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Mobile commerce to give way to mobile-enabled commerce?

January 25, 2011

Patrick Collins is CEO of 5th Finger

By Patrick Collins

Consumer usage, mobile ad spend, smartphone penetration and mobile site proliferation tell the story that the mobile medium has reached the level of maturity that no brand can afford to ignore.

But what are the big battlegrounds of 2011?

Even five-plus years out, no analyst suspects that more than 1 percent of retail revenue will be bought through the phone.

The sweet spot for mobile commerce is low-price-point, low-consideration items such as books, music and maybe consumer electronics, and current mobile offerings “feel” like marketers trying to push incremental commerce through a new channel. 

That is not where the business transformation will occur.

Every year tens of billions of revenue walks out of major retailers – these are consumers who enter the store with intent to buy, but they experienced some breakdown in the path from shopper to buyer.

In 2011, retailers will increasingly identify ways to use the mobile medium to support and reinforce existing shopping behavior, not try to drive channel shift.  They will put tools into consumers’ hands to inspire them in-store, support complex decisions, and tie digital couponing to the real world experience of walking into a retailer.

We have seen a range of these tools launch from WetSeal’s inspiring outfit builder to the launch of the shopkick platform. Many retailers are already thinking hard about how to use mobile as a support tool for the in-store experience rather than a replacement.

SMS as lead dog on mobile marketing plans
Innovation and SMS are almost never used in the same sentence. That is going to change.

The iPhone is a toddler at less than four years old, Android is early in its terrible-twos, and SMS technology is borderline geriatric, clocking in at 25 years old. 

SMS was 160 characters long before Twitter turned pithy conversation into cool.  What SMS has over its younger siblings is ubiquity. 

Brand marketers considering pushing hard into mobile engagement will find a meaningful role for SMS. 

From day one SMS delivers universal accessibility without huge barriers such as driving application downloads, navigating Bluetooth protocols, or hoping a consumer walks by your geo-fence. 

SMS is the flexible intermediary – it can deliver a jump off to a mobile Web page, a phone call or the beginning of a two-way brand relationship. And in contrast to Twitter, an SMS campaign can use the targeting and customer segmentation of a brand’s most sophisticated direct mail drop. 

In 2011, brands will more broadly begin to use SMS to engage consumers directly in two-way discussions, amplify campaigns from other channels such as print and outdoor, and solve “no one opens my app a second time” challenges.

Battle of location technologies will intensify
First, 10 seconds of truth around location-based marketing services:
•    Even with the new Facebook Locations functionality, the total check-in consumer population is too small to run a scale campaign against any population outside of 20-25-year-olds in Manhattan or San Francisco

•    It is still too expensive to get real-time consumer location information from the wireless carriers. Most charge for the data, and service providers use simplistic predictive algorithms to minimize their costs

•    Bluetooth proximity marketing barely works – it does not work on iPhones, it only works on some BlackBerrys, and increasingly sophisticated consumers have decreasing ability to interact with this technology

But this year, two sides will face off to determine whether consumers will anoint location tracking or location check-in as their preferred method of interaction. 

The carriers – with advantaged access to your location – and location-based service providers are hoping that interruption-in-context experiences will create the most consumer value.

Imagine yourself walking past an REI and you get a text message for 30 percent off a polar fleece. This is a well-targeted ad with a short distance from message to action. 

On the other side of the aisle are the location check-in marketers who aspire to have consumers self-identify their location, potentially even taking unique action to request brand engagement. These are the Twitters, Foursquares, Yelps and Facebook Locations-type partners that engage consumers to actively self-select into a brand relationship.

So who is going to win location tracking or location check-in?

You hate to bet against the guy that already has the data – the carriers. The consumer-side of the location check-in model does not scale.

If a consumer walking down Madison Avenue is hit with 10 different interruptions-in-context, soon the mobile platform will be driving more opt-outs than foot traffic. 

On the other hand, the location tracking model scales perfectly, although more slowly on the consumer side.

The location battle lines are drawn and the $100 billion local ad market is the prize.

PUT SIMPLY, 2011 will bring SMS the respect it longs for, location-tracking marketers will earn their top-of-the-heap status, and a mind shift from mobile commerce to mobile-enabled commerce.

Patrick Collins is CEO of 5th Finger, San Francisco. Reach him at

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