Mobile commerce: Coupons, 2D codes and purchases. Oh my!

Editor’s Note: Welcome to Reality Check, a feature for RCR Wireless News’ new weekly e-mail service, Mobile Content and Culture. We’ve gathered a group of visionaries and veterans in the mobile content industry to give their insights into the marketplace. In the coming weeks look for columns from Tom Huseby of SeaPoint Ventures, Mark Desautels of CTIA, Mark Donovan of M:Metrics, and more.
There has long been a debate about mobile commerce. When will it come to the United States en masse? When will the consumer have unfettered access to purchasing via their mobile phone? When will coupons take on mass adoption and appeal worldwide? The following article highlights three mobile commerce companies and their solutions-as well as assesses when we can expect to see mass rollout in the United States.
ShopText: Physical goods purchasing
Brands are beginning to see mobile as an opportunity to extend the reach with the consumer and measure the success of their marketing initiatives. A New York based company called ShopText provides the brand or advertiser the opportunity to drive ROI (return on investment) and link the consumer directly to a product or service through an ad. Through ShopText, advertising is now enabling acquisitions and not just purchases, but sampling, loyalty, etc. The ShopText application allows marketers to know who their customers are, including their address, demographic profile, etc.
How is the service enabled? A consumer will set up an account instantly on their mobile phone or at shoptext.com, which will not only collect their demographic information but allow them to input their credit card to purchase physical goods through the ShopText network. In the mobile registration scenario, the consumer is called back via an IVR (interactive voice response) system that will walk them through the registration process. Security, on an ongoing basis, is ensured by the customer entering a PIN code whenever they enact a purchase through their mobile device, like withdrawing cash at an ATM.
So far, the response has been tremendous. Consumers are able to send a text message and purchase products when they see them in magazines, on billboards, or in any other medium-immediately!
M-commerce applications will be a key driver for educating consumers on how to use mobile. According to Mark Kaplan, co-founder and CMO for ShopText, “After one campaign, we received about a dozen e-mails telling us our application was the first time that they’d interacted with mobile. Overall, there’s been little resistance. Outreach is obviously a top issue in terms of educating consumers on the capabilities of their mobile device.”
ShopText implementations to date have included over 50 pages in CosmoGIRL, sampling for Pantene as well as Old Spice, Neutrogena, Clean & Clear, Bonne Bell; “Lucky,” which has featured products from Elizabeth Arden, Mavi Jeans, Calvin Klein; and Knitting Factory, which is selling concert tickets by text from its print media and off its Web site.
Sweepstakes, digital and physical goods pairing, ticket purchasing-the options are truly endless.
Scanbuy: 2D Codes
2D codes are a hot topic! And, at most conferences, the question is eventually raised, when will 2D bar codes come to the United States? These codes allow consumers to use their wireless devices to interact in a graphical manner with traditional and digital media. The unique, two-dimensional bar codes, which can be placed on any item, allow the consumer to take a picture using their cameraphone. Then, through bar code reading software, the 2D code is interpreted to provide product information, downloads and more. 2D codes are a visual system allowing consumers to access relevant information much like short codes, IVR or other mobile media techniques.
In Japan, approximately 40% of consumers have used bar codes through their mobile device. Why so high? Japanese operators and handset manufacturers have worked together to ensure devices support visual bar code technology, helping to drive adoption. However, the Japanese business model isn’t supported by mobile advertising, and instead consumers are charged standard data rates. In South Korea, where codes are also utilized, each operator has chosen to pursue its own 2D strategy, hindering broad scale consumer adoption. There are many implementations of 2D codes in Korea, but no ubiquity for brands looking to deploy cross operator campaigns. In the Philippines, handset manufacturers sell directly to the consumer and in this market, adoption of 2D codes is having some success. In this ad-supported market, brands are able to secure their own codes and launch to the consumer. Brands pay on a per-campaign basis, but per-click may prove to be the ideal business model.
In France, the Paris transport system has launched an interactive campaign using 2D codes with New York-based Scanbuy. The consumer can scan a code and see when the next bus or subway will arrive. Consumers who don’t have a bar code scanning tool on their device can access the application to download through text messaging or a wireless Internet site.
What have been obstacles to adoption in the United States? The lack of cameraphone consumer adoption, cost-effective pricing models as well as overall consumer education. A broad effort at educating consumers and advertisers about the technology is needed, as well as point-of-sale integration for applications that use 2D codes for mobile commerce, says Jonathan Bulkeley, CEO of Scanbuy.
Demand on the advertiser side is huge. Advertisers get it, says Bulkeley. Print publishers are especially interested in 2D campaigns and what the visual opportunity can do for them. Most promising uses for 2D technology include ticketing, couponing and product or service information. The key is applications which rely on consumer pull to access the information.
Cosmo Girl launched an application with Mobot in 2006 based on pure image recognition. Cosmo Girl readers were encouraged to take photos with their mobile device of ads or features in the publication and send them to the magazine for a chance to win prizes. The Cosmo Girl application wasn’t based on 2D codes, but rather image recognition. Bulkeley says image recognition is the “holy grail, but making it a reality is years away.”
In the United States today, Scanbuy is launching U.S. campaigns targeted towards specific devices and demographics. “People change their behavior based on ubiquity,” Bulkeley said. This means 2D applications, on a broad scale in the U.S., are at least 18 to 24 months away. Scanbuy has used the technology as part of the U.S. Air Force’s “Do Something Amazing” campaign, which has been featured at venues including NASCAR and other sporting events across the country.
Cellfire: Mobile coupons
Ever try a mobile coupon application? I recently downloaded the Cellfire application to my Blackberry and was surprised to see the number of offers and opportunities for redemption through the Cellfire service. I contacted Brent Dusing, CEO of Cellfire, to learn the current status of their mobile couponing business in the United States. Is mobile couponing a reality for U.S. mobile users today? The short answer is yes! The Cellfire application is today available to every consumer on every network-either on-deck, or as a downloadable application.
Is it successful? In the print coupon world, industry average for redemptions is around 0.58% but for the mobile coupons from Cellfire, redemptions are in the 5 to 15% range. What drives redemption? Merchant, brand, and type of offer (i.e. buy one, get one free vs. discount off total purchase). The Cellfire coupons are currently redeemable across over 10,000 locations across the country and include large retailers such as Enterprise Rent-A-Car, Virgin and others. To date, there have been approximately 7 million coupons issued for a total of $21 million in savings.
What are the inhibitors to broad scale mobile coupon adoption in the United States? Why are we not seeing more merchants using the services? Some would argue that broad scale adoption has already occurred-but given broad retailer awareness, I would argue this is not yet the case. Although point-of-sale (POS) integration is not necessary, a successful deployment will require successful expertise and implementation at the retailer. “POS integration is not a cookie cutter approach-expertise is critical” says Dusing.
What about other markets outside of the United States? Couponing is not a global phenomenon and every market is unique. Mobile Dreams Factory in Spain has deployed a mobile couponing application with a large beverage company which is showing success.
For more information on mobile coupons, download the Introduction to Mobile Coupons guide from the MMA, available at www.mmaglobal.com/mobilecoupons.pdf
You may contact Laura directly at laura.marriott@mmaglobal.com. You may contact RCR Wireless News at rcrwebhelp@crain.com.