| Special Report: SMS - Instant gratification |
| Thursday, 10 July 2003 | |
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Precision Marketing 11 July 2003 - Seen one way, SMS marketing in its current, most frequently deployed interaction has a whiff of the 'We can, so we will' sentiment about it. After all, with an overwhelming majority of the population in possession of a mobile phone, it would surely be madness not to add the device to the burgeoning arsenal of promotional tools. But to regard the mobile phone as merely another promotional channel is surely to underestimate its potential. Because in this little gadget - as invaluable an accessory in a woman's handbag as her lip gloss, and in a man's pocket as loose change (if you will pardon the gender stereotypes) - is a genuine convenience facilitator.Which is why companies - most notably branded goods - are increasingly eyeing the marketing and customer service value of SMS-delivered electronic coupons tickets. The attractions for the consumers are clear; no need to spend time tearing coupons out of magazines, only for them to get lost down the bottom of bags or pockets. And no need to worry about remembering airline or concert tickets and e-mail confirmation print outs. Purse, keys, important documents - all get forgotten from time to time - but never the mobile. Its constant presence, bar an oversight of catastrophic proportions, is virtually guaranteed. But e-ticketing comes with its own challenges, most notably those of how best to deliver secure vouchers. Factor in consumers lack of emotional acceptance of such non-paper-based transactions - in spite of their obvious practical benefits - and it seems that marketers must negotiate a tricky path. To date, trials of e-coupons have largely encompassed so-called 'simple redemption'. This involves a handset owner being texted a non-individualised marketing code that the consumer must merely display to be assured their money off or free goods. The catch is that such coupons are largely unsupported by security protocols. Technically, any number of people could attempt to redeem the voucher by passing the handset around and flashing the phone screen at the bar staff or checkout attendant who, chances are, is to busy to notice that the same coupon has already been used. In theory, the marketing code could also be texted from phone to phone, snatching control of the promotion out of the hands of the marketer and pushing it into the realms of unwanted viral marketing. Moving beyond this simplistic method, though, the alternative is individualised serial numbers that can be keyed in by checkout staff and voided upon use. Elsewhere, personalised barcodes can be swiped across a store's electronic point of sale (EPOS) system and verified - depending on how advanced the system's capabilities are - on a backend database. Even so, that is not to say that security issues are then automatically eradicated. "This method used to create that unique voucher must be inaccessible to unscrupulous people attempting to create codes themselves," cautions Steve Almond, chief executive of mobile marketing infrastructure company called TxtOrder. "If someone gets hold of the algorithm used to generate the marketing code, they can create their own codes that may even go online through the look-up table." It maybe a case, then, of making a trade-off between implementing a more flexible, but intrinsically less secure bar-coding system, or adopting a safer, but more rigid, single-use code. With a single-use code, the only danger lies in the fraudster using their own non-legitimate one from the genuine recipient's phone. That one scenario aside, the security angle is covered reasonably well. But single-use e-vouchers do not make for the most compelling marketing proposition, and fail to seize the real strengths of the mobile phone for the purpose of coupon delivery. It is widely acknowledged that the mobile phone is the natural successor to the store loyalty card. That being the case, the most logical e-voucher solution lies in the more flexible permanent barcoding method, where the phone takes on the aspect of a credit or store card. Again, a hook-up to an online database should ensure security on such formats, but there is more at stake here, and with a rolling programme of e-couponing, more opportunities to defraud the system. But the issues involved are similar to those surrounding credit card use, a risk most consumers are prepared to live with. Furthermore, technology providers are going to increasing lengths to make phone barcoding watertight. Methods employed include embedding individual barcodes into ringtones. Peter Larsen, vice-president of business development at mobile marketing specialists Enpocket, says: "It is effective, because it is very hard to forward a ringtone to most phones, so you get rid of the viral aspect. On the other hand, it is not ideal, because such a code cannot be read by the normal retail equipment in a shop." And that is the crux of the matter. What is at issue here is not just how secure a barcode is, but whether or not outlets Epos systems are capable of processing them and whether or not consumers handsets are able to receive them. "About 70 per cent of existing barcode scanners will read a barcode offer, and about 80 per cent of phones are capable of accepting the barcode. But even with that as a solution, this is still a little bit ahead of the market," says Almond. He suggests that the onus is on mobile phone technology to existing legacy systems, as opposed to trying to force progress on an unprepared market. "It is up to the people who are creating the technologies to ensure it is 100 per cent viable. We must avoid expecting retailers to change their existing systems. It is about tweaking technology so that it works with what is there at the moment," he says. In spite of this, developments are under way that will require retailers to invest in new kit, enabling a closed digital loop in contrast with transactions terminating at the point of sale. Such investments will, however, allow them to avoid the more expensive option of completely updating their Epos system. One solution, from mobile marketing technology supplier Flytxt, is a customer facing e-coupon redemption unit. Placed at the checkout, this enables shoppers to either punch in their unique code or swipe the barcode on-screen while queuing. The transaction is logged via a high-speed connection to a central database and a paper coupon is swiftly delivered for use at the till. Alternatively, a second option comes in the shape of a unit that sits behind the till, whereby the checkout operator can verify the transaction. Both are currently under testing with assorted retailers and leisure groups. "Of course, this requires extra investment from the retailers," concedes Flytxt chief executive officer and deputy chairman of the mobile marketing association, Lars Becker. "But it is a necessary investment. Most Epos systems do not have reatime capabilities at this point, and most only update once, overnight. With no live conncection to some kind of database, they cannot verify SMS codes." Not only do such devices facilitate a greater degree of security, they also allow the marketing upsides of e-coupons to kick in - the tracking, reporting and monitoring of what each customer is doing, and where and when. The crucial difference between paper-based couponing and e-couponing is the ability to efficiently track campaigns. Somerfield is poised to trial e-coupons in select stores, aided by technology provider I-coupon and mobile marketing specialist 12Snap. Somerfield marketing brand controller Nicholas Hall comments, "Mobile vouchers are much more accountable. You know hour-by-hour, day-by-day what is going through the till and can track whether campaigns are doing well or badly. If they are floundering, you can try to improve the offer mid-campaign. With paper vouchers, however, they have to go to the reconciliation house, and you have to wait for reports to come back. With paper-based coupons often left piling up at home along with other items of waylaid mail, the immediacy of electronic vouchers represents another marketing upside. Consumers can be reminded that they have an unused coupon on their phone via text message from the retailer - a great way to drive store profits. And, with developments in infrared technology and services such as infrared technology and services such as Blue Tooth, location based marketing is a further consideration. "The biggest advantage of e-couponing is the instancy of it, the fact it can be done the moment a person needs it," says Ivan Southall, commercial director at opt-in mobile list supplier IPT. "If you send a coupon at the point of sale, or when someone is browsing in the supermarket, these are exactly the times when it might alter their decision between buying one product over another." But the flipside of that, and the reason location-based marketing has been so slow to take off, it is threat of dashing mobile marketing to smithereens by tipping the intrusive balance too far the wrong way. "This marketing medium is potentially incredibly powerful, but how do we make sure we do not strangle it at birth?" says Southall. "It is a terribly difficult conundrum for marketers." Which begs the question, just how accepting are consumers of non-paper-based tranactions? According to Larsen, the decline of paper-based coupons combined with the ease of with which consumers view their mobile phones has created optimum market conditions. "They (Paper Vouchers) have gone out of fashion, partly because of demographic changes and partly because people are not using magazines in that way anymore. There is a demand for getting value that will emerge with how people are using their mobiles and the ease with which they can get money off." Such acceptance could be promoted by a nudge in the right direction from the mobile networks. For example, they could get new subscribers to opt-in to e-voucher schemes with select leisure and retail partners. And Becker also suggests that the use of e-ticketing for their own business would not go amiss. "The mobile phone operators can help drive the adoption of coupon solutions by implementing it in their interests, because it creates more data traffic, which means more revenue for them. Unfortunately, I have not seen any initiatives undertaken by mobile phone operators yet." But while mobile marketing and technology providers extol the virtues of e-coupons, not everyone is acting as a cheerleader for the medium. James Critchley, product development director at technology supplier Txt4, anticipated higher redemption rates for electronic vouchers in the face of traditional coupons, which he claims, are relying on a limited number of hits. "What the retailers want is the exposure that goes around putting the vouchers out there - the marketing collateral. In terms of actual redemption, they work towards fractions of a per cent. In 99 per cent of cases, the brand does not actually want the vouchers redeemed. Making redemption easier (via e-couponing) is actually increasing their overheads," he says. In contrast, Critchley argues that e-ticketing represents more of a win-win solution. "It is incredibly convenient for the consumer and is also a very positive brand interaction - slick, sensible and intuative." For or against, it is still early days, and serious trials are just beginning to crank up. There are business models to be formulated and industry standards to be agreed, and it is likely to be at least another couple of years before the true scale and value of electronic couponing has been gauged. Ultimately, it is the consumer's call, and as we all know, you can take consumers to water but you cannot make them drink. © Copyright Flytxt Ltd 2006. Unauthorized use of any content constitutes a material breach. |
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