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Déjà Vu?

Published
  • November 03 2000, 1:00am EST
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Last month I addressed the issues of real-time wireless delivery of information within an organization. This area represents a real opportunity for companies – one that is rarely addressed. This month, let’s look at wireless delivery of marketing and commerce, an area that is glorified in the press today, but has yet to prove itself in real-life situations.

You can hardly open any marketing magazine without reading about the wireless revolution. Pundit after pundit proclaims that marketing on wireless devices will lead to a whole new world of business-to-consumer (B2C) mobile commerce (m- commerce), potentially greater than e-commerce, due to the proliferation of cellular phones. Supposedly, Americans (and some of the even more "wired" wireless countries such as Scandinavia and Japan) are just waiting for the next hot special to begin placing orders by cell phones.

But is this an accurate depiction of life in the future? Will consumers actually make purchases on wireless devices, and what role will marketing play in those purchase decisions? What makes an effective wireless marketing effort?

Clearly, the business opportunity for wireless marketing is obvious. Since U.S. cell phone penetration exceeds 70 percent, surpassing Web’s 50 percent penetration, the mobile phone represents a larger pipeline for interactive marketing. As cellular phones morph into mini-Web portals, they become an improved interface for consumer interactions. Plus, they have increasingly sophisticated interfaces and faster access that hold potential for even more sophisticated and comprehensive marketing communications.

Given this rosy forecast, why are so few marketers actually implementing wireless campaigns? Why are consumers reluctant to respond to the offers? Several significant barriers are delaying, but not stopping, the growth of wireless marketing. Once these barriers are overcome, wireless devices will hold the functionality of Web-enabled computers. As a result, I anticipate consumer response to m-commerce to eventually exceed e-commerce.

Interestingly enough, these barriers to m-commerce and m-marketing strongly resemble those that faced the Internet in its infancy. Given the accelerating rate of technological change, the barriers for m-marketing will probably fall faster than they did for the early Internet.

Think back to the early days of the Internet. Consumers hesitated to make purchases, and the advertisers were slow to implement marketing campaigns on the Web. The barriers to e-commerce and e-marketing in those days were substantial:

Poor Interfaces – Original Web interfaces were text heavy and, even when graphics began to appear, the quality suffered due to "primitive" hardware in the installed base. As a result, only early adopters made the effort to wade their way through the interfaces to read marketing messages, make purchases and provide information about themselves.

Lack of Standards – Disagreements among e- commerce infrastructure providers about e-commerce security standards delayed the acceptance of the Web, convincing main street America that e-commerce was too risky. Several high-profile credit card thefts reinforced that notion.

Speed – A few short years ago, the main speed of installed modems among consumers was 9,600 baud. Today, the main speeds are 56K modems, even through the actual speed of a modem in action can be as low as 22,000 baud. A big improvement from the old days, but many of us can still remember sending for a Web page and going out for a cup of tea until the page appeared. Slow modem speeds, especially in the convenience-based economy, presented a substantial barrier to adoption of the Web marketing and purchasing.

Pricing – The early days of the Internet were inexpensive for academia but expensive for consumers. Originally, the pricing was usage-based with expensive plans for the most basic of services. With competition, pricing for some ISP services became free, and they supported themselves with advertising or other revenue streams. Now, most consumers do still pay for their ISP, but the prices are far below the early days. As pricing declined, penetration and usage increased (though for reasons other than price), and overall Web acceptance and usage increased. After all, for marketers to reach consumers effectively, those consumers have to be online long enough (hours per day and days per week).

If you consider the wireless marketplace today, you will find the same cast of characters but in a different play. Interfaces, speed, standards and pricing are all conspiring to delay the acceptance of wireless communications as an effective marketing vehicle, just as the same issues slowed Web acceptance in recent memory. Hopefully, the key players in today’s wireless space will study early Internet history and avoid repeating it:

Interfaces – As with the Web, the interfaces on wireless devices, particularly cell phones, are solely text- based. This limits branding capability for marketers. Text-only communication reduces the ability of marketers to effectively communicate a consistent brand image and, just as importantly, diminishes consumer interest and response. The net result is to create a static medium that limits interest on both the part of consumers and marketers.

Standards – The wireless protocol debate continues without resolution. As with the Web, the lack of wireless standards leads consumers to doubt the security of communications. The processes for commerce are different, too. Consumers need to learn different navigation parts for different sites, making wireless purchases too time- and energy-intense to happen.

Speed – When consumers move to leverage wireless communications for Web access, they actually take a step backward in terms of speed. While consumers adopt DSL and cable modems in their homes and T-1 lines proliferate in their offices, wireless communications remain around 9,600 baud for pager-type devices and 19,200 baud for cellular phones and cellular PDA modems. This barrier may be very significant, depending on the ability of the wireless provider to tailor content for a much more limited text and speed basis on the cell phones and modems.

Why is speed to important on wireless devices? Consider the places of usage to be more accurate. As opposed to the Web, wireless is truly on the go. Communications can occur while at the dry cleaner, in the car or walking through an airport. Available time may range from several minutes to several seconds, but clearly appears to be much less than desktop access time for the Web. Yet, the frequency and short duration of wireless use in a day counterbalances the slowness of the connection experienced.

Pricing – In the early wireless market, prices varied widely but tended to be usage-based, driven by the cellular phone providers’ desire to maximize immediate revenue. If you examine pricing trends for Web access over time, the fallacy of this approach becomes evident. As alternative wireless devices proliferate, pricing will inevitably decline, and some free-with-advertising providers will occupy the lower end of the market. Since wireless devices will also include cell phone capability, the lower-end providers could "steal" traditional cell phone services from mainstream providers.

In addition, history demonstrates that today’s high pricing may drive profitability but will slow market growth. Pricing declines bring increases in both penetration and usage, which yields revenue growth, both the short and long term. Unless cell phone companies learn this lesson, they are destined to repeat it, potentially losing some of their high-profit cell phone customers at the same time.

What Does This Mean for Marketers?

The similarities between the Internet and wireless marketplaces extend to effective marketing communications. An effective wireless marketing campaign must contain all the elements of effective Web marketing, and then some:

Personalized – Since phones are registered individually, the communication can be personalized based on identified preferences, historical purchase patterns, demographics, etc., which should result in greater response levels than more generic communications. All of the rules of permission-based marketing still apply, of course. Consumers may also view marketing via cell phones to be a further invasion of their privacy, so caution is especially warranted in this medium.

Relevance – Information delivered via the device must be relevant in order for consumer acceptance of wireless marketing to grow. Relevancy includes the concept of personalization but also addresses real consumer need states. After all, a personalized marketing communications for Miller beer does not fit my needs if I only drink wine.

Timely – In addition, since most wireless phones are activated all day, available viewing hours far exceed Web or television viewing hours. The increased access time permits "time-driven" marketing creating such offers as discounts on groceries on the way home from work or on coffee and donuts in the morning. The increased time also permits delivery of more time-sensitive offers such as "Stop by in the next hour and get a free CD," or "Click here to receive a limited-time offer." The time factor is a key differentiator from Web communications and may, in fact, be the distinguishing feature of wireless communications that truly brings consumers in. After all, today we want it all, and we especially want it now.

If marketers and device manufacturers can work together to provide a more real-time medium on wireless units than on the Web, then consumers should respond, especially when time is at a premium for the communications or offers.

Finally, just a quick note on wireless devices. Throughout this column, I have focused on cell phones as the dominant wireless communications medium, primarily due to the high household penetration levels. At the same time, wireless modems incorporated into PDAs such as OmniSky, RIM Blackberry and Palm VII demonstrate the potential of the wireless medium in a more graphic way (only a slight pun intended). With user-friendly graphical interfaces, faster response times and enhanced content, these devices have achieved much higher functionality and user value than cell phones today. As prices decline, and convergence with cell phones continues, these devices are becoming the new standard for the future of wireless communications.

Everyone recognizes the potential of wireless devices to exceed e-commerce. At the same time, marketers clearly face a number of challenges before the most common devices – cell phones – are ready for prime time. These challenges mostly involve technology development and pricing strategies from the providers. However, if the history of the Web is examined, the future of wireless becomes clear. Wireless will become a dominant consumer medium. The only question is when and what the market structure will look like when that growth is complete.

Marketers ultimately must make wireless communications integral to their marketing plans and can leverage learnings from the Web marketplace to make wireless communications even more effective. The main differentiator of wireless – real-time communications away from the desktop – is particularly exciting. Real-time marketing can link click-and-mortar in a new way, with Web- on-the-g" features driving consumers to retail locations and immediate actions.

Wireless holds potential to drive true convergence of "the click" and "the mortar" on a global basis. All that potential, stored in a tiny cell phone that fits in your pocket. Not a bad deal, I would say.

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