Read an Excerpt
THE MOBILE MARKETING REVOLUTION
HOW YOUR BRAND CAN HAVE A ONE-TO-ONE CONVERSATION WITH EVERYONE
By JED ALPERT, STEPHEN FISHBACH
The McGraw-Hill Companies, Inc.Copyright © 2012Jed Alpert
All rights reserved.
No one expected that text messaging—an internal testing feature included free with every cell phone—would have any commercial applications, let alone that it would become the most widely utilized data application in the world. And even now that text messaging services claim 4.6 billion subscribers, orders of magnitude more than any phone app, business is in danger of underestimating it once again. SMS is as essential for business and organizational users as it already is for individuals. Why? As the Internet and other new media technologies continue to destabilize our established ways of communicating—advertising, public relations, direct mail, customer service, internal corporate communications, and more—text-based mobile campaigns offer a unique solution to the contemporary disconnect, not only restoring lost connections but taking existing relationships to a higher level.
Text messages drive people to action—whether it's voting, clicking a link, seeking out a vaccine, redeeming a coupon, making a phone call, or merely sending in their personal information. These are but a few of the uses that yield outcomes orders of magnitude greater than other forms of communication—and at a significantly lower cost. And yet the story of text messaging has none of the expected trappings of a blockbuster Internet Age success—no hungry young PhDs working in a Silicon Valley garage, no ultra-high-tech breakthroughs, and no overnight billionaires.
Friedhelm Hillebrand, the German communications researcher who first saw the commercial potential of SMS and settled on its length limit, didn't even conduct market research. Hillebrand was working to come up with a technology that would allow cell phones to transmit and display messages. His initial vision was small: that businesspeople with car phones (at the time, the only kind of cell phone in widespread use) would use SMS as a paging system on the road. Because the cellular networks had limited bandwidth, messages needed to be as small as possible. That's why the first S in SMS stands for "short" (SMS stands for "short message service").
Working from home in 1985, Hillebrand reasoned that most of what people really needed to say would probably fit on a postcard, then tried out some sample messages for length on his typewriter. He discovered that these sentences were almost always shorter than 160 characters. "This is perfectly sufficient," he decided, in typically German fashion. "Perfectly sufficient." Satisfied, he used his position as chairman of the nonvoice services committee of the Global System for Mobile Communications to require that all cell phones be capable of sending 160-character messages. Hillebrand owned no stake in this new application, and it never made him rich.
In fact, like many revolutionary technologies, SMS was slow to take hold. The world's first SMS message wasn't sent until December 1992. A 22-year-old engineer named Neil Papworth used his personal computer to text "Merry Christmas" to Vodafone director Richard Jarvis—the "Hello, Watson" moment of text messaging technology. The first SMS typed on a phone (rather than a computer) was sent the next year, in 1993, by Riku Pihkonen, an engineering student at Nokia. When the mobile providers eventually did set up SMS gateways, they were meant to be used for network notifications—usually, text messages to let customers know they had received a new voicemail. By 1995, customers were sending an average of only 0.4 messages per month.
Before the dawn of predictive typing and pop-up keyboards, texting was a slow and laborious process. Every character had to be entered through multiple taps on the cell phone's keypad. And challenges to digital dexterity weren't the only obstacles holding the new technology back. Part of the reason behind SMS's slow adoption was that, at first, carriers had no consistent way to charge for SMS plans. And why would they promote a new service they had no way of monetizing?
In North America, another hurdle to widespread adoption was that users couldn't text between the wireless carriers. Different cell phone carriers in North America had adopted different wireless standards, and for technical reasons, it was impossible to SMS between them. So if you had a Sprint plan, it was functionally impossible for you to text your friend if she was on the Verizon network. (In Europe, where Friedhelm Hillebrand's GSM was dominant, interoperability was never a concern.) But as mobile phones evolved from an ostentatious status symbol that users lugged around in a briefcase to the convenient nearly pocket-sized device of the early 2000s, the carriers realized that in order for their SMS services to achieve scale, they would need to learn to work together. By May 2002, as the carriers were adopting cooperative standards, about 1 billion text messages were sent every month in the United States.
Just eight years later, in June 2010, U.S. mobile phone subscribers sent 173 billion text messages—an average of more than 600 per person. Globally, about 8 trillion messages were sent in 2011. From a format that carriers couldn't figure out how to monetize, text messaging has evolved into a $200 billion global business.
Text messaging triumphed not by dazzling the world with new technology or by brilliant marketing but by doing what matters most in the Internet Age: it made itself useful to users. It helped them do something they wanted to do, namely, communicate quickly and easily, where and when they wanted to do it.
In fact, many of text messaging's so-called competitors, elaborate applications and sophisticated technologies such as the mobile web, can't replace text messaging exactly because of their technical sophistication. Texts have by far the widest reach of any form of communication, making text messaging the most effective way to reach both rich people and poor people and bridge the "digital divide" between the 60 to 70 percent of users who have access to broadband Internet service and the 30 to 40 percent who are "have-nots." Text messages are compatible with almost every type of mobile phone. That's true regardless of whether a person has a "smart" phone, like an iPhone or an Android, or a much simpler "feature" phone, which nowadays is any mobile device more complex than a Styrofoam cup and a piece of string.
Text messaging is also uniquely protected from spam. That means consumers won't reach the point where they distrust messages they've asked for because they can't distinguish them from hoaxes and scams. The FCC has ruled that SMS spam messages to cell phones are illegal, under the Telephone Consumer Protection Act and the CAN-SPAM Act, unless the device's owner has explicitly given permission. Wireless carriers have broad powers to stop spammers at the source—much more access than e-mail providers. Anybody can sign up for an e-mail account, after all. Cell phone service, on the other hand, requires book- length contracts in tiny print that nobody actually reads. Those contracts give the carriers the ability to track bulk messaging to its source.
Furthermore, sending an e-mail is free—but sending texts costs money. Even if 99 percent of a spammer's e-mails are blocked by spam filters, they only need to make $1 to turn a profit. But spamming out millions of text messages could mean paying hundreds of thousands of dollars. Even if you had a hundred relatives trapped in Nigerian prisons, requiring just a small cash investment to unfreeze millions of dollars, text spamming just doesn't make financial sense.
Text messaging is more immediate than e-mail. It erases the digital divide. It's spam free. It has faster response rates, higher open rates, and more precipitous growth rates. For these reasons and many more, it represents an evolution in digital communications past the constraints of e-mail. For businesses and other organizational users, it presents the logical next step in their efforts to engage with their audiences, to disseminate information, and to build relationships.
Yet many organizations have been slow to adopt text messaging. If you're in the business of communicating, you want to ply your trade using the most pervasive form of communication that exists. It's almost axiomatic. Yet for some reason, with each successive evolution in technology, some futurists insist that it has limited application. I remember attending meetings in the mid-1990s about the uses of e-mail and other new technologies in which people would wonder, "What sort of organizations will want to use e-mail? Who will want to build websites?" as though these activities were niche tools for special cases.
Of course, looking back now, that's ridiculous. But it's always ridiculous looking back. It's a little harder to have perspective when you're in a moment of rapid technological advancement. In the early days of the telephone, there was a debate over whether or not phone service should reach every household in the United States. Not just would phone service expand that broadly—but should it. As Columbia Professor Tim Wu writes in his book The Master Switch, "[The clientele] of the first Bell monopoly consisted of businesses and rich individuals living in large East Coast cities; Bell was in no hurry to broaden the coverage of its network.... Bell's shareholders were monotonously interested in dividends alone." People living in rural areas, particularly in the West, were forced to create makeshift telephone wires of their own, "With nothing but galvanized wire and barbed wire."
The same suspicions and biases held true for electricity in its early days. Some people thought electricity made sense for large urban areas but had limited application in rural America. Probably in caveman days, language itself was seen as a nice invention for a select few, but not of much practical application for your ordinary grunter.
Text messaging, as with e-mail, as with the World Wide Web, and as with electricity, makes up the fabric of the way we communicate. It's not an alternative to e-mail, TV, and websites; it's a powerful addition and must be added to any organization's media mix. And if used correctly, it can revolutionize the way that businesses and organizations communicate with their users.
Mobile Extends the Web's Revolutionary Democratization of Information
When I first started working as a lawyer in 1989, at the law firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP, I had a secretary. Assistants and secretaries were pervasive back then. In many cases people had more than one if they were just "that important." That person's job was a lot more complex than just answering your phone calls and taking the occasional memo. Your assistant was a vital information-gathering resource. Whenever you needed background data, research, or an outside perspective, you turned to her (or him, but usually her) to track the information to its source. Cataloging and accessing information wasn't some peripheral duty. As today, industries ran on information. And in the 1980s, you needed that information curated.
As we all know, personal computing, the web—and particularly hyperintelligent search engines—have completely revolutionized that process. The resources that used to go to tracking down and retrieving information now can be better allocated. In The World Is Flat, Thomas Friedman recalls asking Colin Powell "when he realized the world had gone flat:"
He answered with one word: "Google." Powell said that when he took over as secretary of state in 2001, and he needed some information—say, the text of a UN resolution—he would call an aide and have to wait for minutes or even hours for someone to dig it up for him.
"Now I just type into Google 'UNSC Resolution 242' and up comes the text," he said. Powell explained that with each passing year, he found himself doing more and more of his own research, at which point one of his press advisors remarked, "Yes, now he no longer comes asking for information. He already has the information. He comes asking for action."
Powell's press aide cuts to the crux of the issue: rather than asking for information, Powell can ask for action. When accessing data has become trivial, it doesn't get rid of the need to have an assistant. Instead, it elevates the assistant's role into much more productive work. The web democratizes the flow of information and automates tasks that should be automated. Now your assistant isn't stuck slogging through libraries of ancient legal arcana only available in dusty tomes; now he or she is coming up with creative ways to use it. Friedman writes, "There are a lot more conversations between bosses and staffers today that start like this: 'I know that already! I Googled it myself. Now what do I do about it?'"
In the early 1990s, the New Yorker ran a fascinating article about media tycoon Barry Diller. After seven solid years of guiding Fox Broadcasting Company to stellar growth and record profits, Diller was chaffing under Rupert Murdoch's managerial thumb. (Fox, then as now, was a division of Murdoch's News Corporation). "There is only one principal in this company," Diller remembered Murdoch saying. Diller's journey to liberation began, he claimed, when he purchased a PowerBook—one of the first commercially successful laptop computers:
The machine's allure was that it promised a certain kind of freedom—from secretaries, meetings, memos, press leaks. Diller used it to compose his resignation statement; to fax draft copies of the statement to Murdoch and to his own closest friend, the clothing designer Diane Von Furstenberg [now his wife] to list things he must do before issuing the statement [of resignation from Fox]; to sort from his copious address book the three hundred people he wanted to have received the resignation statement before they heard or read about it; to jot down notions of what he might like to do next and whom he might consult. The PowerBook went with him everywhere.... Just as Diller could convert his laptop into a word processor, a fax, a file cabinet, a spreadsheet, a conveyor of commands, or a link to various networks of news or data, so in the next few years, he came to understand, viewers will receive video on demand—be able to watch what they want when they want. With the click of a remote-control or a telephone button, they will summon up movies from the equivalent of a video jukebox. In an instant, they will send for and receive a paperless newspaper, a program they missed last night, a weather report.
To give you some context, this was when CompuServe and Prodigy were still the largest online Internet portals and a young upstart called America Online was making inroads into their dominance. Diller was able to use his laptop to circumvent a whole society's worth of restrictive conventions and mediating structure and gaze directly into the digital future.
Of course, democratizing information for media moguls like Barry Diller or enormously powerful government officials like Colin Powell isn't the most inspirational way the web has transformed society. But the web has also made it so that Josh Marshall at Talking Points Memo can have the same reach as the New York Times. Not only does the web democratize who can access information, but it democratizes what kind of information can be accessed. Now, to have an influence on public opinion, you don't need a multimillion-dollar newspaper or television channel behind you. You just need to sign up for a free account with Blogger.
The rise of Salesforce.com and customer relationship management (CRM) software took the democratizing power of the web and extended it into business analytics. Knowing your consumer and satisfying their needs is essential to any successful business. Thus, getting the answers to questions like, "What kind of people are purchasing my product?" "How often do they make those purchases?" "Why are they purchasing?" and "How are they using my product?" are invaluable—or, more accurately, extremely valuable—to a business. They can guide advertising, packaging, new product development, and basically every other step in the product's life cycle, from conception to consumption.
But in-depth and accurate market research used to be extremely difficult to obtain. Thus, an entire industry of market research firms developed to track and record that information—and after going through the arduous process of gathering this data, they weren't going to give it away for free. As a result, it used to be that only big consulting firms like McKinsey and huge consumer products corporations like Gillette and Proctor & Gamble were able to get reliable information about their customers. In a competitive marketplace, start-up businesses were inherently at a loss. They just couldn't afford the data.
The advent of CRM software revolutionized analytics. Imagine a very complicated Excel spreadsheet that basically tracks every interaction with every customer or client—or potential client. A CRM system is a way for companies to keep track of their sales leads, existing clients, current and past donors—basically to automate and organize the entire business of selling and soliciting. Now people have a way of seeing and reading their own data.
Salesforce, one of the earliest and most widely adopted CRMs, claims that 78 percent of a sales representative's day is spent hunting for information—like the latest presentations or deal updates—rather than actually selling. By centralizing and organizing all that information, suddenly you enable a sales rep to engage with clients more effectively and with a great deal more personalization. Like Colin Powell's press aide, your reps are now able to do more than gather information—they're able to act on it. Your business evolves from being like the manager of the gourmet restaurant who only knows the preferences of his biggest-spending customers to being like IBM with a full complement of market analytics.
Salesforce is just one CRM, focused on one aspect of business—sales. There's a CRM system, or multiple CRM systems, for every type of business or organization imaginable. If you're a nonprofit looking to engage constituents around issues and raise money, Blue State Digital, Blackbaud, Convio, Salsa, and others have been optimized to meet those needs. If you're a healthcare provider or pharmacy, then McKesson might be the right CRM for you. And CRMs are a lot more elegant and powerful than just Excel spreadsheets. Salesforce looks more like a Facebook page where instead of "friends" you have leads. By providing simple ways to organize and share information, CRMs enable small businesses to compete with the resources of big businesses. Conversely, they also enable big businesses to keep an infinity of data sorted and stored, allowing them to have the personalization of a small business.
Excerpted from THE MOBILE MARKETING REVOLUTION by JED ALPERT. Copyright © 2012 by Jed Alpert. Excerpted by permission of The McGraw-Hill Companies, Inc..
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.