The State of Mobile Marketing

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Our industry is an interesting one; it’s a complex marketplace of intent, monetization, and relative performance. Those in the direct marketing space either have traffic, e.g. via their website or email list or they have the ability to acquire it, e.g. through paid search. Any traffic revolves around users and in what users might have an interest. With search, users generally already express that intent. With email, the users haven’t generally expressed an intent so much as an offer catches their attention. In either event, an offer will capture, match, their intent, and it will focus on finding a way to make money off that expressed or latent intent, i.e. the monetization. Anyone who has traffic, leverages intent and then makes money, understands though that not all ads perform the same. This is where relative performance comes into play. An offer only continues to receive traffic if it can perform equal to or better than the other offers. For example, you don’t see Columbia House DVD among frequently promoted offers, because MP3 players have changed the intent landscape. One of those offers that currently out-competes Columbia, along with a large number of others are ringtones.

We don’t seem to talk about it often, but if you run offers from CPA networks, you know it. Perhaps we don’t talk about it that much because we don’t want to jinx it, as though we know the offers do too well to be true. Maybe we don’t talk about it because we don’t want to admit openly that, yes we run them. Whatever the reason, it does sound a little weird. If you run campaigns for Blockbuster or Netflix, when asked what you run, you can say the brand name or the generic DVD rental services. The same goes for online education or even credit cards. Those who do either of those tend to say so proudly, and perhaps it’s because those listening understand that market and/or implicitly approve of its promotion. The same rules do not really apply for those in the mobile marketing space, especially those in its most well-known incantation, ringtones. When asked what they promote, far too many people seem to say ringtones with a hesitance, as though bracing for some question or rebuke. Whatever the reason and despite the apparent stigma, mobile marketing, even ringtones, will not go away any time soon, not even with more iPhones. Similar to the incentive offers, it not only makes everyone in the chain far too much money, but users have yet to tire as their interest is based on culture not a one-time fad. They will, though struggle, morph, and, similar to incentive offers, adapt. This week, we look at this amazing mobile market and three of its more prominent segments.

Ringtones
The European company Jamster had the first major ringtone hit. Being from Europe, where cell phone usage far outpaced, both in technology and user comfort, Jamster had a natural advantage when it came to promoting to the US market. They had already weathered the learning curve and could apply those learnings here. They came to market with individual ringtones that users could purchase online and send to their phone. They did a great job especially considering that the phones of the time played simplistic tunes (not the true to life sounding ones of today) and that users had little familiarity with adding content to their phones, let alone content that didn’t seem to originate from within the phone. As the market progressed, others saw the potential and began to compete. Instead of offering individual songs, they went down another path, subscription services. In a subscription service, users do not pay a la carte, they pay monthly; as a result, these companies leveraged the same hook, “ringtones,” but could pay more to the marketer as they paid not a percentage of the initial sale but a percentage of the lifetime value. Today’s most prevalent ringtone offers don’t always have names that make sense, among them being Blinko, Thumbplay, Zapsters, Dada Mobile, Ringazaa, Flycell, and Rock Your Tones, but they all run off this basic model. The demographic of today’s online users combined with a) the companies’ paying a large percentage of the users’ lifetime value, along with b) the ease that a monetary transaction can occur, has created a perfect storm for these offers.

Text Services
On first glance, it almost makes sense that ringtones might do well. Users can get a variety of useful content, quicker, easier, and cheaper than they can if they try to do so through the phone menu. Text services, though, you might not expect to do as well, even though every handset can receive them. Yet, if you know the folks at Mobile Messenger, you find out that text can perform as well if not better. In fact, Mobile Messenger doesn’t do ringtones, they do but it’s far from their strength; they don’t really do text either. What they do is transfer the risk and the reward to the marketer. It took me a while to understand their role, but they basically have many of the same components as a Blinko or Dada. They have content and the ability to bill consumers. What they don’t do, though, is necessarily create an offer then take the payment risk by offering a flat CPA. Instead, Mobile Messenger, allows the marketer to come up with an offer (or run an existing concept), create the page, have full control, and act as the silent partner – doing billing and passing the lion’s share of the revenue to the marketer. It has pros and cons. The marketer must front the cash for expenditures, but they receive the full lifetime value of that customer not some percentage. It won’t work for everyone, but in a world where a top ringtone affiliate will do low four-figures per day, a top affiliate in this arena can do triple or more. This market, too, will undergo change, but it shows a different side to mobile marketing, one that has allowed a company to become the largest mobile marketing firm that few know.

Outside the Box
Perhaps the most exciting use of mobile and one that has existed in other countries for years comes in the form of mobile as a billing mechanism. Ringtones and text do use mobile as a billing mechanism, but they do so for content that comes to the phone. Soon, we’ll see billing as means for paying for items that typically require credit cards. Think of all the free trial offers, from dating to software to health programs, that today need a credit card. As mobile progresses, we will see these offers soon allowing users to bill it to their phone, or promoting a secondary, smaller test trial for the phone if the credit card option does not happen. The phone won’t solve everything, as phone companies will not feel good about users adding potentially a hundred or more dollars in non-mobile services to their phone bill, but it still hints at the future. If the subscription ringtone service does decrease, the way CD sales have, at least mobile as a whole will not go away. It will only thrive, and we should all look forward to this and other outside the box / outside the handset applications as it will increase our revenues.

Editor
DM Confidential
www.dmconfidential.com
e: confi@digitalmoses.com

3 COMMENTS

  1. I totally disagree with you ringtones will soon go to the carrier, you will see flycell & ringazza vanish. The carriers control billing especially cingular the largest. Cingular is and has been planning to de-activating 3rd party billing for a long time, that move is comming soon. That move puts most of these ringtone players out of business as cingular represents over 40% of the ringtone user base…If I had to advise dada,flycell,blinko,& thumbplay id advise them to learn how to sell another product besides just ringtones..Your readers should also know that if cingular decidesto disable 3rd party billing that not only will new subscribers not be billed the existing databases of these ringtone companies will not be billed either.What a concept!

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