As mobile marketing has started to come into its own over the past few years, companies have begun to realize the benefits both as a potential source of revenue as well as a promotional vehicle. For those who have been in the digital media industry for awhile, there are a lot of parallels between the beginning years of the Web vs. what we’re currently seeing with mobile.

At the dawn of the Web age, a lot of the content we now get for free today was tried on a subscription model. This was mostly due to the fact that Web advertising was non-existent and companies were trying to make up at least some of the money they were spending on this new medium. Since the Web was still at its basic infancy and more importantly, content wasn’t readily available, such premium services were still viable.

However, as the Web grew in popularity, it became more difficult to have people pay for services that they now considered to be part of the “free” Web. Now, subscription services (outside of the adult entertainment industry) are basically non-existent but Web proprietors are able to survive and even thrive thanks to the explosion of online advertising.

As noted, the mobile industry is kind of like the Web industry circa let’s say 1997, in between the IPO of Netscape (which helped make the Web get into the mainstream) but before the .com explosion a year later. Like the Web at that time, companies have been using mobile mostly as a profit center – selling content like ringtones, screensavers, games as well as premium services like subscriptions and 1-off contests, most notably in the hugely popular American Idol text voting campaigns.

However, while premium services are still generating revenue for companies, a gradual shift is happening towards using mobile as a promotional vehicle. It’s also possible that, like the Web, some premium content costs will be offset by mobile advertising, which is still basically in testing mode for now with companies.

With all of this in mind, which option do you choose – Profit or Promotion or perhaps both? Let’s examine the Pros and Cons of each.

Profit

The easiest way to a quick profit with mobile campaigns is to offer a premium SMS service. As mentioned above, this can be anything from contests to an ongoing monthly subscription service. However, in order to make such premium campaigns successful, you have to make sure your offer is worth it to your potential consumers. This is especially true if choosing a subscription model.

Pros

· If done the right way, this method can produce both short term and long term profit.




· Costs for the campaigns can be completely or partially absorbed not only by your buyers but also by your arrangement with a mobile aggregator or your mobile service provider. Many premium campaigns include the right to send a limited number of messages to your subscribers before having to pay a per message fee.

· You can strike a deal with the carriers or major mobile content sites to sell your content on their Wireless Application Protocol (WAP) deck – basically a portal you access via your mobile Web browser.

Cons

· While you can get an initial profit boost from your premium campaigns, sustaining them as a viable revenue stream can be tricky due to the fickleness of mobile consumers always looking for the new hot thing.




· If you are offering content that needs to be licensed, initial contracts plus ongoing royalties can eat into your profit margins.

· Depending upon the premium service being offered and where it’s being sold (such as a WAP deck), the carriers may take an additional cut of the revenue.

Promotion

As noted, mobile marketing has come into the forefront over the past couple of years as more companies began to realize the potential of using SMS campaigns to promote their products and services. While the total dollar amount being spent in this channel is still very small compared to their more traditional brethren, savvy companies are starting to use mobile marketing as a differentiator against their competitors.

Pros

· Mobile marketing is an ideal method to reach on-the-go consumers, especially for time sensitive offers, like a lunch coupon or last minute travel deal.




· It’s a great way to extend your brand and bolster brand loyalty, such as using a keyword that integrates your brand into all of the mobile campaigns.

· It is especially useful for youth marketing campaigns, where other more traditional forms of marketing usually fall on deaf ears.

Cons

· You have to pay a per message cost for every campaign, which is also not offset immediately by your consumers.




· You need to be patient as it takes time to establish effective mobile marketing campaigns.

· Since there is also a per message cost to the consumer, you need to be extremely careful about your collection methods as sending messages to people without their permission can lead to potential legal actions.

In the end, whichever method you choose to use, it’s time to start thinking about integrating mobile into your overall strategy. Both options as you’ve seen have their pluses and minuses, but in the end, mobile is becoming too big of an opportunity not to act now. Also, be sure to check out our recent whitepaper called “SMS or Die”, which goes into much more detail on the specifics of mobile marketing than the general overview I’ve written here.

If you are already using mobile strategies, which method do you prefer and why? Share your thoughts and efforts below.

Until next week,

Steve Chipman
COO
mobileStorm