1-10077_Mobile_Marketing_FINAL_090110

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JULY 2, 2010

Mobile Marketing asEnterprise Imperative:

Strategy, Not Tactic

By: Tony White


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Mobile Marketing as Enterprise Imperative: Strategy, Not Tactic

Current Market Trends

THE OPPORTUNITY

Recent evolution in the mobile applications market now offers enterprises new

opportunities for reaching customers in ways never before possible. In the past 18

months, a number of independent market forces have converged to enable goods-and-services providers to market to specific customers, at specific times, at specific

locations. Importantly, such targeted messaging draws on a richer-than-ever set of

consumer information, including not only detailed demographics from implicit (inferred)

and explicit (user-provided) profiles, but also real-time, location-based data. Mobile

devices, namely smart phones, now have sufficient computing power and screen real

estate to effectively and conveniently replace laptops a majority of the time. Already,

they have become the primary device for e-mail and calendaring1, and as they supplant

laptop-based Web clients, built-in GPS capabilities will foster opportunities for achieving

competitive advantage via time-and-place aware, native mobile applications. With the

right user permissions, organizations can easily use real-time, location based services toenrich the customer experience and themselves by a definite, if yet difficult-to-

quantify margin2.

Though we are still in the early stages of mobile application provisioning and mobile-

based marketing, a dramatic acceleration in development of both proprietary corporate

mobile applications and mobile versions of Websites3, along with a commensurate surge

in mobile-focused usage patterns by consumers, bears witness to the shift away from

laptops and toward mobile devices. Savvy enterprises have already begun to execute

extraordinarily powerful mobile marketing campaigns. In January 2010, 61.5% of our

clients reported developing their mobile applications in-house

4

, but based on recentconversations, Ars Logica believes that this number will fall as the feature-functionality of

commercially-available packaged offerings ramps up considerably in Q3 and Q4 of this

year. Over the next 24 months, a continuation of this pattern will result in the software

vendors who deliver the most heavily benefit-laden mobile applications dominating the

market in their respective categories (enterprise content management, customer

relationship management, business intelligence, salesforce automation, and so on).

1 Over the past six months, 65.4% of Ars Logicas clients have reported using mobile devices as the

primary means of checking e-mail and scheduling meetings. n=26.2 A large retail customer of one Ars Logica client is currently developing an iPod application that will allow in-

store customers to take a photo of bar codes and immediately access product information, pricing,

competitors pricing; place the item into a persistence-enabled shopping cart; get notifications when the

items goes on sale; purchase the item; or add the item to a wish list, which can be shared with friends and

family.3 Based on interviews of the customers of 33 Web content management vendors from January to April

2010, Ars Logica found that 38.6% of respondents had developed (or were in the process of developing) in-

house, native mobile applications; and 76.5% offered Website versions optimized for mobile. n=132.4 Based on survey data from Ars Logicas clients, September 2009 February 2010. n=26.

1 Copyright 2010 Ars Logica. All Rights Reserved.


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Marketing in a New Era How Mobile Marketing is Different

As marketers know, assembling robust data sets about prospective and actual

customers remains key factor and a key hurdle in converting the former into the

latter. Demographics remain necessary, but seldom prove sufficient. Past behavioralinformation, including the circumstances under which it occurred, also usually helps, but

is similarly difficult to collect, analyze, and monetize. Now assume that you can add

time- and location-based information to whatever data youve already gathered about a

prospect through opt-in campaigns, implicit profiling, list purchases, and other multi-

channel methods. That is, you know when your prospective customer either is (in real

time) or will be (based on a pre-determined itinerary) at the airport, rental car agency,

hotel, etc. With five minutes reflection, you will understand how device-generated

information about physical proximity to your or your partners goods and services

exponentially boosts your marketing power. This is one of the fundamental differences

between mobile marketing and pre-mobile marketing.

FIGURE 1 Opportunities and Challenges of Mobile Marketing

Mobile technologies have evolved, but mobile strategies still involve difficult choices.

Below is a summary of opportunities and potential pitfalls.

OPPORTUNITIES CHALLENGES

Heightened brand loyalty SecurityDramatically higher sales conversion

rates with time-and-location data

Consumer irritation from perceived

privacy violations

Improved cross/multi-channel marketing Over-communicating/promoting

Information sharing across partner

networks for promotion optimization

Platform support decisions

(BlackBerry, iPhone, Android)

Source: Ars Logica, Inc.

Source of Information: Ars Logica clients, interviews of WCM/CMS buyers

Remote time and location sensitivity provides marketers the opportunity to capitalize on

two old adages, combined: Timing is everything, and Location, location, location.

Mobile marketing now allows vendors to reach buyers not only anytime and anywhere

(potentially annoying), but at the right place at the right time (always welcome).

Alliances, associations, bureaus, and other collectives representing numerous

enterprises such as airports, shopping malls, travel and tourism boards, and hotels, who



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in the past offered little if any marketing benefit to their constituents, now find themselves

in a position of extreme cross-channel marketing power.

Mobile marketing especially enables premium-experience providers and companies with

access to data sets that span a wide range of consumers, such as:

Travel and tourism bureaus. Once simply collectors of promotions from

municipal or regional businesses, travel bureaus are now beginning to craft

effective, multi-constituent, cross-channel, mobile marketing campaigns5.

Banks and credit card companies. Perhaps the ultimate repositories of

consumer data, banks and credit card companies are in an enviable, the sky is

the limit (creatively is really the limit) position regarding mobile marketing

strategies. For elite cardholders, trivial examples would include offers of

automated enrollment at the elite level of a partner hotels loyalty program whenthe customer arrives at the hotel, or an invitation to use a partner airlines first

class check-in counter when a ticketed customer arrives at the airport6. More

generally, financial services firms would certainly recognize the added value of

mobile communication as a more timely, and therefore more relevant, touchpoint

for high-net-worth and institutional investors.

Aggregators of online behavioral data and real-time location information.

Web advertising portals and online analytics providers commonly assemble

extraordinarily rich and actionable user information.7

As with banks, their ability

to create mobile killer applications is a function of their vision. The informationand technology are available.

At its core, marketing is simply the behavioral psychology of selling. Since human

behavior is always time and place dependent, mobile marketing represents the current

lective binary buying-decision switch from no to yes.ne plus ultrain flipping the col

5 Of the top 10 online travel agencies in the U.S., all 10 currently offer optin delivery via mobile

device of discounted partner promotions (airline, car rental, gas station, hotel, movie, concert, etc.),destination information, and weather forecasts. Opting in often means receiving promotionsindefinitely, not just at the time of sale.

6 Ars Logica knows of several networks of premium goods and services providers that are planningjoint marketing campaigns to create crossbrand loyalty among their toptier customers. These

networks target the users of byinvitationonly credit cards, frequent patrons of 5star hotels, elitestatus airline passengers, and account holders at ultraexclusive retailers. This phenomenon couldeffectively create berbrand loyalty, in which loyalty accrues to consumer experience across the

network.7 When Ars Logica presses clients to create a comprehensive list of marketing use cases that leverage

only the information that Google maintains on them as individuals, it becomes clear that the potentialis nearly infinite.


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CURRENT REALITY

Although mobile applications and devices now empower enterprises to seize the above-

described opportunity, most are not taking full advantage of the new possibilities. Travel

and tourism bureaus with first- or second-degree access to mobile user information

and subscription-based corporate clients numbering in the thousands often maintain

the status quo of overlooking four-dimensional data about the circumstances under

which their customers customers spend. Airlines frequently provide travel information

regarding travelers itineraries, but neglect to request permission from users to collect

real-time positional information, and thus relinquish sales opportunities for themselves

and their partners. Cross- and multi-channel marketing agreements between hotels,

airlines, rental car agencies, retailers, entertainment venues, and countless other

enterprises fail to recommend procuring user permissions for their mutual benefit.

FIGURE 2 Mobile Device Usage Increasing Dramatically

Ars Logica conducted a survey asking clients, What percentage of the time do you

use a smart phone or mobile device, instead of a PC, for e-mail/calendaring, Web

activity, or running native applications? (n=26)

54%

65%

81%

85%

23%

31%

50%

65%

8%12%

27%

58%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2009 2010 2011 2012

Email &Calendar

Web

Activity

Native

Application

Source: Ars Logica, Inc.

Source of Information: Ars Logica clients, interviews of WCM/CMS buyers

projected



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THE CHALLENGES

The anytime, anywhere nature of mobile marketing also poses significant challenges.

Historically, getting consumers to ingest information was a major hurdle. Now, relatively

easy mobile access to customers threatens to encourage overselling, leading to

consumer irritation and potential opt-outs. So marketers must make difficult decisions

about how often to send promotions and which particular offers to make. That is, even

with detailed historical behavioral information, adequate demographic information,

explicit profile information, and a community of partners with whom to make joint offers,

how do marketers decide between the permutations of possible promotions?

Privacy also remains a huge issue for mobile marketing. Even though mobile users are

getting used to granting wide-ranging permissions in their license agreements,

marketers still risk crossing the line between value-added service and customer-

offending privacy violation. With the tremendous opportunity of mobile marketing comes

substantial risk, the chance of success improving with the strength of the brand.

Consumer perception is that trustworthy brands will not misuse information and even

further, that they have notmisused information, even given behavior similar to a less

trustworthy brand. Five years ago, consumer attitudes regarding Web/device privacy

were markedly more conservative than they are now. However, social computing

phenomena (Facebook, for example) have dramatically loosened users positions on

exposing personal information, and Ars Logica expects this trend to continue.

Over-reliance on technology in the absence of a well-articulated mobile strategy

represents another significant risk for mobile-marketing newcomers. Certainly,delivering mobile-friendly, device-specific versions of Web marketing campaigns always

adds an important consumer touchpoint. But mobile enablement of a Web presence

does not equate to leveraging the additional user information available from well-

designed, native mobile applications. As mentioned above, several airline and hotel

brands have done a commendable job of customizing and extending their Web initiatives

to reach consumers through the now-critical mobile channel. The relevant caveat,

however, is that technology does not solve marketing problems. It automates marketing

solutions, sometimes rendering possible marketing scenarios that were previously

impossible.

Lastly, the marketing advantage that already accrues to companies with rich data sets

will be magnified by mobile marketing. Any piece of consumer information becomes

potentially actionable with the addition of time (especially real-time) and place data.

Thus, Vendor X with 100 data points on a given customer would be far more likely to

convert him or her than Vendor Y with 5 data points, by a factor of approximately 20.



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The factor shrinks to far less than 20 without time and place information. For even with

200 data points, Vendor Y would not know when best to make the offer. Given the

exponential mobile marketing opportunity afforded by additional consumer information,

strong partner networks that include information-sharing agreements assume extreme

importance.

RECOMMENDATIONS

Ars Logica urges its clients (and anyone else who will listen) not to treat mobile as

simply a bolt-on to existing Web marketing strategies, but rather as technological

evolution capable of differentiating them from competitors to much the same degree as

Web marketing itself. That said, the question arises of what practical steps clients

should take in developing their mobile strategies. We recommend that clients begin by

asking themselves questions such as the following:

How aware is your IT organization of the security risks presented by mobile

marketing and communications? Has it conducted a comprehensive security

audit based on specific enterprise mobile usage scenarios? Mobile content is

enterprise content, and the same retention, compliance, and privacy regulations

apply to it. Some companies have not adequately planned for mobile data-

interception, viral-intrusion, and firewall-breaching attempts.

How mobile-ready is your enterprise content? That is, can content within your

business applications be presented effectively on mobile devices? Some of our

clients have found that while content managed within their Web CMS repositories

may be mobile-ready, they lack the content-transformation technologies capable

of delivering mobile-compatible content from other enterprise systems. Although

an enviable position to be in, only a few of our clients currently have a virtual

technology layer that unifies content for mobile delivery. Ars Logica recommends

evaluating the tools and technologies that will get you to that point.

Should you build mobile applications yourself (or parts of them), or are there

vendors whose offerings satisfy the majority of your requirements? Most

companies will find that a combination of commercial products will be required toexecute an overall mobile strategy.

While most organizations can benefit from mobile marketing in some fashion, those who

maintain detailed user profiles of their customers, have strong partner networks with

which to assemble compelling joint offers, and depend heavily upon the mobility of their



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customers for their livelihood, mustconsider mobile as one of their moststrategic

marketing channels. To be sure, the business goals for mobile marketing will vary

widely from company to company and across industries, and these differences will

shape the strategy itself. (We will discuss vertical-specific mobile strategy

considerations in upcoming research, and in consulting projects.) But despitedifferences between and among clients, we urge them all to treat mobile notas just

another channel, but as a critically-important strategy that spans a range of enterprise

technologies and encompasses the lions share of corporate sales, marketing and

communications initiatives.



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Advisory Services

Software and Technology Selection

Tel: +1 617.943.5611

Fax: +1 617.226.4575

75 Arlington Street

Suite 500

Boston, MA 02116

www.arslogica.com

ContactServiceS

Ars Logica is a vendor-neutral analyst frm helping companies

evaluate their WCM requirements and select appropriate WCM

sotware. To address clients content management-related

questions and problems that arise throughout the year, Ars

Logica oers unlimited direct analyst access through its Analyst

Anytime advisory services. These annual, subscription-basedservices provide guidance by phone or email within 24 hours

on a wide range o issues. The number o inquiries submitted

throughout the year is not limited.

In our Sotware and Technology Selection engagements, Ars Logica maps

clients unctional, technological, and strategic requirements to potential WCM

solutions and identifes the sotware vendors whose products best satisy theserequirements. We maintain a continuously updated comprehensive matrix o the

eature-unctionality o most WCM vendors products and solutions. We also

receive requent briefngs rom these vendors and have in-depth conversations

and consulting engagements with their customers, ensuring that we always

understand the actual state o vendors oerings as well as their orward-looking

strategic directions.

Custom Engagements

Ars Logicas expertise in WCM and related technologies such as digital asset management, records

management, marketing campaign management, search, and portals, gives us the open-ended ability

to help clients on a wide range o projects, including: building the internal business cases, assessing

technology requirements, analyzing sotware products and vendors, selecting and assembling sotware

solutions, crating Web strategies, and running corporate educational seminars. We also assist vendors

in developing strategic roadmaps, and we and present our view o the WCM market at industry

conerences and end-user events.

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