Tag Archives: trends

Mobile phone advertising, design and consumer insights

On Friday, I had posted about how mobile phones will become the next breakthrough as a new media. Due to the convergence of media technologies combined with the popularity of the mobile phone, it will and can displace the internet as the new media.  Today, I will examine the emergence of mobile phone advertising, design and consumer insights.  

How has mobile phone advertising rose to prominence?  This was from a workshop conducted by Space 150 to discuss the future of mobile phone advertising.   As discussed on Friday, the iPhone or any Android-powered devices due to their user-friendly design enable the phone to become a tool of multitude of devices (e.g. internet, mp3 and video player, email, calculators, alarm clock, etc.) at ones disposal.  As a result, there is a higher percentage of iPhone users that have engaged with internet tools (streaming music/video, social networking sites, etc.) versus other mobile phone users on the currently slow mobile network.  

What are the current forms of advertising that exists?  SMS text messages, videos, pictures and now games.  Why isn’t mobile advertising widely embraced?  It is because it is subjected to potential privacy and political issues. If this form of advertising faces these barriers, why should an advertiser/marketer invest in this form?  First mover advantage benefits can be reaped.  Mistakes that are made today may not be as detrimental versus if they are made tomorrow due to today’s lesser amount of competition.  In addition, an ROI model can be developed to measure future successes.  

How can mobile phones be designed to become more user friendly?  With the increasing number of choices for mobile phones available for sale at the carriers, is there much differentiation among the varying phones? In this case, less is more.  Keep the phone simple: larger screens; larger buttons; streamlined features, easy scroll-ability and navigation.

Due to the popularity of the portability of the mobile phone, as well as the inherent personal nature of this device, consumer insights have never been much easier to obtain.  The user groups for mobile phones are broken down into the following groups:  busy moms (heavy callers), baby boomers (heavy callers), connected teens (heavy callers, text messaging and mobile phone applications), business users (heavy email and mobile web users) and early adopters (heavy text messaging, apps, email and mobile web users).  The Space 150 presentation delves into a further breakdown of the various groups with respect to their lifestyle, needs, drivers, primary use of the phone, the technology of the phone, and other communication tools that they engage in.

The methods that these varying groups engage their phones with the outside world can be as diverse as from coupons to contests, from interacting with social networks to engaging in interactive media from the content providers. 

Main mobile connection principles include: 1) Function first; 2) Keep it simple; 3) Integrate; 4) Leverage the platform; and 5) Be a leader.

I agree with the importance in designing mobile phones that center around the consumer’s needs, wants, and habits.  It is imperative that both marketers and advertisers understand the market psychographics and demographics.  It is clear that undoubtedly different groups use the mobile phone differently.  

I do not agree with engaging in a one-size fit all type of solution towards mobile phone advertising. Different products/services have different needs and marketing strategies need to be adapted accordingly.  For example, to increase brand awareness, being able to give a product/service free in exchange for advertising might be effective.  The permissive nature of this advertising bodes well for the advertiser, the telecommunications carrier and the user.  A major problem that the presentation addressed was the inherent nature of high number of ad impressions that result in low action rates, which translates to purchases.  Also, if a product/service was free in exchange for ad views, how does this improve brand equity?  

I feel that luxury goods/services cannot follow the mold of offering free products/service in exchange for ad views.  As I had alluded to on Friday, consumers need to be engaged and become advocates of the brand for this type of ad campaign to succeed.  For common goods/services or discount items, then any type of ad campaign that maximizes brand awareness is key.

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Mobile phones as the next medium?

 

With mobile phones outnumbering TVs, PCs, and automobiles; SMS text messaging outnumbering emails, it is not difficult to understand how the mobile phone will be disruptive as the next large media platform. 

 

There is already a convergence in technologies between Internet, Mobile phones, TV and banking industries.

 

According to the exerpt from the book, “Mobile as the 7th mass media,” by Tomi Ahonen, the mobile phone started as a simple communication tool that allowed the user to contact or be contacted anywhere and during anytime.  Now this device has transformed to include: consumption (browser), charging (payments), creation (camera), cool (fashion), commercials (advertising) and now community (social networking including: Flickr, Twitter, etc.)

 

The seven types of media that were discussed in this book include: Print, Recordings, Cinema, Radio, TV, Internet and now Mobile Phones.

 

Internet was the first technology that content providers engaged users.  Traditionally, the messaging delivered by the content provider was broadcasted to the user, with no interaction.  With the advent of web 2.0 technologies the relationship between the content provider and the user was transformed by the formation of online and offline communities that enabled the user to share, discuss and collaborate different ideas, news, files and other interests with other users.

 

The book contains a chart that illustrates how newer technologies can cannibalize older ones.  Mobile phones can cannibalize all the other media including the internet.  All the functionalities of the internet are now fulfilled by the mobile phone. 

 

The seven inherent advantages of the mobile phone include: the personal nature of the phone (advertising message ca be customized to the user, as mobile phones are rarely shared); the portability (the mobile phone is always in proximity to the user whether if they are traveling or sleeping); cell phone is always turned on; the ability to have a payment channel; ability to have user-generated content; more accurate information about the user (easier to measure audience data); the interactivity between the phone and its users – data 2.0 (includes text and twitter messages) measuring not what the individual does, but rather what the group engages in.

 

An example includes: the iPhone 3G has disrupted the current business model with the convergence of internet and mobile phone technologies, while maintaining user-friendly design with sleek design.  A significant number (30.9%) of iPhone users watch online mobile videos.  During some ad campaigns that targeted mobile phones, 75 percent of all video ad impressions were from iPhone users.  With media rich formats and campaigns that engage the consumer, this type of media could be the future of advertising media.  Increasing brand awareness and brand equity would be the main objectives of advertisers of this medium. 

 

Here is a quote from an article discussing advertising and the iPhone:

 

These big brands require premium mobile executions on rich formats, like video and interstitials, to visually showcase their products and to create engaging user experiences. The best use of mobile is seen in multi-format, interactive campaigns that leverage both rich formats and high volume formats like WAP display and text banners to generate brand awareness and favorability, message association and increased likelihood to buy, rather than pursuing on-the-spot purchases in most cases.” 

 

Here is another article with an interesting video that illustrates the advantages of portability and the interactivity of the mobile phone.  The user shown in the aforementioned video can scan barcodes that are embedded in advertisements that are printed in magazines, newspapers and other written media to purchase the item or to engage in further interactions with the advertiser.

 

Undoubtedly, mobile phone will be an emerging force for media in the future.  The only area of contention could be the infringement on the user’s privacy.  After all, users must pay for airtime minutes as well as any data received or sent.  In my opinion, the only effective manner that mobile phone advertising can be effective is if advertisers engage the consumer, by being granted permission to do so.  It is the consumers that need to seek this type of media whether it would be downloadable games, applications, or to engage in text messaging/twittering.  Recently, to launch the new 2009 Audi A4, Audi of America released an iPhone game that utilizes the accelerometer technology on the iPhone.  This certainly created a buzz for the game.  Users were fascinated by the game and through users, they became advocates of the advertiser.  

Emerging technological trends for businesses

 

 

 

  

 

What are some emerging technology trends that will change and reform businesses and the economy?

 

 

This article from McKinsey Quarterly discusses eight trends can be categorized into three subcategories: Managing Business Relationships; Managing Capital and Assets; and Leveraging information in new ways. 

 

 

The next four trends are categorized under the “Managing Business Relationships” heading.

  

 

The first is Distributing Cocreation – This is when suppliers, customers and contractors can aid in product/service development.  By shifting more power and ultimately more autonomy to outsiders that work together, costs and lead times can be reduced by getting different insights during the development process and forgoing some of the bottlenecks associated with having total control of the innovation process.  The notion of a open-source innovation was discussed in this earlier post. 

 

 

Companies will need to compete with each other in order to attract the best and most innovative contributors.

 

 

The second trend is “Using Consumers as Innovators,” and is facilitated by the growth of the web 2.0.  Customers are looking to be engaged with one another or with an organization.  Customers are increasingly being engaged by the their involvement in the development, testing and marketing (viral marketing) of products or services.  An example of is Wikipedia.  The accuracy of this online encyclopedia is almost as accurate as Britannica’s. 

 

 

With this trend, development cycles and costs can be reduced, while understanding the customer’s behavior and wants can be easier.  The cost to attract customers is lower, and retaining customer loyalty becomes easier. Companies also need to be aware that the customers that would be involved in the development of their product or service is a small segment of the overall market, therefore, the developers’ needs and wants maybe different than the overall market.  Often customers’ needs and wants are immediate and not long term. 

    

 

The third trend is “Tapping into a world of talent”, as the internet is becoming more interactive with new communication and collaborative tools, outsourcing some functions of a business to specialists, talent networks, and freelancers is increasingly more viable from a cost and functional aspect.  As I had alluded to in yesterday’s post, some advertising agencies have outsourced their creative, account management and media buying departments.  Many companies would focus on their core competencies and not have the burden of being tied down to those other functions. 

 

 

The main task is being able to harness the global talent pool, managing the existing workforce and being able to integrate the work in a cohesive manner. 

 

 

The fourth trend is “Extracting more value from interactions”, that is interactions between different types of work and enabling the workforce to function more effectively and efficiently. 

 

 

The first type of work is Transformational, usually work that is involved in the production of goods or in the extraction of raw materials; the second type of work is Transactional, usually work that is clerical or simple-rule based such as a call center operations or someone involved with data entry; finally, the last type of work is Tacit, which primarily deals with knowledge, judgment and collaboration with multiple interactions with multiple stakeholders.  For example, a sales person would engage in tacit work, by interacting with the marketing, product development, H/R, logistics and after sales departments to maximize sales, while engaging and interacting with multiple parties through collaboration. 

 

 

There are systems that can maximize the efficiency of both transformational and transactional work such as assembly line work.  However, with tacit work, there is no such a rule or process.  Maximizing the effectiveness of this work is accomplished by focusing them on interactions that create value.  Companies must enable these workers with greater decision making ability, bring down barriers, increase the availability of resources/information and facilitate collaboration.  New and current technology is facilitating this trend and enabling tacit workers to become more effective by having wikis, blogs, emails, text messages, and feeds to make communication and collaboration easier.

 

 

The next two trends are categorized under the “Managing Capital and Assets” heading.

 

 

The fifth trend is “Expanding the Frontiers of Automation,” companies will continue and expand their automation ability for tasks and processes that are repetitive.  For example, Fed-Ex and UPS have enabled users to track their packages online.  A major benefit would be to lower costs and help users get the information they need effortlessly in a timely manner.

 

 

The sixth trend is “Unbundling Production from Delivery,” uses existing business structures of large businesses (e.g. supply chain management, computing power, etc.) and rents this to other businesses.  From a supply side, this technology would attract asset-intensive businesses (e.g. factories, office buildings, etc.) to raise their utilization rates and therefore, their return on invested capital.  From a demand side, this technology would attract businesses that do not possess the economies of scale and scope to achieve competitive marginal costs. 

 

 

Unbundling also offers businesses quick and easy access to assets; that minimizes impact on their balance sheets; and makes their income statements more favorable.  For the businesses that offer unbundling, it decreases their marginal operational costs because of greater utilization of resources, and greater economies of scale and scope.  Companies need to manage possible supply and demand conflicts.  Examples have included the mobile phone networks and Amazon.com. 

 

 

Here is another example in this article that discusses the growth of APIs across many existing web platforms using existing computing power of large companies. (e.g. eBay, Amazon, etc.)

 

 

The last two trends are categorized under the “Leveraging information in new ways” heading. 

 

 

The seventh trend is “Putting more science into management,” companies are using statistics and other data to use internally and externally.  For an internal example, automotive companies will typically spend more on sales incentives and on advertising campaigns based on seasonality of sales and possible product lifecycle changes. For an external example, Listen.fm and Amazon.com both use customer segmentation systems that utilize recommendation engines that suggest certain items based on the user’s past history, and on other users’ preferences.

 

 

As mentioned in an earlier post, the costs for computing power and storage capacity will continue to fall; and the quality and quantity of information that will become available will rise. The increase in information will empower organizations, as it becomes becomes transparent to employees and suppliers, and the access to it becomes broadened. 

   

 

The eighth and final trend is “Making Business from information,” as now increasingly more data is captured by businesses and from varieties of sources; this could be beneficial for an information-based business opportunity.  Intermediary businesses that have access to greater quality and quantity of information can charge a premium for the aggregation and analysis of this data.  An example of this could be a security firm selling its video footage of a retail store to a market research firm studying retail consumer buying behavior. 

 

 

These aggregators need to be cautious, because they could be aggregated themselves. Their business model can continue to flourish in business to consumer shopping sites and business to business directories.

 

 

Companies need to be cognizant of these eight emerging trends.  Rather than reacting to it, companies can now use these trends to catalyze change and create opportunities as a result of this.

 

What is the future for ad agencies?

 

 

The above link was an insightful presentation on the future of the ad agency and its relationships with the client and the world, it was presented by Scott Goodson, who was the chair of the Global Marketing Summit in 2007 and is the founder and CEO of Strawberry Frog.

 

 

Some of the main points included:

 

 

Ad agencies should focus on their main strength, which is idea generation.  Often the agency is very preoccupied with the execution of an idea, and due to time constraints, it potentially stymies creativity.

 

 

As discussed in an earlier posting, there is a trend to outsource different departments in ad agencies.  Many traditional functions such as the creative department, media buying, and executing ideas now have outlets to which these services can be outsourced.

 

 

By bidding some processes to suppliers, Strawberry Frog’s lead time for innovations has diminished, and the quality of the new ideas has increased as a result of focusing on its core strength – idea generation.  Consequently, the agency is reinvigorated and rids itself of clutter.

 

 

The traditional model for monetary compensation is based on billable hours.  This structure encourages billing based on execution versus idea generation.  A revised model would include compensation that includes profit sharing (for the agency) as well as billable hours.  This encourages the agency to be cognizant of innovative money generating ideas

 

 

From a client perspective, also discussed in an earlier posting; booking, planning, and buying media is now available to bidding in an open auction on services such as Google.   This type of service is analogous to cherry-picking the preferred talent to work on an ad campaign.  Creative and Executing teams can also be found through a bidding process in an open auction.  This gives the client the power to select from a variety of sources. 

 

 

So, with this open style auction of media agencies, do they have a role in the future?  I do think that media agencies have a role, but it has diminished greatly due to Google’s business model, which can reap the benefits of the long tail.  Smaller customers and individuals now have unfettered access to purchase media through an auction-style portal to bid on multiple types of media, and most importantly, have pertinent metrics to measure their ROI.  Media agencies will continue to occupy the important advisory role, as their access to research and trends will enable them to do so.  Due to economies of scale, larger customers and institutions may still find it advantageous to buy their media through these agencies.  I think the Media agencies need to adapt their business model to cope with this.   

 

 

Also, the market is becoming culture-centric.  This can be broken down to three areas: User-generated content, ideas and products that are all subject to peer reviews.  As discussed in earlier post, the prevalence of social media enables the collaboration from various users.  Clients and agencies must adapt to center their approaches to incorporate these business behaviors.

 

 

Finally, the presentation also looked at how both the client and the agency is now becoming more socially conscious.  As noted in an earlier post about Transformational Design, the movement towards green marketing is an excellent example.

Is the “long-tailed theory” flawed?

The above link discusses how the “long-tailed theory” could be wrong.  This theory was created by Chris Anderson, editor of Wired Magazine. He believes that the internet is a medium that enables the consumer with more choice which is fueled by content on demand.  With more choice, means that niche products will have an increasing influence on total sales.  Niche products/services are not normally sold through traditional channels (e.g. brick and mortar operations) due to physical contstraints such as inventory, which leads to a lack in economies of scale to justify the availabilities of those products/services.  However, when all those other niche  products/services are added together, this amounts to a large number.  So significant in fact, that he theorizes that the summation of the number of niche or non-mainstream products will exceed the total amount of mainstream products.
 
A Harvard professor came out with a study last week to refute this theory.  Its quite an interesting read.