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Highlights of the CMO Forum at Mobile World Congress

150 representatives from across the global mobile marketing value chain gathered for a brainstorm at The CMO [Chief Marketing Officers] Forum at the Mobile World Congress in Barcelona two and a bit weeks ago. The focus was “Mobile as a True Marketing Channel - Realising the Opportunity”. Lots of others tried to get in, but it was strictly invitation-only. Telco 2.0 facilitated the event using our ‘Mindshare’ interactive tools and presented some new research. It’s interesting to compare the output from this event (below) with the Telco 2.0/GSMA Digital Marketing & Advertising Summit in October (output here).

For those who weren’t in Barcelona, or couldn’t get past the bouncers on the door, here’s what happened:

Henry Stevens , in charge of the Mobile Advertising programme at the GSMA kicked off proceedings on a positive note by announcing that the five major operators in the UK (Vodafone, O2, Orange, T-Mobile and 3) had just agreed to collaborate on developing a common set of standards for customer profiling and metrics.

The full import of this became apparent during the first session when Mike Anderson of , Deputy Managing Director of News Group Newspapers (one of the biggest brands in the UK) and Sunil Gunderia VP at Walt Disney indicated that standard approaches to marketing and advertising across network operators were critical for the mobile platform to develop into a major channel for brands and content players.

Both Mike and Sunil were positive about the opportunity in mobile but felt that substantial challenges remained. Mike illustrated this point by explaining that it had taken News Group two years to conclude deals with the five UK operators. Another speaker pointed out that it would have taken him only a few hours to have developed marketing campaigns for News Group across Google’s entire web footprint!

Sunil pointed out that, although the walls were crumbling around many operator gardens, closed portals remain in too many markets to make mobile a truly global opportunity for content players. He also pointed out that too many operators still discouraged off-portal downloading of content through punitive data charges and that flat rate data pricing was critical if the industry was to move forward.

Prior to the first session, Brian Featherstonhaugh, Chairman and CEO of OgilvyOne, had challenged delegates to think differently in the digital age. He explained that the 4 P’s of marketing - Product, Place, Price, Promotion - were outdated in the digital age and suggested their replacement with 4 E’s:

  • From Product to Experience: It is no longer sufficient to focus on product features, instead marketers need to focus on the full brand experience associated with a product or service. The digital age with its greater interactivity enables marketers to achieve this in ways that have not been possible in the old static mediums.
  • From Place to Everyplace: Mobility has enabled consumers to experience products and services anywhere, anytime. No longer is the consumer confined to store locations or other static locations when buying or using products - they can be anywhere.
  • From Price to Exchange: The digital world is increasingly about consumer control and intervention. End users don’t just pay for things with cash; they may offer value in the form of attention, participation or information. Thus the digital age can lead to more complex exchanges of value which the marketer needs to consider in product and service development and promotion. And talking of promotion….
  • From Promotion to Evangelism: There is a need to unite people around what Ogilvy term ‘The Big Ideal’ - something which inspires people and causes them to evangelise a brand. Brian noted the success Dove has had with its concept of women feeling good about themselves for what they are rather than aspiring to model-like proportions.

Richard Saggers Head of Mobile Advertising of Vodafone Group focused on the opportunity for the mobile industry in advertising and the steps Vodafone is taking to realise the dream. He focused on the opportunities that the mobile gives for brands to interact with their customers and the successes mobile has achieved already compared with other media - banner click throughs of 2-3% versus 0.2% on the web.

Then it was Telco 2.0’s turn to explain that marketing and advertising is only a small part of a much bigger opportunity for telecoms operators. We introduced the two-sided telecoms market concept, explaining that operators have a huge opportunity from enabling ‘upstream’ parties (advertisers, retailers, application service providers, governments, developers, etc.) to better interact with their customers.

Regular readers of this blog will be familiar with this. We focused on the wide array of latent telco assets, particularly around data, which will enable operators to help upstream parties:

  1. Identify and Authenticate end users safely and securely
  2. Market and Advertise to end users in a more effective manner by making marketing more targeted and relevant
  3. Transact more easily with their customers
  4. Fulfil on-line (e-content) and off-line (physical goods) orders more cheaply and effectively by leveraging QoS, presence and location capabilities
  5. Charge for goods and services using Telco pre- and post-pay billing and payments services
  6. Support their customers better using Telco-enabled call centres and customer care facilities

We presented highlights of our recent Telco 2.0™ research which showed that the opportunity for operators to support upstream customers as being a $350 billion market in 10 years.
Telco%202.0%20-%20Future%20Total%20Market.png

Around $95 billion of this was from specific value-added services (VAS). Advertising, Marketing Services and Business Intelligence formed one VAS worth around $34 billion in 2017:
Telco%202.0%20VAS%20Market.png
We went on to say that this was not a certainty but required operators to work together more effectively to realise this (see Summary of the day below which closely reflects the closing comments of our presentation).

After lunch, the debate turned to 3 critical areas for turning the theoretical opportunity into a reality:

  • Extracting and Abstracting Data - from data to information
  • Turning Data into ‘Currency’ - making information valuable to brands and other third parties
  • Independent Measurement and Reporting - measuring success consistently

Omar Tellez of Synchronoss proposed a simple extraction process for data which focused on 3 pieces of data and explained that these accounted for a large proportion of the information required for personalisation and targeting of media. They co-presented with Vivo, the Brazilian operator, which had tested the solution on its own customer base. There were some mutterings from delegates that such an approach was interesting but unlikely to become a standard if it was seen as a Synchronoss proprietary solution.

TeliaSonera’s CTO for R&D Johan Wickman argued that ads on the mobile were inevitable in the near future and that operators had a valuable role in ensuring that ads remain relevant to users. He felt that operators must use their data assets to help personalise advertisements. He went on to show some results from a TeliaSonera pilot showing how targeted ads can increase attention and interest from users with only 10% of users responding positively to non-profiled ads compared with 80% for profiled ones.

Mark Donovan, CMO at M:Metrics focused on the need for simplicity and standardization if operators are to make their data. He proposed that operators should make everything available to the ecosystem as this would maximize value. However, it was not quite so clear how operators (a) realize value from such openness and (b) protect their data assets and customers. He shared M:Metrics data showing combined behavioural and demographic mobile user profiles and explained how valuable this is to media planners and buyers seeking to target certain segments with their brands.

The final section focused on specific case studies for mobile marketing and Jessica Greenwood of Contagious Magazine kicked off proceedings with several examples of ‘best practice’ mobile campaigns from the creative standpoint.

The final two presenters were from operators: Pekka Ala-Pietilä, Founder of Blyk and Rick Joubert, Executive Director at Vodacom. Both presentations were fascinating and contained two overriding messages for the operator community:

  1. Do something now! Learn by jumping into mobile marketing. Too much analysis and planning won’t help when operators are seeking to develop something so new and so different to their core business.
  2. Keep things simple. There is a temptation for operators to try and offer a full suite of marketing capabilities now. This is unnecessary as value can be created for both brands and end users through a simple approach.

The Blyk approach has been to simplify things by focusing on a tight demographic (16-24 year olds) which immediately limits the types of marketing message required. Further targeting has been achieved by asking end users (‘members’ in Blyk parlance) specific questions about their interests when they join Blyk. They are only marketed too via SMS and MMS - two media that the youth segment is very familiar with. In return for receiving up to 6 SMS or MMS per day, members get up to 217 texts and 43 minutes free. Blyk explains that this is sufficient to cover the usage of two-thirds of all 16-24 years. In reality, it is likely that Blyk will benefit from additional paid-for usage from members as well as inbound termination.

The ad-funded model therefore fits with the standard MVNO subscription model nicely. And the results of the marketing are very impressive: an average click-through rate of 29% from the first 116 campaigns compared with 0.1% for email and 0.02% for banner ads. The click-through rate will, no doubt, go down but is still likely to remain far in excess of other media and demonstrates the potential opportunity in mobile for brand advertisers. We are planning a more detailed analysis of Blyk’s business model shortly.

As we have pointed out before, our thinking is that the advertising alone may struggle to generate sufficient revenue aone to cover network and marketing costs but that Inbound Termination and Overage MAY be enough to fill the shortfall and make Blyk viable. Overall, we are encouraged by what Blyk has done and the management team is very experienced and very bright.

The success of Vodacom’s foray into mobile marketing can be gauged by a few key stats that Rick relayed:

  • Having started commercial operations in October 2007, mobile marketing revenues at Vodacom have nearly outstripped on-portal content revenues already;
  • Some inventory is sold out 2 months in advance;
  • 75% of brands have re-booked second and third campaigns after an initial trial
  • Excellent results from recent campaigns: 100,000 leads per month generated for life insurance company; 84,000 downloads of Nike branded content; increased calls to National Aids (HIV) Helpline by 150% (crashed the 100 seat call centre!)

When asked about the dangers of alienating customers with spam, Rick responded that they did not think of the marketing as spam but as a service. He suggested that the critical thing for end users is to provide them with value in return for the marketing. In South Africa, they have had particular success with a free text service, ‘Call Me’, which enables mobile users with no credit to send a free text asking the recipient to call them. The cost of the text is covered by an advertisement appended to it. This is relatively unobtrusive for the recipient and is more than outweighed by the value of receiving the ‘call me’ message.

Such a service may not be directly relevant to mature markets but something similar could be. Most operators already send free alerts to customers when someone has called them and they have missed the call. Why not add an advertisement to this free service?

Rick came up with 5 key lessons from launching Vodacom’s mobile advertising business:

  1. Focus and invest. This is a new business not a new product and requires commitment and dedication from top management and staff.
  2. Take direct responsibility for revenue. Don’t expect agencies to do the hard work for you - establish relationships with brand managers directly and educate them.
  3. Align incentives to traditional media incentives. Ensure agencies are not disintermediated but are rewarded appropriately for placing business with you.
  4. Create end-user value. Build value in to the marketing channel - the ‘Call Me’ service is a good example of this.
  5. Create ubiquitous mobile media. Don’t just focus on mobile internet and rich media. Build mobile marketing into mass-market products and services (SMS and voice) and so develop scale.

Summary

Overall, we reckon that the conclusion of our presentation gives a pretty good summary of the day:

  1. Brands and content players feel that mobile has great potential but far more needs to be done to create a platform which is large scale and cost-effective. It remains too fragmented and too difficult to merit being a core part of a brand’s or content player’s strategy.
  2. The potential opportunity for the operator community is huge. Advertising is a small part of a very attractive 2-sided telecoms market opportunity which encompasses Identity, Authentication and security; Marketing and Advertising ; E-Commerce; On-line content delivery; Off-line (physical goods) order fulfilment; billing and payments; and customer support and care.
  3. This opportunity will only be realised if operators add data mining to their core skills. They possess the data assets to enable upstream customers to interact more successfully with end users but do not yet possess the skills to exploit these.
  4. A standard approach to customer profiling and metrics is required and the recent announcement from the 5 UK operators is a positive move.
  5. Planning is too often used as an excuse for procrastination. The best way to learn is to enter the market.
  6. A successful mobile marketing (or 2-sided) play for operators requires a separate business unit:
    1. Board Level Support - this is a big strategic play
    2. Joined-up Business Case - think beyond marketing
    3. Separate Dedicated Organisation - so the parent company cannot swamp the baby
    4. CRM & Data Mining Expertise - Google currently do far more targeting than operators with far less data
    5. Collaborative Process - no operator is big enough to go-it-alone; there is a need to work together (as operators did in developing the GSM standard 20 years ago)
    6. Business Model Development - a rate card for advertising is the starting point but the business model for a 2-sided business is complex. Determining who to charge what will take significant thought and testing.

[Ed - for the next stage of the debate on this, come to the Telco 2.0 Executive Brainstorm in London in April].

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