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Consumer economics are ripe for mobile

Given the explosion of mobile's fanfare, a legitimate concern by many key decision makers is whether the economics match the hype. Just how large is the profit pool and what is the competitive landscape facing both firms and agencies entering these new waters?

Critical to the decision process is the economic conditions of mobile from the consumer side. In the end, it doesn't matter how beefed up the mobile agency is or how glitzy the product if there is not a current -- and expanding -- marketplace to exploit.

Fortunately, the ideal combination of technological expansion and a market share battle among carriers is positioning the consumer to reap major rewards in the immediate future. Not only are more options being made available to mobile consumers at an increasingly discounted rate, but there is clear evidence that consumers themselves are warming up to the new touch points being created as a result of the mobile evolution.

First and foremost is the ongoing price war among carriers in their continual quest to grab and maintain market share. In an industry where a high churn rate of customers has been a consistent reality, premium positioning is being thrown out the window as both governmental and competitive forces squeeze down on carriers.

The U.S. House of Representatives has been looking at a bill eliminating the long-term contract requirements that many carriers require during initial sign-up. Removal of this tie-in would shift significant power from the firm to the consumer.

Meanwhile, competitive forces are providing a major boost to mobile users. A quick Google search for the term "cell phone unlimited calling plan" generates a fascinating view of the mobile telecom landscape, with paid ads from Verizon, Sprint, and T-Mobile all offering unlimited plans. Ad copy screams "Introducing Simply Everything. Sprint's Unlimited Calling Plan!" and "Get Unltd Nationwide Minutes & Messaging For Only $99.99/Mo."

To be realistic, offering unlimited minutes is not the largest giveaway in the history of capitalism. With free nights and weekends already standard, few consumers actually use up all of their minutes. But the true potential for mobile marketing is in the trend towards increased access to features such as mobile web and messaging. Now that text messaging is being thrown in with minutes, mobile web is the next frontier in the price war.

Why? Consumers are demanding it. According to a recent survey by comScore, the number of units accessing the mobile web increased by 157% in 2007. Looking deeper into the numbers provides a fascinating peek into the future. Currently, 59% of usage is work related leading comScore to conclude that usage is more of a "need than want." Of those who use mobile web, 79.2% have household incomes of $50,000 or more. Essentially, those who have access to mobile web are not using it as a toy, but are quickly finding themselves in a position where access is a necessity. This has opened up a new touch point to a very profitable consumer base that will only expand as access to the web anywhere grows and users find themselves in the same position as the early adopters.

Finally, in another piece of good news for mobile marketers, 28 million users responded to mobile ads in 2007 with a survey stating that consumers "would be receptive to mobile advertising to lower their bill." The study looked at all ad formats - from SMS to click-to-call to mobile video.

Those who have not set sewed their seeds in mobile marketing need to do so now if they are to be properly positioned to reach consumers during and after the upcoming explosion. A critical advantage that the North American marketplace has is the second adopter position mobile marketing is currently in. Unlike the internet bubble of the late 1990's, where radical ideas were being tested and fabulous flops littered the landscape, the high adaptation of mobile in Europe and Asia has provided a fertile template without the high risk. This provides the best of both worlds, where the mobile ROI remains high but the tactics are established. Those firms who take advantage of this opportunity early will have a key strategic competitive advantage over their competitors.

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