down into small segments and match the right offer to the right consumer at the right time.”
There are still hurdles to be overcome, but again, the times really are a-changin’. Verizon and Sprint announced in late 2006 that they would allow advertising through their proprietary WAP portals, and AT&T said they would do something similar by late 2007. But Google this week plans to officially announce it’s open mobile operating system and platform, according to industry rumors. Dubbed “Android,” the new mobile OS and platform isn’t expected to hit the market until 2008, but it has the potential to dramatically alter the mobile landscape, not just in the U.S., but everywhere, making proprietary portals irrelevant. Oppenheimer raised its price target for Google stock to $850 (it is currently trading in the $715 range), and one analyst expects the Silicon Valley giant’s revenue derived from mobile advertising to reach $10 billion within 5 years.
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