Copyright 2002

[ February 19th 2002 ]

With cellphones already deployed for fun as fashion accessories and for 160-character text gossip, it was only a matter of time before mobile firms tapped their potential for the serious business of buying and selling.

Advertisers are weighing the best methods to promote products and services via the cellphone, which in some ways is more intimate than TV, but far more disruptive. Experts say it is crucial to ensure mobile marketing does not go the way of e-mail "spam" - irritating and largely ignored. And on the buy side, payment systems have been created which allow mobiles to be used like credit cards, so that for someone dashing out of the house going through a mental checklist of "keys... phone... wallet", two out of three might not be so bad.

"The phone is such a personal device for people, that they tend to look after them much more carefully," said Barry Shrier, sales and marketing director at paybox, a mobile payment firm started in Germany with sights on the rest of the world through a partnership with Taiwan's Pacific Electric Wire & Cable.

Putting new revenue sources in place will be crucial for mobile operators, which face huge bills for investments in next generation networks despite few clear paths to profit from them. The novelty of wireless voice calls has worn off, along with the growth potential. Many countries are saturated with mobiles, and there is only so much time users can spend shouting into their phones in theatres, restaurants, and quiet train carriages.

Inspired by the surprise success of text messaging, the industry has set big targets for non-voice or "data" revenues. Ways to meet the targets will certainly dominate the industry's annual southern France rendezvous at 3GSM in Cannes this week. The large sums of money available from advertisers seeking a finely targeted audience may help underwrite mobile investments. Fittingly, early ad developments have involved the Formula One motor racing industry, which itself funds its multi-million dollar cars with money from advertisers eager to get their name on these incredibly fast, moving billboards.

The Jaguar Formula One Racing Team took part in a pilot programme to reach its fans for One 2 Infinity, a product launched by software firm Global Beach allowing many people to hear voice messages recorded at a central location via the Internet. A mobile-enabled campaign then ran with Lara Croft, of computer game Tomb Raider fame, who turned drinks sponsor for GlaxoSmithKline's Lucozade.

By using SMS text messages to alert fans, who then heard messages from Lara on their mobile, Global Beach Chief Executive Clive Jackson said his product took advantage of the mobile's voice capability, and not just its data functions. "[Much of the industry is] still trying to make a phone behave like a PC," Jackson said in an interview on the sidelines of this month's SMS 2002 trade fair in London.

Mobile group Orange, already a Formula One sponsor, announced a similar service last week inviting subscribers to hear retired veteran racing announcer Murray Walker deliver a post-race review, starting with the first race on March 3. Other campaigns include one from ad firm 12Snap, which did a tie-in with fast food giant McDonalds promoting the UK opening of animated film Monsters, Inc. A code on the back of a large fries could be sent via text to enter a competition.

Shum Singh, a mobile commerce analyst at Durlacher, said consumers had to be able to "opt in" to such promotions. "Advertisers don't want to make the mistake of sending them messages without permission, as they did with the Internet, because of the backlash it would create," he said.

An Israeli ad agency, AdreAct, produced a campaign for Dunkin' Donuts in Italy offering coupons in exchange for text messages to numbers on billboards, sparking an initial nine percent sales rise. Rival ad firm Flytext did a chocolate campaign for Cadbury offering prizes to texters.

As for buying things, the world's largest mobile phone operator Vodafone has developed a service allowing its UK subscribers to make payments of under five pounds through their phones, with the charge showing up on their bill. Vodafone believes m-pay, due for a UK launch next month and aimed at smaller purchases such as mobile ring tones or access to particular online content, will prove popular among people wary of giving out credit card numbers on the Web. But Durlacher's Singh said this system might struggle to take off because it was limited to Vodafone subscribers. "A successful system would have to be pervasive," he said.

Paybox, half-owned by Deutsche Bank, is one firm hoping to be the independent mobile payment system of choice. A computer authorises transactions when a pin number is typed into the phone, making it more secure than credit cards, Shrier said. Having enjoyed some success in Germany with credit card-less operators like taxi drivers, paybox has signed up 6,500 merchants and 500,000 subscribers around Europe, though only 60 percent of the subscribers are described as "active".

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