Selling via cells

The growth of cellphone usage in Canada (see gistbox) is enough to make any marketer HOT4 mobile. But there are niggling barriers, such as the lack of POS systems that can handle m-couponing and the challenge of finding cost-effective ways to promote your mobile efforts.

The growth of cellphone usage in Canada (see gistbox) is enough to make any marketer HOT4 mobile. But there are niggling barriers, such as the lack of POS systems that can handle m-couponing and the challenge of finding cost-effective ways to promote your mobile efforts.

Still, there’s no doubt that a future in marketing looks bright for the portable, pocket-sized gadgets. The possible pay-offs for brand handlers? Eli Singer, marketing & communications strategist for Toronto-based brand consultancy Spencer Francey Peters, points out several: First, since it’s an on-the-go medium, there’s the potential to increase occasions for purchase; second, it provides the ability to segment customers by personal information and location; and third, the viral aspect can help you break the ice with new customers.

‘I think there is a disruptive strategy that can be put into place and that it’s not just about the phone as a channel,’ says Singer, who runs a new media blog consultancy on the side called Mass Influence Media. ‘If you’re Amazon.com, for instance, you could be able to steal that customer who’s standing in Chapters with a book in their hands. [In other words], the phone is a way to access a competitive brand.’

However, it means first getting past the aforementioned obstacles. Vancouver-based online and wireless community Digital Youth (DY) is knocking some of those obstacles down for marketers. In conjunction with the Vancouver Province and Toronto-based technology partner Impact Mobile, last March it launched a full-page mobile marketing destination containing downloadable content and advertising. The program was such a success, that on Nov. 18, ‘Mobile On Demand’ (MOD) will appear in five CanWest-owned newspapers across Canada.

Dan Reitzik, president of DY, says that during the pilot MOD drew on average 1,000 to 1,500 text-in messages for a particular offer over a week. One of the most successful initiatives was for a contest to win a bike, associated with the 20th Century Fox flick Supercross, promoted both in the Province’s MOD section, as well as on mall video screens owned by Montreal-based DAN Media. A total of 3,800 responses were received. Then, the day the movie hit the silver screen, the same folks were sent follow-up text messages reminding them to buy their tix.

‘You have to have a hook,’ says Reitzik. ‘In order to make the jump to two-way advertising, you have to give [consumers] an incentive.’

Reitzik is hoping to give newspaper readers a lot more reasons to pay for content on their cells. The new MOD section will offer TrueTones from Universal Music, the program’s category-exclusive sponsor, at $3.50 a pop. Universal has also signed on for the ‘New Music Tuesday Club,’ which will enable participants to text message the genre they prefer, such as ‘rock,’ to 808080. Then every Tuesday, they’ll receive an SMS telling them about a new CD hitting the stores.

DY is still looking for advertisers for MOD, including a video rental company to sponsor the ‘New Movie Tuesday Club,’ which would alert users about DVD releases. (Cost per buy is between $800 and $3,000 a week, depending on size of ad.)

At this point, the Music Club aims to build an SMS database and raise awareness. Eventually, Reitzik says, coupons and other incentives like free band posters, will be implemented to track results.

That will likely happen once DY and partner DAN Media complete a pilot program enabling them to test results of m-couponing at POS.

By January, the two firms, along with aggregator Impact Mobile, will launch a pilot ‘Text-N-Save’ program with retailer Wireless Wave, according to Reitzik. It will work like this: Shoppers in approximately 45 malls (still TBD) across Canada will be exposed to ads on DAN Media’s digital screens prompting them to text a message to Wireless Wave. The offer? Savings of up to 50% on cellphone accessories. The campaign follows The Bay’s old ‘Scratch-n-Save’ model, and will run for between six and eight weeks.

‘It makes sense because [the campaign] will run in malls that Wireless Wave is in, but more importantly, [the chain] has a POS system to handle the codes,’ says Reitzik. ‘[Otherwise], we’d be worried about fraud and people forwarding the coupons.’ To counter that issue, 10,000 codes will be used in the pilot, and each will be removed from the system as redeemed.

Reitzik says Wireless Wave also has an advantage in that its retail staff is knowledgeable on all things cell-related, m-couponing included.

He adds: ‘Once this is hammered down, a boiler plate can be developed for other retailers.’

Another way to tap into mobile is to partner with a firm that can supply premium content for your customers. Reitzik sees possibilities for sponsorship of poker tips or gambling, for instance.

In September, Fountain Hills, Ariz.-HQ’d QuoteMedia, which develops financial applications and market data services, announced a stock quote text messaging service, Text Quotes, with coverage in both the U.S. and Canada. Users can receive stock market info by text messaging stock symbols to the shortcode ‘QUOTE.’ Cost for this luxury is under $20 a month, providing the company with a new revenue stream. At press time, QuoteMedia was also talking to major banks, brokerage firms and stock exchanges in North America about enabling them to private-brand Text Quotes for their own clientele.

Vancouver-based Duane Nelson, who heads business development for QuoteMedia, reports that so far uptake for the SMS endeavour has been slower than expected, with users numbering in the thousands and most of them being Americans. But he sees huge potential. ‘You can go golfing and still get stream quotes, whereas before you were strapped to your desk.’

The main barrier, according to Nelson, is that software sales on handheld devices are at a very early stage. QuoteMedia expects that will change as wireless carriers begin to act like software distribution centres. ‘That’s a step they’re taking – they’re bundling software,’ he says. ‘There has to be an application to drive those numbers.’

Of course, there’s another major caveat to all this mobile activity: It still remains to be seen just how much interaction the cellphone-carrying consumer wants with advertisers.

The answer, along with supplying users with value-added content, believes Reitzik, is to be upfront about how much anything will cost. ‘Once somebody feels burned or misled, they won’t text message again.’

So proceed with caution.

GISTBOX

* According to Toronto-based Solutions Research Group, there are already more than 15 million mobile phone users in Canada, and the number of 15 to 19s with cellphones has increased from 30% in 2001 to 58% in 2005.

* An estimated 1.3 million Canadian mobile users downloaded a ringtone in the last month, according to SRG’s Fast Forward 2005 research study.

* One dollar in every 10 that kids in the States spend is related to their cellphones, says the Wireless World Forum’s mobileYouth 2005 Report.

* A June 2005 study by Motorola Canada says 80% of 15-20s have their phone with them and turned on all or most of the time. And 13% of their time is spent using their mobiles versus 39% spent watching TV.

Dialing up dollars

Just how likely are consumers to pay for stuff over their cellphones? The experience of Sulake Canada, the interactive entertainment company behind Habbo Hotel, would suggest very.

In conjunction with CHUM Television (which provides a home for the Canadian Habbo Hotel) and mobile media firm MyThum Interactive, Sulake introduced a mobile commerce application for the Habbo online community last June.

What this means is that players can now purchase their credits by text messaging HABBO to the shortcode 30303. They get a voucher for 15 credits to be used online, for a $3.00 charge. These credits are used to buy virtual products and services – anything from furniture to pets – in the hotel.

Allan Best, country manager for Sulake Canada, reports that since its launch the number of Habbo dwellers who have opted to go the SMS route has increased from 12% to 18%. Credit cards still beat out SMS as payment choice by 1% (dropping from 50% to 19%). ‘By Canadian standards, we’re ecstatic, but by company standards, we lag behind in SMS sales,’ he says, pointing to the fact that in Europe SMS accounts for 40% of sales.

While technically the launch went smoothly, the major challenge for Sulake Canada is that the Canadian Wireless Telecommunications Association has set a price cap of $20 monthly for any m-commerce activity, which is an issue for Sulake since the price of credit bundles increases by $3 increments. In the U.K., the monthly price cap is 60 pounds.

‘There are two ways to make more money,’ says Best, ‘one is to get more users and another is to increase the prices. Ideally we’d like to do both.’ With a higher price cap, Best believes that he can match the European figures in SMS sales.