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Growth of mobile commerce inevitable in 2010

December 24, 2009

mobile-fraudWith 2010 just around the corner, the New Year’s sweet spot will likely be mobile commerce, especially for direct-response marketers and retailers.

Mobile commerce is how retailers and sellers of content, products and services use the mobile medium to acquire and retain customers by encouraging transactions on mobile phones, as well as by driving traffic to retail stores, catalogs, the wired Web or other channels.

“We anticipate mcommerce will grow in 2010 driven by a couple of factors,” said Jamie Wells, director of global trade marketing at Microsoft Mobile Advertising, Redmond, WA. “On the retail side, mobile coupon offers will drive activity as consumers are open to receiving valuable offers to their mobile phones.

“The proliferation of smartphones is changing consumers’ expectations and behavior on mobile,” he said. “Consumers are getting over the trust barriers associated with mobile commerce.

“The proliferation of smartphones is driving more PC-like mobile Web activity and more confidence.”

Other factors will also contribute to the growth of mobile commerce in 2010.

Consumers are very likely to make impulse buys and mobile is changing the way that they shop. The ability to serve a click-to-buy ad is going to be an attractive advertising element for retailers and direct response marketers in 2010.

“In nine years of agency pizza lunches, industry panels and client presentations, the pitch was always mobile engagement,” said Gary Schwartz, president of Impact Mobile, Toronto. “For every pizza slice they ate we made them listen to the mantra: ‘Mobile can activate your traditional media. Run a mobile campaign.’

“With the recession exiting, companies that for years branded themselves as “mobile marketing agencies” or “mobile marketing technology shops” have suddenly rebranded their wares as mobile commerce,” he said. “The focus has become close-loop programs that can end in some form of conversion. Suddenly we are talking about transaction and point-of-sale.

“The market has matured (God bless it) into acquisition and conversion: discover the mobile customer, do something with them that will end in a transaction of some kind: Point-of-sale integration, m-commerce, on-board credit chips, m-couponing, PIN-on-receipt.”

Retailers are the first to migrate to the mobile commerce space.

In 2010, expect the following sectors to enter the mobile commerce space: publishing/media, entertainment and travel.

One of the challenges in 2010 will be creating mobile commerce experiences that perform well.

According to research firm Gomez, mobile Web users may be willing to trade some functionality for the “anytime, anywhere” convenience of the mobile Web, but they are not willing to sacrifice performance in key areas like availability and speed.

For example, a recent Gomez study found that two out of three mobile Web users have encountered problems when accessing Web sites on their mobile phones in the last 12 months, with slow load time being the number one performance issue.

Expectations for performance were made even clearer by a majority of study participants who said they expect to be able complete simple transactions like checking their bank balance in a minute or less, or they will abandon the site.

Most of the mobile commerce offerings of 2010 will be in the form of mobile shopping sites from which consumers could purchase products and services.

Clearly, mobile Web experiences are not yet matching visitor expectations, which can put revenues, customer relationships and brand loyalty at risk, per Gomez.

A Gomez study found that 85 percent of participants said they are only willing to retry a mobile Web site two times or less if it does not work initially.

More than half are unlikely to return to a Web site they had trouble accessing from their phone and 40 percent said they’d likely visit a competitor’s mobile Web site instead.

Gomez offers some best practices:

1. Understand the end user’s expectations and needs
2. Share common experience management technologies, metrics and best practices across your mobile and Web initiatives
3. Establish a baseline for historical analysis and benchmark yourself against the competition
4. Test and monitor from your end-users’ perspective
5. Test across the entire Web application delivery chain
6. Test and monitor at a frequency to insure you can resolve issues before end-users are impacted

As mentioned before, retailers are expected to be the big mobile commerce players in 2010 and likely beyond.

Tiffany Gerhard, senior manager of marketing and emerging capabilities at Best Buy, said (at the MMA’s Mobile Marketing Forum) that mobile enables the shopping experience to be more social than ever before.

“The right information at the point of impulse increases desired consumers behavior, sales, profits and customer satisfaction,” Ms. Gerhard said.

“We view mobile as less of a tactic and more of an integrated effort to build a relationship and drive consumers in to our retail locations,” she said.

Scott Dunlap, CEO of NearbyNow also offered his outlook for 2010.

He said that in 2010 mobile commerce will be the new face of retail.

“This holiday saw explosive use of mobile, with consumers checking online prices from inside stores, doing local search from geolocated devices and getting reviews on products and service providers,” Mr. Dunlap said.

Retailers will need to adapt to a consumer that is simultaneously in the online and physical world, including flexibility on price, differentiating on service and pumping real-time inventory information into the Internet to attract mobile consumers.

Those that do not will become the display cabinets to Amazon, eBay and others.

“We are already seeing it with Sears, Target and Walmart using mobile apps to create new service experiences and allowing their store inventory to be found online,” he said.

Mr. Dunlap also said that new virtual currencies and mobile payment capabilities will push mobile into the limelight as a transaction engine.

“In particular, I think that Apple will release a payment capability using iTunes, and Facebook will introduce a virtual currency that extends their virtual products (Facebucks?),” he said.

Since the iPhone/iPod touch will easily hit 100 nillion units while Facebook hits half a billion users, the impact of these two inventions will be large and instant and create billions in transactions in the first six months, he said.

Both will enable reaching a younger, connected audience, and the rising middle class of high-growth countries. Mobile will be the vehicle used for these transactions to enter the physical world, per Mr. Dunlap.

Mr. Dunlap also believes that print ad budgets will shift to mobile dramatically in the second half of 2010.

Print is the original mobile medium, and where most local marketing dollars are spent.

The audience for mobile has now reached critical mass, and more dollars will shift there.

The measurability of mobile ads will continue to question and erode the value of print ads, causing a landslide similar to the effects search marketing had in the early 2000s.

“Apple’s entry into the tablet market will create a newstand for both the tablet and Apple mobile devices, and permanently change the nature of digital distribution similar to how iTunes did for music and movies,” Mr. Dunlap said. “This will force all magazine ad budgets to become print/mobile budgets overnight, and open a new wave of innovative cross-media opportunities.”

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Giselle Tsirulnik is senior editor at Mobile Commerce Daily and Mobile Marketer. Reach her at

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