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tomi secret agentWearing a fedora, bespoke Hong Kong suit, and shirts with “007” embroidered on the breast pocket, Tomi Ahonen stands out in a crowd.

A former Nokia executive, and almost certainly the most prolific business writer to fixate on monetizing mobile technology, Tomi has been writing about mobile marketing since 2002.

He has written the first business book on 3G: m-Profits: Making Money from 3G Services, and more recently The Insiders Guide to Mobile.

Tomi explains why mobile marketers shouldn't obsess over apps, but start with the basics...

What are the biggest challenges for mobile marketers in the US?

American smartphone sales have just passed the point where more than half of all new phone sales are smartphones. 

The installed population of smartphones is only 31%, meaning that if you do anything that works on every smartphone, every BlackBerry, every iPhone, every Android, every Windows, you are still abandoning 69% of the U.S. population. 

It’s wonderful that Apple has awakened the advertising industry and marketing industry in the United States to a love of apps. But recognize, for anything that you can reach with that smartphone, you can reach a ten-times larger audience on SMS.

And then of course you do MMS, and then of course you do mobile web. It doesn’t mean that an app is bad. Just understand that the reach can be far, far bigger with SMS, with MMS, with mobile web. It is starting to be realistic to do it on QR codes. In many markets, you can do excellent mobile advertising with voice.

The problem is much bigger on the client side. They just want an iPhone app. Very often, the mobile campaign is sold, in the United States, in North America, even in Latin America, the campaign is often sold as, “Oh, by the way, if you give me 10% more money, we can also do a mobile web version of this." And the mobile web version is the one that gets all the business, but the chief marketing officer has this cool app for his iPhone that he can show his CEO. 

That’s why Kraft says, “Leave no phone behind.” The Kraft philosophy is that all mobile advertising starts with the basics; you do SMS, you do mobile web, you do MMS. And then you add other functions, premium. If you want to do it on QR codes, if you want to do AR, if you want to do an app, et cetera.

Coca-Cola has a guideline saying for their mobile advertising, 70-20-10. 70% is SMS; 20% is mobile web; 10% is apps.

For mobile advertising and mobile marketing, Japan is the undisputed leader.

Why is that? 

Americans see the iconic pictures of Dr. Cooper with the Motorola phone, and they think that because Motorola in America invented the handheld cellular phone, the industry launched in America. It didn’t.

By the time the first phone was sold in Chicago, Japan had had cellular phones for four years. Finland had had them for two years. The first digital service was not launched in America; it was launched in Finland.

The first paid content onto a mobile phone was Finland. The first mobile messaging, Finland. The first mobile Internet,  Japan. The first 3G service,  Japan. The first camera phone, Japan. QR codes, near field communication, mobile wallets, all of this from Japan.

The world’s first national advertising agency specializing in mobile advertising was launched in Japan. The largest Japanese carrier, NTT DoCoMo came together with the largest Japanese advertising agency, Dentsu, to start D2 Communications. It is the largest mobile advertising agency. 

Their rivals immediately copied them. The next year, KDDI, the number two carrier, launched with the second-biggest advertising agency in Japan, and the number three carrier, which was then called JPhone – it’s now called SoftBank – got together with Yahoo Japan, part of the local advertising.

They saw that mobile was becoming a medium. They saw some rudimentary advertising already coming from little independent companies - early messaging advertising and early web banner ads and so forth - and that this is going to be a media platform.

Someone is going to sell advertising professionally, and we’re going to do it. And they’re just like any other ad agency. When you go to D2C, they don’t only support their own carrier. You can put ads on television; you can put ads in print – they’re an ad agency. But they specialize in mobile.

Now, there are some very smart people in New York who know a lot about mobile marketing. But they happened to get into mobile early. They have good competence in that. Some of the big advertising agencies – Ogilvy, Saatchi, those kind of guys – they’ve also got good mobile teams. But very many of the people in this industry are still struggling.

The competence is the problem. You have to understand to do something different.

That competence is still rare in the US.

(Tomi uses his Samsung phone’s built-in projector to play a little Men in Black)

Very little mobile marketing in America has been what’s called engagement marketing, which becomes interactive when consumers co-create the marketing experience. But even that, here, we’ve had wonderful examples.

Borders bookstore experienced 16% redemption rates on their mobile coupons. Rite-Aid allows you to register your loyalty card as your cell phone number. You don’t have to carry the plastic card. And now they can send you an update reminder: “Your prescription’s running out. Please go to your doctor and get a signature.”

If you look at any of the award-winning campaigns, from Japan, Singapore, China, South Korea, Hong Kong, you go over to Scandinavia, Nordic countries, Britain, Spain, Italy, Israel, even Brazil, South Africa – they’re far, far more conceptually advanced than what we see here. And working on simpler technologies.

For example, in Hong Kong, Guinness beer sponsors the big rugby tournament called the Sevens. Imagine the Super Bowl. The teams come in from around the world to play, and of course all the fans come, for one week. Guinness sponsors a free mobile phone app. Not for smartphones. Java. It works on 75% of all phones on the planet.

It gives you everything about the tournament: Which venues, who’s playing who, what is the latest score, what are the high statistics, all the biographies, who is injured, et cetera. It is also a tourist guide for Hong Kong, so it shows the subway map; it shows where the airport is, where the embassy is, where your hotel is. It shows you which bars sell Guinness, of course. All of this is normal.

Now the clever part: In Hong Kong, the taxi drivers don’t speak English. They speak Cantonese.

So, in addition to all the normal sports stuff, the touristy stuff, and the drinking stuff, it has a push-to-talk button on a list of simple tourist phrases that you might want to speak. It’s not an intelligent real-time translation machine. It’s just very simple. Someone has recorded the saying, in very clear voice, in Cantonese. The text on your link is in English. So you’re an Australian who wants to tell the taxi driver, “Please drive me to my hotel.” You click on the button; you show it to the guy, the taxi driver, and it speaks Chinese to the taxi driver.

Also, it has all the flirty stuff, you know: “What is a pretty lady like you doing in a sexy bar like this?” or whatever.

Another example, from Japan, is CoCo Presso, which is an ice coffee brand. You can buy anything in Japan in a vending machine. CoCo Presso put up giant man-sized posters in the subway, offering you a free coffee. Scan with your cell phone, and you get the coupon. Your phone shows an arrow: the nearest vending machine is here. Usually, like, six feet away. 

You walk to the vending machine. Every vending machine in Japan is, of course, cell phone-enabled, so you can pay directly. Half of Japanese have their bank accounts on their cell phones. Normally you'd just charge it to your phone bill. But in this case, you get a free drink, because it’s a free coupon. 

Tomorrow, you’re thinking, “Oh, great, I know where I get the free coffee.” You get the coupon. You bring it to this vending machine. The vending machine says, “Sorry, you have already redeemed the coupon at this vending machine, but this coupon is valid if you can find another one of my vending machines.”

Because of course they wanted you, the consumer, to learn where their vending machines are. And over every one of them, of course, there’s a big poster saying, “Here is the next one! Come here!”

If the Japanese are so advanced, why is California the envy of the global tech world?

The Japanese were much too successful domestically. They didn’t care about the world. 

The Japanese domestic market is big enough,  the population is a third the size of the United States, that you can sustain very big companies. Sharp and Panasonic and Toshiba and Fujitsu and Sony and the big carriers of Japan don’t need to look at the rest of the world – they have a huge domestic market.

Their networks were very high capacity. They stopped selling 2G phones when the iPhone – a 2G phone – was launched. The original iPhone 2G was, on its launch date was already obsolete in Japan. They’re all 3G phones now. For four years, all phones sold in Japan have been 3G phones. Because the technology, the infrastructure, the market was so advanced, the local vendors found it easier to sell to the Japanese market and not bother about the rest, which seemed to be old-fashioned to them.

So, Japanese consumer got very advanced devices and advanced services, and the ecosystem grew. But they had a very hard time crossing the seas to bring this to other networks on older technologies, on lesser phones, on less friendly ecosystems, and so forth.

I’ve seen analyses that with hindsight, everyone was reading the wrong analysts. One of the particularly popular beliefs in Japan was that the cell phone industry was at saturation around the year 2002, 2003, 2004. So, there was no point for Toshiba or Sharp or Panasonic or Sony to try to fight for the cell phones with Nokia at the time, because the world had reached saturation.

In reality, the world doubled total penetration of phones, and doubled again. Strategic decisions that were made on what seemed like good information at the time ended up being faulty.

This has resulted in what’s called the Galapagos Island syndrome, which is the phenomenon where the Japanese market developed ever more Japan-unique kinds of experiences. Part of it is all kinds of Japanese things; but it’s very strong specifically in mobile.

That’s the difference from the US, where they had an eye on global products from the beginning?

Yes, yes, and same for Europe. European countries are so small –Finland has five million people; you can fit two Finnish populations in New York City. Norway, five million people. Denmark, five million people. Sweden, seven million people. These are tiny countries in terms of populations. Immediately, they want to collaborate, and create bigger markets.

The iPhone awakened the Americans to mobile opportunity. The West Coast was kind of seeing the end of the internet opportunity, the PC opportunity. It was getting ever more difficult to make money there. You get a couple big companies that make it – the Googles, the Amazons, the eBays, the Yahoos – and everyone else is kind of struggling: “Where’s my place?” But on mobile, there’s a huge opportunity, thanks to the iPhone.

Everyone now believes, “Okay, the next internet will be in my pocket. Let’s make money out of this next wave.”

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Published 20 October, 2011 by Sam Dwyer

Sam Dwyer is an Analyst based in Econsultancy's New York office. He can be followed on Twitter @sammydwyer.

24 more posts from this author

Comments (4)

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M.S. Melendez

Thank you for the piece-one of the more thoughtful responses to this conundrum that many deal with-a part II of this would be great to further expand on the topic. Well done and again-thanks!

about 5 years ago

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Craig Sullivan, Customer Experience Manager at Belron International

This point is well made. Stop obsessing about apps - There is an econsultancy report covering how to get a balanced app and mobile web strategy on econsultancy here :

http://econsultancy.com/uk/reports/mobile-websites-and-apps-optimization-best-practice-guide

(disclaimer : written by yours truly)

about 5 years ago

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Murat

"The problem is much bigger on the client side. They just want an iPhone app. Very often, the mobile campaign is sold, in the United States, in North America, even in Latin America, the campaign is often sold as, “Oh, by the way, if you give me 10% more money, we can also do a mobile web version of this." And the mobile web version is the one that gets all the business, but the chief marketing officer has this cool app for his iPhone that he can show his CEO. "

Oh yeah sure, because that's exactly how it works, a 5/6 figure app budget gets signed off because the marketing officer wants something cool on his phone. Seriously what kind of simplistic bullshit view is that?

Ever heard of customer insights? Analytics? I haven't seen mobile web stats from a brand in 2 years that hasn't had iPhone first for mobile traffic - so it's understandable they would want a iPhone app.

"Tomi explains why mobile marketers shouldn't obsess over apps, but start with the basics..."

The 'basics' doesn't mean using SMS/MMS in your mobile marketing - it's starting with a good idea and execution. SMS isn't going to help a shit campaign idea anymore than a app will.

about 5 years ago

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Sam Dwyer, Analyst at Econsultancy

Tomi's argument is primarily about increasing reach.

The hypothetical iPhone story is a little simplistic, sure, but not utterly unreasonable.

While yes, iPhone users seem to consume more mobile web than others, creating an app specifically for the iPhone doesn't subsequently _increase_ reach. Instead, what it captures is an even smaller tranche.

This is good for engagement, acquisition and retention within the tranche, sure. But if other, more basic technologies are ignored, the total reach is significantly foreshortened.

about 5 years ago

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