white paper: mobile couponing

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1 An iLoop Mobile Whitepaper Author: D’Arcy Salzmann May 12, 2010 © iLoop Mobile 2010

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This white paper will help you understand the challenges and opportunities using mobile to create a one-to-one relationship with your customers.

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Page 1: White Paper: Mobile Couponing

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An iLoop Mobile Whitepaper

Author: D’Arcy Salzmann May 12, 2010 © iLoop Mobile 2010

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Introduction With the arrival of digital marketing channels, the landscape of marketing has changed forever regarding the way brands, publishers and virtually every other type of company reach their target consumers and audiences. The most significant change has been the advent of mobile marketing and the ability to interact with consumers via the most personal and ubiquitous device ever—the mobile phone. We hope this whitepaper provides useful information on how the mobile channel can be used for promotional messaging and couponing, specifically in the way precise, personal and contextual messages can enhance bottom-line marketing objectives. If you would like more information on mobile marketing campaigns using SMS/MMS, mobile Internet sites, mobile-enabled Web sites and other advanced mobile marketing technologies and strategies, please give us a call. We work with Fortune 500 companies and companies of every size and industry, and would be glad to discuss how can help you. For more info visit our Website at www.iloopmobile.com or contact us directly: Steven Gray | COO | iLoop Mobile Inc. +1.714.801.2370. Skype: sgray12 Text message SGRAY to 20757 and get my business card on your phone. Try it for free! www.txtcard.net

Connect with us

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Overview: The Evolution of Mobile Marketing Mobile phones are pervasive. In the United States, nearly everybody has a mobile phone. What’s more, mobile phones are personal devices, used extensively for a variety for purposes and almost always within reach. According to a study by market researcher Synovate, the U.S. has more than 286 million cell phone subscribers, 82% of whom never leave home without their devices. It’s no surprise, then, that applications and services for mobile phones have become so popular. Between July 2008 and July 2009, users of mobile phones and electronic devices in the U.S. sent more than 1.3 trillion text messages—almost double the 660 billion calls they made, according to CTIA (Cellular Telecommunications and Internet Association). The Pew Research Center, in a study released in December 2009, found that 68% of cell phone owners older than 18 send text messages. Approximately 95% of 18-to-24 year-olds send text messages. Even in older age ranges, texting is becoming increasingly popular. As of the third quarter of 2008, approximately 77% of U.S. wireless subscribers are reported to have paid for text messaging either as part of a package or on a transaction basis. The Nielsen Company estimates that text messaging is used regularly by 57% of all mobile subscribers 13 and older. In any given month, U.S. mobile subscribers engage in more text messaging than phone calls. Given those numbers, it isn’t surprising that advertisers and marketers are seeking to leverage text messaging for interactive engagement with consumers. In fact, SMS-based marketing has established itself as one of the fastest-growing advertising channels in the world today. Forrester Research Inc. estimates that mobile marketing will become a $54 billion industry by 2014. A Forrester survey indicated that 74% of marketers preferred to use SMS messaging as a marketing tool, while 44% of consumers surveyed said they would rather receive product information and other marketing messages through SMS campaigns than via any other channel.

Early Successes in Short-Code Marketing Short-code marketing involves text messages that incorporate a Common Short Code (CSC), or short code. A short code is an abbreviated phone number used for text (SMS) and multimedia (MMS) messaging. According to Wikipedia, Canada’s Labatt Brewing Company in 2002 ran the first cross-carrier SMS short-code marketing campaign in North America. Since then,

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mobile short codes have become increasingly popular as a new communication channel for personal interaction with consumers. Nielsen's report notes that so far, marketers have used short code marketing in a range of ways, including simple information messaging, rewards programming, couponing, and even direct SMS purchasing. Nielsen cites the following examples of how SMS short-code messages have been employed by brands and advertisers:

Papa Johns, Domino’s Pizza, Chipotle and Pizza Hut allowed customers to register ordering details online, then order pizzas from their mobile phones via text message. Nielsen estimates that 552,000 AT&T and Verizon Wireless subscribers texted with Domino’s Pizza, 279,000 texted with Pizza Hut and 182,000 texted with Papa John’s in Q3 2008

Foot Locker sent special offers to its “VIP program” participants, with texts going to approximately 306,000 AT&T and Verizon Wireless subscribers in Q3 2008

Subway’s FRESHBUZZ service allowed Subway customers to receive news

and promotions via text message. According to Nielsen, Subway sent sandwich deals and other offers to 212,000 AT&T and Verizon Wireless subscribers in Q3 2008

Coca-Cola's My Coke Rewards program had engaged 1.1 million AT&T and

Verizon Wireless customers as of Q3 2008. The following are a few examples of major brands and retailers who provide marketing information through text and multimedia messaging: American Express, Arby's, Best Buy, Citibank, CNN, Coke, E! Entertainment, HP Snapfish, Jiffy Lube, Mandee, Paramount, Vans, Village Inn, Weather.com, Wells Fargo, and Western Union.

Pitfalls of Broad-Based, One-Size-Fits-All SMS Marketing Today, consumers look at every text message they receive almost immediately. For marketers, that presents an immense opportunity, but it also entails a prohibition against contaminating a rich marketing and communications channel. That’s why the Mobile Marketing Association (MMA) established text-messaging guidelines, monitored by the CTIA and wireless operators, to which all mobile marketers must adhere. These guidelines were adopted to protect the consumer from spam and unwanted messages, but also to provide consistency, standardization, and to protect the integrity and overall value of SMS as a marketing medium.

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As mentioned above, mobile phones are personal devices, so marketers must be respectful of how they reach out to the consumer with marketing and promotions. Broad, one-size-fits-all SMS marketing campaigns—uninformed by personalization, relevance, and contextual immediacy—run the risk of alienating rather than engaging the target audience. Mobile marketing campaigns are far less effective when they fail to leverage the personalization, precision, and relevance that are defining attributes of the mobile medium. Consumers, for example, who opt in to a brand advertiser’s mobile marketing campaign expect personalized messaging and promotional offers that will speak directly to them. They want the communication to be personalized (based on market segmentation and customer preferences), relevant (based on ZIP codes and other geographic markers), and immediately actionable. What consumers don’t want are mobile marketing campaigns that take an impersonalized, shotgun approach, and that fail to speak to them directly. Such campaigns run the risk of being perceived by the consumer as indifferent, irrelevant, and even as a type of spam.

Consumers Wary of Mobile Marketing “Spam” A recent study of college students by WPP Group’s Mindshare found that, even though texting is preferred to face-to-face communication within the youth demographic, approximately 76% of those surveyed said they do not like to receive ads by text message. That opposition isn’t directed at the medium, but at how the medium has been misused by unwary marketers. Consumers in that demographic and others want dialogue first and foremost, and they also want preapproval of advertisements sent to their mobile phones. For advertisements to win that preapproval and trust, they have to offer value, which is predicated on “smart” attributes of personalization, relevance, and immediacy.

Ensuring that Mobile Marketing Fulfills Its Potential The problem is, how do marketers ensure that mobile marketing is personal, relevant, targeted, and timely? Thankfully, advertisers and marketers can use innovative new approaches and technologies to ensure the consumer appeal and full effectiveness of mobile marketing campaigns. Indeed, advertisers now are well placed to deliver value whenever and wherever consumers can benefit from an interaction or transaction. Such value can be delivered by ensuring that the marketing message is one an audience is eager to hear. But how can that be done?

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Defining Smart Alerts and the Customer Lifecycle—and Why They Matter The best approach is to ensure that mobile marketing communications, such as alerts, are smart. What’s a smart alert? They are customized messages based on relevant intelligence. They are targeted based on, for example:

who the customer is what’s happening around the customer (contextual relevance) where the customer is (geographic location) how the customer has responded to offers in the past (database records)

Perhaps more important, once a relationship between the brand and consumer is established, smart alerts can be integrated into the entire customer lifecycle:

initial customer acquisition and to establish brand affinity two-way relationship building and conversion cross selling and upselling improving customer satisfaction and brand loyalty

In short, smart mobile alerts and smart mobile coupons are effective, immediate, interactive, direct response marketing conduits. The Yankee Group estimates that even mobile coupons can deliver redemption rates of 10% versus 1.2% for paper-based coupons. The potential for smart mobile coupons is much greater.

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Market researcher Aberdeen Group determined that Money Mailer, an iLoop Mobile Platform customer, employed mobile coupons to help one of its clients, a fast-food restaurant, achieve more than a $20-to-$1 ROI with an integrated mail/mobile campaign. The redemption rate on the mobile messages averaged a staggering 17%. Because they are more relevant, the initial opt-in rate is expected to be higher, but perhaps more important is the ability to continue to deliver relevant messages during the customer lifecycle, translating into a lower opt-out ratio over time. Smart alerts and coupons address the convergent interests of consumers and marketers. Customers have opted in to receive the alerts and coupons, so they’re amenable to receiving them and won’t regard them as spam. Meanwhile, brands and advertisers tap the alerts and coupons to capitalize on time-sensitive marketing opportunities. Carefully targeted and data driven, smart alerts and coupons increase customer acquisition and conversion while also bolstering brand loyalty. They take SMS marketing way beyond the simple, one-size-fits-all approach. Industry observers, including Nielsen and others, agree that the likelihood of consumer purchases increases if the marketing message is targeted (based on careful market segmentation), personalized, and offers point-of-need relevance. As such, SMS coupons should map real-time information and profile history of direct relevance to the customer.

Providing Mutual Value for Customer and Brand/Advertiser As mentioned earlier, smart alerts and coupons are effective as marketing channels because they deliver value to both customers and advertisers. Benefits to consumers include:

Opt-in nature confirms that consumers want to be engaged Immediate, direct response to promotions gives customers what they want,

when they want it (such as when a given product or service is first available) Personal convenience derived from consumers being able to act instantly on

relevant, compelling calls to action Similarly, brands and marketers also benefit:

Real-time, news and information driven alerts increase customer acquisition, conversion, and loyalty

A leap beyond “one size fits all ” SMS promotions confers brand and message differentiation

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Segmentation, personalization, and point-of-need relevance increases likelihood of purchase

Time and place relevance increases likelihood of purchase Valuable consumer data is captured for analysis and fine-tuning of future

campaigns

iLoop Mobile Platform: Delivering on the Promise of Smart Mobile Marketing With its patent-pending Situation Relevance Engine, the iLoop Mobile Platform advances the art of SMS marketing and reconciles the interests of consumers and advertisers. It does so by providing smart coupons that address the following customer criteria:

1) Physical location 2) Weather conditions 3) Redemption history (what previous campaigns a given customer has

responded to) 4) Purchase behavior and preference (which products and services customers

want to be informed about, and how and when they want to be notified of actionable opportunities)

5) External events and information triggers (news and other developments that might be immediately relevant to the circumstances and value proposition)

6) Any other relevant data source (whether provided by the advertiser/brand or the consumer’s social networks)

Along those lines, the iLoop Mobile Platform has several advanced capabilities, including the following:

CRM Database Integration—Automatically delivers coupons relevant to a customer’s profile data and history

Coupon Management—Handles quota, validation, distribution timing, expiration and redemption code management

POS Integration—Integrates with in-store systems and coupon clearing houses such as Infinian, Inmar, and others

Dynamic Targeting—Targets individual consumers and groups of consumers using any number of criteria or profile triggers

Redemption Codes—Deliver unique redemption codes or SMS messages with a URL link to WAP-based coupons

2D Barcodes—WAP coupons can include standard or 2D barcodes for point-of-sale retail redemption

Consumer Behavior—Intelligent coupon database stores customer behavior and campaign trends for subsequent targeted delivery or campaigns

Analytics Dashboard—Detailed, segmented results reporting.

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The iLoop Mobile Platform provides a comprehensive solution for mobile campaign creation, management, and analytics. Platform features include advanced mobile campaign reporting and analytics, SMS alerts with CRM targeted messaging, expanded APIs, multi-byte characters for all international languages and viral marketing applications. The licensed SaaS self-serve platform, along with the Campaign Packages, are designed to help companies achieve significantly increased ROI in mobile marketing, surpassing the performance of marketing channels like email, print, Web ads and other traditional marketing channels.

How the Solution Works How do smart coupons work in practice? The following chart illustrates one example.

In the illustration above, a consumer sends an opt-in message to receive a coupon from a brand or advertiser. The database receives the keyword opt-in message, correlates relevant data relating to relevant criteria, and generates a personalized coupon, either in the form of a contextually relevant SMS-only coupon or an SMS message with a link to a WAP page that features multiple coupons and a barcode for point-of-sale redemption.

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In all, it’s a personalized, targeted approach that provides convenience for the consumer and flexible fulfillment options for the advertiser, brand, or retailer. A marketing campaign would work similarly, as the following illustration demonstrates:

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In the above example, an opt-in promotion prompts subscribers in New York City to send a keyword via an SMS message. The keyword is received by the database and referenced against all the relevant criteria, including weather. With 90-degree temperatures producing sweltering heat in the New York area, the database—responding to current conditions—intelligently chooses to send a coupon for a discount on a summer skirt rather than one for a discount on a fall sweater. An SMS coupon (basic SMS or enhanced WAP/barcode) is then sent to the consumer’s cell phone. The consumer then redeems the electronic coupon for a discount in a retail outlet.

Additional Campaign Scenarios The creative possibilities for one-off promotions or campaigns are practically endless. Consider the example of how weather can be used as actionable criteria. During a particularly oppressive heat wave in Houston, air-conditioned AMC movie theaters could offer mobile coupons on two-for-one or three-for-two admission prices. Similarly, a Starbucks in Seattle could offer latte specials during a cold spell. Automotive dealerships might extend specials on snow tires in advance of winter storms in the Northeastern states. Data other than weather conditions can drive promotions, of course. Market data, such as a surge in the Dow Jones industrial average, could trigger notifications from Charles Schwab along with coupons offering complimentary investment advice at local Schwab offices. Back-office systems, such as inventory, could also drive smart coupons. Land’s End, for example, uses business rules to clear out end-of-season inventory by offering smart coupons that proffer “daily deals.” All inventory is assigned a promotion start date and valid regional code. Sweaters and boots might be promoted in the North and Northwest, for instance, with shorts marketed in Southeast and Southwest. Such campaigns are monitored in real time and discontinued when stock is sold out. The process is fully automated. Using inventory-based mechanisms similar to those employed by Land’s End combined with news-based criteria, the NFL or another major professional sports league could offer opt-in coupons for discounts on jerseys of players who retire or are traded. Presuming considerable inventory of a given jersey, the NFL could apply a sharp discount and issue smart coupons to opt-in subscribers regarding sales of a traded player’s former jersey. News-based sports marketing also might occur at Foot Locker. If an athlete associated with a certain shoe brand or tennis racket wins a competition or tournament, Foot Locker could send out smart coupons regarding sales of gear worn or endorsed by the victor.

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Immediacy, Interactivity, and Location Bring New Power to Mobile Marketing A myriad of other examples, leveraging the extensive reach and inherent intelligence of the platform, are possible. What’s important, however, is that all of the above examples represent new advertising and direct marketing scenarios unleashed by the interactivity and immediacy of smart SMS alerts and coupons. In this new world, advertisers and brands aren’t limited by technical constraints. They can take campaigns to the limits of their creativity and imagination. One new area with tremendous potential is geo-fencing, a messaging mechanism triggered whenever an opt-in subscriber enters or leaves a specific location. Called Geographic Messaging Service (GMS), this nascent area is emerging as a powerful addition to the mobile marketing arsenal. A sample application of geo-fencing in action might involve a consumer who opts in to a push messaging service for a restaurant chain or other retail brand, which might link content to the user in a specific geographic setting, such as a one-mile radius around New York’s Times Square. A personalized message featuring the content—either a coupon for a special offer or a notification of a store event occurring that day—would be sent to the opt-in subscriber when he or she enters the predefined geographic area, which could include suburban malls as well as urban centers. The iLoop Mobile Platform makes it possible to deliver a complete campaign, whether planned well in advance or executed extemporaneously as a result of changing circumstances (such as an oversupply of inventory), real-time events (weather patterns or relevant news), and, as discussed above, customer location. In fact, a valuable aspect of smart alerts and coupons is that they can be invoked opportunistically, as events unfold, to capitalize on situations that offer mutual benefits to consumers and advertisers alike. Moreover, the analytics capabilities of the platform give brands and advertisers the post-campaign intelligence to customize subsequent marketing efforts for optimal results. The dynamic interactivity of smart alerts and coupons gives advertisers a wealth of ongoing insight into consumer behavior and preferences, facilitating incremental improvements in later campaign effectiveness.

Proven ROI The ROI from such campaigns can be compelling. The Aberdeen Group found that Money Mailer, which has used the iLoop Mobile Platform to run more than a thousand mobile marketing campaigns, has helped its clients achieve a 3.5-to-1 uplift in consumer response to the paper coupons, with between 2–11% opt-in rates and 8–20% redemption rates across many campaigns. Those results have been garnered by simply including a text messaging call-to- action on print advertisements.

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What’s more, Money Mailer has found that typical print mailings with a mobile call to action result in hundreds of new database acquisitions for small local businesses. In just a few weeks, one local restaurant built a database for regular SMS messaging that included more than 900 customers.

Summary: Mobile Marketing and the Continuous Customer Relationship The widespread proliferation of mobile phones and the popularity of SMS messaging set the stage for the first wave of SMS marketing based on short code messaging. While many advertisers have been successful with broad SMS marketing campaigns, new innovations enable smart SMS alerts and coupons that bring personalization, relevance, immediacy, and value to mobile marketing initiatives. Savvy advertisers and brands are seeking to develop closer, more personal relationships with their customers. The formula for success must involve delivering more value to customers as a trusted source of relevant, timely, and targeted transactional information. Mobile smart alerts and coupons give consumers unprecedented opportunities to benefit from bargains and deals that they would not have enjoyed otherwise. At the same time, they give advertisers and brands a direct, interactive channel to their most passionate and loyal customers, affording opportunities to capitalize on changing variables (inventory volumes, weather, external events, etc.) to realize increased revenue and profitability. Additionally, advertisers strengthen their bonds with customers, continually enhancing interactive relationships that confer mutual benefits.

About iLoop Mobile iLoop Mobile is a premier mobile marketing solutions provider to the world’s largest enables brands, media companies, agencies, and retailers. iLoop Mobile's marketing platform allows customers to quickly and independently create and manage campaigns worldwide using an intuitive, self-service, Web-based package. Customers can also take advantage of iLoop Mobile's extensive experience in developing and launching mobile campaigns using the company's managed services, which provide turnkey marketing programs for messaging, mobile Web, mobile-enabled broadband websites and mobile coupons. All customers have access to iLoop Mobile's powerful mobile Web and messaging analytics, enabling detailed analysis of their mobile marketing activities. Founded in 2004, iLoop Mobile is headquartered in San Jose, California, with offices in Krakow, Poland.