APRIL 2004

How do you envision mobile phones fitting into the marketing and media mix?

Jeff Mason: I'm looking for that to be further defined. There are obvious payment activities you can make happen with a mobile phone. There are obvious media messaging opportunities as well. But the bigger opportunities concern how to map those kinds of activities into the larger picture -- which include media as well as transaction and promotional applications. I can see the day when the grocery store is full of promotional offers you can access using your cellphone. Those are probably the most intriguing ways to bring the potential to fruition.

Rod Mano: I believe it's still a specialized niche within the marketing mix. I've worked with several companies over the years that are trying to use SMS, text messaging, or links through mobile phones, and I think that it is currently a small, but growing, percentage.

So, as an organization, you have to figure out your niche. But if you find a niche that your customers want and you can market for that segment and use that application, then you're all set. If you're trying to deploy it broadly -- thinking that everyone can use it -- I don't think you'll succeed.

Denis McGarry: From a marketing standpoint, it is going to fit in along the same lines as it has with the Internet. The whole permission aspect of it still needs to be worked out and developed, but I think it's going to be accepted by a substantial number of consumers.

"Mobile-phone marketing has the potential to take database marketing to even greater degree of immediacy." -- Denis McGarry, Miller Brewing

In fact, we have been looking at this area recently and, within SAB, being an international organization, there has been a lot of use of mobile phones outside the United States. As to the media mix, I'm not certain how that's going to work out, but I'm sure that it will.

Wes Bray: I envision it as being the element of the marketing mix that makes a program highly interactive and immediate and personal, because you can access an individual consumer directly. I'm not sure that mobile phones are an end in and of themselves from a marketing standpoint. They are more effective integrated with the full marketing mix, but they add that element of immediacy, interactivity and personal communication that really nothing else offers.

What do you see as the biggest hurdle that mobile marketing will have to overcome for widespread acceptance?

McGarry: The biggest short-term hurdle is the number of wireless carriers and the complexity of working through that structure. In the longer term, the biggest hurdle is the permission marketing aspect of having marketers contact consumers on a cell phone versus an e-mail type of situation.

Mano: Even though we're seeing some consolidation in the carrier market -- still depending on where you are in the world -- it's still hard to get at a mass market as you would through television or the Internet.

Another hurdle is that most people still aren't comfortable typing things in or going to links on the phone, although it's not just a mechanical or skills issue. There is a lot of talk about using geo positioning to locate exactly where a consumer might be (e.g., walking past the Gap). If you told consumers you were going to do that, it would scare a lot of them.

Now, there are undoubtedly technology-aware consumers who would think that's pretty cool. But most people might think that's spooky. I think that will become a privacy concern -- and the opt-in, opt-out, e-mail, cyber things are becoming even more strict. That's true not only here, but also overseas.

Bray: The biggest hurdle at this point is that American consumers do not use their phones the way European and Asian consumers do. Americans are just now beginning to view their phones as something other than a communications device.

Mobile marketing relies upon text messaging, or downloading images, or game playing -- different types of data services usage. What we're seeing in the United States is that the younger demographics, the 15-29 cohort, are beginning to adopt the usage of those data services.

But it's still not widespread, and that's the biggest near-term hurdle. We just have to ride the rising tide as consumers become more comfortable using these kinds of services – and paying for them.

Mason: Yet another hurdle is the manufacturer - retailer relationship. How do I segment my mobile marketing effort by retailer, or within retailer? Data capture is yet another hurdle -- the hurdle there is going to be privacy with your retailer, not just privacy over the airwaves. Many retailers have loyalty card efforts and will have a vested interest in the cashiering of any in-store cell-phone promotions, as well as in the preservation and integrity of that data.

Where do you see the greatest creative potential in mobile phones as media?

Bray: As the technology evolves over the course of the next 12 to 18 months, you'll be able to receive streaming video across your phone. That means you'll be able to watch TV, receive commercials, watch movies, interact in real time with visuals -- all the kinds of things that you can do across your computer. In fact, arguably your speeds will become even greater than with your computer. That opens up a tremendous level of potential creative applications, only limited by the size of the screen.

"Mobile marketing enables you to build a database of consumers who have opted in, who want to interact with your brand." -- Wes Bray, HipCricket

In the near term, the creative applications have more to do with the immediacy and interactivity of the device. It's one of the few marketing devices where a marketer can contact a consumer directly, and immediately. And you have the ability to immediately respond -- which makes for all sorts of fun promotions, instant win games, and flash mob generation, at 24/7 interactivity. It makes all that kind of stuff really fun.

Mano: If you can get around the privacy issues to do some location-based promotions that have value to the customer, I think that's the key. If customers perceive there's real value, and they're not annoyed, that would be powerful. It's got to benefit the customer. There's been talk about using your phone as a coupon or a redemption code -- like walk in now and get 10 percent off. I don't know physically how that would work, but if you worked through that, it would be really interesting.

Mason: There was a product years and years ago called Talking Yellow Pages and everybody thought it was the greatest thing since sliced bread. You could be thumbing through a phone book, see an ad and call a special code. It would play an audio ad and then it would give you an offer. You could take that code and go to that retailer and cash in on the deal.

Well, mobile telephone marketing is kind of the Dick Tracy version of that. You go to a store and there's a code at the display. You dial it with your cell phone to activate the promotion. Now, if you had the ability to transact off the phone, you could take it up to the counter, punch it, pay for it with your phone, and apply the code for the discount or promotion.

McGarry: The creative aspect of it is very interesting. Mobile-phone marketing has the potential to take database marketing to an even greater degree of immediacy, because, with wireless, the marketer can reach consumers at any point during the day.

Creating that sense of a dialogue with that consumer will also require marketers to make sure their content is always relevant to each consumer. When you increase the speed of contact with your consumer, you also increase the complexity of work needed to add value for that consumer.

Cell phone marketing probably will be most associated with those products having a high frequency of consumer use -- the beer industry is very relevant for the 21 –27 year old consumer, for example. It seems like the cell phone is never off their ear -- so for that consumer it has a lot of potential. Categories that have a low frequency of use wouldn't be as relevant.

What do you see as the greatest benefit that mobile marketing will bring to marketers and to consumers?

Mano: To the marketers, the benefit is that you can reach that consumer at any time. That's 24-hour access, as opposed to a PC, where someone is only on it for 10 –12 hours a day, tops. That's number one.

To consumers, it's that you always have your phone with you. So, it is a device that you can use all the time, anytime, and hopefully in a useful sense. Maybe I want to buy movie tickets on the phone because I'm on the way to the theater right now. Or I'd love to get those concert tickets -- and phone my friends and enjoy the benefit of having them meet me at the show.

Mason: It could bring in a whole new wave of consumers. It could bring consumers who have never consumed your product before -- and also activate existing customers in a new way. It could be a whole new personal media conduit.

"If you can get around the privacy issues to do some location-based promotions, I think that's the key." -- Rod Mano, Starwoods Hotels

Typically, it would appeal to the early adopters. But just imagine if people aren't watching TV anymore like they used to. The cell phone could effectively be that new medium in the hand. But some permission-based aspect of it has to exist. You can't have a constant flow of calls going into people and cause that kind of disruption. But there's some permission-based aspect of it all that's got to be accessible.

Bray: For marketers, it's the ultimate in personal marketing. Mobile marketing enables you to build a database of consumers who have opted in, who want to interact with your brand. You have the ability at low cost, or almost no cost, to interact with those consumers on a one-to-one -- very personal -- basis. That's kind of the nirvana of direct marketing.

Mobile-phone marketing is a way of making a database very vibrant. You can interact with a consumer, any day of the week, any time of the day, if they allow you. That's the big marketing idea that people have a tendency to lose sight of sometimes. Mobile-phone marketing is really about being able to make a database very alive and interactive, to really use the databases that marketers have built, in a way to drive business.

For consumers, it's all about content. They have the ability to receive content that they have solicited, that they have opted into or given permission to receive anytime, anywhere. So, if they are big Britney Spears fans and they just want to know what she is up to, they have the ability to get snippets of information, pictures, music clips about Britney anytime.

McGarry: We have a program called the Miller Time Network, which is an on-line program to communicate to consumers many of the activities going on, in and around their neighborhood. Some of these events are sponsored by Miller Brewing Company, but some are just relevant to their lifestyles. The opportunity for us is to bring that activity into a wireless environment. For someone who is time crunched, we're able to alert him or her the day before the activity, versus weeks before.

What steps should marketers take today to position themselves for a future in which mobile phones are widely used as a marketing medium?

Mano: If I had the answer how to do that I'd be a rich man! It has to make sense for the carriers, the marketers and the customers, which is a tough proposition.

A couple years ago, there was a big push to do hotel reservations through mobile devices. People forget that a phone's a phone. I could use my cell phone right now to call a hotel, talk to a live agent, and make a reservation. So you're not really going to save me much time by enabling me to do that using my keypad. It would take me ten times as long.

Ring tones seem to be hot right now, as does music. And we'll see what's next out there -- everyone is always looking for that next killer application. You have to figure out those applications that make sense for a mobile/web application as opposed to just using the phone.

McGarry: At Miller, we're still figuring that one out ourselves. Marketers are going to have to figure out whether it is appropriate for them even to be involved in mobile marketing. They need to determine if it is appropriate relative to the type of relationship that they think that they need to have with their consumers, or that their consumers would want to have with them.

If so, then you have to figure out how you are going to add value for that consumer through that communication link. There also is great value in learning from Europe, where mobile is a way of life.

Mason: We're going to have to continue to read publications like yours that report on things like this and that drive studies and research and so forth. It's something that we're committed to watching, as I'm sure everybody else is.

"I can see the day when the grocery store is full of promotional offers you can access using your cellphone." -- Jeff Mason, Cadbury Schweppes

I worked on Nokia in a past life, as well as Samsung, and worked with associations like the CTIA and the other cellular telephone-based entities that are out there. It's a matter of monitoring and working with these organizations, seeing what the real progress is and then activating that.

Bray: The industry right now is so new that there are very few metrics that exist. The industry, from a technical standpoint, has only been enabled for mobile phone marketing since last fall, so we're in "month six" of the industry even being able to technically happen.

As a result, we can't project things like response rates. If we have a database, and encourage everyone on the database to sign up, we don't know how many of them will respond. If we put an invitation to sign up to opt-in on a TV ad, we don't know what the response rate will be. We don't know retention rates or decay rates. We don't know how much a subscriber is worth.

We're still just learning the basic economics. Will consumers pay premium rates for rich content and, if so, how many of them and how long will they stay? All those basic metrics that the direct mail industry has nailed down to a fair-thee-well -- we don't even have the vaguest idea when it comes to mobile phones. This is all highly proprietary information. It will vary by category, and to a certain degree will vary by brand franchise, depending upon the strength of the brand and whether it has that information in the existing database.

These are all things marketers have to learn about. They need to begin testing and developing programs now to start to build this database, to generate the metrics. These metrics are competitive leverage because when this industry breaks wide open, which it will -- and I'm guessing it will 12 to 15 months from now -- the marketers who have taken the time to test, who understand what the response rates are, who know how much a program will cost, what the responses will be and what the return on investment will be -- those are the marketers who will have a significant advantage.