Back in April, I posted a review of Hotxt, a downloadable Java application that allowed you to send all the sms-type messages you wanted for £1 ($1.79) a week. This concluded with the view that:
So, is Hotxt hot? To be honest, I’d go for lukewarm with lots of potential. If they sort out their usability/copy writing issues and went for a free service at the core, I think they’d be red hot.
While I’m sure that my review didn’t have anything whatsoever to do with it, I’m delighted to say that the site is hugely improved in terms of usability and clear copy and today, they announced that they’d be going free.
Today I met with founders Doug Richard (famous for his role as a panelist Dragon’s Den - a TV programme where wannabe entrepreneurs pitch their wares to VCs) and David Whitewood and had a good chat about the industry and a briefing about the product, company and new direction.
The free strategy seems to have evolved as much to overcome cumbersome ICSTIS subscription regulations introduced as a result of errr….over-enthusiasm by certain ringtone companies, as well as the ability to offer the service globally from now on. Billing still remains a core competency of the company and will be able to be utilised when selling the premium products that they’ll now have to introduce to be part of their new business model.
A business like Hotxt has 3 main challenges (if we ignore that porting Java applications across many handsets is, and will remain, a nightmare):
1. Get people to want to download in the first place - what I call, putting your product in danger of being sold.
2. Getting them to download the product once they’ve expressed that interest. I’ve written about this before on a widely commented post about how difficult this is. Maybe 50% - 75% of requested WAP Push messages are never responded to. Don’t forget, at that point, the user has requested details of how to download and then, for whatever reason, simply does click on the link to complete the install process.
3. Getting them to use the product once it’s downloaded. You’d have assumed that if users had jumped nimbly and knowledgeably through the first two hoops, they’d gracefully dive through the final one, wouldn’t you? Well, my friends, “never assume” is the lesson here.
Doug and David weren’t prepared to discuss numbers at each of these stages and understandably. But if they’re following anything near industry averages, there is a significant and intensely frustrating drop off at each stage. This is caused by issues such as WAP Push not being delivered, the message arriving but storing somewhere other than the Inbox, download issues, handset compatibility, the application being filed in a less than obvious/obscure place. I could go on (and on) with this list and it’s sadly typical for any company trying to operate in this kind of area.
My experience, for what it’s worth, is to send a WAP Push and if it’s not clicked within an hour, send the same link embedded in an sms. While some might be tempted to abandon WAP Push altogether, I’d say, the double whammy approach gives the best results. But that’s not the overall solution - lots of experimenting and tweaking each part of the process is essential.
Hotxt clearly have a smart team and are very focused on the various metrics I’ve described above. If you’re in this kind of business, you just have to be obsessed with making incremental improvements at every stage of the process and to develop an internal best practice process, in the absence of any available industry standards.
Speaking of which, if you are UK based, run this kind of business and are interested in sharing learning (as opposed to nicking other people’s ideas - give, then take, please) drop me an email using the link above. I’m thinking about getting a small group of non-competing companies together to see how they can improve their results by applying the wisdom of crowds.
So, back to Hotxt. They still face considerable challenges, as any entrepreneurs do, as well as the issues I’ve outlined above. But now they’ve (inadvertently) taken my advice, I have to conclude that, yes, they are now Red Hot. Moreover, the new strategy means that the answer to Doug Richard’s own catchphrase “Where’s the exit?” now has many potential responses, with the proviso that they execute well.
Finally, on a personal note, it’s rather nice doing a Doug Richard on Doug Richard. Ha.
easyMobile, the UK MVNO, has announced that it’s to shut up shop, albeit with a Terminator-esque “I’ll be back” post script. The venture proves, if nothing else, that this MVNO lark isn’t the licence to print money it might seem to some.
The idea behind easyMobile was to strip out a whole bunch of costs from the value chain, by selling sim cards and latter, handsets, direct over the web. Customers were initially expected to get hold of their own handsets (though this subsequently changed), which obviously meant that, among other things, easyMobile didn’t have to subsidise them, which is a significant promotional cost of sale for normal operators. Added to this, little in the way of customer support, retail overhead and of course, the cost of building and running the network itself, and you might be forgiven the image of Stelios chuckling to himself as he imagined amassing a second fortune to add to his easyJet dosh.
However, after acquiring only 80,000 customers, TDC, his Danish partner has pulled out of the venture and subscribers’ phones will be cut off on December 13th. Customers are being offered a variety of alternatives and not being simply dumped, so it’s all being handled responsibly and Stelios has bullishly declared “I don’t Easy give up”. Well, actually, he said “I don’t easily give up”, but I couldn’t resist my deliciously ironic version.
More worryingly, he went on to say “I don’t think this is a blow to the brand, the brand has made money out of it” which kind of misses the point about what a brand represents and may explain why the marketing behind this somewhat missed the point too. It’s like a car crashing after its brakes fail, only for the car company boss to say “So what? We sold it at full retail.”
It’ll be very hard for this brand to come back into the market after one failure and at the very least inconveniencing the only 80,000 people who were convinced to give it a go in the first place.
So, a second big success after easyJet continues to elude Stelios, despite some 20 or so other startups. This entrepreneurial thing isn’t as easy (geddit?) as it looks.
I was asked to submit an article to a forthcoming edition of Admap, published by World Advertising Research Center which is the “leading supplier of information, knowledge, insight and data to the global marketing, advertising, media and research communities.”
I thought you might like a preview of the unedited version, below. It’s a little AdMob-centric, but that’s because I can see first hand how well it’s working on a day-to-day basis. Anyway, here it is:
We’ve been talking about Mobile Marketing for nearly a decade and there’s certainly been activity of one sort or another for nearly 7 years. But until now, it hasn’t hit the mainstream and I think it’s true that it hasn’t really delivered its theoretical promise, with the exception of SMS Pull responses that we’ll consider briefly below.
The first forays into the mobile as a marketing channel were via Push SMS alerts. Marketers figured that if you could send the right message to the right person at the right time (and in some instances, in the right place too), this would be a highly effective call to action.
There were three issues with this approach. Firstly, sending an outbound SMS was expensive, certainly in relation to the response rate generated. As an example, let’s take the famous and largely fictitious Starbucks Scenario that everyone talks about in relation to these types of campaign. If I’m passing a Starbucks and they send me a mobile coupon, it’ll cost say, 10p to send, meaning that for a response rate of 10% (which would actually be very high), each redemption would cost £1, just to cover the costs of delivery. This equation means that these types of campaign are simply too expensive for many mainstream brands to consider and especially those who might be best positioned to take advantage of impulse consumer spending.
The second issue with these kinds of campaign was that even if you obtained opt-in permission from the recipients, some messages were regarded as spam if they were received when the consumer was in the wrong place, at the wrong time, or even if she wasn’t in the right mood. No reputable brand wants to be besmirched with the dirty label of being a spammer, even if it wasn’t strictly true and so there was a lot of understandable nervousness around this form of mobile marketing.
Finally, there was the whole creative issue of restricting the marketing experience to text. Perhaps, Coca-Cola Marketing Manager, James Eadie, said it best in a speech last year: “Until such time as the digital platform [ie mobile] can help us connect emotionally with consumers, in the way we can with a 30-second TV commercial, we are always going to struggle.” While a text message can undoubtedly connect emotionally, as anyone who has ever received an SMS saying “I love u” can attest, the opportunities for marketers are admittedly somewhat more limited. It suits an offer-led approach, but pure brand messages are hard to paint on a text only canvass.
The next phase of mobile marketing also entailed using SMS, but this time much more successfully, as a way for consumers to “pull” information from other marketing channels. They might enter a competition seen on the TV, download a ringtone in response to a press ad or request more information from a poster. While only one aspect of the marketing mix, 18.5% of UK mobile owners have used their phones in this way in the last 3 months, according to research firm, M:Metrics. This type of activity is growing and it’s really only a matter of time before an SMS short code becomes as important an element of advertising, as putting on a web address is today.
The Mobile Internet
The next phase of mobile marketing will be as a result of the explosive growth of the mobile internet and if you’re not a user yourself, please suspend your sceptism while we look at some facts.
The mobile internet (sometimes called WAP), has really taken off in the last 12 months. In fact, (again according to M:Metrics) 29% of UK mobile owners use it now, which proves that it’s hardly a niche medium any longer. It’s certainly true that WAP was memorably hyped when launched and was for many years a disappointing and frustrating experience. But as connection speeds have got quicker with 2.5G (most phones today) and now with 3G and slicker handsets, using the mobile internet is easy, quick and very useful. To millions of people, it’s also more readily accessible than a PC and therefore actually their preferred method of going online. And it’s going to get bigger – much bigger than we see today.
Furthermore, the mobile web is no longer just about text, but graphics and images can be used and the day is not too far off when video can be incorporated on a mass market basis, particularly when operators start to offer fixed price data plans. All these factors mean that a lot can be done today, but in the immediate future, the mobile web will equal the experience of the PC-web we enjoy today.
As marketers, this presents us with an opportunity, as where we have eyeballs, we can serve advertising – and potentially, the highly efficient, measurable and cost-effective, interactive advertising that has worked so well online in recent years.
If we look at this type of advertising as consumers browse the web on their mobiles, the problems of first generation mobile marketing also disappear. There is no high cost of transmission charged by mobile operators, like in a Push SMS campaign. Moreover, this can’t be confused with spam as we’re asking consumers to click if they are interested, if not, they simply ignore it. This form of advertising has also already been proven beyond all doubt by the online advertising ecosystem – consumers are used to seeing ads when they browse and it’s no longer controversial, providing the ads aren’t too aggressive in format.
Like the PC-web, the mobile web is also a global opportunity. When you put up a mobile website, it’s accessible from all over the world and will be found and used by people everywhere. Counties as unlikely as S Africa, India, Israel and Bangladesh are huge users of the mobile web, as well as the more obvious UK and US audiences. All these countries can also be addressed with advertising, as easily as the home market itself.
This opportunity was seized by AdMob at the start of this year, with the launch of the world’s first mobile advertising network. Less than 9 months later, AdMob has served over 200 million ads and by the time you read this, will be well on the way to 300 million. When something grows this quickly and with numbers this high, it’s worth examining in more detail and that’s what we’re going to do now.
AdMob
The idea behind AdMob is very straightforward. Firstly, find mobile websites with high traffic and offer to run text link advertisements on their site on a Pay Per Click basis. For most such mobile websites, this represents a new revenue stream and in many cases, a complete business model. This means that AdMob has been able to grow very quickly and can offer 300 million pages of global ad inventory every month – and that figure is also growing fast.
Once AdMob has secured this inventory, it can be offered to potential advertisers and many have grabbed the opportunity with both hands. But what kind of advertisers have been early adopters on the mobile internet channel?
The first segment is mobile content sellers – companies selling ringtones, games, services and applications for mobile. For them, AdMob is a major turning point as it turns the mobile phone from a distribution channel to a mobile marketing channel, in a stroke. In particular, they can take advantage of AdMob’s unique targeting methods that we consider further below. But the most exciting development over offline advertising is that their ads are preaching to the converted – we know, beyond a shadow of a doubt, that people who see the ads are mobile literate and active users of their phones. This cuts wastage dramatically.
However, the second segment – and potentially much larger and mainstream – is blue chip brands. So, why would these types of advertisers, who have largely eschewed PPC and text-links online suddenly wake up to the potential of the same thing, but on mobile? For this, we have to step back and look at the big picture and ask where the mobile internet is going next.
Already, mobile phones out-number internet connected PCs and this is true both in the UK and on a global basis. This means that more people can potentially access the web via their mobiles too and because your phone is always with you, you can access it more frequently. This is why the smart money is betting that the mobile web will be as important, if not more important, than the PC web.
So, if all these people are flocking to the web via their phones, the first thing a brand owner needs is a way to communicate with them there too – in other words, a mobile enabled website. Just as we saw a huge build out of websites back in 1996/7, we’re poised to see the same thing happen with the mobile web in the next 18 months, as brands jump on the mobile bandwagon.
This time, they have some more choices – do they adapt the content that they already have for the PC websites, do they build from scratch (probably the best approach strategically) or try a combination of the two? Whatever the answer, what they need once they have built a mobile site is traffic for the new content, because as we learned from the web, “build it and they shall come” optimism is misplaced.
AdMob worked with one such early adopter brand to support their mobile portal themed around their sport sponsorship. They spent 0.4% of their total spend with AdMob (the rest was spent mainly offline, with a little online too), yet we delivered 40% of their traffic. This clearly makes a very compelling case indeed.
When you think about this, it’s not so surprising that the mobile channel should out-perform other media like this. After all, the mobile web can get consumers to a mobile website with one click of a keypad, whereas if the consumer sees an ad offline, they have to remember it, remember the address, know how to use the mobile web, have the right settings in their phone and then input the URL via an awkward interface. Mobile is bound to outperform, in the same way that the PC web would be the best way to promote a normal website, over and above any other medium.
As the mobile land grab starts to take place (and believe me, it’s already started in earnest) practically every brand will need a mobile website and a means of promoting it. This means that mobile marketing is about to explode from big niche to the truly mainstream.
Creating a Mobile Campaign
If you need a mobile marketing campaign, you can set one up surprisingly quickly, directly on the AdMob platform – you can take it from planning to execution in about 10 minutes, for a simple campaign. So let’s look at how that works.
AdMob uses a very intuitive wizard to guide you through the creation of an ad. The first thing you need to do is Register at www.admob.com and click on “My Ads” and use the menu to select “Create Ad”. You’ll then see a series of screens that help you through the steps. This takes you through series of choices you need to make to target your campaign.
Firstly, you need to create the ad itself by inputting up to 35 characters of compelling copy that will get the consumer interested enough to click. Many advertisers tend to personalise the ad by quoting the user’s phone model. This might not resonate so well with you, but to the youth market their phone model is more important than the make of car might be to you. So being able to say “Ringtones for 600i” or “Games for E61” really grabs attention.
Next is to decide which countries you want to run your ad to run in. The UK, Europe or even global campaigns can be selected, depending on your requirements. You can also choose which types and brands of handset to run your campaign on. Intriguingly, this allows, for instance, a handset manufacturer to target their competitors’ handsets and I’m sure we’ll see this starting to take off in the next few months.
You also choose the type of site to advertise on, whether this is Communities, News and Entertainment or Portals - you have the choice of 6 channels of interest to select.
Finally, you need to decide how much you want to pay for each click your ad receives, as AdMob operates a bidding system. The higher your bid, the more likely your ad will be served and thus the more clicks your will get.
The Future
Without being too trite, I think we can say that the future for mobile advertising is already here, despite not being on many marketers’ radars yet. Hundreds of millions of ads are already being run, click-through rates are much higher than online (8% is still not unusual, though 5% is more common) and millions of dollars of revenue are being generated through the channel.
The land rush to create mobile websites is already underway – witness the 120,000+ recent purchases of .mobi, the new mobile domain, by companies throughout the world, which is indicative of the level of interest. And these new sites will open up rich and engaging new ways to interact with the consumer, just as PC-websites do so effectively today.
So the next big trend in mobile will come as these companies start to want to promote their new sites and there’s no better way of achieving this than via the mobile channel itself.
On the near horizon (actually, by the time this article is published), we also have richer media experiences within the advertising format itself, which includes banner advertising and ultimately video. So my final thought for you is that if I’m right and the future of mobile advertising is even half as big as I suggest, you really have to get involved and find out what all the fuss is about.
