How mobile is set to impact the 2009 holiday retail season

Dec 16, 2009

by Eric Holmen * • 15 Dec 2009

With Black Friday over and Christmas tree lights now officially blinking, it’s time to gather around and sing the Retailer’s Holiday Carol. All together now: “It’s the most wonderful time of the year.”

Except, of course, for the fact that last year’s holiday sales season was anything but wonderful. And retailers from Poughkeepsie to Palo Alto are worried that this year will be the same.

Analysts’ forecasts are mixed, and so it’s hard to know who to listen to. For some, the outlook is half-empty, whereas for others it is half-full. Last month, the National Retail Federation predicted a single-percentage-point sales decline from last year’s holiday period, while an independent research group, ShopperTrak, foretold a 1.6 percent increase. Deloitte estimates total holiday sales from December to January to be essentially the same as the same period a year ago.

So although these predictions don’t take on the catastrophic tone of last year’s, none of these analysts seem ready to join in the caroling and festivities just yet.

Gloomy projections notwithstanding, individual retailers are not all doomed to a lackluster holiday season. In fact, an environment of weaker demand marked by uncertainty in consumer’s willingness to spend provides exactly the type of opportunity for retailers to engage in forward-thinking marketing tactics — having few options can breed innovation. Increasingly, therefore, non-traditional marketing channels are being introduced by innovative retailers because the costs associated with catalogs, direct mailers, and mass media advertising campaigns are no longer justified by the returns they yield. The retailers that are best positioned for success this holiday season are engaging in high-return, low cost-per-touch, interactive strategies like mobile marketing and mobile advertising.

Mobile’s magic

It seems that each of the last five years has been touted as the year that the retail industry will finally integrate the mobile channel into its marketing efforts. And each year, this gets closer to the truth. Mobile device saturation in the U.S. is at its highest level ever (a fact that has been true every year, as Americans continue to adopt mobile technology in ever-greater numbers). Currently, more than 82 percent of Americans own and use mobile devices on a regular basis, making the mobile channel as wide ranging an outreach tool as mass media.

What’s changed this year is that more individuals are willing to use their mobile devices for more than a phone call or text message, for which we can thank smartphones in part. Thirty-two percent of American mobile users have used their devices for accessing the internet at some point, and a majority (54 percent) use their phones for non-voice activities. Thankfully, this type of usage has spilled over to the holiday period as well. The same Deloitte study mentioned above also indicated that nearly 1 in 5 consumers plan to use their mobile phones this holiday shopping season to find store locations, obtain coupons and sales information, and research products and prices. In the 18 to 29 year-old age group, four out of 10 (39 percent) say they plan to use their mobile phone for holiday shopping.

For retailers, leveraging this technology to increase holiday sales will be a hallmark of a successful season, and an imperative heading into the New Year. Mobile coupons are already featuring prominently in some retailers’ comprehensive mobile strategies, in addition to SMS (text message) marketing campaigns carried out with respectful express consent opt-in and double opt-in practices.

Mobile couponing, the latest technology-fuelled wave in direct discount marketing, is another aspect of the mobile-retail universe that is on the verge of breaking out on a big scale. Although some form of mobile coupon has been around since SMS became widely available on mobile networks and handsets, it’s only now that U.S. consumers have adopted a more value-conscious attitude and marketers look for high-impact, low-cost means of reaching new consumers that mobile coupons are finally coming into their own. The convenience of redemption, immediacy of value, and efficacy in driving both revenue and feedback are driving that trend. And the more that retailers embrace the mobile medium as a legitimate and powerful marketing tool, the more mobile coupons will flourish as a bona fide business driver and revenue generator.

In fact, a study by Juniper Research estimated that by 2011, retailers worldwide will be sending out nearly 3 billion coupons to mobile phones, which will be redeemed for $7 billion worth of discounts.

Apples, oranges and mobile

What has also emerged as a powerful tool and is being tested by some bigger retailers this season is mobile advertising. Mobile marketing and advertising – both in conjunction with mobile coupons or executed independently — have gained prominence among retailers over the past 12 months; however, there is a difference between the two. Both play an important role in developing the customer lifecycle and attracting new business, but mobile advertising is focused on precisely that — advertising. Mobile ad networks provide retailers with the ability to place banner ads on mobile sites, or iPhone apps, or within a text message; however, these reach an audience that is not likely to be existing customers. Mobile marketing, in contrast, focuses on developing and building the customer database and sending relevant messaging to that audience.

As such, mobile ad networks have evolved rapidly and the best networks can generate as many as 200 million unique mobile impressions in a month. Strong mobile ad networks also offer partnerships with mainstream media outlets, providing cross-channel integration and using traditional means to feed the actionable mobile sales channel. What this means is that retailers now have the ability to advertise on the billions of impressions mobile is capturing, combining marketing to build a database of engaged consumers they can sell to.

While the mobile channel may not be the holidays’ savior — because the American consumer will ultimately determine the fate of the retail industry’s highest season — it is allowing innovative retailers to differentiate themselves, using mobile advertising and mobile marketing to open whole new avenues of communication with existing and potential consumers.

And in my mind, that is definitely something to rejoice and sing out loud about. 

Eric is responsible for leading SmartReply’s strategic and creative teams in developing innovative voice, mobile marketing and advertising solutions.

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