Mobile Marketing's Promise: The Universe of One

Editor’s Note: This special report on mobile marketing first appeared in the March Special Edition of RCR Wireless News. The special report is running in two parts. The first part of the report was made available Monday. Click here to read it.
Australian operator Telstra provided a unique perspective on the application store frenzy, with CTO Hugh Bradlow saying the carrier will take a shopping-center approach to hosting a number of application stores, including perhaps its own.
“We are looking at this more like a shopping center owner than a store owner,” Bradlow told the Mobile World Congress Event audience. “A facilitator, like a shopping center, is providing options for customers. We may have our own store, but will provide options for customers.”
Bradlow added that this approach makes fiscal sense for the carrier, noting, “There is a place for shopping center owners and most of them are rich.”
Domestic operators Verizon Wireless and AT&T Mobility appear set to launch their own applications stores. Both carriers hosted developer conferences during this year’s Consumer Electronics Show hoping to lure application developers into their camps.
For Verizon Wireless, it used the conference as a hard sale to developers, almost pleading with them to contact the carrier with their ideas and promising fast approval processes for submitted applications. The carrier was also aggressively trying to distance itself from its past dealings with applications developers, which seemed to have left a bad taste in the mouths of those developers.
Looking to help grease the wheels of development, Verizon Wireless last year unveiled its 4G Venture Forum in an attempt to link VC firms with developers in need of some extra cash.
Canadian operators have moved even more aggressively into the space with that country’s three largest carriers, Rogers Communications, Telus Mobility and Bell Canada having recently launched a trial of the GSMA’s OneAPI initiative, which is designed to provide application developers with unprecedented access into the customer and network assets of the three carriers.
According to the GSMA, the OneAPI program “is promoting the adoption of a common, lightweight and Web-friendly set of APIs to provide application developers with easy access to mobile operator network capabilities.” The Canadian commercial pilot program provides that access through a single gateway being operated by Aepona Ltd.
“A common set of APIs will benefit the entire mobile industry by making it much more attractive for developers to create innovative applications and services by utilizing the capabilities and information provided by operators about their networks,” said Michael O’Hara, chief marketing officer at the GSMA. “Our OneAPI initiative will help eliminate fragmentation and aid the growth of the mobile applications ecosystem, resulting in a larger addressable market, encouraging innovation, enhancing the customer experience and creating new revenue opportunities for mobile operators and developers alike.”
The move was applauded by industry observers as a way to simplify the integration of network data into applications as a way to make those apps more useful to consumers.
What’s the price for convenience?
While app stores seem to have become the de facto place for consumers to shop for applications, there is still concern that the current pricing models need tweaking. Apple sort of set the bar at the 99-cent level when it launched its iTunes music service, but that was for a piece of music that a consumer could listen to in a number of locations. What’s the true value of an application that while maybe more useful than a song, is limited to being used on a single device?
Free is a popular option, with analysts noting that more than 80% of app store downloads are of the gratis variety. This leaves very little – as in no – profit for either the developer or anyone else to split. Talk about a tough business model.
But, for carriers the pricing of applications is almost secondary since just being able to access a device’s data connection often requires a customer to sign up for a data package, which translates into recurring revenues for operators.
“Customers that run apps need a data package so it’s a big business for us,” noted Telstra’s Bradlow. “I think customers will pay for some applications, and some applications like telemedicine will be paid for by the health industry. I think $1 to $3 looks to be the sweet spot for apps, but those that are selling some for $40 or $50 are just dreaming.”
Bradlow added that while ad-supported applications could split the difference, he thinks people in general ignore such ads and that will make it a difficult value proposition.
While challenges obviously remain for how applications are distributed, there does not yet seem to be any slowdown in the attempts to capitalize on the market.
Decision Making
If 2009 is remembered as the year the mobile application space matured, 2010 is shaping up as the year technology had evolved to actually measure what people were doing on their mobile devices.
The importance of measuring the usage of mobile consumers is becoming increasingly important as content providers are looking for more detailed metrics as to the usage of their applications and advertisers and marketers are trying to figure out how to take advantage of the mobile space.
At the recent Mobile World Congress event in Barcelona, Spain, Jakob Nielsen, from United Kingdom-based advertising firm GroupM Interactive, invoked an old advertising adage during a keynote session when he said, “Fifty percent of advertising works, we just don’t know which 50%.”
And that is where companies that monitor customer use of mobile services come into play. While any firm can throw around anecdotal evidence to support a claim boosting that company’s presence in the mobile space, advertisers, marketers and those producing content are in need of real data that shows how consumers are consuming wireless services.
In the past that has been a hit-or-miss proposition that revolved around limited consumer surveys or basic bill-scraping techniques. Now, that has changed as firms have begun to employ broad consumer panels with millions of participants, while others have developed software that can track where a customer roams on their mobile device. Some have even made arrangements with wireless carriers to tap into their networks to track how customers interact with the wireless Web.
However the data is gathered, the importance to companies looking to invest in the mobile space cannot be underestimated.
“Advertisers tend to spend a little money initially and then wait to see the numbers before spending more,” added GroupM Interactive’s Nielsen.
Tapping the network
One of the more significant moves on the metric space came earlier this year when Seattle-based Ground Truth unveiled a “census-based” measuring technology that uses actual data provided by wireless carriers as to what their customers are doing on their devices. Ground Truth, which is backed by Steamboat Ventures and Voyager Capital, calls its methodology True View.
“Carriers log everything,” said Michael “Luni” Libes, founder and CTO of Ground Truth. “Everything a person does on their phone is logged. The biggest challenge was getting carriers to share this information.”
Libes noted that with information provided from unnamed wireless operators, Ground Truth has a divers
e set of data covering approximately 2.5 million mobile In
ternet users across the country. Libes noted the source of that information as well as the depth differentiates Ground Truth’s offering in the market.
In return for providing Ground Truth with access to this information, Libes said it provides the carriers with in-depth reports on data traffic patterns.
The cooperation of wireless carriers is probably the biggest coup for Ground Truth and its True View methodology. The company said the platform provides “non-personally identifiable usage data” from its carrier partners and provides “actionable mobile metrics.” Ground Truth said those metrics include number of unique visitors, page views, sessions, session length and advertising clicks. The company added that it can also provide insight into the mobile clickstream, including where a site’s traffic comes from, where it goes and other sites often visited by a site’s viewers.
Libes said that actionable claim is backed by the company’s ability to provide in depth information on a weekly basis.
At launch, Ground Truth managed to garner accolades from numerous players in the mobile advertising and marketing space. “As more advertising dollars are being allocated to mobile campaigns, marketers must have access to data that can illustrate where consumers are going on the mobile Web and which sites are most engaging,” said Jason Spero, VP and GM of Admob’s North America operations, in support of Ground Truth’s offering.
Survey says
Consumer surveys are also a popular way to track customer usage and are the method used by a number of analytical firms like Compete, Alexa, ComScore, Hitwise and Nielsen Online. Boston-based Compete says it taps into an online panel of more than 2 million consumers across the U.S. that have given the company permission to track their online usage as well as volunteer for select surveys on their behavior. The firm just recently finished up a survey looking at consumer reception of mobile marketing and advertising content showing strong support for such efforts.
“Compete’s analysis of consumer behaviors and attitudes indicate that the mass market is prepared to open their mobile experience to marketers who are using the mobile channel as an integral part of their strategy to reach consumers,” said Danielle Nohe, director of consumer technologies at Compete.
Compete also noted that companies looking to expand their marketing presence into mobile might want to set aside some of their efforts on educating consumers on the benefits of mobile marketing, especially those mobile customers with feature-packed devices.
“The fact that over more than 20% of smartphone owners would be interested in receiving coupon offers is very promising for the mobile marketing industry, considering that it is still in its early stages,” Nohe said. “They now need to focus on engaging and driving behavior of these ‘early adopters’ in order to help bring these concepts to mass market.”
Software solution
Using a different solution is San Francisco-based Motally Inc., which employs a software solution that allows application developers or marketers to track how customers are accessing their content.
“If you are not looking at the data, you are flying blind,” said Motally’s founder and CEO Arte Merritt.
Motally said its service is similar to the Web-based tracking solution from well known analytics firm Omniture, but developed specifically for mobile services. Motally’s service uses software code embedded into a site that sends tracking data, including what device or Web browser is being used, to Motally for processing and analysis. The company added that it currently tracks users’ location by country, not gender or age. But if mobile application developers prompt users to enter more demographic information, they are able to capture the information.
“There is so much powerful information here beyond just if my numbers go up or down,” explained Motally founder and CEO Arte Merritt. “It’s more interesting to see how they are using the app and how that can be used to improve their application.”
Tracking concerns
Despite advancements designed to increase the accuracy and validity of mobile metrics, there are still concerns that limitations still remain.
Even with millions of wireless users being tracked, that accounts for only a small portion of the 250 million-plus mobile users domestically, and billions of users around the world. In addition, some have noted that consumers are often confused by the dizzying array of choices in the mobile space.
“So much is changing and so many tools and options are available, that consumers are typically just confused as to what it is they do want … and even what it is they need,” explained Compete’s Nohe. “This is a challenge for all marketers as they try to roll out products and services to consumers. They need to both launch and educate the consumer.”