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.”