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iPhone revolution sends brands the message on mobile

The great iPhone revolution has finally got marketers excited about mobile. After so many years when the experience failed to match the hype, consumers are embracing the new wave of smartphones that can easily access the web and download software applications, known universally as apps.

Some 54 million smartphones were sold worldwide in the first quarter of 2010, says research firm Gartner. That’s annual growth of 50% — much faster than the wider mobile market.

What’s more, as Google co-founder Larry Page told his Zeitgeist conference last week, the smartphone will soon become the norm as the handset price plunges. Google, which created the Android operating system to rival iPhone, estimates the number of mobile users is likely to rise from 1.5 billion to five billion in the next decade.

“We are just at the beginning. The opportunities for combining communications and transactions on mobile are extraordinary,” says M&C Saatchi chief executive David Kershaw, whose ad agency has just bought Shoreditch marketing firm Inside Mobile.

Analysts forecast the US mobile advertising market will increase from $320 million last year to $600 million in 2010 and $1.5 billion in 2013. Both Apple and Google have snapped up mobile advertising companies in the space of two months. Google’s $750 million acquisition of AdMob was cleared by US regulators on Friday, following Apple’s purchase of rival Quattro Wireless for $275 million.

The attraction of mobile is plain. We take our phones everywhere and, as Douglas McDonald, head of mobile marketing at marketing group Creston, says: “It is such an enormously personal device. If as a brand you can develop a good personality and a two-way customer relationship dialogue, then the phone is an absolutely killer channel.”

The personal nature of mobile is also a potential pitfall because invading that space with unwanted messages is guaranteed to upset consumers.

“The key is to get permission,” says McDonald, who warns brands not to buy up lists of mobile numbers to bombard consumers. “The challenge for the marketer is to make something so compelling to the consumer that they will initiate a dialogue.”

It’s a case of “pull” rather than “push” marketing as the consumer asks: “What have you got for me?”

The popularity of iPhone explains a lot about what has changed about mobile in just a few years. James Hilton, who co-founded Inside Mobile in 2006, recalls there used to be too many different handsets, mobile internet connections were poor, around half of apps failed, and the data-plans charged by phone operators were expensive. Now those problems have largely disappeared — helped by the availability of reliable wi-fi internet which allows a small phone to harness the power of thousands of computers, a process known as cloud computing.

Mobile marketing firms are being inundated with requests from brands who want to create apps and make their websites mobile-friendly. Hilton says he has seen a step-change as clients want mobile to be at the heart of an integrated marketing campaign from the start.

Ed Williams, managing director of Britain’s biggest property website Rightmove, told the recent Numis media conference that it has cost £50,000 to develop and market an iPhone app but “the value has been in the millions of pounds”. More than half a million people have downloaded his app and it is responsible for 5% of all properties viewed on Rightmove. “iPhone is definitely proving to be material” to the business, says Williams.

Touch-screen phones are ideal for consumers who want to look at a lot of graphics and video but don’t need to type much. As Hilton says: “Mobile content has got to be portable and snackable. You can’t expect consumers to read reams and reams of words. The dwell time on a mobile is definitely less than on a computer but then that it is positive too because you have got to get a clearer message across.”

Even though some consumers are willing to pay for apps, the majority of users still prefer to get their content for free — in exchange for receiving advertising every time they use the app.

While all the hype at the moment is about iPhone and forthcoming iPad, launched in the UK on Friday, the basic text message, the SMS, remains a powerful communications tool — and you don’t need a smartphone to use it. Most consumers are likely to open an SMS within minutes whereas emails might not get opened for hours, if ever. The prompt to send an SMS could be an outdoor poster or old-fashioned direct mail posted through the letter-box.

McDonald says: “Mobile is a fantastic way of making dead media’ interactive. It’s turning a non-interactive experience into an interactive one. If you are looking at a poster and do something instantly like send an SMS, you don’t forget to do it later.”

Retailers are just starting to explore how mobile can drive “physical” sales — say, by offering shoppers an incentive such as a credit or money-off voucher. Users receive the voucher by SMS after sending a keyword or scanning a logo with the camera on their phone. Then all they have to do is show the voucher to the retailer to redeem it.

Coca-Cola promoted its drinks brands Sprite, Dr Pepper and Fanta in the UK last year with an SMS offer. Shops carried posters next to the drinks display, telling consumers that they could get it for free if they sent a text to Coca-Cola. Within seconds, they received a voucher that they could use immediately. David Tymm, chief executive of digital agency i-movo, which ran the promotion, says 207,000 people took part and he was able to provide Coke with analysis by location and time and even use till receipts to report what other products shoppers bought at the same time.

Global positioning system (GPS) technology offers further opportunities. A popular new app is Vouchercloud, which uses GPS to offer discount vouchers at local stores and restaurants nearest to your location. Another app, Four Square, has been dubbed “the new Twitter” as it lets users share local recommendations in real time.

In the era of the smartphone, marketers have only just begun to discover its potential.

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