The recipe for a successful mobile strategy for your brand

[Most major companies have tried engaging their customers through their mobile phones, but not everyone has succeeded. Guest author Guillaume Arth talks mobile brand experience and identifies the steps towards developing a successful mobile strategy]

Creating the right mobile strategy for your brand

‘Get into their pockets and you’ll get into their minds’ could be the slogan soon underpinning any new marketing manifesto. Indeed, mobile commerce has become core to the strategy of mainstream brands as it empowers new forms of customer engagement.

Mega brands like eBay have taken strides in mobile as an extension of their online presence through mobile websites and applications. eBay’s  iPhone app has already been downloaded 11 million times. The online auction giant expects to make $1.5 billion from mobile this year compared to $600 million in 2009. Retailer brands like Best Buy use apps to offer specific promotions or gifts in the process learning a lot more about customers.

Interestingly, traditional media have been quicker to adopt a mobile strategy as many advertising budgets are moving online. Since this summer, the Wall Street Journal, The Times, and Wired magazine (to name a few) have all launched iPad apps signaling a shift in premium print media. Similarly, TV channels like MTV are also embracing interactive, social apps, either designed as companion apps or offline versions of TV content. As reported by Advertising Age recently, brands like MTV  “focus on two approaches to its iOS apps: first, co-viewing apps that capture the social-media chatter around TV and awards shows and second, apps for video on the go”.

Moreover, borrowing lessons from Foursquare and Gowalla new types of apps allow you to ‘check in’ to TV shows and movies. A good example of that is the TV chatter app, which enables users to do their own programming and interact with Twitter live streams and post their own.

However promising these developments might be we will have to wait another 12 to 18 months to see whether print and broadcast media can truly leverage on mobile.

Getting your brand experience right

Through their scale and prolonged web presence EBay and Best Buy have successfully faced the challenge of multi-channel integration as well as getting visibility and ‘placement’ of their mobile commerce apps on stores.  For these reasons they still remain exceptions. As a mobile gaming exec put it to me recently, ‘you have to be at least in the top 100 apps on iTunes if you want to make any kind of money. You have to market yourself in a way that can create actual retention, not just hype at the back of a free app’.

Indeed, some free apps may enjoy good download stats but those don’t necessarily translate into good reviews and recurring users as the Gucci app recently showed.

Some brand strategists argue that it is still ‘early days’ and that a ‘wait-n-see approach’ is more sensible; after all market penetration of higher-end devices like the iPhone and Android-based handsets is still only around 5% of devices sold worldwide in H1 2010. However this figure hides that we are in fact talking about high value, high ARPU customers with the biggest propensity to actually try out a branded mobile app. Additionally with more 150 million smartphones sold we have passed the point of only talking about early adopters. This is now a mass-market phenomenon, which has opened up new and more direct routes to consumers for brands.

So how should a brand go about developing a mobile strategy?

Before enlisting a highly paid musician to create a DJ-like app experience or hiring a top-notch programmer to start churning out software code, it is important to consider what factors make some apps successful and other mediocre:

Firstly, understanding users. A successful app will capture the imagination by being relevant, useful and delightful. Indeed users are prone to quickly veer off to something else in disappointment so understanding what makes them tick is important. After all your brand is trying to take a piece of someone’s busy schedule. Hence pilot first and then scale appropriately. One can draw lessons from successful games that offer a basic, yet addictive experience which is then enhanced with a bigger feature set at a 2nd stage. Then it becomes easier to convince existing users to come back and possibly pay a small premium (a good example of that is ‘Hungry Shark’ part 1 and 2 by Future games of London.)

Secondly, a deep understanding of mobile as a medium is essential. No matter how amazing your ideas may be, it is worth keeping in mind that mobile is a tactile, impulsive and intimate medium that doesn’t tolerate too much ‘fuzzing’:  basically users need ‘to get it’ in a matter of seconds and… it needs to work! Taking the brand’s website content and ‘over-specifying’ an app is likely to fail. One can think of the 2010 Roland Garros app whose flawed design, and overly complex feature set probably didn’t achieve much for the tennis brand. Here is a prime example of how a flawed approach to an app can possibly damage a great brand especially when competitors or peers (the other Grand Slam tournaments in this case) have done a much better job.

Based on good design guidelines, a mobile app should aim at creating a brand narrative that will work in the mobile context rather than throwing ill-conceived ‘marketing junk’ as one can often read in app reviews. App marketing can be a double-edged sword and because of its immediacy and interactivity, brands must have their ears on the ground, learn and react quickly ensuring negative feedback doesn’t spiral out of control.

Thirdly, having a longer-term app roadmap where the mobile brand extension evolves and engages with its customers. The mobile app roadmap should grow gradually and elegantly, adding features and customer engagement opportunities on the way. Brands can build more loyalty by letting their essence shine through the simplicity of its mobile incarnation.

Last but not least: pricing. One million free downloads equals to zero direct revenue and too many apps are free making it difficult to solicit direct revenues through branded apps. But revenue shouldn’t be the only goal of a brand-extension strategy; the main goal should be engagement. After all, who would be willing pay for ‘walking into a shop’? One shouldn’t repeat the same mistake as mobile operators portals have done with charging users for just browsing. Providing a ‘free-entry’ experience is an important consideration which can then be followed by a premium (paid-for) experience.

Sowing the seeds for deeper customer engagements

With mobile, brands can equip themselves with a powerful and interactive marketing platform that forms a key pillar of a ‘multi-touch’, digital media presence. The entry of brands into the mobile domain is being encouraged by four recent developments:

1. A new breed of mobile natives who have greater access, understanding and trust in the mobile medium as a more personal and less ‘mediated’ experience for shopping or entertainment

2. Devices evolve at a very fast pace.  Thanks to the widespread support of XHML/HTML, Java script and CSS, (More than 250m devices now feature the open-source WebKit browser engine, as seen in the 100 Million Club) and greater set of APIs, devices offer richer media experiences: audio, picture, video, social, messaging, location…and the list goes on.

3. The greater availability and affordability of cloud-based technology open source APIs, as well as packaging and rendering solutions for mobile websites, allow new entrants – like brands – in the market (‘BK Render’, a mobile rendering solution from french start-up Backelite is a good example there)

4. The accelerated development of mobile transactions from operator billing to bar coding, I-Tunes, Google checkout, PayPal, NFC and others.

‘Convergence marketing’ is the new frontier

At the core of the ‘new mobile economics’ brands and service providers are increasingly empowered to create new experiences and new business models. With the caveat that there is no current “write once, run anywhere”, I argue that brands are better positioned than ever to work around consumer and platform fragmentation through ‘convergent positioning and marketing’. Essentially rather than feeling daunted by technology, it is about looking at what the brand is trying to communicate and push a consistent message across to all users whatever digital medium they are using.

Users. Where are they? They are everywhere and ‘ubiquity’ is their destination.  The user journey starts with a phone in each pocket, device connectivity and grows to digital ecosystems spanning across tablet computers, laptops desktops, TVs and many more places tomorrow. This creates a connected environment of opportunities for brands to express and market themselves in new ways, with social apps and blogging leading the way. Costs and barriers to entry to digital are lowering and marketing and retailing of digital goods is becoming mainstream.

Further down this new crowded high street, Apple, Google, Samsung and to an extent LG and Sony are embroiled in the battle to conquer our living rooms with internet TV services, through VOD, apps and widgets.  At present, joint communications and Internet TV services are mostly ‘beta’ services on trial with operators including Verizon (US), Sonaecom (Portugal) or KT(South Korea). Orange recently signed a partnership with LG, where Orange provides billing and customer care while LG provides IPTV services.

There are also handset apps that act as a remote control – Free.fr in France for example (Free.fr app) – signaling that mobile might take over as the ultimate ‘EPG’ (electronic Programming guide). Currently 10-20% of IPTVs are connected to a broadband going up to 50% with higher broadband penetration. Samsung expects to sell 35 million TVs globally in 2010. In comparison, it took Microsoft 3 years to sell as many Xbox units. As TV remains the most popular consumer electronics device in the home this presents significant opportunities for any IP-based service or a brand looking to market itself through digital. With an installed base of millions it is only a matter of time before mobile app stores users are migrated to the big screen.

Apps and mobile services are good place to start for any brand but as we have discussed it is only the beginning. For instance, Nokia recently argued that ‘context devices, rather the apps, will be where the money is’.

With the digital switch over completed in most developed markets by 2012, ‘Convergent marketing campaigns’ will soon become a reality. Of course being successful will require adjustments and some juggling with technology but I believe that within 18 months, brands, service providers and advertisers will be at the intersection of a bigger phenomenon than the app stores as digital grows exponentially.

Now is the time for any brand to plan and leverage on those exciting developments and – through deeper customer engagement – turn new experiences into new revenue streams.

Guillaume.

[Guillaume Arth is a mobile media consultant based in London, UK. With more than 10 years of experience in this space, he currently specialises in service strategy, sales and marketing advising large and small organizations. You can contact Guillaume at: g /at/ cozmopolitanmedia.com or you can follow him on Twitter @cozmedia]

Demolition Derby in Devices: The roller-coaster ride is on

[The economic realities will lead to a roller-coaster ride that will shake up the mobile industry. Guest blogger Richard Kramer talks about the impending price war, the implications for industry growth, and how this will alter the landscape of device vendors in the next decade]

With all the discussion of technology trends on the blogosphere, there are some harsh economic realities creeping up on the handset space. The collective efforts of vendors to deliver great products will lead to an all-out smash-up for market share, bringing steep declines in pricing.

In November 2009 I wrote a note about what Arete saw as the impending dynamics of the mobile device market. I called it Demolition Derby. This followed on from a piece called Clash of the Titans, about how the PC and Handset worlds were colliding, brought together by common software platforms and adopting common chipset architectures. As handsets morphed into connected devices, it opened the door for computing industry players, now flooding in.

New categories of non-phone devices
A USB modem/datacard market of 70m units in 2009 should counted as an extra third of the smartphone market, as it connected a range of computing devices. By the end of 2010, I believe there will be many new categories of non-phone mobile devices to track (datacards, embedded PCs, tablets, etc.), and they may be equal to high-end smartphone market in units in 2011.  Having looked at the roadmaps of nearly every established and wannabe vendor in the mobile device space, I cannot recall a period in the past 15 years of covering the device market with so many credible vendors, most with their best product portfolios ever, tossing their hats in the ring.  I see three things happening because of this:

 

1. First, a brutal price war is coming. This will affect nearly every segment of the mobile device market. Anyone who thinks they are insulated from this price war is simply deluded. I have lost count of the number of vendors planning to offer a touch-screen slim mono-bloc Android device for H2 2010. The only thing that will set all these devices apart will be brand, and in the end, price.  Chipmakers – the canaries in the handset coal mine – are already talking about slim HSPA modems at $10 price points, and $20 combined application processors and RF. Both Huawei and ZTE now targeting Top Three positions in devices, with deep engagements developing operator brands. They are already #1 and #2 in USB modems.  Just look at the pricing trends ZTE and Huawei brought to the infrastructure market; this will come to mobile devices.

2. Second, growth will rebound with a vengeance. I expect 15% volume growth in 2010, well ahead of the cautious consensus of 8%.  I first noted this failure of vision in forecasting in a 2005 note entitled “A Billion Handsets in 2007” when the consensus was looking for 6% growth whereas we got 20%+ growth for three years, thanks to the onset of $25 BoM devices. Consumers will not care about software platform debates or feature creep packing devices with GHz processors in 2010. Ask your friends who don’t read mobile blogs and aren’t hung up about AppStores or tear-downs:  they will simply respond to an impossibly wide choice of impossibly great devices, offered to them at impossibly cheap prices.

3. Third, the detente is over. The long-term stability that alllowed the top five vendors to command 80% market share for most of this decade is breaking down.  This is not simply a question of “Motorola fades, Samsung steps in” or “LG replaces SonyEricsson in the featurephone space”.  Within a year, there could be dangerously steep market share declines among the former market leaders (i.e. Nokia) to accompany their decline in value share. Operators are grasping control of the handset value chain; many intend to follow the lead of Vodafone 360 to develop their own range of mid-tier and low-end devices. Whether or not this delivers better user experiences, operators are determined to target their subsidy spend to their favourite ODM partners. In developed markets, long-established vendors are getting eclipsed: in 2010, RIM or Apple could pass traditional vendors like SonyEricsson or Motorola in units. RIM and Apple already handily out-paced older rivals in sales value, and with $41bn of estimated sales in 2010, are on par with Nokia.

Hyper competition
So where does this lead us? Even with far greater volumes than anyone dares to imagine, there is no way to satisfy everyone’s hopes of share gains, or profits. With Apple driving to $25bn in 2010 sales and Mediatek-based customers seeking share in emerging markets, the mobile device market is entering a phase of hyper-competition. It is all too easy for industry pundits to forget that Motorola and Sony Ericsson collectively lost over $5bn in the past 2.5 years. More such losses are to come.

Never before have we seen so many vendors acting individually rationally, but collectively insane. Albert Einstein once famously said that “the defintiion of insanity was doing the same thing over and over but expecting a different result”.

The men in the white coats will have a field day with the mobile device market in 2010.

– Richard

[After four years as the #1 rated technology analyst in Europe, Richard Kramer left Goldman Sachs in 2000 to form an independent global technology research group. Arete has 10 years experience dissecting the financials and industry trends in  semis, software, devices and telecom operators, out of offices in London, Boston, New York and Hong Kong. Richard can be reached at richard [dot] kramer [at] arete.net]