The evolution of mobile advertising

By Mark Holcomb
Director of Marketing, Santy Retail

The evolution of mobile advertising and mobile coupons presents potential opportunities for small businesses, but not without real challenges and potential risks.

The following provides our perspective on the opportunity as well as our plans for leveraging this technology to best help business owners.  Here are some statistics that show how big the mobile market is for retailers today:

• 89 percent of adults in the United States have a mobile phone
• In 2009, 17.5 percent households, or approximately one in six in the United States are purely mobile phone dependent and have no landlines
  • Oklahoma and Utah have at least 26 percent
  • Nebraska, Arkansas, Idaho, Iowa, Kentucky, New Mexico, Texas, South Carolina, Tennessee and Washington DC have at least 20 percent
• 58 percent of Americans have a mobile phone with Web connectivity
• An average of 54,922,000 of Americans received an SMS ad between Sept – Nov 2008
• 81 percent of young adults report use text messaging
• 66 percent adults aged 30-49 report use of text messaging

When it comes to mobile coupon usage, technology is primed for mobile couponing to boom in use over the next few years. The current downturn in the economy has increased the demand for value and search for a ‘good deal’ exponentially as people are more close-fisted with their money.

There are several different types of mobile coupons, including: 

• Common Short Codes (CSC) -- These consist of a short series of five or six digits to which a user can send a text message to trigger a message back (i.e. coupon) from advertiser
• Quick Response Codes (QR) -- These checkerboard-looking codes can contain up to 4,300 characters. Consumers takes pictures of a QR code, which launches the phone’s browser to a URL in the code to provide information and coupons
• Image Recognition Advertising -- Reader take a picture of ad in a magazine, then sends the image to to a publication or advertiser and receives texted content like ringtones or coupons
• QR and Image Recognition advertising have become mainstream practices in Asia and Europe. These areas have been and are slated to continue to be first and second in utilizing mobile technology and couponing, with North America building in volume over the next few years
• Overall Redemption Rates -- Paper coupons historically have redemption rates under 1 percent. As mobile coupons are an opt-in service, redemption rates are between 10 to 15 percent
• Specific Targeting Opportunities -- Several opportunities exist to narrow down targets to specific demographics and buying patterns, with the ability to provide easily accessible coupons and offers at point of sale.
• For example, in Japan, McDonalds sends customers discounts via mobile email for the consumer’s favorite menu item and provides coupons based on previous purchases.

Projected growth

The redemption value of mobile coupons is forecasted to increase more than 30 percent by 2010 to reach 100 million users globally. The current global recession is slated to be the driver of adoption as consumers seek new ways to find value.

However, many markets still do not yet have appropriate equipment set up at point of sale to utilize bar code couponing.

There are several large corporations with big budgets that are able to utilize mobile testing. Although it seems that mostly the three industries below have used mobile couponing, several other companies such as Hollywood Video, 1-800 Flowers, Sears, Virgin Music, SuperCuts and McDonalds have begun exploring mobile couponing. The largest users of mobile coupons include:

• Fast food
• Consumer package goods
• Retailers

Starbucks rewarded loyal customers and reached out to new customers through in-store signage and postcards handed out in malls with callouts to text words to a predetermined code to receive discounts and size upgrade offers. As a result, Starbucks enjoyed a 60 percent mobile coupon redemption rate.

McDonalds encouraged Monopoly at McDonald’s game participants to contribute online. Players were able to text a code to collect Monopoly properties. Those who collected an entire property could win cash & prizes up to $100,000. Almost 2 million game codes were entered by mobile users.

BMW reached out to mobile users to notify them of limited-time offers. The company sent individualized texts with pictures of the specific owner's car, color to 117,000 BMW owner mobile users promoting the use of winter tires with a specific tire price for their individual vehicle. As a result, BMW saw $45 million in sales in Germany alone.

Subway reached frequent customers with special deals to drive traffic. Their "My Subway" mobile effort combined mobile coupons with periodic coupons and last-minute offers. The company saw a redemption of 5 to 6 percent, compared to 3 percent for traditional paper coupon redemption. Plus 6,000 consumers signed up with the program -- and another 150 new registrants are added every week at the 100-plus franchises in Buffalo, N.Y.

For a free analysis of how you can take advantage of this new technology, call Mark Holcomb at 520.360.1772 or e-mail mholcomb@santy.com.

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Mark Holcomb, director of marketing, has more than 30 years experience as a top-level marketing executive with a proven record of achievement in strategic marketing, event management, advertising and promotions in the retail RV and automotive industries. As a former Oldsmobile and Chevrolet dealer and vice president of marketing for a $400 million RV group, Mark played a vital role in the company’s consistent expansion through cohesive, high-impact marketing, brand strategies and integrated, multimedia marketing programs through Interactive, television, radio, print, and direct mail to achieve short- and long-term sales and gross profit objectives.

Santy Retail is located in always-sunny Scottsdale, Ariz. Santy Retail is a full-service marketing communications agency committed to staying at the front edge of the fast-changing marketing landscape to provide clients with unexpected ideas to maximize the impact of marketing communications.