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Mobile Computing

Implications for the Advertising IndustryThis page to be editted

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New Advertising Models

• Micro Advertising: Digital TV, with it's 100's of channels, means the end to blanket mass advertising. Advertisers will need to match the buyer profile to the most suitable channel and specific time of day or programme. Data Mining by both the client (on existing customers) and by the channel provider (on their customers) will identify matching micro segments that can then be specifically targetted.
  • For example, an insurance company discovers from an analysis of its customer database that those who invest in unit trusts are clustered in particular postcodes. They talk to a number of channel providers and find that a cable TV company has a high penetration in that area and that many of their viewers watch the 10 pm business day round-up programme. Further, the channel provider has other data showing that these customers have a high disposable income, a varied portfolio of investments and good grasp of financial matters. The result is an advert for Managed Unit Trusts targetted to cable TV customers in those specific post codes.
• One to One Advertising: Using the next generation of intelligent set-top decoders, advertisers will be able to specify an audience profile and have the adverts delivered, by the channel provider, to specific households, even delivered to a particular person and personalised with their name and shown when they next view - true One to One Marketing. When working at this level of granularity it will be essential to match style and mood of adverts to individual behaviour.
  • For example, adverts for Tracker Unit Trusts would advertise low risk and be targetted at clients with low or modest savings or with a natural propensity to be cautious.

  • "The ultimate promise of the Internet is the ability to generate TV-sized
    audiences and to target a single individual.",
    Joe Kraus, founder of Excite, one of the web's top portals and search engines.

• Portal Advertising: The WWW has seen the huge rise in the power of the portal: Microsoft Network, Netscape, Yahoo, Excite, AOL and Lycos are leading portals. For these players, advertising is a significant revenue stream (e.g. Yahoo's $203m income vs $92m expenses). The major Digital TV providers also intend to become portal, in some cases only providing access to their selected suppliers. Similarly, AOL plans to distribute via Web-TVs. Besides their mass pulling power, another advantage of portals is their ability to better target adverts.
• Visitors to the search engine Alta Vista are presented with adverts according to the keywords they are searching on. Enter the word insurance and the chances are you will see an advert for insurance. One life insurance advert even presents a premium calculator.
• However, portal advertising is expensive, with estimates of $20-$40 to acquire a new customer. Some of this can be offset against lower distribution costs, the ability to have a continuing dialogue with the customer and the resulting increased life time value (LTV), and during the early stages of e-commerce, referrals from customers who enthusiastically talk about their use of the new medium.
• In the long term, there are likely to be only 3 or 4 major portals plus a number of niche portals. This is same as the print world, where there are a few general daily newspaper and numerous specialist publications. Marketers need to decided whether to go for the mass audience portals (expensive) or niche portals (risk). Customer profile matching is key.
• Payment by Results: With targetted adverts, the number of viewers will reduce per advert and the unit price per view will increase but so will the quality - i.e. the response rate. In many instances the channel provider will be handling the viewer's telephone calls, either making the sale (see US Shopping Channel) or passing on warm leads to the client. As the experience and knowledge base of the channel provider increases, then they will increase their charges. To offset the perceived risk to the client, channel providers will move to payment by results. Clients will need to ensure persistency is taken into account. Such business models are more likely where a high degree of trust has been established over time.
• Affiliate Advertising: Major e-commerce companies like Amazon.com have affiliate programmes. Other sites refer their visitors to Amazon and if they buy then the referer receives commission. This is also a form of payment by results.
  • Alta Vista visitors are presented with a referral to Amazon according to the keywords they are searching on. Enter the word law and you will see an advert to click here to search Amazon for books on law. Equally it could say click here for legal insurance.

Multi-medium Distribution Channels

• Choice of Mediums: With busy and unpredictable lifestyles, consumers are demanding companies be available on any day and at any time of day - the 7/24 society. In the near future customers will extend this choice to the mediums used. Use and familiarity with interactive TV will encourage consumers to use other new interactive mediums: PCs, kiosk systems, and the more sophisticated mobile 'phones, pagers, and PDAs. Companies in turn will need to be able to receive and consolidate and integrate customer messages from all these mediums.
  • A consumer may make see an advert in their morning newspaper, make an initial enquiry via their PDA, and later in the day get a query back by mobile phone. Then, on returning home in the evening, find a personalised proposal sent by email to their PC or Internet-TV.

• Different Mediums: A challenge for advertisers is to deliver the same message over a range of mediums which have different physical characteristics. In many cases the format and length of the message will have to be amended and the customer directed to another devise (e.g. their home PC) for more in-depth information.
  • Mobile phones now come in different types: speech only, short text messages, long text messages, and internet text pages. The next generation will support graphics, video and sound. Digital TVs will also be in different formats: standard TV using a set-top decoder, wide-screen TVs, and eventually high-definition TV. The decoders themselves conform to different hardware and software standards.
• Integrated Mediums: Many devices will support multiple mediums and the challenge will be to transparently switch the customer from one to the other.
  • A Digital TV advert may have a press the blue button for more information. Pressing this button would connect the TV to the internet for more information. Because the decoders will have a smart card the supplier's web site will be able to identify the customer and produce a tailored advert. And it almost goes without saying that all this information, including what the customer has just been viewing, should be to hand when they make that telephone call to the Call Centre - then it's time to close the sale - not irritate the customer by asking lots of questions.
  • Similarly, telephones are now on the market with built in keyboards and screens allowing data to be accessed and displayed without having to boot-up a PC. Instant information includes railway timetables, interest rates, share prices, theatre seats, hairdressing appointments, etc..
• Interactive Mediums: A new generation of rich interactive adverts will really engage the recipient thus increasing the propensity to buy.
  • A recent @Home Network study found recall of rich media ads is 34% higher than regular banner ads, and of those who clicked on rich media ads, more than half spent 30 seconds to five minutes engaged with ad information and the brand.
• Media companies will need to master digital authoring and recording of adverts using a more modular approach. Much of the material will be re-used in different adverts and in many cases the assembly will be dynamic, driven by the responses of the recipient - see Enterprise Repository.
  • In a financial advert for an ISA, pressing the blue button on the TV remote would explain the various forms of ISA using video and animation; the yellow button the range of investments (and then the numbered buttons specific investment history with graphs with user defined parameters); the red button the terms; the green button access to an advisor, and so on.
• Variable Responses: Each of the different mediums has a perceived response time. People often expect e-mail responses within the day but a telephone response within 3 rings. Digital TV is even more responsive demanding because in many cases viewers will be responding to a advertisement, and not just in ones or twos, but in their thousands. These are hot leads and every effort needs to be made to convert them into a sale.
  • The US Home Shopping Network has 1,000s of operators to take the orders, with each operator backed up by a product knowledge base to answer any customer queries.
• Digital TV decoders require a smart-card, programmed to give access to the various channels according to the subscription paid. In the future these cards will also hold personal data such as name, address, credit card number. At the touch of a button a viewer could release this information saving valuable time and eliminating errors. Remember, the viewer probably wants to get back to watching their TV programme!

Knowledge Acquisition

• Customer Tastes: The new class of Web analysis software is equally applicable to Digital TV. Analysis will encompass not just programme preferences but also customer's responses to adverts, the goods and services they purchase, and any additional information they request. Such information can not only be used to build a relationship with particular customers but also used to to develop marketing, pricing and other strategies such as the direction of new product development.
  • One method that Lifetime Television uses to evaluate the popularity of its cable TV programs is by gauging Web site traffic patterns that follow the programs, said Carey Goldson, manager of MIS for the cable network. That information helps Lifetime determine how to spend marketing, programming and even IS dollars, he said.
    - InternetWeek, March 29, 1999 / AdMedium Newsletter.
• Customer Profiles: Internet visitors are anonymous but Digital TV viewers have to subscribe. This immediately locates them at a physical location from which other demographic information can be derived. Then, over time, the provider gathers explicit information about interests (e.g. those customers regularly watching a gardening programme). But the real leap to customer knowledge comes when a relationship has developed such that subscribers volunteer information about their lifestyle and interests. In return, the TV provider can reduce the number of adverts (a current complaint of satellite and cable is that there are too many ads) by restricting adverts only to those of interest.
• Customer Interactions: Besides web browsing or shopping, Digital TV will give suppliers and manufactures a direct access into the homes of millions of people. PCs are usually left off and take time to start up. TV is instant, almost like a telephone. This should encourage more feedback from customers, particularly when linked to a reward programme, ideally one that grades feedback and rewards accordingly.
  • Netscape allows customers to type a product name and then get connected to the supplier's site.

Integrated Processes

• Acquisition Process: Customer's buy products to meet their needs and to bring benefits. It's important, that whatever medium customers chose, they should be taken smoothly through the acquisition process. This means not only supporting different mediums but also reflecting the capabilities of the mediums, the varying capabilities of the customer, their personal behaviour, and the frame of mind of the customer at that instance.
  • For example, a customer may see a TV advert for a savings account and then spend just 30 seconds interacting with the ad (before the TV programme resumes) and then decides to hit the more information button - finished! He or she doesn't want to be filling in financial questionnaires!
• Life-long Processes: Whilst customers' expertise will vary, they do all possess knowledge. Knowledge about how well or not so well the company's products and services meet their current needs, and knowledge about how they personally are impacted by life style changes. To tap into this knowledge companies need to have processes in place to assist customers in particular circumstances, or indeed throughout their whole life. Processes for helping people to question, interpret, simulate, and adapt to all that life throws at them.
• Cross Organisational Processes: These processes transcend the whole organisation. The challenge is to make it seamless. It may require changes to organisational structures, the development of new cultures, the orientation to a knowledge organisation, the creation of central knowledge base, and the analysis of this base. This is a long journey, defined by a vision and executed incrementally. A methodology helps to structure this journey. In short it needs Strategic Interactive Marketing.
• Integrated Marketing: These new electronic mediums are seen as so radical that in most organisations they are given a separate and almost god like existence. The argument goes that dynamic technology needs young dynamic wiz-kids, unfettered by traditional ways of marketing and selling, and able to seize the opportunities as each week brings its bounty of new technology.
• Whilst in the early days of the net, with its young, male and nerd audience, this might of worked, it will no longer work. The internet is changing to a broad church. Women now make almost 50% of the net population. Older people, with time and money, are enthusiastically taking to it. And Digital TV will really bring the masses to these electronic mediums. These customers will see Digital TV as just another medium and will expect it to be as easy to use and as convenient as the telephone.
• It is imperative that organisations integrate these new mediums into their other delivery channels. Marketing programmes needs to embrace all channels such that each provides synergy to the other, and then each channel should be able to respond to whatever choice the customer makes - including multiple choices by any one customer. Most importantly, the new mediums need to be seen to be part of the overall brand.

Next is Implications for Financial Services

External Resources
 

1. Cooper, Alan, 1999, Customer Knowledge Management and Mass Customisation, Internet Business, April 1999.
2. See the full list of resources for this web site for other related resources.

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