Seizing The Mobile Marketing Opportunity. Research findings on adoption, growth and strategies that work

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1 Seizing The Mobile Marketing Opportunity Research findings on adoption, growth and strategies that work

2 Mobile Marketing in Focus In a business environment that has seen more than its fair share of rapid change and innovation, Mobile Marketing has emerged particularly quickly as a tool of unique power and value across multiple industries, primarily for customer loyalty and membership programs. While many companies are eager to take advantage of these opportunities, there has been little hard data available to provide them with a clear picture of Mobile Marketing s capabilities and how early adopters are using them. SoundBite commissioned the research highlighted in this white paper to help marketers develop successful Mobile Marketing strategies that drive new business growth. 52% stated that Mobile Marketing s ROI is higher than traditional programs and will be increasing their budgets for it Research methodology From January 16 to February 29, 2012, Luth Research surveyed 122 key marketing executives via its protected online surveying platform. All respondents were screened to ensure their roles/companies met the following criteria: Size. The majority of companies earned more than $1 billion in annual revenue and all companies earned more than $100 million annually; Industries. Companies represented the following industries: Retail, including Quick Serve and Fast Casual Restaurants; Consumer Package Goods; Telecom; Travel and Hospitality; Media and Entertainment; and Financial Services; Participant Role. All respondents served as the primary or joint decision maker on budget allocations for marketing vehicles, such as TV, direct mail, print, digital and online. Respondent profile The majority of respondents (82%) are currently using Mobile Marketing. Most of those not currently using Mobile Marketing are planning to implement it by Less than one-quarter of respondents not currently using Mobile Marketing said they had no plans to implement it by 2014, if at all. The majority of marketers with a loyalty program and Mobile Marketing initiatives used Mobile Marketing for their loyalty programs (79%). Only 21% indicated they were currently not doing so. page 2

3 Executive Summary The outlook for Mobile Marketing is quite positive with a general expectation of continued growth, increased consumer smartphone adoption, and technology advancements. More marketers are implementing Mobile Marketing and those already using it are seeing strong benefits more than half of respondents (52%) stated that Mobile Marketing s ROI is higher than traditional programs and thus will be increasing their budgets for it. These budget increases were reported to come from both incremental investments and allocations of larger shares of total marketing budgets. Top objectives for companies engaging in Mobile Marketing Increase purchase frequency Increase brand awareness Attract new customers Increase average spending To date, Mobile Marketing initiatives have been effective. According to the survey, 86% of respondents with loyalty programs say that Mobile Marketing has been successful in helping them overcome the primary challenges of loyalty programs; only 6% said Mobile Marketing has been unsuccessful. While adoption was high, marketers surveyed were not without concerns about implementing Mobile Marketing. Their primary concerns were: technology constraints; difficulty gaining express consent, or opt-in, from consumers; consumer receptivity; that the approach is not yet proven; the diversity of mobile platforms; and both internal and external resource limitations. For companies that had not yet implemented Mobile Marketing, the largest inhibiting factor by far is resource limitations (57%) a reflection of the lack of internal and external expertise required for Mobile Marketing. Some of these concerns were cited among the top challenges marketers are facing in particular, consumer privacy and the diversity of mobile platforms. Resource limitations were cited as the key reason not to engage in Mobile Marketing. Other challenges included a lack of knowledgeable internal resources and external expertise. When using Mobile Marketing, the majority of marketers, specifically those with loyalty programs, were using opt-in databases and generally managed them internally. Success in getting consumers to opt-in was reportedly high. Given the high leverage that it provides, marketers put a high priority on growing their databases in Tactics proven successful in acquiring new customers included social media, online/web promotions, s, POS capture and QR codes. At the same time, building opt-in databases presented challenges to some respondents. Working with a marketing provider with strategic expertise in this area may be a solution to these marketers. Leveraging Mobile Marketing was judged among the key ways to address the challenges of achieving loyalty program goals, which included: increasing customer average spend/basket size; increasing customer awareness of the program and its benefits; increasing customer purchase frequency; promoting cross- and up-sell offerings; and improving customer retention. Not surprisingly, marketers with loyalty programs indicated they are planning to increase their efforts in this area in Overall, these findings indicate that Mobile Marketing has been used successfully to strengthen loyalty programs and brands can maximize these gains by implementing or expanding Mobile Marketing initiatives. page 3

4 The New Age of Consumer Communications The key to communicating with consumers is to reach them where, when and how they prefer to be reached. Increasingly, that preference is their mobile devices. As technology developments have given mobile phones and tablets more capabilities from easier shopping to navigation to gaming these devices have become the primary means by which people connect to the world for all aspects of their daily lives. Consider these statistics: 96% of the US population owns a wireless device. 1 By 2013, mobile phones are expected to be the #1 web access device. 2 82% of consumers have used their mobile phones in a store. 3 86% of mobile Internet users use their devices while watching TV. 4 The average US mobile user spends 2.7 hours per day socializing on a mobile device. 5 As these growth trends continue, there has been a corresponding decline in print newspaper readership, particularly among younger people. Thus, many traditional retail marketing vehicles, such as print coupons and advertising supplements, are now reaching fewer consumers. Consumers are driving change The good news is that consumers are increasingly able and willing to connect with their preferred brands across a variety of industries via Mobile Marketing. Today s consumers prefer to receive relevant information and offers via their mobile devices, and are more likely to act upon them when they do, as the following statistics confirm: Mobile coupons get 10 times the redemption rate of traditional coupons million people in the U.S. have opted in to receive text messages from marketers. 7 According to a study by IBM, on Cyber Monday 2011, 10.8% of site traffic to 500 retailers came from mobile devices, up from 3.9% in Additionally, mobile sales grew dramatically, reaching 6.6% of total e-commerce sales on Cyber Monday versus 2.3% in million QR code scans were recorded in Q3 of 2011 a 440% increase year-over-year. 8 A mobile ad triggers a 43% response rate from consumers using smartphones. 9 1 Source: CTIA 2 Source: Gartner Group 3 Source: Insight Express 4 Source: comscore 5 Source: comscore 6 Source: Mobile Marketing Association 7 Source: The Sacramento Bee 8 Source: ScanLife 9 Source: Luth Research page 4

5 Seizing The Mobile Marketing Opportunity May2012 This growing consumer acceptance is not surprising, considering Mobile Marketing s distinct advantages, including: The ability to target offers consumers are more likely to pay attention to offers tailored to their individual needs and desires. Greater convenience mobile coupons require less time and effort to redeem than print coupons. Support for preference management Mobile Marketing gives consumers greater control over the communications they receive, thereby ensuring that offers are both relevant and personalized. Real-time messaging marketers can reach consumers with greater timeliness and immediacy with mobile communications than with other vehicles. Brands are playing catch-up While consumers have led the migration to mobile communications, many brands have lagged behind. According to a study by Forrester Research: 68% of companies do not have a mobile strategy. 46% of companies have either one or no employees working full-time on their mobile efforts Although 70% of firms increased mobile budgets in 2011, most fail to properly plan or measure success. What are the factors behind these numbers? In the Luth Research survey, marketers expressed a wide range of apprehensions about Mobile Marketing, including: Concern about consumer receptivity (39%) The approach is too new and not proven (32%) Technology constraints (32%) Challenges in gaining express consent/opt-in (32%) Resource limitations (29%) For the few companies that had not implemented Mobile Marketing, 57% cited resource limitations as a source of apprehension. This suggests that if these companies had access to the proper expertise, they would be more willing to try Mobile Marketing. Interestingly, marketers who used Mobile Marketing for their loyalty programs were least likely to worry that the approach is too new and not proven (22%) or not effective (7%). Similarly, those with loyalty programs had less concern that there is a limited audience for Mobile Marketing (16%). This strongly suggests that existing Mobile Marketing users have had positive experiences using mobile-based programs for loyalty-building and consider it a proven approach. page 5

6 Trends point to a fundamental shift to multi-channel marketing As brands and retailers move to seize the Mobile Marketing opportunity, more companies are shifting to multi-channel marketing strategies that leverage the strengths of all channels, media and vehicles so that each component in a campaign reinforces and builds upon all the others. Here, mobile devices have a distinct advantage over other marketing vehicles, because they enable marketers to reach consumers via multiple channels: voice, text, and web. 47% of the respondants selected Mobile/ smartphone enabled marketing/ads Trends in Mobile Marketing Adoption and Practice Because Mobile Marketing is still a relatively new concept, it s vital that marketers first have a clear picture of what that term means and what kinds of programs and activities it includes. Accordingly, the Luth Research survey included questions designed to gauge respondents understanding of Mobile Marketing and its value. What is Mobile Marketing? According to the survey, marketers are becoming increasingly familiar with the full scope of Mobile Marketing. When asked to select a phrase they most associated with Mobile Marketing, survey respondents top-of-mind responses were: Mobile/smartphone-enabled marketing/ads SMS/text messaging Mobility/reachability (the capability to engage consumers anywhere, anytime) Mobile apps Marketers in the retail industry associated Mobile Marketing with SMS/Text messaging at a higher percentage (29%) than survey respondents overall (13%). page 6

7 What are the key benefits of Mobile Marketing? When questioned about the top benefits of Mobile Marketing, survey participants top answers were: Key Benefits Mobility/ reachability Quantifiable Immediacy Interactivity Personal/targeted Quantifiable was especially relevant to marketers in larger organizations. Among marketers using Mobile Marketing for loyalty programs, ease-of-use was cited among the biggest benefits (85%). Although WOW factor and response rate/effectiveness ranked lowest among perceived benefits in the survey, about two out of three marketers (69% and 63%, respectively) still agreed they were key benefits. Mobile Marketing is: An additional channel to engage with customer segments that are more engaged on mobile. It provides a revenue generation/boost opportunity along with keeping customers engaged. Survey Respondent, VP of Digital Marketing A great vehicle to get a large amount of information to a large amount of current and/or potential clients in a short space of time. It makes business so much easier, and quicker, which leads to a higher earning potential. Survey Respondent, Regional Vice President page 7

8 Mobile Marketing adoption and growth The survey results indicate that the rate of Mobile Marketing adoption accelerated sharply beginning in The largest number of companies surveyed initiated their Mobile Marketing programs in 2010, with another sizable contingent starting in The trend is expected to continue as indicated by marketers in their outlook for Mobile Marketing. Marketers surveyed had a generally positive outlook on the near-term future of Mobile Marketing, with a total of 74% providing comments supporting growth and progress. The most common expectations were continued growth (35%), increased smartphone/mobile device adoption (15%) and quick advancement and evolution of tools/technology (8%). While 7% expected increasing consumer acceptance/consent, a corresponding concern (increased consumer resistance/ privacy concerns) was mentioned by 6% of those surveyed. The strategic objectives behind Mobile Marketing The most frequently-cited objectives behind the decision to adopt Mobile Marketing were: to increase purchase frequency/revenue (42%); to increase brand awareness (32%); and to attract new customers (30%). Increasing brand awareness was of much less importance for marketers with loyalty programs (17% vs. 32% overall). For marketers with an internally-managed opt-in database, promoting cross-sell and up-sell offerings was among the top objectives (32% vs. 20% overall). Budgeting and resources Nearly three-quarters (71%) of survey participants reported their Mobile Marketing budgets were increasing, from an average of $5.4 million in 2011 to about $6.5 million in Increases were reported to come from slightly higher overall marketing budgets, but also from an increased allocation of total marketing dollars to Mobile Marketing (from 13% in 2011 to 17% in 2012). When asked why their Mobile Marketing budgets were increasing, respondents top responses were: increasing penetration of mobile devices (19%); working on new mobile strategies/tools (19%); effectiveness/cost effectiveness (18%); and to stay on top of a growing trend (13%). Why use a Mobile Marketing provider? Three out of four mobile marketers are currently using (or plan to use) a Mobile Marketing provider most often an advertising agency (31%) or a Mobile Marketing specialty provider (29%). Their top reason for using an external provider is a lack of internal resources (58%). Other reasons included technical management (52%), expertise in leveraging opt-in databases (46%), and gaining opt-in/express consent to build the database (44%). Not surprisingly, those in the planning phase were most likely to leverage providers to determine Mobile Marketing strategies (67%). page 8

9 What Mobile Marketing tools are being used? While respondents Mobile Marketing usage spanned the full range of tools, most of their efforts are focused on social media mobile marketing (64%), mobile web advertising (58%), mobile apps (58%) and SMS/ text messaging (55%). A majority of marketers in retail (60%) and CPG (59%) are using QR codes, and approximately half of retailers and CPG marketers are using mobile coupons/ bar codes (47% and 53%, respectively). Social media mobile marketing Mobile web advertising Mobile apps SMS/Text messaging QR codes Mobile coupons/bar codes MMS or picture messaging Location-based services User generated content (UGC) In-game mobile marketing Augmented reality 16% 13% 10% 5% 23% 44% 38% 64% 58% 58% 55% What does Mobile Marketing do well? According to the executives surveyed, Mobile Marketing has been especially successful in increasing brand awareness (49%), attracting new customers (38%) and retaining customers (38%). Between 26% and 31% of marketers reported seeing positive results in terms of revenue, including increases in purchase frequency (31%), high ROI (27%) and increases in average spending (26%). Marketers using Mobile Marketing for their loyalty programs were more likely to report that it works to increase their customer loyalty metrics. While 27% of marketers stated they were achieving a high ROI with Mobile Marketing programs, 39% were not able to quantify an estimated number. Of those who could, the average reported ROI was 32%. page 9

10 Mobile Marketing ROI Mobile Marketing is a very good investment. When asked about the ROI of Mobile Marketing compared to traditional initiatives, more than half of respondents (52%) stated returns were slightly or much higher for Mobile Marketing compared to traditional programs as compared to only 15% who stated returns were lower for Mobile Marketing vs. traditional programs. Another 19% stated they had not measured the ROI of Mobile Marketing. Data capture and management strategies 52% stated returns were slightly or much higher for Mobile Marketing compared to traditional programs A Mobile Marketing strategy needs to be built on customer data. According to the survey, the majority of marketers with Mobile Marketing programs (89%) utilize an express consent or consumer opt-in Mobile Marketing database. These databases tend to be managed internally (61%) more often in companies with loyalty programs (69% vs. non-loyalty program respondents 47%). About one-third (36%) used a Mobile Marketing provider, especially CPG companies (52%). Three out of four respondents (74%) reported being successful getting opt-in from consumers, while 17% stated they didn t know or were not able to evaluate if they were successful. Among the top tools for achieving customer opt-in were social media (64% net success score), online/ web promotions (60%), (45%), POS capture (24%) and QR codes (21%). The least effective tools reported were bag inserts (-22% net success score), direct mail (-14%) and broadcast (TV, radio) (-6%). Top Tools for Customer Opt-In Social Online/ POS QR Contest Banner Free Media Web promo Codes Ads Stand Inserts 64% 60% 45% 24% 21% 7% 7% 5% page 10

11 Mobile Marketing and Loyalty Building The year 2010 saw a large increase in brands with loyalty programs initiating Mobile Marketing programs, a trend that extended into 2011 and is expected to continue as indicated by marketers in their outlook for Mobile Marketing. When asked about their goals, respondents expressed a variety of challenges for their loyalty programs, including: increasing customer average spend/basket size (32%); increasing customer awareness of program/benefits (28%); increasing customer purchase frequency (25%); promoting cross- and up-sell offerings (25%); and improving customer retention (25%). To meet these challenges, marketers are using an assortment of tools, including social media (55%), (48%), Mobile Marketing (45%) and improved program benefits/rewards (43%). In 2012, brands plan to continue their heavy investment in social media (57%), as well as increasing their use of Mobile Marketing (52%) and improving their branding and messaging (48%). What Mobile Marketing can do for loyalty programs Among respondents with loyalty programs, Mobile Marketing was found especially successful in increasing brand awareness (39%), attracting new customers (39%) and retaining customers (37%). Between 22% and 33% of marketers reported seeing positive revenue-related results, including increased customer purchase frequency (33%), high ROI (28%), increased customer average spend/ basket size (24%) and increase average customer spending (22%). Leveraging Mobile Marketing for Loyalty Programs: Of those engaging in mobile marketing to overcome primary issues, the majority (86%) stated leveraging Mobile Marketing was somewhat or very successful. page 11

12 Putting Knowledge into Action The Luth Research survey results paint a clear picture of the state of Mobile Marketing in early They demonstrate that Mobile Marketing is growing in adoption and has become a proven, valued tool in the marketing arsenal particularly for retailers and CPG companies seeking to build stronger, more lasting consumer relationships. With this in mind, marketers can begin to expand their Mobile Marketing strategies to take greater advantage of its unique power to engage consumers more effectively. Mobile Marketing is growing in adoption and has become a proven, valued tool in the marketing arsenal Specifically, organizations should consider the following six recommendations: 1. Build a 360-degree company-wide mobile strategy with a five-year roadmap. Like any other major component of marketing, mobile merits its own strategy spanning the enterprise. Companies can begin by taking a closer look at corporate business goals and how Mobile Marketing can best support them. With a high-level strategy in place, marketers can begin to explore specific programs and tactics and map them to the appropriate Mobile Marketing components, such as apps, text messaging and so on. Concurrent with strategic development, organizations need to assemble the resources to support Mobile Marketing, including database development and tool selection. Careful thought should be given to how best to approach consumers to achieve their opt-in and allay any concerns they may have regarding privacy, control and security. Another major consideration is staffing and external expertise. Organizations need to compare vendor capabilities and costs and determine how much internal expertise is needed to support long-term plans. 2. Make it a top priority to build your consumer mobile opt-in database. Mobile Marketing success requires a carefully-developed database of willing participants. That s why it s smart to start early in building your consumer mobile opt-in database. Working with an experienced vendor, you can pursue a variety of strategies to build the database. As you do, remember that Mobile Marketing works best and delivers a higher ROI when consumers give their express consent to participate in the program and are allowed to control the kinds of communications they receive. page 12

13 3. Align the mobile channel to every phase of the customer lifecycle. Many early Mobile Marketing efforts are one-off experiments focused on a single, specific objective. Going forward, organizations should take a broader view, looking at ways to apply Mobile Marketing across the entire customer lifecycle, from acquisition to engagement to retention. At the same time, companies should seek out opportunistic ways to employ Mobile Marketing to address specific challenges or openings. Finally, Mobile Marketing should not be a stand-alone effort; for maximum effectiveness, it should be integrated with existing traditional programs. 4. Incorporate mobile data into existing customer databases. Mobile Marketing is an interaction between companies and consumers and as much an inbound data collection channel as it is an outbound marketing channel. Data captured via Mobile Marketing can be incorporated into existing databases to better understand and manage consumer preferences and to develop targeted offers that appeal to each consumer s shopping preferences. 5. Establish a method for measuring and analyzing mobile programs. Mobile Marketing lends itself especially well to efforts to measure and analyze results and to use the findings to develop and refine programs for greater success. It s a tool that engages and interacts directly with each consumer, providing more opportunities for more detailed, specific, and useful feedback. And because preference management capabilities such as express consent give each consumer more control over how, when, and where that interaction occurs, brands can zero in on strategies and techniques that prove more effective. 6. Create a mobile-specific vendor strategy. Mobile Marketing is not a monolithic specialty; there is a wide range of vendors in the space offering a broad array of products, services, and expertise. For optimum results, organizations should seek out Mobile Marketing providers that have relevant expertise and service offerings, proven experience with demonstrated results, and the complete range of technological features and capabilities necessary to fully leverage the Mobile Marketing opportunity. page 13

14 Taking the next step : The Luth Research survey results confirm that Mobile Marketing is a powerful, proven tool that enables companies to interact with consumers more closely and productively to deliver more value and strengthen loyalty. To learn more about how your organization can benefit from Mobile Marketing, visit: page 14

15 ABOUT US SoundBite Communications powers nearly 2 billion proactive customer interactions annually for over 450 clients including 25 Global 500 and 50 Fortune 500 companies. It serves two global markets, Mobile Marketing and the Hosted Contact Center. Our Mobile Marketing solutions allow you to harness the power of mobile phones to acquire new customers, improve loyalty and grow revenue. Our personalized, multi-channel communications provide engagements throughout the full consumer lifecycle: marketing, customer care, payments and collections. Our solutions Visit: are powered by two platforms: SoundBite Engage, an integrated multichannel communications platform with SMS, voice, predictive dialer, and web; and SoundBite Insight, a preference management platform Ticker: enabling targeted and personalized communications. NASDAQ: SDBT CONTACT North American Headquarters SoundBite Communications, Inc. 22 Crosby Drive Bedford, MA USA Toll Free: Toll: Fax: California Office SoundBite Communications, Inc. 2 Venture, Suite 340 Irvine, CA Toll Free: Toll: Fax: Virginia Office SoundBite Communications, Inc th Street North, Suite 500 Arlington, VA Toll: EMEA Sales Offices SoundBite Communications Standard House Weyside Park Catteshall Lane Godalming Surrey GU7 1XE Toll Free: +44 (0) Fax: +44 (0) SoundBite Communications UK, Ltd is a limited company registered under company No in England and Wales and whose registered address is listed above. Sales Inquiries: General Inquiries: 24-Hour Client Support US Toll Free: Sales: Investor & Media Relations: page 15

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