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Posts Tagged ‘NFC’

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Over the last 4 or 5 years there has been vigorous debate regarding when, exactly, the true potential of mobile will be realized. Mobile mapping, mobile TV, check-ins, mobile payments, push ads, games, QR Codes, NFC, Daily Deals, SMS, virtual mobile currency, pop-up ads, barcode scanning, coupons, and a litany of others have had their moment in the sun, but none have generated commerce upside at a truly transformational level.

Turning Point 2011

Finally, as 2011 came to a close, we saw real, tracked and reported numbers that were far too numerically impressive to be dismissed as a fad or trend. These numbers were tied to Mobile Commerce.

When I say mobile commerce, I do not mean mobile payments, which I define as paying for items at checkout, using your mobile phone. I an referring to online sales converted on mobile websites specifically designed and formatted for this purpose. Example: m.finishline.com

Retailers & Brands Lag Behind, Fueling The Opportunity

For years, online retailers and brands waited, while their customers flocked to web-connected smartphones and, as a result, small screens are now crammed with large format websites never designed for this purpose.

In late 2011 retailers and brands finally started waking up and launching mobile optimized sites, and this fueled explosive growth and big profits for those still out ahead of the curve.

Mobile consumers can finally land on mobile-optimized commerce-enabled websites and the traffic to these sites can be converted into transactions in a trusted, secure environment. These mobile conversion metrics are the key and the resulting revenue numbers are real, undeniable, and impactful.

Changing Expectations

As more brands and retailers launch mobile commerce sites, consumer expectations have changed rapidly. In fact, most consumers surveyed now expect mobile sites to not only function, but to work better than  standard e-commerce sites.

Retailers and big brands are finally realizing that mobile commerce is not some fringe distraction to their e-commerce team, but, rather, a way to add 10-20% to their bottom line in incremental revenue. That’s right, retailers and brands are not stealing from Peter to pay Paul, and most see no drop in “traditional” online sales. It’s all upside.

For athletic shoe retail giant Finish Line, their mobile site now makes up 14% of their total online traffic. For adult online retail leader Adam & Eve, mobile commerce accounted for a whopping 8% of their total revenue, only 2 weeks after it was launched.

Still not convinced that mobile commerce has ushered in a revenue-fueled turning point that should/will change the entire tenor of the mobile space? Here are the numbers.

2011 Mobile Commerce Stats

-PayPal saw a 397% increase in consumers shopping via PayPal Mobile on Cyber Monday 2011, vs 2010.

-Rue La La saw an almost 200% increase in mobile sales on Cyber Monday 2011 vs 2010.

-Ebay’s mobile commerce doubled to $5Billion+ in 2011

-Ebay’s Black Friday mobile commerce sales were up 516%, over 2010.

-2011 mobile commerce sales were up 91.4% over 2010.
– In 2012, mobile commerce is expected to increase another 73.1% to $11.6 billion.
-The average mobile commerce purchase was $123 (vs. $87 for purchases from desktop PCs).
-Shopping by mobile users doubled from 1.87% to 3.87% of all online purchases in the past 9 months!

-During the 2011 Holiday season, 44% of all Google searches for last minute gifts and store locator terms were from mobile devices

-Of consumers surveyed, 70% use their smartphones in stores and 77% have contacted a business via mobile.

64% of smartphone owners age 18-24 used a smartphone to find a deal this Holiday season.

-There were 20Million mobile bar code scans in Q3 2011, a 40% increase from Q3 2010.

-According to IBM, mobile traffic made up 18.3% of all online traffic on Christmas day 2011.

Conclusions

Mobile commerce transactions can occur anytime, anywhere and are being initiated on smartphones carried religiously by almost 50% of Americans. Online sales are no longer occurring only in front of a desktop or laptop, but anywhere and anytime. Retailers and brands should take notice.

Even more importantly, mobile commerce sales can be triggered by real world interactions with marketing initiatives most retailers and brands are already paying for! Printed mailings or catalogs, in-store point of purchase displays, peer to peer recommendations, signage, social media campaigns, emails, etc can all serve as mobile trigger points, when they are accessed by mobile consumers. The (largely untracked) digital media marketing spend already occurring can be tapped to drive mobile commerce, with tracked results. This means that smart brands (or their agencies) can (and should) be able to adjust these campaigns on the fly, to maximize ROI, in the form of tracked incremental mobile commerce revenue.

The biggest takeaway here is directed toward online retailers or brands who still do not have an integrated mobile commerce solution. Read and digest the numbers above and ask yourself this simple question, “How easy it is for a mobile consumer to visit my website and convert a sale?” (Hint: Try it!).

If you do not have a mobile site, the answer will be painfully obvious. Make fixing this your 2012 New Year’s resolution!

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Wilson Kerr (@WLLK) is a mobile LBS marketing expert, and VP of Sales and Business Development for  Unbound CommerceContact Wilson today to learn more. Mobile: 303-249-2083.

Some of the stats in this post were compiled from various sources by Gabrielle Kalika of Mobile Marketer. I have added added more my own, also compiled from various sources. All stats can be verified, via Google search.

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Mobile Marketer Senior Editor Giselle Tsirulnik recently interviewed me, regarding the role that SMS can play in mobile commerce. I am re-posting this interview and expanding some of my answers.

I hope this post gives retailers and brands insights into ways that “Trigger Point Marketing ™” like SMS can be used to link tracked mobile commerce sales with the social sharing of the specifics of  a product or price, by customers. When consumers share the news about something they recently bought among their social network, the effect can be powerful, as long as retailers can track the resulting lift via mobile commerce transactions.

Here is an extended version of what I said:

Q: What is the benefit (for a brand or retailer) of having a consumer SMS/MMS a product they are viewing via a mobile commerce site,  to a friend?

A: This sort of social sharing means the retailer or brand has a new touchpoint delivered instantly to a highly prequalified audience. Since the text arrives from a trusted friend, the person who receives it is very likely to open the text, read it, and click on the link. It stands to reason that the conversion rates for the recipient of the SMS would be many times higher than traditional marketing blasts.

By providing the tools needed for consumers to repackage and redeliver a marketing message to a highly prequalified audience within their own social graph, retailers can tap into a very potent mixture of personal referrals and siphon off additional mobile commerce sales.

Q: How could this potentially drive sales for a retailer?

A: Smart retailers are increasingly offering their customers tools whereby they can share the deal they just got. Word of mouth and personal referrals consistently ranks amongst the highest-ranked reasons consumers visit a store or retail website. If the retailer has a mobile-optimized site, an SMS sent by a customer can serve as a delivery mechanism for a deep link right into the section of the mobile commerce site where the exact product that was purchased (or product grouping) is queued up and ready to buy for the text recipient. This can directly, positively impact mobile commerce sales and, more importantly, can be tracked, measured and even used as a way to reward consumers who have spread the word.

Q: Do you think more retailers will be incorporating SMS into their mobile sites in 2012?

A: Yes, retailers interested in stay relevant will utilize a variety of new ways to have hyperlinked touchpoints spread by pleased, loyal consumers.  In a few clicks, the recipient of the text message can buy the item their friend bought and also have the opportunity to pass the word along. By adding this option pre or post-purchase, retailers can infuse their mobile commerce sites with

As SMS starts to replace email with younger generations and more and more retailers build and launch mobile commerce retail sites, this method of “Trigger Point Marketing(tm)” is a great way to drive tracked ROI. SMS is alive and well and retailers should certainly add it to their marketing mix, in support of mcommerce.

Q: Why is SMS a good medium to encourage sharing?

A: An SMS text message is instant and it is personal and it generally comes from a known, trusted sender. For these reasons, a whopping 98% of all text messages sent are opened by the recipient. No other form of digital marketing even comes close.

SMS also opens up a new channel of communication between the retailer and the consumer and builds a retailers database of contacts, since the mobile commerce platform captures the mobile phone numbers of both the sender and the recipient.

Q: What are some other ways SMS can be incorporated into a mobile commerce site?

A: When integrated into a mobile commerce site as a “social share feature”, SMS can also be tapped to distribute pre- and post-purchase links to a product in a mobile commerce site, within the social graph of the purchaser

SMS can also be used, via short codes, to drive traffic to a mcommerce site, when a hot link is sent back to the consumer, by the retailer. Additionally, SMS can be used to sign up customers to loyalty programs or allow them to opt-in for announcements of new arrivals, etc. If a shopping cart is abandoned, SMS can be used to ping the customer who did not complete their transaction, to remind them that their cart is full and they forgot to check out.

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The Final Word: Mobile commerce is no longer an option for retailers and brands that sell consumer direct. Retailers that do not have an integrated mcommerce site are losing sales every minute, literally.

The linkage between proven, incremental sales and mobile marketing has long been elusive. This fact has kept a barrier up between the ecommerce team and the marketing dept. This is finally changing and the fact that socially driven messaging can be infused with deep links within a mobile commerce page means that these two worlds are finally set to merge. When this happens, marketing will be able to see a quantifiable return on their spend and the ecommerce team will have a whole new revenue stream via mobile commerce that is, in turn, supported by mobile marketing. A win-win. Remember, SMS is but one method, and QR codes and Near Field Communication (NFC) are also viable ways to drive proven, new mobile sales via”Trigger Point Marketing ™”.

The silos between marketing and ecommerce must be demolished. The retailers and brands that realize this and embrace this notion fastest will win. The rest will be left behind.

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Wilson Kerr (@WLLK) is a former Tele Atlas exec, LBS consultant, and now leads Sales and Business Development for  Unbound Commerce.

Contact Wilson today to learn more. Mobile: 303-249-2083.

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Wilson Kerr (@WLLK) is a former Tele Atlas exec and started Location Based Strategy, LLC in 2007 to help clients harness the power of mobile.  Contact him today to learn more.

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Over one hundred billion dollars is spent annually on “traditional” online advertising, and each of the last three years have been prematurely declared the year of mobile advertising. For too long, the promise of mobile advertising has been based on technical, location-awareness-related advances the industry has heralded as beneficial, while these same advances scared consumers away.

This is finally changing and consumers are discovering simple, easy iterations of mobile technology that provide simple, easy solutions for problems they want solved. Saving money via special offers/coupons at known, nearby business locations is the best example and Groupon and their kind have driven socially-promoted savings on purchases that can be measured in increments of $Billions.

group-buying-sites

The Bridge To Mobile Commerce: Deals and Group Buying

Groupon is the fastest growing technology company in history and Founder/CEO Andrew Mason links their success to providing a “hybrid of local advertising and local commerce”.

Groupon’s unprecedented success should serve as a  lesson to the various elements involved that melding established consumer behavior and technology in a simple, easy way that also leverages consumer acceptance of social media  is a key factor for success.

The real power of this model lies in the fact that incremental, tracked purchases are made at the beginning of the consumer interaction, generating pay-for-perfomance, frontside ROI metrics that blow other “wait and see” methods of marketing out of the water. When you add in a “social media award” component (share the deal and get the deal for free), this model becomes even more powerful, as the campaigns quickly become viral and market themselves.

While Groupon, Living Social and the rest have been written about extensively, I am not sure the full potential impact of this model is understood. These companies solve an existing problem for local businesses by converting the traditional coupons, sales, and special offers they have used for decades into tracked offers that can measure in both financial upside and foot traffic. They also tap exisiting marketing budgets by stealing pre-allocated dollars away from traditional media via no-risk performance-based value propositions (that work).

This is in contrast to much-touted hyperlocal mobile push advertising campaigns that require a problem to be explained, before a retail business or brand will considering paying to try to solve it (assuming they agree the opportunity for ROI is there). More importantly, most retail businesses still do not have a way for mobile banner click-throughs to land a consumer in a place where a purchase can be converted. This is where mobile commerce comes in.

ebayMoving The Merch: “Redemption Is Mobile Commerce”

The quote above is from Dan Gilmartin of Where.com and I agree. While redemption of printed or digitally displayed group buying vouchers brought into a restaurant, hail salon, or spa (for example) works well-enough, retailers that sell lower-margin goods want converted sales that “move the merch”, as they say. Giving 50% of your margin away to Groupon and their kind, is a fine solution for high-margin, service-oriented businesses, but retailers need to link campaigns for specials to actual sales.

Converted sales transactions, rather than impressions rendered or click-throughs to a standard website, are what attracts small to medium-sized retailers that gain little from traditional brand marketing. Since non-standardized point of sale systems for redemption are still the Achilles Heel of the mobile coupon model, tracked, mobile commerce conversions will emerge as the new, essential “redemption metric” in 2011.

With $1.5 billion in mobile sales logged in 2010 (a 3X increase over 2009), Ebay’s mobile commerce success shows that consumers are willing to transact on a mobile device. In just the 30 days before Christmas 2010, eBay transactions were valued at over $100 million  in gross merchandise value, a 135% increase over last year (Mobile Commerce Daily).

“Today’s consumers are transforming the shopping experience with their mobile phones, and retailers who have not broken down their siloed channels will not be able to keep up,” says Jim Bengier, global retail industry executive for Sterling Commerce.

Coda-research

2011: The Year Of Mobile Commerce

In the rush to check off the branded app and social media platform “must-have yes boxes” , mobile commerce sites were passed over by retail brands, and consumers have been left to “pinch and zoom” and fumble with large format websites not optimized mobile devices.

How big is the mobile commerce opportunity? In July of 2010, a scant 12% of online retailers had a mobile commerce site and an even smaller 2% had an app with checkout capability (Acquity Group). Even with these dismal brand/retailer adoption numbers, US mobile-commerce (sans travel bookings) grew from $400 million in 2008 to $3.4 billion in 2010, and growth is predicted to be “explosive” in 2011 (Mobile Commerce Daily). Show me the money, indeed.

In 2011, linking a smooth-running mobile commerce engine to special offer and redemption platforms/efforts will emerge as essential, as this is the simplest way to track success in a way most retailers understand. Retailers who sell online should build robust mobile commerce sites linked to their etail “technology stack” in order to capture converted sales, driven by mobile (or social) marketing. Simply “scraping” an etail website and shrinking it to fit for mobile ignores key differences in mobile vs at-home consumer purchasing-related behavior.

Social Commerce: Sharing The Wealth

Of the 620 million consumers using Facebook, the most active 200 million access the social network through their mobile device.

Why do large retailers and brands spend money building up millions of Facebook Page fans and then drive them away from Facebook to convert a sale? It’s even worse if they send a mobile consumer to a standard website.

Increasingly in 2011,  retail brands will use Facebook to promote special deals for fans, and give them the option to buy what they are promoting by linking to a mobile commerce page where that product is cued up. Facebook might-well offer these tools for businesses as a part of Facebook Deals, as they look to emulate Groupon’s incredible success.

Social commerce will take a while to catch on, but is on the horizon. It is an extension of mobile commerce, because technical integration with the “etail technology stack” is needed to create Facebook Commerce tabs, so secure transactions can take place within Facebook pages.

The power of social commerce really shines when, for example, mobile (or Facebook commerce tab) purchases driven by special deals offered to Facebook fans can be shared within (and extended to) the buyer’s social graph, after the purchase is made.

Mobile-Payments-M-Commerce-Transactions

Tap, Tappity, Tap: NFC  Taps Established Consumer Behavior

I’d be remiss if I did not mention NFC (Near Field Communication) in this post. While mobile and social commerce are next up for online purchases on a smartphone, mobile payments at point of sale for smaller transactions will also be a hot topic in 2011. The path to a “mobile wallet” will be rocky, but NFC will emerge as the best way to both validate mobile proof of presence, and conduct small “tap to buy” transactions using value deduction from a secure, preloaded digital account contained within the device. Consumers know NFC and it is easy to use. The fact that three big US carriers have buried the hatchet long enough to line up behind NFC via the formation of Isis, is a powerful signal.

These inherently mobile “real life hot links” need to go somewhere, so NFC will support the rapid growth of mobile commerce as well. Watch for NFC tags to start appearing in pilots/tests on out of home advertising, packaging, and even wine bottle labels.

Conclusions

Mobile commerce drives revenue and location-specific redemption of special offers that can be promoted via social media marketing. Redemption takes the form of real mobile commerce transactions linked to promotions that mimic the powerful Groupon model, without giving up the margins. Mobile commerce will grow rapidly in 2011, as branded apps fade in importance, in direct proportion to increased data speeds,  accelerated location-enabled smart phone adoption/usage by consumers, and the creation of mobile commerce sites by retailers.

Facebook will increasingly play a role in every brand or retailer’s marketing plan. With 200 million accessing it via their mobile device, Facebook will become a place where discounts, sales, and special offers are  not only shared and compared, but increasingly parlayed into converted mobile commerce sales. Facebook commerce transactions that leverage this same technical backside integration and occur within Facebook will not be far behind.

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Wilson Kerr (@WLLK) is a former Tele Atlas exec and started Location Based Strategy, LLC in 2007 to help clients harness the power of mobile . He is also running sales for for mobile commerce solution provider Unbound Commerce. Contact him today to learn more.

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Wilson Kerr (@WLLK) is the Founder of Boston-based LBS consulting firm Location Based Strategy, LLC and helps brands understand location-based forces that drive changes in human interaction and communication. He can be reached at Wilson@LBStrategy.com.

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As a LBS consultant seeking to fortify my position as a thought leader in the area of checkins and Mobile Proof Of Presence (MPOP), I scan daily blog posts, articles, tweets, newsletters, and emails for real, live examples of companies harnessing the potential of MPOP to drive sales lift.

Many experts (myself included) have opinions about how impactful the phenomenon of “brands delivering personalized marketing messages to opt-in consumers at the exact time and place they are most-able to act upon these messages” will be. My use of the word “phenomenon” here tips my hand, but specific examples that can be seen as validating use cases are generally still hard to find.

Checkin

Checkin Platforms Have Paved The Way

While the potential has been in-place for some time, it has only been in the last 6 months that the stage has finally been set for cases of  lift to be demonstrated. By “lift”, I mean proven, incremental sales tied to opt-in location-based marketing campaigns delivered via mobile platforms that leverage the fact that a consumer willingly notified the offer-serving platform they were in physical proximity to the point of sale. We have Fourquare, Gowalla and other “checkin” platforms to thank for this shift, as their success has accelerated consumer and brand awareness (and calmed the hand-wringing “privacy alarm” naysayers).

The Meat Of The Matter

The Meat Of The Matter

While checkins are hip and fun, the real meat of the matter here is in mobile payment systems, offer redemption tracking, and algorithmic “learnings” by the platforms that deliver real, actionable value to consumers.

This is what will get us over the hump, as the offers are not only unintrusive, they are personalized, actionable, and tied to a system that gets smarter over time, based on real consumer redemption/purchase behavior. Pie in the sky? Amazon nailed this years ago and new “customized daily deal” companies like RueLaLa, Living Social and Groupon are out of the gate and growing fast.

On July 14, Mobile Commerce Daily Associate Editor Dan Butcher posted an article that stopped me cold. Titled,“McDonald’s Goes With Near Field Communications For Sales Lift”, it succinctly describes a program that utilizes nearly every ingredient of (what I believe to be) the recipe for a new form of location-based marketing. Dan’s post was covering a July 5 post by Senior Analyst Red Gillen of financial consultancy Celent titled, “A Merchant’s Argument For Mobile Contactless Technology“. Note that the (bold) emphasis is mine, throughout.

Red Gillen

Red Gillen Of Celent

Mr. Gillen researches payment initiatives and visited with McDonald’s in Japan, to discuss mobile technology. He starts off by saying, “..The focus of our discussion was McDonald’s use of mobile technology for sales lift purposes — i.e., as a channel to distribute coupons and special offers, to entice customers into McDonald’s restaurants.”

He is already speaking my language. “Sales lift” is another way of saying incremental purchases and his immediate shift to the importance of using mobile to drive more customers through the retail door struck me. Too many view the “mobile web” as a smaller version of the web and miss the obvious real world implications of being able to walk around, while online, with a device that knows where you are. Coupons are old news but linking Near Field Communication (NFC) as the “mobile technology” behind redemption by a specific customer and, thus, proving that customer was in a specific store at a specific time is not.

He goes on to describe the program in detail by saying, “Customers (now about 18 million of them) register as members of McDonald’s “Toku” promotional program.  On a weekly basis (in time for the weekend), McDonald’s sends program members a mobile e-mail, with a list of coupons and promotions available that week.  Customers then have two choices.  One is to use their mobile browser to open mobile coupons, which are shown to McDonald’s cashiers (a promotional code is clearly visible).  The other, if customers have already downloaded the McDonald’s app (which 8 million have already done), is to download the coupons to their contactless mobile wallet.”

Wow. An opt-in program. Time sensitive offers delivered to a mobile device. Two ways to redeem the coupons. One of them involves mobile NFC payment tied to a downloadable opt-in branded app that serves as a “contactless mobile wallet”. Hmmm.

McDonald's Mobile Coupons

McDonald's Mobile Coupons

Red is just getting warmed up. Remember this is not a pilot or a concept, this is  happening. He goes on to say, “Either way, the customer gains the benefit of the coupon.  However, with the contactless version, there is a special advantage.  Namely, McDonald’s is able to close the loop between coupon distribution and redemption.  By associating redemption patterns with a customer’s “Toku” membership ID number, McDonald’s begins to develop intelligence about that customer’s preferences.  Based on this, McDonald’s is able to configure and send out highly personalized promotions (by menu item, specific restaurant, time of day/week, etc.) to the customer’s mobile phone, which the customer is more likely to redeem. This increasingly tightening marketing loop cannot be achieved with plastic membership cards, nor with mobile browser-based coupons.”

So, the NFC redemption system learns as it goes and is able to generate increasingly personalized time/place/item offers based on real behavior within the application. This is the “walk-by-and-get-an-offer Starbucks Cliche” so often flogged in LBS circles, but it’s real and it’s live now and, apparently, used by 8 million opt-in consumers in Japan, in conjunction with a distinctly American brand that is hardly a fringe player in the quickserve landscape.

The finale is contained in the last paragraph, “Once customers tap their contactless coupons, the data is leveraged to immediately send orders back to the kitchen..This just goes to show that contactless is not just about payments.  In fact, it often isn’t about payments at all..”

 

NFC Contactless Payment and Redemption

Red’s point is that, even though NFC is most-often associated with cash-free payment (for example in mass transit ticketing), the real power of this model is that the system is using the personalized, tracked coupon redemption patterns to learn from the consumer’s behavior in order to both prove increased store visits and sales (lift) and increase efficiency via the speed of the resulting transaction.

I have covered why this is so important for brands to understand in previous posts, but suffice it to say I am excited to finally see the first real examples of companies leveraging the power of tracked, cutting edge mobile LBS technology, while also respecting and harnessing the power of consumer preference.

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Wilson Kerr (@WLLK) is the Founder of Boston-based LBS consulting firm Location Based Strategy, LLC.

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Wilson Kerr (@WLLK) is the founder of Location Based Strategy, LLC a Boston-based consulting company dedicated to location-based marketing and business development. You can “become a fan of” Location Based Strategy on Facebook.

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Now that the collective tech/social media world is coming off the sugar rush of Facebook’s big Open Graph announcements of last week, I thought I’d take a fresh look. I should say that I am 41 years old and an active user of Facebook. I certainly see the powerful implications of sharing subjective information across a social network (graph). What I am not 100% sure about is if anyone is stepping back and questioning the viability of their approach.

Facebook made an audacious and smart positioning move to grab the social media high ground, but what are the real benefits to consumers? To Brands? To Facebook? Did Facebook really just “Win The Web”, as the New York Times proclaimed?

Not New News

First of all, last week’s thunderstruck, gushing over-reaction of adoration among industry insiders and press seems somewhat odd, given that Facebook introduced the Open Graph concept at the Developer Garage of October 28, 2009. Here’s an article by Nick O’Neil that outlines what he rightly categorizes (at the time) as “part of a broader move by Facebook”.

From Facebook at the time: “The Open Graph API will allow any page on the Web to have all the features of a Facebook Page…it will show up on that user’s profile and in search results, and that page will be able to publish stories to the stream of its fans.”

So, why then the wild enthusiasm and assertions? Perhaps the youthful Zuckerberg-lead Facebook team best-embodies the promise of social networks to finally dethrone some of the entrenched ad-supported superpowers like Google.

A Google Killer?

Is this move so profound that it will allow Facebook to collect enough information to power a “social search engine” and, as such, topple Google? There is no doubt that Facebook is in a position to learn, store and categorize opt-in personal preferences of individuals and utilize them to great advertising sales advantage. But there are major differences between these companies.

Google makes $23 Billion annually by giving people useful personal and business tools and serving effective and unobtrusive contextually ads in exchange for the use of these tools. Google increased Gmail users by 43% last year and their list of services is impressive, and growing. Google also has direct connections with the local retail points of sale that are so important for tracking incremental purchases and, as I have written about, is well-along the path toward deciding on the right way to collect, measure, and capitalize on these metrics.

Facebook, on the other hand, is not useful. Yes, I said it…fun, interesting, and a novel new socially relevant way to correspond with others with shared commonality. But useful? No. Over 37% of all people signed up for Facebook are inactive. That’s 150 million of them. Facebook made an estimated $650 Million last year and certainly has a lot of traffic, but they have not yet capitalized in a way that comes even close to challenging Google. The fundamental value proposition Facebook offers consumers is different. Try not checking your Facebook page for a week and see what happens. Facebook is a nice to have and, as such, needs to be incrementally more thoughtful about what they do and how they do it.

Size Matters

There were other implied assertions Facebook made last week that I question. Namely, that growth and unique appeal can coexist. Facebook has rocketed to popularity by mimicking the same voyeuristic appeal as the original printed freshman facebooks most of us used to peruse the social landscape back in college. But, after freshman year, the book became irrelevant. Why? Because the size of the graph made the details of the graph highly relevant. If the network grows and becomes indistinct, it loses its effectiveness and the stream of information becomes cloudy and irrelevant in the context of a broader network (no longer wow’d by the initial relevance).

For brands, the “fan page” acts as a tighter circle of consumer interaction and an opt-in sub-network, within the broader context of the web. Consumers have to “become a fan” and the thoughtful act of doing this makes the sub-network powerful and relevant to the brand and others within it. Facebook’s switch to the “Like” button was designed to make it easier for people to convey their preferences. This also has the potential negative side effect of broadening the input stream of consumers to specific sub-networks and clouding the waters  by making the size of the pool exponentially larger and, as such, less meaningful. The more the merrier for Facebook, as this grows the audience to whom they will serve ads to and pads their knowledge about every Facebook user. But it could dilute the opt-in pool for brands and clog the feedback loops.

The Like Button Is Too Easy

The sharing of subjective opinions and preferences based on real world interactions with products and services is the real power of social media (and location based marketing). Ratings and reviews are the best example of how consumers interact with real places and share input, currently, but it does not take much imagination to see that real-world interaction with a wider range of products and services is coming soon.

Providing this subjective input takes a minute or two and this fact (especially when consumers are mobile) serves as detergent to flip or casual positive or negative inputs. The “Like” button allows instant input, with less thought, all designed to rapidly fill Facebook’s master database. Great for Facebook and their advertising machinery plans, but the user experience (in the form of people’s news feeds) could-well become clogged with a deluge of “likes” that become less impactful in direct proportion to the times the too-easy “Like” button is used.

Personal Preference Profile Probes

What Facebook has announced is very smart, but it requires compliance by companies and brands. They are essentially telling any company that has a web page dedicated to something someone would “Like” to infuse Facebook code into that page, with specific metadata tags that categorizes the real-world product shown. This is very good for Facebook, but it essentially means web pages need to insert little  “probes” under their skin that feed a stream of data back to the Facebook mothership. Will companies and brands do this?

They might, but they also might realize that they are turning over the keys to the kingdom to the same barbarian at the gate who will then come back and charge them advertising fees based on the personal preference profile metrics they delivered on a silver platter. They could also do things in the future with this “holy grail” (the personal preference profile) that we can not conceive of currently. My point is that brands should not jump on this before they carefully consider the implications of the volume of valuable opt-in metrics they will be delivering to Facebook, and the benefits.

Content websites should be careful too, as Facebook is sure to sell advertising based on consumer preferences for something they read. Again very good for Facebook, but it could mean a thorny editorial/sales line in the sand gets crossed if readers get hit with ads for products related to an element of the content that does not resonate with the consumer targeted or if the ad seems to imply a paid connection between the editorial content and the advertiser.

Three Things Not Announced: Location, Location, Location

In a surprise to many (including me), Facebook made no mention last week of location-based marketing and framed their announcements around web-based open graph linkages and, more specifically, the integration of “like” button code on product pages to tap the power of personal preference aggregation. While the “visionary” open graph high ground move got the press, the real pot of gold lies at the end of the point-of-sale rainbow, reached by linking marketing to incremental tracked sales. Brands make money by selling more products in stores, period.

It was widely speculated that the reason Facebook did not announce checkin functionality or QR codes or NFC to link updates with real-world physical locations last week was that they might buy Gowalla or Foursquare. We now know that Facebook was about to launch a “door sticker” campaign to reach out directly to merchants and is using, of all things, SMS short codes to track consumer interaction and link it to location.

I personally think this is just the beginning and Facebook will dive headlong into the location-verified Proof Of Presence Metrics game soon. But can they pull it off? A simple location-enabled “Like, with comments option” might not be the right move here. This is too flip, to fast, to easy. Again, good for Facebook as they seek to remove friction for aggregation of personal profile preferences for who, what and where, but I am not sure members of the social graphs want to hear about every checkin and every store or venue or brand that those in their network simply “Like”.

My Friends All Like Different Things

I know the people in my social network and I am certainly more interested in hearing their preferences and opinions than the blanket ads I see every day, foisted upon me by those charged with selling the products. This, of course, is the power of social networks to shape consumer behavior. But I also have a solid majority of pals who are not on Facebook. The two I reached both gave me the same answer, which was, essentially, “Facebook is stupid. It’s full of asinine egocentric banter and takes way too much time to deal with”.  I sympathize and often have to weed though posts about spilled milk (literally) and inane random thoughts.

But I also use Facebook for business and have made an effort to be a fan only of pages conveying important, relevant information. I, for one, do not intend to fill my feed with all my “Likes” and hope those who fill my feed will hold off too. Aside from the obvious volume implications, I am not going to be swayed by the fact that someone “Likes” anything. Now, if they took the time to write a review or checkedin on Gowalla and stopped to rave about something and this was posted with intent, I’d be inclined to take a look. But the click of a “Like” button is too fast, to flip, and too easy and we all like many, many different things, for different reasons.

I know brands and companies have a different Facebook opportunity to potentially take advantage of, but the people making these social media marketing decisions are usually personal Facebook users as well.

Considering The Implications

Facebook has the traffic and the momentum to do some powerful things. I just hope the collective Social Media/LBS/Mobile world can stop for a minute and consider the positive and negative implications of not just the “open graph”, but the site-integrated Facebook metadata tags that, if implemented, will feed consumer preference back to the now-warming Facebook ad engine. Agencies should consider this move on behalf of their clients carefully. I hope Facebook users consider the long and short term implications of sharing so much about their personal product preference profiles with Facebook, the privacy issues this raises, and the effect of potentially having volume and size dull down the interactions with others within their network. And, I hope Facebook considers the user experience implications and that they treat the heavy crop of rich realtime opt-in metrics they will/hope to reap with consideration. Easy is not always good.

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Did your mobile ad campaign drive a consumer to a store that carries your product and can you prove it?

If you can use opt-in consumer behavior to prove that a customer visited a specific retail location and bought a product (and link this to a specific call to action), you are touching the future of mobile marketing. Social network platforms that can effectively capture these “Mobile Proof Of Presence”  (MPOP) metrics,  can offer brands powerful new marketing tools and quantify ROI by linking them to incremental product interactions.. at point of sale.

Lest we forget, companies make money by driving consumers to buy their products, in real stores with real money. Using traditional blanket print/radio/TV advertising for “top of mind”  branding is fine, but new tools allow brands to quantify ad campaigns by tracking incremental store visits, product interactions, and even payment for that product.

Three ways to capture MPOP metrics are: Checkins, QR codes, and NFC. Each has it’s own merits.

Checkins: The Current Craze

Popular “checkin” platforms like Foursquare and Gowalla are proof that consumers will volunteer where they are and what they are doing, for an incentive. By checking in to a specific place, individuals are rewarded with product specials or freebies and broadcast their location to their social networks. The platform that captures this information can use it to build metrics for brands, showing results as incremental traffic to real doors. A downside of checkins is their fad-like meteoric rise and that  unverified rotten checkin apples could spoil the metrics barrel. Foursquare, for example, has had some issues lately with fake checkins. Gowalla validates checkins, by real location.

How much potential is there here? Recent rumors are that Yahoo might buy 1+ year  Foursquare for $100+ Million.

How Do Checkins Work? Watch The Video:

QR Codes: Get Ready!

Quick Response (QR) Codes can be used to verify that someone was at a specific location and capture when that interaction occurred. QR codes are ubiquitous in Japan and taking hold in Europe.

They are easy to implement and serve as a viable “proof of presence” without the requirement that the device knows where it is. This is key..If the QR code is unique to the location, then a physical scan of it verifies a consumer was there.

For print ads, QR codes serve as “real world hyperlinks” to the virtual, online world. A company to watch is Mobile Discovery (video intro), a top provider of QR code campaign creation and management. Please contact me if you would like to learn more about Mobile Discovery or how QR codes can serve as a bridge between real-world point of purchase display or print ads and your mobile/social media campaigns. Get ready, QR codes could be huge!

How Do QR Codes Work? Watch the VIDEO:

NFC: One To Watch

NFC (Near Field Communication) is not new technology and many Americans use NFC every day. Contactless metro cards are the best example. NFC is potentially important for mobile marketing because it can generate MPOP metrics and enable real financial transactions via the device, instantaneously. No opening scanner apps or multi-step checkins. You simply pass your phone over a contactless terminal node and you are done. The downside is that NFC requires a significant investment in retail point of sale hardware and payments will require (messy) Carrier involvement. This is why it has not taken off, to-date.

Major device manufactures like Apple and Nokia are expected to launch NFC equipped smartphones soon, for the US market. Nokia has been doing pioneering work on NFC for many years. The Nokia video below is from 2007! A recently-uncovered Apple patent details “Peer-to-Peer Financial Transaction Devices and Methods”. The new iPhone might have NFC integrated and a payment app on-deck.

How Does NFC Work? Watch the VIDEO:

A Hot New Way To Measure ROI

While trendy checkin platforms dominate the news, be sure to learn the other ways to verify, track and capture all-important MPOP metrics. There is a lot of pressure on mobile advertisers and social network platforms to prove they drove real consumers to real  touchpoints, where  real products are  purchased. As well there should be…

If you want to learn more, contact me. I can help.

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