Mobile Marketing: The Challenges of the New Direct Marketing Channel and the Need for Automatic Targeting and Optimization Tools

Introduction

The mobile phone market is becoming increasingly saturated and competitive (Leppaniemi & Karjaluoto, 2007). In several European countries mobile phone penetration is now over 100% and first-time customers (new users that enter the market and expand the business) are practically inexistent (The Netsize Guide, 2009). In the US, similar competitive intensity has also become the norm after the introduction of wireless number portability by the Federal Communications Commission in November 2003. Facing saturated and stagnant markets, mobile service operators are now focused on attracting competitors’ customers. Because one of the main factors influencing customers’ operator choice is the availability of a more convenient telephony rate plan, (Eshghi, 2007), mobile operators are relying increasingly on price competition for customer acquisition while revenue expansion comes mostly from Value-Added Services (VAS). Examples of these services include the provision of sports information, news, and weather forecasts, download of ring-tones, games, music, short movies, and even TV shows, all for a fee. Occasionally some of these services are offered for free. In such cases the objective of the service is not generating revenue directly but doing so indirectly. For example, revenues can be generated indirectly through the charges related with the data transmission services or the browsing of additional web pages over the phone. In the case of free viral videos aimed at building brand awareness and word-of-mouth, firms usually wish to build or sustain future revenue streams and long-term goals which are even more difficult to assess (future revenues could be associated with product sales both via the mobile phone or offline, depending on the firm that launches the videos). In addition, services may be offered for free in order to improve users’ experience, satisfaction, and loyalty. These products or services are produced by the mobile service provider itself or by external content providers, in which case revenue sharing contracts are established: mobile operators and content producers each take a percentage of the revenue generated, with the share of each depending on the type of content and on the power split between organizations.