Broadsystem CEO Caroline Worboys looks at the potential for mobile marketing in fast-growing economies around the world
According to First Direct, there are currently 71 million active mobile
phone handsets in the UK, with one in 10 people owning four or more. A
decade ago there were just 13 million mobiles and a mere 8% of us owned
more than one. These staggering growth statistics indicate as a nation
just how mobile we have become.
Without a doubt, the mobile phone
has revolutionised communication, although many argue perhaps not for
the better! The majority of us are now 'on call' or contactable 24
hours a day - less than a third of us turn our phones off at night.
With this opening up of social accessibility has come the demand for
24-hour access to information. We expect to be able to text a number
and in return receive up-to-date information, whatever the time,
wherever we are. We can access train times, weather reports and
football scores - all sent direct to our phones in real time. Equally,
our bank can text us to inform us of when we've been paid or if we go
overdrawn. Delivery companies can keep us updated on their progress and
doctors and dentists will remind us of imminent appointments by SMS.
Additionally, the mobile phone has also given us more of a voice. TV
programmes, radio stations, newspapers and magazines now actively
encourage real time feedback via shortcode text and as a result we have
never have been more vocal.
Consequently, the UK is one of the world-leading countries in terms of the broader social acceptance of SMS as a vehicle to respond and interact with marketers. This can be largely attributed to the lessons learned by the consumer backlash against SMS marketing experienced in the 1990s. Profligate texting by advertisers sparked consumer rage over lack of targeting, meaning that many large brands, such as McDonalds, dropped SMS from the marketing mix. In the long term, however, this has proved a positive, as marketers were forced to return to the drawing board and determine exactly how SMS could become a trusted and effective communication vehicle.
Evolving the usage of SMS as a CRM tool has meant that mobile marketing has flourished, with increasing numbers of brand marketers realising that integrating an SMS component into a campaign can not only boost the bottom line, but also, importantly, give access to new markets. It was found that mobile networks are opening up countries traditionally difficult to reach, given the less sophisticated nature of the infrastructure for mail-based communications.
Countries such as Greece, Slovenia, Pakistan, Singapore, South Africa and Malaysia, for example, raised significant funds for the Tsunami through mobile marketing. SMS fundraising went from nothing to 21% of the total money donated globally.
With many financial and business pundits now placing the fortunes of the world economy on the BRIC countries (Brazil, Russia, India and China), you have to wonder whether mobile marketing will play an important role for businesses looking to expand into these markets. We have therefore investigated both the penetration of mobile phones and propensity for mobile marketing in each country.
China had 449 million phone users at the end of last year. China Mobile, the world's largest mobile operator, has itself surpassed the total population of the USA, with a subscriber base of 301 million customers. The number of handset users in China is expected to rise by 11% to more than 500 million by the end of the year, and to 660 million by 2010. As a result, it is potentially the worlds biggest 3G mobile market. Moreover, the advent of 3G will have a strong impact on mobile marketing in China, enhancing the capabilities of how marketers can communicate with consumers.
Russia currently has over 125 million mobile phone users, a mobile phone penetration of approximately 86%. Yet, in the major cities, such as Moscow and St Petersburg, penetration has surpassed 100% with an average of 126.5 SIM cards per 100 people. Whil SMS marketing is still very much in its infancy in Russia, large brands, such as Stolichnaya, are testing its effectiveness as a way of building communities and engendering loyalty and trust.
Brazil's mobile market is the fifth largest in the world behind China, the US, Japan and Russia. While Brazil is a smaller market than China, its total penetration for mobile usage is higher, at 50% versus 30%. This, combined with the fact that Brazil is the tenth largest market in the world in terms of Internet usage, indicates the voracity for digital growth, providing a number of opportunities for mobile marketers.
Finally, mobile telephony is also a thriving market in India. There are currently over 80 million mobile users and this figure grows by the day, fast turning the mobile phone into a critical marketing medium. SMS is proving extremely popular. One reason for this is that consumers are price sensitive and use text messaging as an alternative to voice, due to it being more economical. As a result, text messages have become a part of everyday life with billions being sent each week. Unfortunately many of these are poorly (i.e. not at all) targeted promotional messages, and we are seeing a backlash very similar to the one experienced in the UK 10 years ago. The Telecom Registry of India is reacting and stepping in by introducing strict regulations to stem the number of unsolicited promotional SMS messages being sent. As in the UK, marketers need to reassess the use of SMS as a marketing channel and begin to use it as a value-adding relationship tool, or risk having the channel legislated against.
Clearly, privacy is an issue for consumers the world over. Whilst targeting is essential for all direct marketing, given the personal nature of a mobile phone it is especially vital for SMS marketing. Ideally, marketers should build up a relationship with a consumer, before introducing SMS into the mix, and then use it as a response mechanism, or as a way to enhance the customer experience, perhaps via updates or notifications. Without prior mobile contact between a company and brand, it's very easy for promotional messages to over step the boundary into the realms of irrelevance and intrusion. To help clients address this problem, Broadsystem has developed a unique algorithm for optimising the balance of communications across all channels, including mobile.
Generally, people's acceptance of mobile, their willingness to embrace it, and the conceptual excitement has, across the globe, far exceeded the pace at which the Internet was accepted. There is therefore enormous scope for brands looking to communicate with consumers via mobile, wherever they may live. As mobile penetration continues to grow, mobile marketing increasingly is teetering on the cusp of becoming a mainstream, global marketing tool, making it an extremely exciting and fast-paced channel. However, if it is to continue to flourish, it is essential that brands understand the medium - both its strengths, and more importantly its pitfalls. Otherwise, conceivably, marketers could lose the power of the largest communication revolution of all time as a marketing vehicle.