Jan 28, 2010 - Noreen O’Leary

In one of the most telling signs yet of new consumer frugality, annual coupon use is on the rise for the first time since 1992, according to Inmar, a promotion transaction settlement company. Coupon distribution last year hit the highest level recorded since Inmar began tracking trends in 1988.

For the first time in 17 years, consumers used more coupons than the year before; 3.3 billion packaged-goods coupons were redeemed, a 27 percent increase over the 2.6 billion redeemed in 2008. The increase in coupon use began in October 2008, as the U.S. financial crisis took hold, and led to five consecutive quarters of double-digit growth.

“There’s no great hard-core data about whether there is a fundamental shift in consumer behavior, but looking at the culture at large we’re seeing and hearing about a fundamental shift toward back-to-basics, with people doing more to save money,” said Matthew Tilley, director of marketing for Inmar’s promotion services division.

As evidence of that, Tilley underscored the health of freestanding inserts, a coupon staple in Sunday newspapers. “FSIs continue to make up almost 90 percent of coupon distribution and over half of all coupons redeemed are from FSIs. That big dog grew at an even faster rate than overall coupon growth last year, a 36 percent increase to the overall growth of 27 percent," said Tilley. "Despite the readership decline in newspapers, people are still willing to go back to their Sunday newspapers for coupons."

Tilley doesn’t foresee coupon redemption continuing at current levels, but expects growth of 3-5 percent annually in the foreseeable future.
The increase in coupon redemption goes hand in hand with an increase in distribution. Brands issued 367 billion coupons, at an average face value of $1.44, indicating their embrace of the promotions in these tough times. “Brands saw coupons as a key to maintaining brand strength,” Tilley said. “If they reduced their promotional presence, they stood to lose sales to lower-priced competitors and store brands.”

Food-related coupons dominated the first half of 2009, while ones for non-food drove distribution and redemption in the second half. Tilley said that in prior years, particularly 2008 — when redemption levels were decreasing — the industry saw increases in the face value of coupons. Now, he said, the industry is seeing a complete reversal in the face of soaring demand: Brands are mitigating the cost of increased redemption by maintaining face values and keeping expiration periods in check. In 2009, face values declined by a penny, reversing a multiyear trend of increasing values. Expiration periods were shortened by 10 percent last year, after years of virtually no change.

Categories that traditionally haven’t been heavy users of coupons, like alcohol marketers, increased their coupon distribution last year.
While still a small factor, online coupons also contributed to the rise in coupon distribution and redemption in 2009, with Internet distribution up 92 percent and consumer redemption of these coupons up over 36 percent.

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Tekelec, a mobile messaging company, conducted a study that found SMS is reaching across all demographics and is now prevalent among older generations, not just young adults and teenagers.

Texting, what was once strictly an activity for the younger generation, has become trendy with adults over 45. Mobile is becoming more integrated into the everyday lives of consumers across continents and age groups.

“What’s most revealing to us is that 60 percent of over-45-year-olds – a demographic thought to be SMS laggards – say they’re just as likely to use SMS as they are to make voice calls,” said Ronald Cornelisse, senior manager of product marketing and mobile messaging at Tekelec, Amsterdam.

“The importance is that text messaging is becoming prevalent among older generations, changing everything from how operators market their plans to how advertisers can reach more consumers through the mobile channel,” he said. “Brands will miss out if they only market their mobile campaigns to younger generations.”

SMS usage will expand in the older demographics as current prolific younger users age and bring their SMS familiarity and expectations with them and older generations will naturally use SMS to communicate with their younger family members, friends and coworkers. 

Five-hundred consumers in North America and Europe were surveyed by Tekelec regarding their SMS usage.

Ladies love SMS
More than 80 percent of the respondents said they believe they would get a quicker response from a text message than from an email or voice message.

SMS is more popular among women. Forty percent of female respondents described themselves as mainly a texter compared to 30 percent of men.

On a related note, 25 percent of women participate in television voting via SMS compared to 14 percent of men.

“We didn’t expect the gender gap the survey showed,” said Mr. Cornelisse. “The benefits and uses of SMS are gender-neutral, so that disparity was unexpected.”

Mr. Cornelisse said the popularity of TV voting via SMS may be a reason why the survey found women use text messaging more than men.

Sixteen percent of respondents under 35 said they use SMS to vote on reality TV compared to 9 percent of 35-44 year olds, and 7 percent of consumer 45 and older.

According to the survey, 35-44-year-olds are the largest consumers of news and sports via text at 18 percent compared to 17 percent for those under 35 and 8 percent for those over 45.

Unstoppable growth
A majority of the under-35 crowd, 57 percent, said they send more than 30 text messages every week, as do 44 percent of 35-44-year-olds and 14 percent of consumers 45 and older. 

Text messaging is catching up to email as the preferred means of daily international communication.

Thirty-two percent of consumers across all age groups said they prefer SMS compared to the 33 percent who favor email.

Additionally, 32 percent of respondents said they believe their use of SMS will increase in the next 12 months.

Tekelec is predicting that SMS will grow the most around person-to-application, application-to-person and machine-to-machine communications. 

Mr. Cornelisse said person-to-person will be the foundation of SMS messages, but organizations are using texts in innovative ways, such as security systems that send customers updates when someone has entered their home.

“The immediacy of SMS cannot be underestimated,” Mr. Cornelisse said. “Brands have a tremendous opportunity to tie text campaigns with tangible, near-term actions, and they can expect results across all age groups. 

“The risk, however, is that a poorly executed campaign could create a quick backlash,” he said.

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The nation stands today at a pivotal point where mobile will soon infuse every marketing, media and retail decision just as the Internet did in the last ten years. The Mobile Decade is upon us.

Marketers have only to look around this country and see the one thing that consumers today cannot be parted from: their mobile phone. And that device, as the decade wears on, will become the interface between consumer and society.

Are all stakeholders in this economy geared for the major changes down the road? Those who are prepared are already in some version of Mobile 2.0 with their marketing plans. Those who aren’t need some more validation before committing time, people and budget to adding mobile to the mix.

Of this all can be certain: mobile will democratize every institution just as the Internet did. It will enhance the value of marketing, content and commerce for some and cut the margins in others.

In other words, mobile will level the playing field, empowering consumers even more with information that shifts the balance of power even further away from the marketer.

How will this likely play out for marketers?

Brand knew
More consumers will rely on their mobile media to tap into news, information, shopping and entertainment. Brands who seek to maintain their edge in this decade will have to roll out 360-degree marketing plans that include mobile advertising on key sites.

In addition, they will have to debut mobile-friendly sites and mobile applications to enable an easy, user-friendly two-way communication with their target audience.

Brands will also need a strong SMS program to reach out to consumers who choose that medium along with email as their two primary choices for direct marketing. SMS will complement email in loyalty marketing efforts and, equally important, drive traffic to offline channels including retail stores.

Brands cannot afford to be locked out of a mobile relationship with customers and prospects. The alternative is to wish upon themselves the same fate that befell those brands who were stubborn to the attractions – and necessity – of an effective Internet presence in the early- to mid-2000s.

Shoptalk
Ad agencies, for their part, cannot shelter under lack of education, complexity or inadequacy of metrics any much longer.

It’s been two-and-a-half years since the launch of the Web-friendly Apple iPhone. More than 100,000 iPhone applications are available. Consumers are smart. They get it. That’s why the Motorola Droid was the hit of 2009. That’s why Android has rapidly scaled up to more than 17,000 applications. That’s why BlackBerrys are as popular as they have ever been.

Sure, smartphones still account for only one-fifth of all mobile subscriptions. But, if some researchers are right, the market is only two to three years away from a point where as many smartphones will be in subscriber hands as basic feature phones.

That tipping point – when smartphones gain majority acceptance – will become the giant sucking sound of marketing.

Agencies cannot afford anymore to ignore this reality – that mobile is rapidly becoming a critical-mass marketing medium, albeit with margins that are nowhere near print or television.

Indeed, agencies will have to restructure themselves financially – lean, mean and with the same sheen.

On the creative front, it’s time copywriters were taught how to pen copy in 160 characters or six-word headlines on tiny screens. How to be creative and yet get to the point – that’s the dilemma copy folks and art directors will have to face.

As for the account management teams at agencies? Better get used to pitching mobile to the clients and writing briefs that understand what mobile is all about: relationship marketing.

Mobile will not come at the expense of TV or radio or other older media. But advertisers will soon discover that mobile media are as efficient, if not more, in attracting and retaining customers.

Medium is the message
Media, the third pod in the marketing tripod, may have the least time before Mobile 2.0 hits in earnest. If the wired Web has cannibalized print media and not returned ad revenues anywhere near old media’s, then mobile will simply compound that mess.

The media world is about to come to a fork in the road: Either stick to an advertising-supported, free-access model or erect subscription walls to charge consumers for reading on mobile sites and applications.

The history of paid media isn’t good. Bar a few newspapers and magazines that can charge because their content is highly unique, most publications cannot afford to lose traffic over walls that may drive readers elsewhere.

Charging for mobile content will only work if content on the wired Web is also gated. Yes, consumers are conditioned to paying for content on mobile. However, for most consumers, news is not the same thing as content. News has become a commodity. Readers will only pay if the news is viewed as a brand. And that, in this 24-hour news-cycle, is highly improbable.

Which leaves the other possibility as the one to bet the house on: advertising-supported media.

Publishers will have to work double-duty to ensure that advertisers are offered media plans that include all formats – print, online, broadcast and mobile.

That said, it is a shame to visit sites of noted publishers and see wasted advertising opportunities. Get a big brand to taste mobile. Give a free month-long trial to new advertisers. Let them experience the power of mobile. And work with them to tailor appropriate messages that resonate with an on-the-go mindset. Simply repurposing online ads for mobile won’t cut the mustard.

Make the buy
As for retailers, mobile’s benefit is obvious: driving traffic to stores or call centers. Check this writer’s article today on Mobile Commerce Daily at http://www.mobilecommercedaily.com. It explains the mobile prerogative for retailers. Mobile commerce will change the face of retail as we know it.

Now all of these developments hinge on a few factors.

First, wireless carriers will continue to support new Web-friendly smartphones with affordable data plans and upgrade networks to handle increased bandwidth demands. Next, that consumers are sufficiently convinced of the wider benefits and security of relating with brands through mobile. Finally, that marketers stretch to acknowledge mobile’s strengths.

Either way, welcome to the Mobile Decade. Make it memorable for getting things right at the outset. Consumers want to talk. Listen.

Editor in Chief Mickey Alam Khan covers advertising agencies, associations, research and mobile marketing issues, as well as column submissions. Reach him at mickey@mobilemarketer.com.

NEW YORK (Reuters) – A growing number of consumers worldwide used their mobile telephones to help them shop early in the holiday season with usage particularly high among young adults seeking coupons, according to a survey.

The poll of 4,500 shoppers 11 countries sponsored by Motorola Inc showed consumers used their phones to comparison shop, take photos of items they were considering buying or simply to access online coupons, among other activities.

e-Rewards and TNS questioned people in United States, Canada, Britain, Germany, France, Italy, Spain, Mexico, Brazil, India and China. Forty-five percent were U.S. residents.

Motorola said there was a surge in the use of smart phones while shopping this year.

The poll showed 64 percent of consumers between the ages of 18 and 34 had used their mobile phones while shopping in the preceding two weeks, and about a third of Baby Boomers, or people over the age of 50, also used cell phones. Across countries and ages, just over half did.

That trend is expected to pick up speed in the coming years, and retailers will need to adapt if they want to survive, a Motorola senior director said.

“Those retailers most prepared for the onslaught of different types of technology used by not only the consumer but by people in their stores will get better returns,” said Frank Riso of Motorola’s retail technology group.

GIVE ME COUPONS

Retailers catering to young shoppers are particularly vulnerable if they don’t beef up their technology, given how keen those customers are to find and use coupons.

About half of consumers surveyed were dissatisfied with the availability of coupons and discounts, and Riso predicted retailers would ramp up efforts to allow shoppers to download coupons to their mobile phones and use them in stores.

The survey found that in 2009, about 39 percent of shoppers overall were ready to walk away from a purchase if coupons and discounts were unavailable. Those that did walk away each cost retailers $109.

“It’s billions- billions that could have been sold had you been ready,” he said of retailers that don’t invest in technology to accommodate savvy shoppers.

Motorola said Juniper Research forecast that consumer use of mobile coupons will generate nearly $6 billion globally in retail redemptions by 2014.

Use of mobile phones for shopping was highest in Asia, with 78 percent, and lowest in Canada and the United States, where 45.1 percent of shoppers did, according to the survey.

Motorola also announced on Monday the launch of its Mobile Loyalty Solution service, which is designed to help retailers personalize service on customers’ mobile phones and is compatible with most U.S. mobile phones.

Revenue from mobile applications will increase more than 50% this year to $6.8 billion from $4.2 billion worldwide as smartphones proliferate. Of that total, only $600 million is expected to come from in-app advertising, with the bulk derived from transactions, according to a new Gartner forecast.

By 2013, however, advertising will generate a quarter of mobile app revenues, projected to swell to $29.5 billion by then on 21.6 billion downloads. This year alone, downloads will nearly double to 4.5 billion, from 2.5 billion in 2009.

While paid apps will continue to drive the majority of sales in the next few years, Gartner actually expects the proportion of free, ad-supported apps to increase — from 82% of downloads this year to 87% in 2013. As smartphones come down in price and expand to a broader customer base, fewer of these new users will be willing to pay for apps.

In terms of content, games will remain the top app category, while mobile shopping, social networking, utilities and productivity tools will also continue to gain ground.

While the report didn’t break out app revenues by company, Carolina Milanesi, a research director at Gartner, said its app storefronts launched by the likes of Google, Microsoft and Nokia to compete with Apple’s App Store are likely to increasingly play a role. Google appears to be the best-positioned challenger, with about 20,000 apps available in its Android Market and 20 Android-based devices released to date, and more to come this year.

“Application stores will be a core focus throughout 2010 for the mobile industry and applications themselves will help determine the winner among mobile devices platforms,” said Milanesi. Apple is winning that battle so far, with more than 3 billion downloads in the last 18 months and more than 125,000 apps on offer.

Among the latest is the $1,000 BarMax Ca iPhone app, a test prep program for the California bar exam, that’s now the highest-priced title in the App Store. Selling a few of those would certainly help boost app revenues this year.

Posted by Dan Neumann and Allison Mooney

Advertising is not what it was ten years ago. The past decade has seen the advent of social computing and mobile technology, two forces that changed the game forever. What will the future hold? On our respective blogs, MobileBehavior and Organic have been tracking developments in mobile that will affect advertising in 2010 and beyond. From point-of-sale to out-of-home, here are the top five ways we see the device formerly known as a phone changing the game this year.

1. Mobile will completely revolutionize the way local advertisers can connect with potential customers.

While online display advertising has been incredibly effective for many companies, it hasn’t offered all that much value to small, independently-owned businesses. For one, the web is good at scale, not so good at precision. It’s difficult for mom-and-pops to reach the relatively small audiences that might reasonably be expected to patronize their stores.

A number of new location-based services are beginning to provide attractive alternatives for such small-scale advertisers. Foursquare, for one, allows small business to target offers based on a user’s actual proximity to their location. These offers can deliver heightened relevance by appealing to a player’s status, nearby friends, or demonstrated preferences. A similar service, Gowalla, has experimented with branded badges and actual prizes that users can win if they check in at a location. Google is also catering more to local businesses by making their Place pages more mobile-friendly. Advertisers can now create Place pages that are accessible through Google Maps, attach mobile coupons, and even include QR code stickers in their window that lead you to these pages.

These examples are really only scratching the surface of what’s possible for local businesses through mobile. Expect to see more mom-and-pops jump on these platforms in 2010.

2. Growth in adoption of mobile shopping applications will continue to alter in-store consumer behavior, increasing the significance of mobile in point of sale decisions making.

There are a number of mobile applications and tools emerging that consumers can use to make their shopping trips more efficient, productive, and fun. First, there are mobile price comparison apps such as Shop Savvy, Red Laser, Amazon Mobile. These allow shoppers to compare prices at a given location against nearby competitors and online properties — an incredibly powerful proposition. There are also crowdsourcing tools like Fashism and BazaarVoice’s MobileVoice that help shoppers get outside opinions and feedback before purchasing. These types of apps are prime territory for marketers looking to inject a brand into a target audience’s psyche at a critical juncture in their decision making process.

Then there are, of course, mobile coupons, which are finally getting some traction. Zavers, Yowza, mobiQpons(http://www.mobiqpons.com/), and Cellfire are actively signing up small businesses, and it’s only a matter of time before big box stores get on board. Add increased consumer adoption, POS redemption infrastructure and a social dynamic and the appeal to marketers will be greater than ever.

All of the above will provide inroads for more effective CRM, specifically, loyalty programs. Consumers checking their phone just before they buy something will create opportunity to deliver more effective personalized messaging derived from prior purchase decisions.

3. Brands and agencies will continue to build branded apps, but will also have more attractive display media options, thanks to Google.

In 2009, we saw a number of brands scramble to check mobile off their lists by creating apps. But now that the marketplace is crowded, many will take a step back and look at media-buying options instead. Google recognizes this; it’s why they recently acquired AdMob, i.e. to get a corner on all that in-app content. Google will also build up their network of native app content by making development and deployment of ad-supported apps on their Android platform much easier than it currently is on the iPhone. This is all with the aim of more effectively extending it’s AdSense platform to mobile.

Yes, you may say that consumers are obviously keen on micropayments for mobile content. They did, after all, spend $6.2 billion on apps this year, according to Gartner. But consumers are even more fond of free, and in 2010 one way Google will challenge the iPhone is by creating a competitive alternative business model for developers. And where good apps are, consumers go and dollars follow.

Most major carriers and handset manufacturers have multiple Android devices slated for 2010 launch dates, so expect Android’s user-base to catch-up to the iPhone’s by EOY 2010. The web-based Android app store is a hurdle to the experience and doesn’t come close to the experience of the iTunes’ desktop app. If Google can fix this, then developers may start putting Android first on their product roadmaps.

4. Advertising’s outdoor real-estate is fast becoming another connected channel capable of delivering high-fidelity digital experiences as unique, varied and measureable as more well-established mediums.

Outdoor advertising has traditionally been very difficult to measure. People move past signs through various modes of conveyance at varying rates of speed making it difficult to know who actually notices a given media unit. Add line of sight and dwell time, and the problem is further compounded.

Digital Out-of-Home (DOOH) signage is changing all this, and mobile is becoming the key to true measurement and engagement. Using their handsets, once-passive viewers can actually interact with an ad now. For example, Toyota released an iPhone app that let users to draw on the Thompson-Reuters screen in Times Square. Nike’s “Chalkbot” allowed cycling fans to have a robot stencil messages of support for Tour de France riders on the pavement via SMS or Twitter. Vans’ “Be Here” allowed its users to submit video, photo, or text messages from any of the brand’s online properties to be displayed on a digital billboard in Times Square.

In all of the previous examples, mobile served as the glue or connective tissue between outdoor and the web. Indeed, the real potential of DOOH is to blend the digital with the physical world in public spaces. It will also eventually allow advertisers to customize once-mass ads to specific individuals based on data that their phone can reveal about them.

5. Consumers have new power to express their opinions through social technologies from anywhere, anytime. Smart marketers will do all they can to encourage and act on this real-time feedback.

While the crowds may not always be wise, they sure are vocal, and mobile devices are their microphones. In unprecedented numbers, consumers are using mobile-enabled publishing platforms, mainly Twitter, to instantly share their thoughts about products, services and brands.

The best companies have started closing this loop by listening to and acting on consumer’s feedback. Some are even creating dedicated apps and services to collect it. Taxihack is a service for commenting live on NYC taxi drivers. SeeClickFix and CitySourced both give users mobile applications for reporting things like potholes and graffiti while out on the town. AT&T recently used a similar tactic with an iPhone app, Mark the Spot, which crowdsources areas of weak reception.

Much of the power seen in these mobile applications is through context attached to consumer feedback. Universal Theatres relies on a SMS response system to test out trailers and gauge audience response during screenings. This in the moment feedback makes for a much more accurate representation of viewers true opinions.

Whether brands carve out a dedicated mobile channel or simply rely on Twitter customer service, we’ll see more embracing the feedback loop. The challenge going forward will be an internal one, setting up efficient systems to make sure consumer feedback can be acted on and implemented once it’s heard.