Getting Better for Bigger Brands

Mobile marketing goes direct to consumer – Gone are the days when brands could rely on a traditional media such as TV or print – mobile is now working alongside traditional media channels to promote brands direct to the consumer.Andrew Bud thinks payment mechanisms are one good reason for this development.

As the worlds of entertain-ment, marketing and advertising increasingly overlap, the concept of the mobile phone as a medium for companies to market and sell their products direct to the consumer is gaining momentum. The mobile phone is now no longer just a communications device. It is the apparatus for gaming, photography and downloading music as well as a payment tool for services and content.

Up to now, specialist providers of mobile entertainment have dominated the mobile content space, creating an industry now worth some £500m in the UK alone.

However, this is set to change. At first owners of large media brands were dubious about entering the mobile marketing medium.

They were worried that mobile might not be strong enough to support their brands without damaging them and therefore held back, preferring to collaborate with mobile operators within the cosy confines of their walled garden WAP portals. They saw that the operator portals would take on the marketing risks and stresses of the development of the new mobile medium.

But now companies are taking mobile more seriously, seeing it now as an important part of the media mix.

This change has been the result of a convergence of a number of factors. First, the operators in many countries have begun to see the benefits the direct-to-consumer (D2C) mobile content model brings to them. In the UK, for example, around 70% of operator content revenues now come from D2C distribution, for which the operator bears no costs for marketing, licensing or development.

They’ve also seen that the operator portal model has serious limitations to its scalability in terms of content: no matter how creative operator portals may be, they will never match the revenues generated from a thousand creative brands and a million different ads.

Medium messages
Secondly, the mobile medium itself is changing. Although more successful than anyone dreamed, SMS does not allow for the same rich consumer experiences possible through MMS and WAP. However, the spread of WAP, Java and 3G-enabled handsets is finally creating the opportunity to deliver rich media content to consumers on a large scale.
A target market for rich media has finally become available and the opportunities this opens for top big brands is enormous.

And finally there is billing. Premium SMS has been enormously successful – it was immediate and scaleable and allowed the merchant to sell directly to the subscriber, with the carrier solely involved in the billing transaction. Within two years, every carrier in every major European economy was offering it. Its effectiveness was so great that the UK market grew from zero to $800 million annual consumer spend.

This has been primarily driven by the hugely successful ringtone market, but the availability of an easy, ubiquitous charging mechanism has proved the consumer’s willingness to pay for all sorts of content which Internet veterans swore had to be free.
However, the next phase in mobile billing will see two main developments. One is a new generation of service model where the entire transaction and authorisation process will be conducted via WAP.

WAP billing enables a subscriber to download content from WAP portals and charge the payment to a phone bill without sending or receiving a text. Key brand protection capabilities, such as easy refund and authorisation before charge, are feasible for the first time. With the market of technically advanced mobile handsets growing, this billing mechanism will take hold.

Big brands
The second major development will see a mitigation of the prohibitive costs for mobile data today borne by the consumer.

Today, ‘bill shock’ could be fatal for major brands. A video clip valued at £5 could cost the consumer £10 in download costs. This clearly doesn’t work.

Fortunately, a growing number of operators are making available data on a wholesale basis – free to the consumer, paid for by the content provider at a cost effective price. Successfully executed, this is a key to unlock the next phase in mobile business.

Today’s boom is still gathering speed yet mobile payments are being prepared for their next great expansion, as the world’s largest mobile transaction network, mBlox views this expansion with enormous enthusiasm. Mobile billing is the motor behind a whole new industry of mobile content, unleashed by its immediacy, simplicity, interac-tivity and reach.

As users increasingly engage in new social phenomena and technologies such as blogging, flash mobbing and image recognition, advertising and marketing agencies will advance their mobile strategies as interactivity of the mobile medium evolves.

The conditions will soon exist for mobile D2C to become a huge distribution channel for major media brands.