Category Archives: Mobile Marketing

Africa’s Mobile Commerce Segments

M-Pesa Kiosk An article posted earlier this week acknowledges Africa as the global leader in the adoption of mobile commerce (m-commerce). Published on 9 November 2011 “Africa Leads World in Mobile Commerce” highlights the rapid diffusion and adoption of m-commerce, in general, and mobile payments systems, in particular, within the continent.

This article reinforces something that my colleagues and I have known for a while. Africa is using mobile technology to leapfrog the older, more capital intensive, communications infrastructures in use in developed countries. In a recent publication, Dr. Godwin Ariguzo (@ariguzo) and I develop segments for the diffusion of mobile commerce in Africa. With data obtained from the International Telecommunications Union (ITU)  and the 2011 CIA World Fact Book,  we use model-based cluster analysis to identify groupings of countries who are similar given three variables related to m-commerce: Internet Users per 100 People (IUP100 from ITU), Mobile Cellphones per 100 People (MCP100 from ITU) and Gross Domestic Product per Capita (GDPC from CIA World Fact Book).

The first two variables serve as surrogate indicators for the adoption of new(er) communications technologies within a country and the potential for accessing the Internet via mobile phones. The third variable, gross domestic product per capita (GDPC), is used as a surrogate indicator for the standard of living within the country. Not without its critics (and rightfully so, in our opinion), GDPC remains one of the most widely used indicators of the level of development an economy has achieved. Complete 2009 year-end data (data for all three variables investigated) is available for African 53 countries.

The results of the model-based cluster analysis suggest that three distinct m-commerce segments exist within Africa. The number of countries within each segments ranges from 15 to 21 (15, 17 and 21). Countries included in the three segments, along with the average segment scores for each variable investigated, are presented below.

African Mobile Commerce Segements and Segment Means

Based on the results, we propose that the 15 countries in the third segment offer the best opportunity for the roll-out of m-commerce within the African continent. Interestingly, the four North African countries (Algeria, Egypt, Libya and Tunisia) at the center of the political revolution in the Middle East and North Africa are contained within this cluster. The impact of mobile phones and mobile phone technologies in fostering and fueling these revolutions is well established.

The graph below presents the segments in three-dimensional space. Clearly, the three segments are distinct with little overlap. Just as interesting, the graphical presentation allows one to view the impact that each variable has in determining segment membership.

African Mobile Commerce Segements in Three Dimensional Space

In summary, those seeking to launch m-commerce endeavors in Africa should consider implementing them in the third segment (15 countries) first, followed by the first segment (17 countries) and then segment two (21 countries). The full article is available for download from the Social Science Research Network (SSRN).

Africa is a leader in the adoption and implementation of m-commerce. How long will it take for the rest of the world to catch up?

Citation:

Ariguzo, Godwin C. and D. Steven White (2011), “Africa’s Mobile Commerce Segments: A Model-Based Cluster Analysis”, Review of Business Research, Vol. 11, No. 4, pp. 38-44.

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The Future of Marketing

CRMAs many of you know, Boston and the surrounding environs are hosting multiple FutureM events this week. FutureM is a multi-location conference highlighting the newest technologies and their impact on the future of marketing. The future of marketing is in flux. Those of us involved in marketing are witness to the shift from the dominant broadcast paradigm to a new interactive paradigm.

Not attending any of the conference events, and thus without the benefit of the insight provided by the practitioners driving the paradigm shift, makes offering an academic perspective regarding the future of marketing a challenge. But that’s precisely the purpose of this blog post.

What are the characteristics most closely associated with the future of marketing? Marketing is destined to become increasingly fluid, responsive, interactive, efficient, personalized, targeted, location-based and mobile.

Fluid – as marketing moves from the broadcast paradigm to the interactive paradigm, lead-time for developing and placing promotional messages is reduced. As marketing efforts move more to the online and mobile environment, the opportunity to monitor and change the message to increase performance grows. Marketers possessing the tools/skills to accurately monitor campaigns and to make changes on the fly will succeed in the new interactive marketing environment.

Responsive – in the future marketing efforts will become more responsive to the wants and needs of both the target market and the client. In the future, metrics will play a larger role in determining the success or failure of marketing campaigns. Delivering the correct message to the correct target market in order to generate the best potential return on investment (ROI) will become less art and more science. From a target market perspective, fluidity and responsiveness are interdependent.

Interactive – the broadcast paradigm is passive whereas the future of marketing is active. Those in the target market have the ability to interact with marketers in real-time and can participate in the generation of the marketing message. In addition, placement of marketing in online and mobile games offers an interesting opportunity.

Efficient – in the future, the ability to calculate an accurate ROI provides marketers with an opportunity to optimize marketing efforts. Optimization today remains an elusive concept. By reducing wasted marketing expenditures and tailoring messages based on target market responses, the mythical goal of efficiency is destined to become a reality.

Personalized – the future of marketing is one of personalized or customized campaigns. As we move away from the one-to-many communication model, individual targeting and interpersonal communication becomes the norm instead of the exception. Combined with the category below (targeted), marketing messages in the future will be customized at the individual level.

Targeted – the ability to deliver personalized messages is made even more powerful when combined with data. Demographics, psychographics, behavior and usage, historical purchase data, responsiveness to past marketing campaigns and geography will play an important role in the marketing messages that those in the target market receive.

Location-based – in the future, where you are and why you’re there will play an increasingly important role in marketing. Offers from nearby competitors, suggested venues and activities, historical points of interest, sales and promotion information and consumer evaluations/ratings of the same will play change based on your location.

Mobile – coupled with the above, more marketing campaigns will be delivered via mobile devices in the future based on location. P-commerce and p-marketing will gain in importance as the technological capabilities of smartphones and iPads (or similar devices) increase to the point that computer ownership becomes unnecessary.

The main reason for the paradigm shift? Technological advances and Moore’s Law in action. On the consumer side, the cost of increasingly sophisticated technology is decreasing to the point where it is nearly affordable to all in the North American market. In the future, television, video and digital outdoor advertising remain important but serve to drive traffic to online and mobile campaigns. The importance of traditional print advertising is expected to diminish. The ability to reach targeted consumers individually via mobile devices at an affordable rate negates the need for investment in print media.

On the business side, customer relationship management (CRM), data collection and data mining are becoming refined to the point where CRM systems will provide actual value (as opposed to hypothetical value). The goal of marketers in the future will be to collect as much data and information as possible at the individual level and to use this information to predict responsiveness to customized marketing efforts.

The new era of marketing is the social/mobile marketing era. Micro-targeting is the future of marketing. And this future is becoming a reality because of the merging of marketing and information technology.

What do you think the future of marketing will be?

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U.S. Mobile Marketing: SMS, MMS and Wireless Data Growth 2005-2009

Text MessageOne of the predictors of the future success of mobile marketing and advertising is the adoption rate of the mobile messaging platforms through which advertisements may be delivered. The diffusion, adoption and use of SMS (Short Message Service), MMS (Multimedia Messaging Service) and Wireless Data plans (as measured by annual wireless data revenues) is an indicator of the future potential of mobile marketing success.

Using data gathered from a variety of CTIA sources, the following growth charts are presented for the period 2005-2009: U.S. Annual SMS Messages, U.S. Annual MMS Messages and U.S. Annual Wireless Data Revenues. All three graphs indicate positive continuous growth for the period examined.

SMS use is expanding at a compound annual growth rate (CAGR) of 109.5 percent. At year end 2005, 81 billion SMS messages were sent in the U.S. market. This grew to 1.56 trillion by the end of 2009. Use of SMS was once was considered to be an accurate predictor of age (young versus mature). No longer is this assumption true: SMS adoption has bridged the generational gap. Based on its broad-based acceptance and use, SMS provides solid prospects for those considering mobile marketing and advertising.

U.S. Annual SMS Messages

In the period examined, MMS use in the U.S. experienced a CAGR of 117.02 percent, the largest growth of the three variables examined. The increase in MMS use is most likely correlated with the increase in wireless data plan use and the proliferation of smartphones. At the end of 2005, 1.1 billion MMS messages were sent in the U.S, compared to 24.4 billion by the end of 2009. MMS provides the most exciting prospect for mobile advertising, especially in the delivery of short video ads to targeted mobile users.

U.S. Annual MMS Growth

To make mobile marketing and advertising acceptable, especially in the U.S. where customers pay for incoming and outgoing SMS and MMS messages, requires growth in the adoption of unlimited wireless data plans. As we transition from 3G to 4G access, mobile providers are beginning to examine the amount of data that individuals use with an eye towards charging heavy users of data more in an effort to keep bandwidth available for the masses. While this move may seem logical to the providers, it may inhibit the long-term growth of mobile marketing and advertising. U.S. wireless data revenues grew at a CAGR of 48.21 percent for the 2005-2009 period, starting at $8.6 billion and ending at $41.5 billion.

U.S. Wireless Data Revenue Growth

Clearly the diffusion and adoption of SMS, MMS and wireless data access bodes well for the mobile marketing and advertising industry. The acceptance and use of SMS and MMS by consumers of all ages provides a platform on which to build campaigns that are targeted, focused and customized. Consumers are positively predisposed to receiving information via SMS and MMS. The only remaining barriers, from a behavioral perspective, are the diffusion of unlimited wireless data plans and smartphones. Paying individually for incoming and outgoing SMS and MMS messages turns off consumers. Once reasonably priced unlimited data plans become the norm, instead of the exception, mobile marketing and advertising is destined to grow exponentially.

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