As of December 2009, 286 million people in the United States—over 90% of the population—were using mobile phones. Mobile phones are clearly a mainstream consumer device.
Almost one-quarter of the handsets sold in the United States are powerful, user-friendly smartphones (such as the iPhone, Blackberry, and Android). Retailers, banks, consumer product companies, and other specialty industries, such as airlines, can increasingly use such mobile phones as a key channel for customer interaction. Compared to other channels, mobile phones enable more targeted interactions, using consumer preferences and behavior to reach out to consumers in real-time.
Retailers can send real-time ads, coupons, and offers to customers that are based on consumer preferences and physical location, delivering better value to consumers and producing stronger responses. On average, today’s paper coupons yield a redemption rate of only ½%, whereas early results for personalized coupons delivered through mobile phones have achieved redemption rates of between 15% and 50%.2 Merchants using Near Field Communication (NFC)-based loyalty programs, such as those offered by Zapa Technologies in Europe, are also experiencing higher rates of customer participation.
Such results clearly demonstrate the power of mobile. Consequently, mobile marketing and advertising are expected to continue the rapid growth.
Mobile Technologies and Mobile Marketing Approaches
The technologies available in mobile phones have been evolving steadily. New mobile marketing approaches can rely on a number of features and functions of modern mobile devices or combinations of these features:
- The voice channel from the network to the mobile device (used for infomercials or telemarketing)
- The data channel from the network to the mobile device
- The capabilities of the mobile screen in its various designs, resolutions, and forms to present information and act as a user interface
- The capabilities of the mobile speaker to use sounds (e.g., to communicate with a point-of-sale (POS) reader or marketing kiosk)
- The capabilities of the mobile camera to capture visual information (e.g., barcode coupons, images, and text)
- The global positioning system (GPS)/location-based service (LBS) capability that allows a device to be location-aware (e.g., to push marketing offers to the user and make location-aware offers)
- The accelerometer technology that allows the device to be orientation-aware
- The Bluetooth capability that allows the device to exchange data with other Bluetooth-capable devices (e.g., to push marketing during the channel scan)
- The Wi-Fi capability that allows the device to recognize local area networks (e.g., to push marketing during the channel scan)
- The mobile Web capability (e.g., to download coupons, ads, and offers during Web-based sessions)
- The mobile app store capability that allows a user to enhance the functions of the device by downloading value-added apps (e.g., to embed marketing inside a mobile application, usually in return for a discounted app)
- The Near Field Communication (NFC) capability that allows the device to exchange data with other NFC-capable devices (e.g., to enable direct communication with a POS device, a smart poster, or a public transportation kiosk)
Mobile marketing initiatives use a number of approaches that leverage the mobile phone's capabilities to implement mobile promotions and advertising.
- Mobile Web approaches (using the WAP capability on the mobile phone or other mobile device (e.g., iPad)) allow consumers to use the online browser and search engine on a mobile device to find ads, coupons, or promotions and store them in the mobile device. The coupons can be retailer-specific (e.g., a discount coupon from Pizza Hut) or product-specific (e.g., a discount coupon for a six-pack of Coke). For redemption, the coupons are typically coded with 2-D or 3-D barcodes or simple numeric codes for manual entry by a sales clerk at the point-of-sale.
- Text- or SMS-based approaches allow consumers to sign up for a promotion program with a merchant and provide a mobile phone number. Merchants then use SMS and text messages to send coupons or promotions to the consumer’s phone.
- Smartphone-based wallets allow consumers to download a coupon management app onto a smartphone. Consumers then search or receive coupons through SMS or MMS. Coupons are redeemed manually, by displaying the coupon on the screen to a sales clerk, or automatically, by processing the offer on a back-end server.4
- Loyalty program-based approaches allow consumers to sign up for a loyalty program that is bundled with coupons, instant awards, and real-time redemptions. Coupons are sent through SMS or MMS and redeemed by tapping an NFC-enabled phone on a contactless-enabled POS reader or by settling the transaction through a back-end server (e.g., as a statement credit).5
- Another approach leverages NFC chip-enabled mobile wallets. NFC-equipped phones come with wallet software that can store coupons, loyalty points, and payment account information. Consumers carry and manage their coupons and promotions in the mobile wallet. They can access personalized coupons and promotions by searching through the wallet or by tapping the NFC phone on a smart poster or shelf tag. With a consumer’s permission, retailers can also send coupons or promotions "over the air" directly to the phone. Coupons are redeemed electronically, by tapping the phone on a contactless-enabled POS reader.
This white paper focuses on chip-enabled mobile marketing—mobile marketing that uses an RF chip, either built in or added to a mobile phone—to enable mobile contactless transactions. Contactless technology is already built in to new NFC-enabled phones, such as the Samsung Star Smartphone. Addon accessories that enable existing handsets with NFC capability are also becoming available, such as a sticker that can be added to the back of any phone, or a microSD card, sleeve, or clip