Special Report: Cell Phone Marketing

Retailers and brands eager to tap the growing number of cell phone users with marketing messages increasingly are turning to P-O-P techniques to encourage opt-ins."Mobile marketing is, we believe, the future," says Denis Sison, Sprite global brand director at Coca-Cola, Atlanta, which in June launched Sprite Yard, an interactive mobile campaign. With two out of three American adults regularly using mobile phones, marketing via the so-called "third screen" is particularly appealing to retailers and brands who want to target consumers while they shop. There's just one catch, experts say: Not all consumers are ready for it.Stop SpamThe concept of having to pay even a dime to receive an ad via text message bothers consumers like Doug Fodeman, who founded www.children-online.org, a website that aims to educate families about the potential dangers of the Internet and related technology. Fodeman recalls receiving unsolicited text messages when he signed up for cell phone service from AT&T. "I got charged 10 cents to read that advertising. How wrong is that?" he says."The cell phone is like the next frontier for the Internet scams that have been happening for years now," Fodeman adds. In a class-action settlement earlier this year, Distributive Networks LLC of Washington, D.C., agreed to pay consumers who had received unwanted text ads from its company $150 each. Leery of turning off their best customers, many brands and retailers are taking a wait-and-see approach to the medium. And those that do proceed are doing so with caution. But effective mobile marketing requires consumers to take an active role, which won't happen unless marketers give them a reason to try it. For certain demographics like college students, text messaging is a preferred means of communicating, says David Koehler, clinical professor of marketing at the University of Illinois-Chicago, who receives about 1,200 text messages a month from students. "The youth market is all text-message. The marketing potential is huge. This market will just progress." Case StudiesCoca-Cola's new Sprite Yard mobile campaign, which tested June 1 at McDonald's outlets in China, gave consumers who purchased Sprite a scratch card with codes to use for free phone downloads like ringtones and wallpaper. The U.S. launch of Sprite Yard three weeks later also included a social networking component. Consumers with a WAP-enabled phone (wireless application protocol) can text "YARD" to 59666 and receive a link allowing them to access "the yard," where they can share photos, send mobile messages and see each other's social calendars. It also includes downloads of visual ringtones and "mobisodes," or animated shorts."In the United States, social networking is huge," says Sison. The idea isn't to become another myspace.com, however. "At the end of the day, we are a beverage company looking for ways to connect with our consumer and provide value-added experiences at the point of purchase." The company is using in-store signage to announce the campaign."When they text in a code, they're not going to get a commercial from Sprite," Sison says. "The last thing you want is spam coming through the cell phone. That will be detrimental to mobile marketing as a whole."But perhaps the bigger question is whether most teens have the Web-enabled phones necessary to access Sprite Yard, says Andrew Rohm, marketing professor at Northeastern University in Boston. "Some expectations are overblown on what consumers are doing with their phones," he says. "It could be that consumers just aren't ready or prepared to access the applications."Often, saving money is the main incentive for cell phone users who opt in to receive coupons and other offers via text message. Fast-food restaurant Hardee's is testing a mobile marketing coupon offer that's similar to the freestanding inserts it routinely uses to grab new customers.The cell phone program is aimed primarily at men between the ages of 18 and 34, who typically aren't big coupon-clippers, says Steve Lemley, vice president of marketing for Hardee's Food Systems, St. Louis, which is working with mobile marketing company Cellfire Inc., based in San Jose, CA, to test the program in 150 company-owned Hardee's. In-store posters and bag stuffers describe the program's three steps.About 12,000 consumers have signed up for the program so far, enough to justify doing another test, Lemley says, citing a small lift in sales from the mobile coupons. The program also has the advantage of being cheaper than printing and distributing paper coupons, but requires some extra cashier training. "We have a lot of turnover in fast food, so making sure cashiers understand what to do when people show them a cell phone is a bit of a challenge."With gas prices on the rise, Grand Rapids, MI-based Meijer, which has 165 gas stations in five Midwestern states, partnered with SmartReply to roll out a text campaign that alerted consumers of upcoming gas price increases. The program is advertised through signage on gas pumps, in-store and on the back of receipts. Consumers text the word "gas" along with their zip code to Meijer to sign up for the program."We're trying to put consumers in control of how they want to be marketed to," says Mike Romano, managing partner at SmartReply based in Irvine, CA. Meijer's text-alert gas campaign works, experts say, because it gives consumers a reason to accept the text messages -- money savings in a category where they generally have no control over price. Working with SmartReply, Meijer is also considering other mobile marketing campaigns, such as a wine club, where consumers might receive a percentage off their next wine purchase or recommendations of which wine goes with a certain recipe, says Romano.Catching Up to EuropeWhile mobile marketing is just emerging as a technology in the U.S., its penetration is far wider in the United Kingdom, where cell phone users generally do not pay to receive text messages, says Cal Morton, vice president at InterLinked Media, a Richardson, TX-based subsidiary of UK-based TextYou Ltd.In the United Kingdom, in-store promotions that involve a mobile marketing component are much more common. For example, Coca-Cola routinely runs text-to-win promotions offering an Xbox 360 or other prizes. "It makes people stop and look and take the next step right then and there," says Morton.In Europe, nine out of 10 brands plan to use text and multimedia messaging to reach their audience by next year, according to a survey of 50 of Europe's leading brands commissioned by Airwide Solutions, a mobile infrastructure software provider. One-third of the brands plan to spend more than 10% of their marketing budgets on mobile, the study suggests.But marketers in the U.S. are several years behind Europe, partly because short messaging service (SMS) is only five years old. Prior to 2002, two customers using different wireless carriers weren't able to communicate by text message. Still, interest is growing among retailers, notes Doug Rothrock, vice president of marketing at Vibes Media, a mobile marketing company in Chicago that manages the shopping alerts offered to Dallas Morning News readers. The newspaper asks readers whether they would be interested in receiving notices of sales and promotions via cell phone, and alerts are sent out about once a week. The promotions often are time-limited, such as free makeovers at Wal-Mart until 4 p.m.Phone ClutterWhile being one of the first brands or retailers to offer mobile promotions has advantages, the long-term question becomes, how many different mobile marketing programs will consumers want to sign up for, asks Northeastern University's Rohm. "Some of the reluctance stems from this concern that this personal device is going to be bombarded with unwanted messages all day long," he says.Mobile search, on the other hand, provides another approach that many consumers might find less intrusive, giving them control over which marketers they wish to access, including when and where. It also has the advantage of presenting unexpected gains. Search offers advantages for marketers as well, including the ability to offer multiple promotions at the same time on Cellfire, says Dwight Moore, vice president of corporate marketing at Cellfire Inc.. For example, Hollywood Video might offer a "rent one movie or game, get one movie or game rental free" along with a "buy one previewed DVD, get one previewed DVD free" offer.Consumers typically learn about the offers in-store through signage, videos, bag stuffers or by witnessing a customer in line ahead of them displaying their cell phone screen to the cashier. Once they have opted in to receive Cellfire, they have access to offers from many merchants, providing a "network effect," Moore says.Combined with Global Positioning Service (GPS) capabilities, mobile search can put brands and retailers in front of the consumer when and where they're most likely to respond, says Alex Muller, chief executive officer at GPShopper in New York, which recently launched a GPS version of Slifter, a mobile search offering. "It's been growing through viral distribution," Muller says, noting that about 200,000 cell phone users now access Slifter.When cell phone users type in "Nikon" for example, they are presented with a list of several Nikon cameras, including pricing information and store location based on the user's current location. "It's no secret that a retailer's inventory is one of its biggest marketing assets," Muller says. "We're making it interactive."

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