XLNT Deals 4 U!: Companies turn to 'mobile' commerce
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Fans of Fergie -- she of Black-Eye Peas fame, not Prince Andrew's ex-wife -- can send a text message on their cell phones before Monday to try to win a meeting with the singer. But there's a caveat: If they send the message, they shouldn't be surprised when Vanity stores use the same cell phone numbers to hit them with text-messaged coupons and promotions.
Messages from the chain that sells clothes for teen girls likely will be short, sweet and spelled oddly, of course. Just signing up for the contest recently triggered this response: "Thx! U R in Vanity exclusive offers & sweeps from ACCESS!"
The cell phone, long touted as the next big tool for advertising and commerce, finally is winning over U.S. retailers and marketers ready to reach their customers in a different way. But despite an explosion in consumers' personal use of the cell phone, businesses are approaching mobile commerce, or m-commerce, with care as they try to avoid a scenario in which consumers start refusing to take their calls.
"You need to be very selective if you send these things," cautioned Norman M. Sadeh, an associate professor at Carnegie Mellon University and director of its Mobile Commerce Lab.
The oft-repeated mantra is that cell phone marketing never should be allowed to follow e-mail into the category of spam. Proponents say regulations barring unwanted mobile messages will avoid that, yet mobile advertisers still are learning what constitutes crossing the line -- even when consumers voluntarily share their cell phone numbers.
Rick Gardinier, managing director of Downtown ad agency Blattner Brunner's bbdigital division, voted by text message not long ago for a contestant on Fox TV's "American Idol" show. He wanted to understand how the process worked. "I started getting inundated with messages from them," he said. "I finally just stopped them."
That doesn't mean he's turned off on the entire concept. In August, the agency launched a new service to help clients create cell phone marketing campaigns. "We just really have started to see people asking us about it," said Mr. Gardinier, who expects to see more pilot projects next year.
Others are experimenting, too. Strip District agency Think Inc. is talking about trying such a program with salon client Fantastic Sams, said Principal and General Manager Brian Tedeschi.
Regular customers might get an alert to short-term promotions. "It could help build traffic on a slower volume day."
SmartReply Inc., in Irvine, Calif., helped set up the Fergie contest, which is a partnership between the singer's record label and the teen retailer. Another client is the Foot Locker shoe store chain, which has collected several hundred thousand cell phone numbers through its 3-year-old program sending promotions by text message to customers who sign up.
Both retailers limit the number of messages they send, said Dan Jones, Smart Reply vice president of channel development. But he could imagine certain users being happy to accept daily text messages from a company, perhaps a joke or even a prayer. His firm helped set up a text message program with a Midwestern grocer chain to alert customers whenever gas prices changed.
Until recently, the prime U.S. audience for mobile advertising has been teens and young adults who mastered text messaging early. Fancier, Web-enabled phones have spawned more marketing options, but the short message service remains a favorite of marketers, in part because it's the one younger people are most likely to use.
When Blattner Brunner held an internal contest this year that involved sending text messages, more than a few staffers didn't know how. Mr. Gardinier reported people were heard in the halls asking, "How do you do it on my phone?"
Meanwhile, students at Carnegie Mellon University have spent the past few years working with a more ambitious program that allows them to use their cell phones or PDAs -- personal digital assistants, such as a Palm Pilot -- to do such things as find the nearest place to get food on campus, learn about various upcoming campus events and check out their friends' schedules.
The goal of the Mobile Commerce Lab myCampus project is to create a sort of intelligent cell phone program that learns from how its users behave and helps them get the information they want when they want it. The users input information, but the program is also supposed to adapt based on how they actually behave.
One of the main pieces of the project is to determine how to protect users' privacy and let them control just how much information is disclosed to other people, including friends, employers and even retailers. The National Science Foundation just approved a $1.1 million, four-year grant to six CMU researchers, including Dr. Sadeh, to help develop technologies addressing privacy and security issues for cell phones as well as other computer-enhanced environments such as smart offices.
"Our project is to see how far we can push the envelope," said Dr. Sadeh, who wrote a book on mobile commerce in 2002 and teaches a course in which students develop and test new ideas.
Keeping cell phone users in control is key, said Dr. Sadeh. If a fast-food restaurant blanketed everyone on its list with a coupon at 11:45 a.m. daily, some people might have had an early lunch and be annoyed at the interruption. He thinks it might be more effective to wait for users to look for information on places to eat, and then offer them suggestions and coupons.
Many people also are uncomfortable with the idea that their movements can be tracked too closely. Dr. Sadeh doesn't see much support for creating a program that would sense when consumers are walking by, say, a Gap store and instantly send them a message offering a coupon to come in.
SmartReply's Mr. Jones agreed shoppers would see that as invasive, even annoying. He noted if his phone rang to alert him to a new coupon every time he drove by a Starbucks, the trip home would be noisy.
Another issue is cost. Cell phone plans in the United States charge differently for text messages, and consumers are likely to be very selective if they're paying for the message.
That, marketers said, just puts the onus on companies to offer something compelling. It also means those who do opt in are probably truly interested.
Consumers need to be able to change their minds. About one of every 5,000 cell phone users who signed up for the Foot Locker program later opted out, according to Mr. Jones.
The U.S. markets' use of mobile commerce trails that of countries such as Europe, Japan and Korea, in part because of standardization in technology in those places that made it easier to reach large numbers of consumers. Cell phones have moved beyond text messaging there as well.
Dr. Sadeh, who worked at the European Commission several years ago, said some consumers load small amounts of cash on their cell phones to pay for small items such as bread or vending machine items. In April, eBay company PayPal introduced a text-message based system allowing U.S. consumers to send money or even buy things such as shoes using their mobile phones.
Just which direction the U.S. version of m-commerce goes will depend on which offerings gain the most acceptance.
Telecommunications company Sprint last year offered a service allowing National Football League fans to pay to get game information on their cell phones, but this year the company rolled out an improved version free to most of its customers, a spokeswoman said. She said the number of users who have downloaded the new NFL Mobile program is 10 times higher than last year's.
MobileSidewalk, another company based in Irvine, Calif., is hoping consumers will pay $5.99 a month for a service launched in August with TheSportsPage that promises sports alerts, scores and the odds for the big games for fans of teams such as the Steelers or the Pirates.
Boston company MobileLime just announced a project with a supermarket in the Washington, D.C., area that will offer shoppers who participate in its loyalty program alerts and discounts through their cell phones.
Larger players also are dabbling in mobile commerce. Amazon.com has allowed shopping through Web-enabled cell phones for awhile. Yahoo! recently announced it is starting a test allowing advertisers to pay for sponsored search results through its Mobile Web service.
A Maryland consulting firm The Shosteck Group estimates the global market for mobile advertising alone could reach $9.6 billion by 2010. "The cell phone is a very powerful instrument for advertising. There's no question," said Dr. Sadeh.
Even so, the hype over the potential of m-commerce has been around for years, with more than one startup company tripped up by the market's slow adoption rate.
While it may be awhile before Americans are using their cell phones for everything from shopping at The Gap to keeping track of the family's schedule, Dr. Sadeh said the momentum finally seems to be picking up speed. "I think we're past that hype curve."
First Published October 22, 2006 12:00 am