Wednesday, June 30, 2010

Which Use of Mobile Is Right For You?

I've finally had a chance to digest the DMA's 2010 Response Rate Report and I'd like to share some of my take aways with you.

The DMA report is based on a survey of 473 members of - you guessed - DMA members. While the sample size is large enough to make inferences of the general population, the bulk of the membership of the DMA is probably different from...say...the Mobile Marketing Association. Hence no surprise that direct mail and email are the two most frequently used communication channels with 60% and 53% of survey respondents respectively using these channels. Only 6% of the survey respondents said that they were using the mobile channel (which includes both mobile advertising and text messaging). This tells me that mobile marketing is still an experimental medium - for members of the DMA that is. If I compare my personal exposure to marketers' messaging across the different media, I would say that this low adoption rate is fairly consistent across the board.

But low adoption rate aside, it's interesting to note that consumer engagement over SMS is much higher than over email.

According to the report, emails sent to a house list produced on average a 6.64% click through rate and a 1.73% conversion rate. In contrast, SMS messages sent to a house list produced over 100% higher engagement with a 14.06% average click through rate and a whopping 8.22% conversion rate. The conversion-to-click rate is another metric that I use for measuring engagement. It a good way to measure how compelling was my offer in the context of my message about the offer. On average, one out of every four people who clicked through in an email converted - meaning they accomplished some aspect of the marketer's goal (e.g. bought something, registered for a class, downloaded a prospectus, etc.). Engagement in the SMS channel was even greater with one out of every two people who clicked through an SMS message converting. Yes, SMS messaging is way more expensive than email. But with almost a 60% conversion to click through rate, the ROI of SMS messaging is highly compelling.

I interpret the higher consumer engagement in the SMS channel to a combination of the type of consumer that signs up for text messaging programs and the technology itself.

Another interesting observation from the response rate report is who's doing mobile marketing and who's not.

As one would expect, Publishing, Media & Entertainment, and Retail are the two industries having the highest adoption rate with 15% and 14% of survey respondents respectively stating that they are using the mobile channel for their marketing messaging. Interesting to note also is that none of the survey respondents that are in either the Financial Services or the Health Care & Pharmaceutical industries are using the mobile channel. Is this non-existent adoption just an artifact of the DMA membership represented in these two industries, or is this representative of the industries as a whole? I'm thinking that it might be the latter since these two industries represented almost 20% of the total survey respondents - so it's probably not just a statistical anomaly.

So why the low adoption rate of mobile marketing in Financial Services? The report may give some insights as to the reason. A closer look at how respondents in the Financial Services industry use each channel, it appears that they use the online channels primarily to drive traffic to their web sites for further information.

Making a financial decision is a thoughtful process that requires focused attention and one that takes time. None of these qualities fit the mobile channel. Mobile is all about immediacy and instant gratification, and the mobile web experience doesn't necessarily lend itself well to content-laden sites. Unless there is a sense of immediacy in a call to action and/or there is content that can be quickly consumed, then perhaps mobile is not the appropriate channel at this point in time for the Financial Services industry's marketing messages. So be careful about jumping on the mobile bandwagon. Just because it seems that everyone else is doing mobile marketing doesn't necessarily mean its right for your industry, your brand or your clients.

While the mobile channel may not be appropriate for Financial Service marketing messages, it is absolutely the right one for Financial Service transactions. In fact, this industry was a pioneer in transactional SMS messaging with text-to-access to account information including mini-statements, account balance verification, recent transactions, canceling lost or stolen cards, and ordering checks not to mention text alerts for recent account activity or passing of preset balance thresholds, and bill payment reminders.

The market for mobile apps on the iPhone, Android and Blackberry platforms is booming. At last count, there are over 300 "favorite" apps in the Financial category on iTunes so "thousands of smartphone apps for Financial Services" would be a ballpark guesstimate across all smartphone platforms worldwide.

With regards to cutting edge mobile payment technologies for point-of-sale and peer-to-peer services, once again the Financial Services industry is leading the way. Retailers and public transportation firms are introducing pilot programs whereby consumers can make purchases by merely touching their payment-enabled mobile device to a similarly-enabled point of sale device. (Of course, businesses in Europe and Asia have been doing this for years already.)

Mobile technology is transforming the way that people interact with their world and as a result, it is transforming the way that brands engage with their customers. Businesses have realized that though the mobile channel may not be appropriate for marketing messaging, it is clearly a strong channel that enables consumers to interact with their brands in other equally important areas. So it's not a question if mobile as a whole is right for you; rather it's a question of which use of mobile is right for you.

How many different ways is your brand using the mobile channel? Leave me a comment!

Tuesday, June 8, 2010

Consumer Privacy Versus Consumer Relevance

The draft privacy bill sponsored by representatives Boucher and Stearns is creating quite a stir in both the privacy advocacy and the online marketing worlds. It's a classic battle that pits technology as either a friend or foe depending upon your personal bias.

There are already a lot of blog posts and articles regarding the implications of this draft. I list a few of them here:
It is ironic to note that both privacy advocates and online marketers believe that they have the consumer's best interests in mind. Privacy advocates believe that consumers have a right to control the collection and the usage of their personal data albeit how obtuse it may be. Online marketers believe that consumers deserve to have the best online experience with highly relevent information.

Two points of this proposed privacy bill causing consternation among marketers include the following:
  1. IP address and browser cookies would be considered "covered information" and their usage for marketing purposes would become highly restricted.
  2. "Precise" geolocation information would be considered "sensitive information" and its usage would become even more restrictive than "covered information".

Web sites (especially e-commerce sites), ad networks, and even web analytics providers rely on information gleaned from IP addresses and browser cookies from anonymous site visitors. Almost all e-commerce sites ranging from Amazon to Zappos all use site visitors' browsing history to display the appropriate products on their web pages. Under the draft privacy bill, using a site visitor's browsing history to dynamically display page content would be allowed to continue provided that
  1. the site provides easy access to the company's privacy policy,
  2. it informs the consumer that he or she has the right to decline consent, and
  3. the consumer either specifically opts in or at least doesn't opt out.'s web site has a nice feature that enables me to prevent the site from tracking my browsing history.
However, once such a person opts out, then the marketer is not allowed to use the information previously collected on the person's browsing and purchase history during the time that he was opt-ed in.

The idea is that while I may still want to receive email marketing newsletter from my favorite brand, I may not want my personal browsing and shopping history to be included in them.

Web analytic providers and email marketers should take note of this provision. Vendors including Omniture, WebTrends, and Coremetrics enable marketers to build profiles of their customers' web site interactions and then target those profiles for specific remarketing campaigns via email or other channels. If the draft becomes law as it is currently written, then any marketer that does not inactivate an opt-ed out customer's web analytics data from his web analytics profile database and his email marketing database would be in violation of the law subject to severe penalties.

Another provision of the draft bill that is causing concerns among all marketers is the requirement that all "covered information" must be deleted or rendered anonymous if it has been 18 months since the date that the information was initially collected. Email marketers should take note of this provision because according to this draft, a subscriber's email address is considered "covered information." This means that even if you are a retention marketer and send your emails only to those who have opted in to receive then, the only ones that you can send to are those whose email records are less than 18 months old. If you have a single email address in your customer data that is older than 18 months old, then you are a law breaker.

While some brands would be thankful to have active email addresses 18 months old, there are many major brands having loyal customers whose email address records go back many years. Just think of the ramifications this bill would have on your email marketing program. How many dollars would you waste on thinking up and sending "re-enlistment" campaigns just to get your subscribers to re-create their email address records that you already have in your database? How many of you have built consumer tenure into your RFM (recency/frequency/monetary value) and RFC (recency/frequency/click through) models? How effective would they be if your subscriber database has artificially skewed tenure data?

Finally, the inclusion of "precise" geolocation information as "sensitive information" is an eyebrow raiser especially when it comes to mobile marketing. Aside from memories of Bill Clinton's famous "it depends on what you mean by 'is'", just how "precise" is "precise"? Precise to a city? Precise to a neighborhood? Precise to a house? Precise to within 3 feet? Precise to within 10 inches?

According to the draft bill, the collection and use of "sensitive information" requires prior consent. This means that the collection and usage of a consumer's geolocation collected either by your computer's IP address or your mobile device may not be done so for marketing purposes without that person first giving you permission to do so. If you are an e-commerce site operator, then think about how this will impact your site's user experience. approximated my location by examining my IP address and determined that I live somewhere near Minneapolis/St. Paul, Minnesota. This is the default behavior of their site.

If this draft bill becomes law, then unless Amazon changes the default behavior of their site, then their web site is engaging in "an unfair and deceptive act or practice in violation of a regulation under section 18(a)(1)(B) of the Federal Trade Commission Act. In addition to being liable to federal penalties, Amazon would also be subject to civil action by any of all 50 states depending upon how motivated their Attorney Generals are.

Fortunately, the mobile marketing eco-system has arisen in a post-SPAM world although much work is still ahead. Marketers may only send SMS messages to those who have specifically opted in to receive them.

But not all mobile apps include the option for app owners to opt-in and opt-out of location based services. For example, I have the ShopSavvy app on my iPhone which finds and compares prices local to me. Short of removing the app from my iPhone, there is no way to inactive the location-based feature.

So what can you do about it?

Keep track of the discussion through the DMA, the ESPC, and others. As Lois Greisman, of the FTC cautioned during a recent webinar, the draft is still just a draft. Reps Boucher and Stearns, and the FTC are soliciting feedback which to some degree will be incorporated in coming revisions of the bill before it is put to the House floor for a vote. In the meantime, I do recommend that you keep track of this bill from time to time just to be informed. Depending upon where it goes, marketers and web site operators may be in for a lot of work to bring their tactics in line with the new law.

So, which side of the debate do you espouse? Both sides do have their own merits. Leave me your thoughts.

Tuesday, June 1, 2010

Will Mobile Help Save a Dying Industry?

Last year in November, I posted my blog entry on how mobile is breathing new life into a dying industry: print. Back then, the word "iPad" had not yet been unleashed on the marketplace. Interesting to note that here we are a half a year later and my prognostication is proving to be correct. Once again, Apple proves that it has the uncanny ability to take existing product concepts, perfect the experience, and knock it out of the ballpark.

But first: a presentation of evidence to what you probably already knew. The U.S. newspaper industry continues it's 10-year tailspin. A simple search on Google using the keywords "declining newspaper industry" turns up almost 140,000 results, with about 4800 results for articles written in the past ten years. According to an April 27th article carried by The Sydney Morning Herald, the Audit Bureau of Circulations reported that the average daily U.S. newspaper circulation declined 8.74 percent during the six months ending on March 31 compared wiht the same period a year ago. Circulation dropped even more the previous period with a 10.62 percent drop.

Magazines aren't doing any better. According to the Veronis Suhler Stevenson Communications Industry Forecast 2009, consumer magazines will suffer a compound annual growth rate of -2.8% in the 2008-2013 period.

The plain and simple reason for the decline is that people's consumption of media has changed from print to digital. Unfortunately, the heavily-unionized print industry has been slow to adapt.

So while I was partly right back in November with my prediction, I was also partly wrong. Back then, I saw netbooks as the consumer devices that would help breathe new life into the dying print industry. Wrong. But six months ago I didn't know about the iPad. Knowing what I do now, I believe that the iPad will both breathe new life into the print industry while at the same time greatly crimp the growth of netbooks.

All major U.S. newspapers and magazines have either already launched iPad versions of their content, or are quickly on the way to doing so. Publishing giant Conde Nast has already introduced iPad versions of GQ, Vanity Fair, and Wired. Softbank Corporation of Japan announced last month that they will be offering more than 30 magazines and newspapers to their iPad subscribers.

But not everyone is under the spell of Jobs' Reality Distortion Field. Disgraced former equity research analyst turned blogger Henry Blodget in his March 25th entry states a strong case as to why the iPad won't save the print publications' asses. (His words, not mine.)

Nevertheless, there are progressive minds at work in the crusty halls of Old School media. Marketers are starting to combine print media with instant interaction via mobile devices.

Mobile Marketer reports that Macy's has teamed up with magazine digitizer and distributor Zinio to present their traditional print ads for presentation within Zinio's iPad application. A two-page advertisement has a link-away to Macy's Spring/Summer Journey catalog.

Since catalogs are expensive to produce, Macy's has to be highly selective as to who they send it to. But with the iPad, Macy's can distribute digital versions of their catalog and also get real-time feedback.

Consumer electronics giant Best Buy is also starting to build mobile into its print campaigns. One of their circulars includes a QR code that enables readers to view a special trailer for a soon-to-be released video game. The print ad also includes call-to-action encouraging consumers to text the keyword BBYAPP to the short code 332211 to download the QR code reader application.

Slowly the print publication industry is recognizing that our collective preferences have shifted towards mobile devices. That is how we choose to consume our media and that's the way we been choosing it for the past ten years. We listen to music on mobile devices. We watch videos on mobile devices. We take pictures on mobile devices. We take movies on mobile devices. We get directions on mobile devices. We communicate with one another on mobile devices. We surf the web on mobile devices. We make purchases using mobile devices. We even read our email on mobile devices. Now, thanks to mobile devices like the Kindle, eReader, iPad, and others like them, we choose to consume our print media the same way. Let's hope the print publishers wake up in time to save themselves and realize that mobile is what will breathe new life into their dying industry.

So what are your thoughts? Do you think mobile will save the print industry? Will the iPad and similar products be the boost that they are looking for? Post your comments.