NewsLine Column: Location, Location, Location!
With so much debate about forthcoming 3G mobile telephone networks, John Clark from TeleCommunication Systems (TCS) describes the new potential for advertisers that the convergence of messaging and location-based services will bring.
Imagine the scene: you are walking down Oxford Street in London when your mobile phone signals that you have received a new text message. You check your screen to see a message from the coffee shop you are approaching offering you a discount off the price of a drink if you show the message when ordering. This new, highly targeted mobile advertising based on the location of the recipient is the latest marketing technique on offer to companies looking for a more measurable return on investment (ROI) from their advertising. Mobile advertising, or m-advertising as it is known, is the natural meeting of two complimentary mobile technologies: text messaging and location services.
Even though it has only been around for a few years, Short Message Service (SMS) text messaging is already a mature technology. According to the Mobile Data Association (MDA), the total number of chargeable person-to-person text messages sent across the four UK GSM networks in 2002 totalled 16.8 billion. Naturally, commercial organisations saw SMS as a very direct way of reaching consumers. The result is that marketing campaigns via SMS text message are commonplace in the UK and Europe today. Companies of all sizes are using customer information databases in order to send highly personalised and targeted messages to consumers via SMS. For example, fast food giant McDonalds launched its ‘Monsters Inc’ promotion via text message – at one point the promotion was generating over 40 SMSs per second in response. Similarly successful was Microsoft’s use of SMS marketing for the launch of its games console Xbox – 79% of people receiving a promotional SMS recalled receiving a message about playmore.com (the website promoting Xbox) and 69% of recipients stated that the SMS increased their desire to visit the site. When United International Pictures (UIP) used SMS to promote the release of the film American Pie, a record 95% of respondents recalled the brand and nearly 60% said the campaign had a positive impact on their desire to purchase tickets for the film.
On this evidence, marketing via SMS message is already an extremely effective medium. In fact, research claims that mobile text messaging prompts a response rate of 10-28% compared with direct-mail rates of 2% (Source: Media Week “SMS adverts beat direct mail”). When the extra dimension of location information is added, the possibilities for targeting individuals with powerful messages at the right place and at the right time become infinite.
Information about the user’s location is made possible through much more intelligent technology in next generation mobile phone networks that can now pinpoint a mobile phone user’s location to less than 50 metres. So, with the advent of next-generation mobile telecoms networks, mobile phone users can locate their friends or the nearest point of interest to them, such as a restaurant or cinema, using their phone.
It is when the two powerful technologies of SMS and location information are combined that the potential to deliver measurable, compelling, relevant and timely information to the consumer is realised. Advertisers can measure the effectiveness of m-advertising through the response mechanism built into the message – usually in the form of a redeemable voucher, a logo or ringtone. They know that the messages are relevant because only people who have ‘opted in’ to receive promotional material will get messages. They know the messages are timely because they will be triggered by the location of the recipient which also means that there will be very little wastage. Therefore campaigns are extremely cost-effective.
Of course, privacy is a huge issue, but in the UK, very few mobile networks have the capability to offer location based services at the moment. When Hutchison launches its ‘3’ network in the coming weeks, it will be using TCS’s location technology as the platform from which to launch such services. The fact that they are using location as an incentive to potential subscribers to upgrade to their network makes it unlikely that they will abuse the valuable information they have or the advantage that this technology gives them. Personalisation controls built into the TCS location platform further safeguard the individual user’s privacy.
Clearly, m-advertising satisfies all of the criteria that effective advertising demands and is a natural progression from the hugely successful SMS phenomenon we are experiencing today. This means that because people are already used to receiving promotional material via their mobile phone, m-advertising is destined to succeed.
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