So if you are Burger King vs McDonalds. If you are Coke vs Pepsi. If you are Adidas vs Nike vs Reebok. If you’re Audi vs BMW. If you’re iPhone vs Galaxy. There is a seismic shift happening in marketing communications away from the legacy methods on TV and print and radio, to new digital marketing from SMS and email to social media to in-app smartphone ads to Augmented Reality (AR) and beyond. Much of that is reflected in a shift in dollars, the readjustment of advetising budgets, lets move some of the money to the digital budget or even perhaps, mobile budget. And where does that come from? Legacy media. The TV, print, outdoor, radio etc budgets are then squeezed. We can observe this in absolute terms, the fresh eMarketer count of global mobile advertising expenditure in 2014 was .. 42 Billion dollars (oops, many did not see that coming). Yes, from 2013 to 2014 the global mobile advertising industry doubled (again) in size. Mobile already accounts for 29% of all digital advertising expenditure (growing by far the fastest, because mobile is also the most effective) and mobile is now 8% of the total global advertising revenues across all advertising channels.
This is a very long (17,000 words, like 2 chapters in one of my book) very detailed article about the bleeding edge in mobile marketing. Its about the role of big data. Its I believe the first comparative case study of national scale, where the old is compared to the new. It has tons of business examples and all the weird historical oddities my blogs always have. This is a 'three-cupper; get yourself lots of coffee to get through this. If you read the CDB blog for the smartphone stuff, there's nothing of that here. If you are in mobile or digital for its advertising, or its money-making ability, or are involved in 'big data' this is a must-read you probably will bookmark with typical 'Tomi Ahonen Definitive Treatise' relevance, that you will keep coming back in the months and years to come, and send your colleagues to read. With that warning, this is a 'read carefully every word' blog. Don't start it if you don't have the time now. Give yourself 45 minutes to an hour for this. When you do, I will be there at the end to have a chat on how this all makes you feel. Enjoy. We were talking about recent excitement about mobile advertising numbers...
THE EASY ANSWER IS SIZE
Part of the power of mobile advertsising is the growth of mobile overall. There are more mobile accounts (subscriptions) than humans alive. And we interact with the gadget at unbelievable levels. The Tecmark survey in 2014 found that we look at the smartphone now on average 221 times per day. So the opportunities for any advertising brand to appear in our view, on mobile, is unprecedented considering a mass audience. And as we know on this blog all those numbers, the digital media opportunities in mobile are exploding from basic voice and messaging, to interactive gaming - Angry Birds alone (just on mobile) has already had more users than total Facebook accounts active on mobile and PC. Talking of Facebook all major social media find the majority of their users on mobile now. We watch our videos, listen to our music, share our selfies and even use new video-sharing services like Meercat and Periscope to share content that was not possible under older technologies (at least not as easily) such as latest episodes of Veep or Game of Thrones or House of Cards or the Pacquiano-Mayweather fight.
But some of the astonishing growth rate of mobile marketing - doubling in one year - one year! - comes from something else. The marketing professionals are now learning about mobile. They are adopting mobile and adapting to mobile. They are discovering its power. Yes, mobile can replicate all you can do in legacy media of any type - as the BBC famously said a decade ago, all TV and radio content will be available on mobile (and they then did it too, the BBC iPlayer sees more use on mobile than on PC). So all your ‘professional skill’ as an advertising copywriter or fashion photographer or TV producer is not lost, it all is also usable on mobile. But then comes the heureka moment: this thing can do more. Yes, mobile has (nine) unique abilities you can’t do on legacy media, not even the PC and traditional ‘sixth media’ internet (I wrote literally the book on it). Mobile truly is the 7th mass media. And once the creative minds in advertising start to plunge into the rich new worlds of mobile, they are truly enthrilled by the diverse range indeed plethora of opportunities to innovate and be truly creative. There has never been anything like mobile. So the richness and the reach of mobile help power it to such rapid growth in the marketing and advertising industry. Doubling in size in just one year.
Mind you, most in advertising are total newcomers to this opportunity. The Forrester global survey of marketing professionals last year found that 42% worked in companies that had no mobile strategy at all, or their mobile strategy was less than a year old. Nearly half are novices at best. Two thirds said they don’t have an adequate budget for mobile - remember these are not ‘mobile’ experts bitching, these are MARKETING professionals who are overwhelmed by mobile. Four in ten marketers worldwide is ignorant of their company customer attitudes to mobile and get this, six in ten doesn’t collect any data on their customers’ mobile uses. Most of those who do, only measure WEB banner ad clicks on mobile (ie they are measuring an ancient mostly obsolete metric built for a previous media). Forrester said (just like I have been saying for 15 years) that they are critical of marketers only focusing on the shiny new things (like smartphone apps) at the expense of what works - SMS. SMS. SMS. SMS. SMS (as I’ve been writing in my books for 15 years and on this blog for 10 years - happy birthday CDB blog!) and MMS and the mobile internet rather than smartphone apps.
PERFORMANCE BLOWS COMPETITION AWAY
Beyond its size, we get to performance. I just presented last autumn in Seattle at a global mobile gaming conference. One of the presenters proudly showed his stats that his game achieves click-through rates on the in-game mobile banner ads of ten times - TEN TIMES better than the same banner ads to the same gaming population on the same game on the web ie PC version. Mobile. Ten times better rates. The audience was clapping wildly to the speaker. I honestly felt like interrupting the celebrations that a 2% click-through rate - on mobile - is not cause to celebrate, its cause to resign and quit. I NEVER show such piss-poor performance numbers in my mobile marketing seminars around the world. If you can only do 2% in your mobile marketing, you are a loser. Its like bragging about how your car today is ‘so fast’ it can do 20 miles per hour (32km/h). We need to do ten times better THAN THAT. Yes, 100 times better than banner ads on the web. That is what we can do - globally, across THOUSANDS of campaigns by all the biggest brands from Coca Cola to Nike to McDonalds to Mastercard to L’Oreal to BMW... 20% is a number that starts to be ‘reasonable’ target for a ‘good’ campaign - not excellent award-winner area in MOBILE marketing (I’ve got tons that go far above 50%). But 20% is what we can consider good.
And that is by the way, not a ‘click through’ rate, it is usually a ‘response rate’ which is far better - the consumer INTENDED to respond, so ‘response rate’ excludes accidential clicks. And we often see 20% or better ‘conversion rates’ - yes. Send out 100,000 ads, and get 20,000 CONFIRMED SALES. That is not just 100x better quantitatively than your 0.2% pathetic internet click-through rate, it is QUALITATIVELY better. Its not a click-though that hasn’t yet resulted in any sales. A conversion rate means it yielded a sale (or whatever other metric was measured, like say a credit card application submitted, if that was the metric). We see regularly CONVERSION rates of over 20% in mobile when the ad agency knows what it is doing and its on an opt-in campaign for a major brand.
So lets take a race. You are living in Roman times, 2,000 years ago, the times of Jesus Christ. You can pick any method of transport, and get from Rome to the distant edge of the empire in Paris. You do what? You pick the chariot of course. Horse-drawn ‘race car’ of the time. You’ll probably make it on those good Roman roads in about a week. Now what can I do? I am allowed to use 2015 tech to travel the same distance. I pay a few Euros to Ryanair, and I am there in two hours. Bing-bing-bing. You lose, game over. Oh, in this example my speed advantage is conveniently about 100x faster. But we were comparing mobile to the web. What about ‘legacy media’ like TV, radio and print? Thats like going back to the cave man before they invented the wheel or tamed the horse. Haha.. Yeah. Speed. Addictive. Nice. That is where the obvious. overpowering indeed dominating strength of mobile appears. And that is all the easy bits, that any simplest business paper can explain.
But what is the real power of mobile. Why did Google the world’s largest internet company suddenly say - put you brightest people on mobile? Why did Apple Computer, drop ‘computer’ from its name and call itself now a ‘mobile’ company? Why does Starbucks say nothing is more important to their future than mobile? Why does JP Morgan Chase say they are a ‘mobile first’ bank. Why does Visa say the future of payments - yes of money - is mobile (as opposed to say Bitcoin or eCash like Paypal or gosh, archaic tech that powered Visa’s growth to number one, haha, plastic). This is the big article on the power of mobile into the next decade. The power of data. We can collect that data from many sources, including but not limited to, mobile.
UNDERNEATH THE CALM SEAS LURKS... THE DATA MONSTER
So I’ve been meaning to write this blog for a long time but these detailed ‘deep’ blogs do require plenty of clarity of thought - and a lot of background, and its far easier just to count how many iPhones Apple sold in the past months haha. But yeah. Mobile is radically changing advertising. Mobile reaches more media audience than anything in human history more than movies, radio, TV or newspapers, books, magazines, even outdoor advertising. Yes, there are areas where outdoor media doesn’t exist but mobile does. So reach is best. Then mobile is the most efficient. Normal internet banner ads get 0.2% click-through rates. Mobile banner ads do typically 10 times better, ie might get 2% click-through rates but that is piss-poor ridiculously bad ‘interruptive’ advertising and far FAR FAR better methods exist, with opt-in mobile messaging that typically gets between 20% and 40% response rates meaning mobile is at least 100-200 times better than web banner ads.
FunMobility’s brand new 2015 guide to mobile marketing (excellent and FREE resource, get it right now), that covers truly everything from in-game app advertising to QR codes to mobile coupons to mobile web to SMS and MMS, reminds its readers - SMS and MMS get between 90% and 97% open rates, they get 5x better engagement rates than email - and SMS campaigns get 33% response rates! DUH. No wonder mobile marketing is growing at 100% per year, globally everywhere. And as we learned from who? From EVERYONE - that all mobile marketing is built ON TOP OF SMS, nobody starts a mobile strategy from an iPhone app. Who says so? The MMA Mobile Marketing Association teaches us this. Coca Cola says their mobile marketing budget is run on a 70:20:10 rule, 70% goes to mobile messaging, 20% to the mobile internet, and 10% covers all the sexy shiny-toy new stuff that doesn’t deliver yet, like smartphone apps, QR codes, Augmented Reality etc. Or like how Mondelez (Kraft Foods) teaches its marketers: leave no phone behind. It always starts with SMS (and MMS).
On TV you have no idea which ad actually produced a sale, or even if your ad was seen. The audience member might have gone to the toilet on the ad break. On digital interactive media like internet email and banner ads, or social media from Facebook to Instagram, or of course mobile - we CAN measure what happened. Did the audience see it, react to it, actually use that particular ad to turn up in a store (online or bricks and mortar store) and buy. And just about as important, is our marketing reaching the audience for the conversation, is it generating social media ‘buzz’ such as likes and friends and so forth.
That is part of the power of digital media, we can measure it. Nothing is as measurable as mobile, however - not my words, “Mobile is measurable like nothing before.” is what Winston Wang the Director of Innovation for Anheuser-Busch-InBev said (they are the world’s biggest beer brewers from Stella Artois to Budweiser). This is no mobile geek tech author. The biggest beer brewer on the planet. Their Director of Innovation. Loves mobile for its measuring ability. Yet.. that Forrester study said six out of ten companies doesn’t collect ANY data on mobile, and most who do, only collect that pretty well useless metric, click-through rates of mobile banner ads. Sad indeed. But where there is darkness and despair, where marketers cry at night, have no fear, there is hope, light, promise, magic. The CDB blog is here! I will help you see the future. And that all is built on.. data.
COKE AND PEPSI, BK VS MICKEY DEE
Almost all who have seen me live, have seen me drinking a Coca Cola. I drink tons of carbonated cola drinks, and most who saw me at any conference or private seminar, usually saw me drinking cola drinks at the breaks (and coffee) or at the lunches, restaurants, airline lounges, wherever. I’ve drank enough Coca Cola in my lifetime to fill a small lake. And its a very widely held belief among my fans, that Tomi is a Coke-guy, a Coca Cola guy. I talk about Coca Cola a lot also in my presentations and last year in Ecuador, the local Coca Cola marketing at the event even produced this unusual name in Latin America for a custom bottle they nicely made for me:
Yeah. Tomi the Coca Cola guy. And yet VERY close friends of mine know, that in my life, over the past 40 years, whenever I have had a choice, the carbonated soft drink I bought for myself was... Pepsi. In 40 years. Literally, in 40 years I have never bought a Coca Cola for me to drink, while I buy Pepsi every single day I go to the grocery store. If my store is out of Pepsi, I will not buy a Coca Cola, I will go to another store instead (but before I leave, I complain quite loudly to the manager about how incompetent they are if they managed to run out of Pepsi). Yes. I am indeed a Pepsi guy. Literally for 40 years absolutely unfaltering passionate loyalty without fail. The one day I bought a Coca Cola where Pepsi was available in the past 4 decades was April 23, 1985. Oh, and on that one exceptional day, I bought TWO cans of Coca Cola for myself (as well as one can of Pepsi). Why that strange deviation on that day. Its the day Coca Cola released ‘New Coke’ in America, I bought one can of New Coke, one can of regular Coca Cola and one can of Pepsi. I did not buy Coke to drink it, I bought it to test the new flavor. I tested them side-by-side, all same level of ‘cold’ so temperature was not a factor. And by weird accident in timing, I happened to take a picture of myself that day tasting that New Coke (those who read my essay of selfies know this was very unusual for me at the time, I did not waste expensive film on self-portraits):
I decided that no, I still prefer Pepsi over either old Coke or New Coke, and that was the last time I bought Coca Cola with my own money for myself, where Pepsi was available. Exactly once in 40 years and that was not because I needed a drink, I bought it to test out the new taste. Yeah, I am a victim of the ‘Pepsi Challenge’ campaign in the 1970s when I took the taste test in Finland, and decided that I prefer Pepsi, and I have not wasted one penny since on the wrong drink.
Understand this detail about just one random customer among 7 Billion humans. Tomi drinks regularly both Coca Cola and Pepsi (several bottles/cans any one day) but under no circumstances in 40 years has he ever bought a Coca Cola to drink where Pepsi was reasonably close available as a choice. It is utterly irrelevant to me, if Coca Cola has a 2-for-1 offer or gosh, 10-for-1 offer, I will not buy Coca Cola, because Pepsi to me tastes better and I will walk out of the store and go to another, to get my Pepsi. Thats how I feel about my cola drinks. But obviously, in a random bar or restaurant or airplane flight or telecoms conference break, if Coca Cola is there and no Pepsi, I’ll drink the Coca Cola quite happily. Its not that I don’t like Coke, I just prefer Pepsi.
And thats not just me being ‘Tomi-ish’. Take McDonalds’ and Burger King. I may have a slight preference of one over the other, but I will eat at both, buy burgers at both, and have no significant preference one way or the other. I tend to go to ‘the other one’ next, versus where I ate last. So if on my past trip to Singapore I ate in Burger King, then on my next trip to Bangkok if I need fast food, I’ll go to the McDonalds. But I won’t bother to go ‘find’ one over the other, if only one is nearby, thats the one I eat at. Eating twice or five times in a row at BK is no problem for me (or vice versa).
IF ONLY THE BRANDS COULD KNOW
So what is my point? In some consumer brand food selections, I have no significant preference (McDonalds vs Burger King) while in others I have an absolute preference so severe, I will even go find an alternate store if one store doesn’t offer what I want (Pepsi vs Coca Cola). And what if we KNEW this? What if Coca Cola knew this? Why would they EVER spend one cent in advertising anywhere in my view, because Tomi Ahonen will never buy a Coca Cola where Pepsi is available. They are wasting years, indeed decades of expensive advertising at me, because it has produced zero consumption purchase by me where I had the choice. They should yes - work on increasing DISTRIBUTION to ‘catch me’ where Pepsi is not available, but to ADVERTISE to me, or to drop their pricing on some coupon or two-for-one offer or extra large bottles (20% extra for no more cost) etc will not impact me. I will buy Pepsi.
Imagine if Coca Cola knew this, not just of Tomi Ahonen but of every consumer on the planet, who are willing to buy their products and who are not (its not about the Coca Cola company, I have the IDENTICAL BUT OPPOSITE position on Sprite vs 7up. I won’t buy the watered-down slush that is 7up, never had, never will. I only buy Sprite, which is now the Coca Cola company product, where 7up belongs to Pepsico. This is not some personal position against the company, only the taste. I think Pepsi tastes better than Coke but also, that Sprite tastes better than 7up).
And now, what about Pepsi? Imagine if Pepsi knew this about Tomi Ahonen’s preference. They would not WASTE one penny of their advertising budget on me - EITHER. They don’t have to. They already ‘own’ me. They should never give me a 2-for-1 deal, that is just watering down their profits. Use that campaign to those customers who are ‘in the middle’ who can be converted but don’t give discounts to loyal customers who ‘will never change’. Not for a traditional advertising purpose, I mean. Not to ‘get sales’. They are already getting every penny out of Tomi Ahonen they could ever want (on a daily Pepsi consumption level I must be in the top 1% maybe top 0.1% of their customers globally). All offers, coupons, specials aimed at me, are wasted and diminish their profitability, totally unnecessarily.
Obviously - Pepsi can still have various loyalty programs to ‘reward’ my behavior, and to utilize my passion perhaps to support their marketing but actual cash discounts for me? No no no no no. That is wasted money. That is what ‘segmentation’ is all about in marketing, discovering different customer segments - and then creating targeted offers, products, pricing, bundles, marketing messages etc - to MAXIMIZE PROFIT per segment. That is the purpose of segmentation as we wrote in my third book 3G Marketing with Sara Melkko and Timo Kasper haha (says the first ever Segmentation Manager of Nokia, early in my career haha, before I became head of Nokia Consulting).
So Burger King and McDonalds should fight feverishly for me, Coca Cola should never bother, and Pepsi should just occasionally reward me, but not target any significant advertising campaigns or discounts. So what about that Coca Cola billboard I see now outside this Starbucks? It talks to all the passers-by. Including me. Wasted dollars there. What about the big splashy smiling-faces cum-bay-yah Coca Cola TV ad campaign last Christmas? It reaches some consumers who may be persuaded to buy - but it is also seen by me, several times. I may greatly enjoy it as ‘entertainment’ but I won’t buy Coca Cola. It was total waste of their money (in terms of hitting me Tomi Ahonen, no doubt hundreds of millions of buyers were motivated to buy more Coke because of it).
That is the nature of the beast. TV advertising has to be done on a ‘shotgun’ approach as is all of mass media. You look at the ‘demographics’ of that medium. Who buys a car-magazine? Boys. Who buys a make-up fashion magazine? Girls (ok, and some gay boys). Who watches football on Sunday? Dads (and their sons). And so forth and so forth. Try to target your advertisements in a MASS media that has more of your intended demographic, and knowing some of it will be now seen by people who are not the target.
END OF THE DARK AGES
This is how it always was. From the dawn of mass media advertising in newspapers over 150 years ago, to TV the fifth mass media from the 1950s. This is how advertising and marketing was taught in all MBA courses still in the 1980s when I got my MBA. The internet didn’t become a mass media until HTML and WWW from the 1990s. So only very recent business school graduates received ANY interactive digital media training at university. The early internet website training was about HTML coding and page design, not how to do marketing. Early email marketing was an ougrowth of snailmail spam marketing ie the ‘personalized’ snailmail letters we received in increasing frequency in the 1990s. Facebook and most Western social media grew initially on the internet, they also adopted rapidly internet-based banner ad type advertising concepts, as an ‘outgrowth’ of internet marketing. And mobile didn’t become a media until right at the turn of the millenium.
There was no ‘mobile marketing’ university level course program anywhere in the world, until ex MMA bosses (and both very dear friends to me and to this blog) Michael Becker and Paul Berney set up their company mCordis and ran their first such programs now this Spring. The world’s first conference on mobile advertising was 14 years ago in London (that I chaired). The first book dedicated to mobile advertising was by my good friend Chetan Sharma (who kindly quotes me in the book) Mobile Advertising only seven years ago! Its no wonder, this whole area is so much virgin territory with totally rubbish ideas still alive (like interruptive banner ads and pre-roll video forced ads that we already hated on the internet).
Me? I’ve been monitoring this area, working with various industry giants and publishing frequently articles, chapters etc plus talking often to the mobile marketing industry, including running seminars and workshops with the MMA now on five of the six inhabited continents, and doing the keynote several times to the MMA Global event in New York City. My own book on mobile advertising (my 8th book) came out in 2009. And I do regular workshops with the advertising industry all over the planet helping bring in some light to this complex and rapidly-evolving industry. I'm just speaking in Mumbai India next week at MELT 2015 an event for marketers about the industry's future.
So we know there is a ‘shotgun’ approach to advertising. It can work, it has existed for some 170 years, and it is worth 450 Billion dollars globally. It keeps our TV programs live, our newspapers alive, and radio on the air. The advertising industry is also what gave us the internet as an economically viable industry (why is your Gmail account free? Because Google earns money through advertising).
We also know the shotgun approach is wasteful, a perfect example is Coca Cola and Pepsi in the specific case of me, Tomi Ahonen. It is not true of all customers of Coke and Pepsi, I would guess most are not like that. Its not also a ‘universal’ attribute of me, as one ‘type’ of consumer, in McDonalds vs Burger King, I am totally undecided, and buy from both at nearly perfect 50/50 split. So in some cases, the advertising can have a big effect on me. What would be ideal, and where the theorists have promised the marketing and advertising world will evolve - is a ‘market segment of one’. Where every consumer is known so well that Coca Cola knows its futile to advetise to this one guy, and Pepsi knows its unnecessary to waste ads and offers on their loyal guy, and where McD and BK know they should fight for the business of this same guy who eats often at their restaurants vs my sister the doctor who almost never eats the unhealthy foods at those same establishments. We do now know that a big shift is happening in all of media, and it impacts advertising deeply to the core. I am reminded of how accurately Coca Cola’s past Chief Marketing Officer Stephen C Jones wrote about this sea-change in advertising, in his Foreword to the signature book of this blog, Communities Dominate Brands, exactly ten years ago:
The consumer and their connected communities, selecting the products and brands that are engaged in the most relevant dialogue with them, is the centre of any modern and sustainable marketing model. Wireless technology has enabled the consumer to review and reject much of the one-way messaging they receive and re-sort the dialogue that’s relevant to fit the way they live. Experiencing a Coke or interacting with an enthusiastic Coke employee online or in person has always been far more motivating than 30 seconds of anthemic brand worshipping. It’s not that TV and radio programmes are irrelevant. It’s the lack of ability to develop a relationship with an ad that makes the medium a less viable marketing tool.
Yes, Stephen clearly knows his marketing (haha yeah, thats an understatement) but look at how he phrased it comparing the old and the new. Already in 2005 he saw from Coca Cola experiences in mobile that he personally learned out of Japan, that ‘its not that TV and radio.. are irrelevant.. (but that ads there are).. a less viable marketing tool.’ Not dead. But less viable.
THE END IS NIGH
Well. That future is now here. It is already starting to be done. We have lots of initiatives going into that direction, with tons of early case studies and individual brands and trials and campaigns etc. But there is one COMPARATIVE study, pinning the classic shot-gun marketing approach, without mobile, vs a data-driven targeted approach, that was mobile-first. This is the biggest case study for the global marketing industry and it should be taught in all MBA studies, even though no consumer product was bought or sold. Its Narwhal vs Orca. Its the biggest clash of two marketing methods, of a classic consumer survey database clash against mobile-powered Big Data. Its the 2012 US Presidential campaign of Obama vs Romney. If we substitute ‘vote’ for ‘buy’ - this is a perfect marketing case study contrasting PERFECTLY two opposite models. Both were built well both performed well both achieved RECORD performance from their past history evolution. In other words, in 2012, both methods were PINNACLES of their science.
This is like the first-ever ‘tug of war’. You know the rope-pulling contest, two teams pull the same roap. Its usually called a tug-of-war. But the world’s first tug-of-war was a rope-pulling contest of two tugboats built by Isambard Kingdom Brunel, that had the same engine but different propulsion methods. One had the then-normal paddle wheel. The other had the ‘radical’ propeller. This was done in England in 1845 and the propeller-driven Rattler won. Not just won pulling the paddlewheeler tugboat in the wrong direction, Brunel the brilliant showman, actually had Rattler pulling upstream in the river (against the river). Yet the propeller was that much superior to paddle wheels, it still won. And the Royal Navy who paid for this experiment, ended up gradually adopting propellers to its warships as a result. So yeah. Lets do a tug-of-war. Set the two systems to fight directly against each other.
The Obama 2012 voter activation system was called Narwhal. It was a brand new data-driven machine and related processes, built from the ground-up just for that election. It was the biggest and most complex voter activation system the Democratic party had ever created. The Romney 2012 voter activation system was called Orca. It too was a brand new data-driven machine and related processes. It too was brand new built from ground-up just for that eleciton. It was the biggest and most complex voter activation system ever created by the Republican party. The one area where the two differed radically was the concept. Romney’s Orca was built as ‘evolution’ of traditional demographics based marketing databases (built by a traditional IT giant, Microsoft). The Romney machine was designed to use traditional mass media in voting, especially to drive ‘robocalls’ (automated recordings sent to telephones). The Obama Narwhal was built as ‘revolution’ pursuing radical new marketing concepts and precision targeting to a ‘segment of one’. The Obama machine was designed to use modern social media and mobile, especially to drive SMS text messages. This is a perfect tug-of-war, its the same election and the two rivals opted for ‘opposite’ technologies. And best of all, for us considering this case study, the night before the election, the election was tied. Less than one percent was the margin as the average of polls the night before (According to Real Clear Politics).
All of that is interesting but not how the battle was won. It was the monster underneath the calm seas. There was a consumer-insights and preferences database built by the Romney campaign that included actual voting data generated by volunteers at the polling places, that was not just the best the Republican Party had ever produced, it was the biggest and best election-day activation and monitoring database that had ever been made by any political party before that year. It was enormous and it was powerful. The Romney campaign was able to achieve significantly higher Republican voter turnout in 2012, than what John McCain’s campaign had gotten four years before in 2008. The system worked extremely well (even as it had some glitches). Understand what I say. The Romney machine was state-of-the-art, the biggest election database and system ever created before that election cycle and it did produce a big increase in Republican voter turnout in 2012. Their machine was supposed to drive up turnout, and it did. And yet, this was as useless as a colony of ants building an ant hill in the yard where a modern skyscraper is about to be built. They were just steamrollered away, to total oblivion. Like in the original Star Wars movie, this is the first use of the Death Star, not just winning wars but obliterating whole planets. (I felt a great disturbance in The Force...)
The Romney 2012 campaign used the best available tech, the truly cutting edge of classic marketing technique, methods and technologies, to create the best-ever classic method election targeting system. And it performed very well increasing Republican turnout. Yet Obama won not by a thin slice, but by a landslide. The Obama campaign had also updated its system but this was Hiram Stevens Maxim (first modern machinegun). This was Frank Whittle (first modern jet engine), this was Robert Oppenheimer (first atom bomb). Even compared to Obama’s own highly-praised system used four years prior, in the 2008 campaign, this Narwhal was revolution. Complete total game-change, a true seismic paradigm shift. The Obama team built the first election-use consumer data system that was mobile-optimized and used ‘big data’. They achieved a marketing targeting to ‘a segment of one’. (It cost 100 million dollars, built in one year, by a team of 120 data scientists and researchers. It was by far the most expensive election-tool ever created. In terms of all databases on the planet, it was one of the ten biggest while all others larger than it had been developed over decades).
Narwhal was so immense, it had data on every voter. In the 9 ‘battleground states’ (where American elections are won or lost) Narwhal was refined so deeply, every eligible voter was indivivually scored. In those states, it knew every potential voter. It knew if you were not eligible to vote (too young, a foreigner, etc). And it directed marketing smartly so those were not targeted. A non-voter did not receive a ‘remember to vote today’ SMS message for example.
Then they knew the PREFERENCE. Is this a Democrat or a Republican or an Independent. (Is it Coke or Pepsi.) They not only knew the preference, they had a 100 point rating for EVERY ELIGIBLE VOTER. This voter is 72% likely to prefer Obama, this voter is only 13% likely to vote for Obama (ie 87% likely to vote for Romney).
If you have a volunteer army (Obama’s was biggest ever) and you send volunteers to drive voters who don’t have cars, to the polling places. And yes I mean literally to drive, as in driving a car to carpool voters to polling places - you pick those voters who are likely to vote Obama, not those likely to vote Romney. Imagine the power of this insight. You can truly target the valuable voters who support your guy, and not SUBSIDISE YOUR COMPETITION by giving free rides to people who then vote for Romney instead! Thanks for the ride!
Romney did not have this detail about voters. The Romney campaign did what all history had taught using legacy media. You find districts where Republican voters are a majority and you bombard those districts to bring out all voters in those districts, even if that also brings out some Democrats, because in those districts Republicans outnumber Democrats, thats how you tilt the battle in your favor. So the Romney campaign had tons of volunteers on eleciton day, sending robocalls to phones of those households in those districts that were strongly Republican. Note. A robocall doesn’t listen to you, its a recording. So you send the phone recording to a household. Maybe its a rich family with a Hispanic maid, who doesn’t live in the house, but is there to answer the call, and doesn’t even understand what is being said. Maybe the robocall is answered by the child in the family and whatever brilliant message is there by Donald Trump, goes to a non-voter. It may reach a household where they have already voted, that day or in early voting. Maybe the robocall hits a family in that neighborhood that actually supports Democrats, it is now MORE incentivzed to vote - against Romney. And it might hit the reliably Republican house that has one radical daughter who is the family’s Democrat, and she might hear the robocall. So a significant part of this process is wasted effort - but it still worked better than anything before it. The Republican turnout was up, significantly in districts where the Romney system was used.
A proud and determined ant colony building its little ant hill in the shadow of the oncoming steamroller.
The Obama system already knew who had voted - none of the Get-out-the-vote effort was wasted to those who already had voted (about one third of all voters before election day). It also learned during voting day, as people voted, they were crossed off the list, so they were not reminded to vote, AFTER they had already voted. The Obama campaign also made every Get-Out-The-Vote contact on election day personal. Never accidentially hitting the Democratic household’s one goofy conservative uncle etc. Each contact personal, via personal phone call not robocall, to mobile phones, not landlines, via social media, via email, and most of all - via SMS.
The Obama campaign had a second personal score for every eligible voter. Their ‘propensity to vote’. Some people just don’t vote out of some principle or whatever reason. Then no matter how much you might say you like Obama on Facebook etc, you’re not gonna vote. Ain’t happening. That person has a voting propensity index of 0%. Any ‘vote today’ reminders to this person are total waste of effort and scarce resources. Its like my sister and McDonalds OR Burger King. Doesn’t matter how many 10 for one offers you send her, she won’t eat there.
What about the super-intense voter activist who volunteered for the campaign three times and donated twice and actually has a ‘countdown’ clock of election times on his/her blog, and who voted reliably in the last 3 elections. This person is 100% certain to vote. Its like me an Pepsi. No NEED to remind this person.
Now imagine, the somewhat likely to vote, but strongly supporting Obama - type of voter. This voter doesn’t need any effort on WHY Obama. This person needs plenty of reminders, support, incentives, to just remember to go and vote today.
Then imagine a person quite likely to vote today, but still wavering and undecided about Obama or Romney. This person NEEDS convincing, not reminder to vote. Convincing. This person needs a personal phone call or other such activation, ideally from a person who understands his/her situation but who also understands the Obama campaign positions which would be relevant to that voter. So a teacher to call a teacher, a retired auto factory worker calling a retired auto factory worker, a military veteran calling a military veteran. Its not a guarantee this person will pick Obama - but BOY is this FAR more effective than ANY smiling-face print ad of Romney promising a better America, slipped under your door.
Understand the distinctions of these two voter turnout messages. Both come from the Obama campaign. Both are based on data collected over months leading up to the election (and past voting history etc). But they are VERY different messages. One essentially says ‘we don’t care who you vote for, but please go vote today’ (knowing this person will vote for Obama) and the other says instead ‘please make Obama your choice today’ (knowing this person will vote but is still undecided). Sending the wrong message will not give the result you want and is a wasted effort. Telling the lazy voter - this is why Obama is best is ‘preaching to the choir’ but doesn’t help get him/her to the polls. He/she will nod and agree with everything in that radio or TV ad, but it won’t motivate going to vote today. Meanwhile giving the ‘remember to vote’ message to the other guy/gal, who is still undecided, won’t get him or her any ‘more’ to the polling place, that is certainly going to happen, but every word wasted reminding him/her to vote today, is a wasted effort from doing one more pitch instead of ‘please choose Obama today’.
The Narwhal voter indexing had those two scales. Both on 100 point scale. What is your level of support to Obama (vs Romney) regardless of if you are eager to vote now in 2012, and separately, what is your likelyhood to vote today, regardless of who you might vote for.
THIS IS LIQUID GOLD. This is unfattening chocolate. This is no contest. Every single effort on voting day by Obama campaign went to a not-yet-voted, but registered voter, who is not a Romney supporter, who is not sure to vote today. Depending on their level of Obama support, those voters got a personalized marketing pitch. Some got reminders to just go and vote today (strong Obama supporter, but not certain to vote), others got strong final pitches to select Obama rather than Romney (very likely to vote but undecided which candidate) and obviously some were needing both types of encouragement, please pick Obama and do remember to vote today.
Essentially nothing was wasted. Not one ad from Coca Cola to me, neither not one ad from Pepsi to me, but plenty of arguments why McDonalds or Burger King would want me to buy burgers and fries at their restaurant today.
This is the future of advertising. You cannot live in that Obama-system world trying to fight it with Romney-system tools, training, methods and systems. Its like the Zulu wars, when huge armies of proud and extremely capable Zulu warriors, kings of the region for centuries, with perfectly honed skills with the spear and shield, were faced with rifles and s small group of Afrikaans (Voortrekkers). 15,000 proud Zulu warriors who had ruled the region as supreme military force, met - this is no typo - 470 of the white man. With rifles. At the Battle of Blood River. How badly did the Voortrekkers get hurt? Three were ‘lightly wounded’. Over 3,000 Zulus died. A total massacre. After that day, the only way the Zulu warrior and other native tribes of Africa could ever fight the white man, was by adopting this new superweapon - the rifle.
LESSONS FOR MARKETING PROFESSIONALS
First off, classic demographics do play some role - but only in a transitionary stage. Lets use the Obama-Romney example. Does it matter that you are a woman or a man. Yeah. Some election issues were specific to women (abortion, equal pay, contraception etc), others of big interest to women (healthcare, schools, quality of food and environment etc). But that was before BETTER data was available. Imagine a retired man who doesn’t care about salaries for himself but happens to have only women in his kids and grandkids. And that one of them recently was involved in a salary discrimination incident and fired for complaining about it. This man would typically not fit a demographic profile ‘cares about equal pay for women’ because he is not a woman. But that PARTICULAR voter does care about equal pay (a ‘women’s issue). Do you see now, how demographics are instantly obsolete when we get consumer data to this level as the Obama campaign built in one year?
Its better to know each customer actual preference than to make some guess based on a demographic average. And once the perfect knowledge is available on an individual level, you THROW AWAY the demographic that might contradict it. It would be utterly silly, to reject the ad campaign targeting this man about women’s equal pay, simply because he is a man - if we know he has a strong preference on the issue on behalf of women (and we’re the Obama campaign, obviously in this example). Actual consumer specific position always trumps demographics. It always trumps demographics. We will soon think of demographics as quaint as receiving ads via a fax machine (yes that once was common).
Eventually we will not bother to ask archaic demographic data of our consumers. What is your age (except in areas where age is a legal requirement ie smoking, alcohol, gambling etc). What is your gender. What is your zip code/postal code (oh my gosh, what level of stupidity at this futile attempt at useless spying... its the Romney shotgun again). Instead of trying to spy on customers, to harvest this kind of pointless data, why not ASK the customer. Tomi do you like the BMW brand (yes). What other car brands do you like (Audi, Mercedes, Aston Martin, Ferrari, Volkswagen). Which are your preferrred brands (Audi, Aston Martin). Would you be willing to buy a BMW (never). If this level of answers are available, why on earth would you ever bother to ask me what is my age? Not everyone will be this open, but many are FULLY willing to tell you. Why would you ask my age, or my educational background or what part of the city I happen to live in, if I’m right out willing to tell you, yeah, I admire BMW and its a very nice car, but I’ll never buy one. That is Obama preference engine. Thats you Pepsi vs Coke right there. And while not everybody will be willing to answer personal preference questions, most of us are perfectly willing to.
Are people really willing to give out personal data on a phone? We have for example the US CDC - Center for Disease Control - hardly the most popular entity online like Facebook, and an entity with VERY sensitive subject matter, diseases that spread like haha, sexually transmitted diseases. When they asked their registered users to answer a simple survey about themselves in 2010 via mobile - 70% gave a response. To a disease center! How much more will be willing to do so for Adidas or Nike or Pizza Hut or KFC?
So you’re Budweiser beer. They’re watching the Superbowl. In your famous ad on the break, show a number, join the contest, answer 3 questions and win chance for you and your friend to be one of a dozen Budweiser’s guests in next year’s Superbowl. Here is the number, text now. Get to know the majority of Budweiser’s total drinking audience in one day. Haha. Why not? What could be more effective use of their money? Then harvest the mobile phone numbers, allow fans to connect the mobile number to their Facebook pages - again gamify this - and voila. You also know your brand ambassadors. Easy. AND ACCURATE.
The only reason we are still using demographics is that it was better than nothing. Just like early advertising. Better than nothing. There once were steam-powered cars too. Better than nothing but imagine how long you have to wait just for your ‘car’ to start up, if you have to heat the water to boiling. Sorry honey, the car won’t be ready for another four hours, are you really in a hurry to the hairdresser?
And the old demographics-based system does produce results. Its expensive but it does produce results. It is not perfect, not near perfect, but it works. So its been around long enough that it is being taught at universities to business students. Basics of segmentation. Demographics. Yet demographics is a dying discipline. It will be totally replaced by something far far more powerful, similar to how modern cars replaced steam-engined vehicles on roads, how the telegraph was replaced by the telephone and fax was replaced by email. But nobody teaches this stuff yet. The very first course of mobile marketing with accreditation was held this Spring, 2015 by my buddies Michael and Paul (and go attend it wherever you see it, there is no better use of your time. These guys are the best. The courses are now being run around the world).
The competence and ‘science’ of this new discipline of mobile marketing is not yet mature enough to have a solid curriculum around a ‘post-demographics’ era into big data. Most early big data solutions are built - to harvest demographic data. How stupid is that? Its like hunting for pidgeons with an anti-aircraft cannon. Or maybe more relevantly, its like giving a shotgun to a blind person. Lots of deadly power but no aiming ability.
DEMOGRAPHICS AVERAGES VS INDIVIDUAL CONSUMER DATA
We now have the first true case study of these two systems going head-to-head, where one national massive marketing campaign was built with the very latest tools, including big data, including mobile phone based inputs of data, to market the product Mitt Romney for President in 2012, to boost voting (as opposed to boosting sales of a consumer good). It didn’t collect individual consumer preference data, nor did it harvest the individual mobile phone numbers of its supporters into the system. They used demographics data to push get-out-the-vote initiatives to the districts where demographics showed a preponderence of Republican voter support. The campaign was a ‘shotgun’ approach.
Against that the rival Barack Obama for President 2012 campaign went deep and dark into big data, and used precise individual consumer data, and then used a ‘sniper’ approach to target optimal registered voters who had not voted yet. Very very precise targeting truly up to an individual level. I am not kidding. The Obama campaign had a data file for EVERY VOTER in America. This was literally the ability to do a ‘segment of one’. There had never been anything this powerful and the results were a bloodbath. While the Romney campaign DID achieve a boost in support, and Romney achieved more voters than McCain had four years earlier, and Romney HQ could even measure that boost in voter turnout, they did not know, and could not measure how much better Obama’s machine was. Into the early afternoon on voting day, the Romney data guys were convinced that they were winning. But the Obama campaign knew all along, from weeks before, up to polls closing, that this was not even a close election.
So the nitty-gritty details. Romney team DID do better than McCain. In these battleground states where the election was decided (9 states like Ohio, Florida and Virginia, which are always close. So we ignore obviously ‘Red’ states for Republicans like Texas and obviously ‘Blue’ states for Democrats like California) 38% of voters had already voted before election day. The contest was for the last 19 million voters who would cast votes that day in these 9 states. The rest of the states were a foregone conclusion. The race was for these 19 million voters (out of 120 million votes cast). Romney’s team managed to push turnout up by 200,000 votes. That is a big boost. It meant that Team Romney was outperforming the polling gap by Real Clear Politics from the very last surveys the last three days before the election, in these battleground states, that had it a razor-thin edge of 0.7% for Obama.
So the Romney team knew they had boosted their turnout by 2% and that should push them over the top, to defeat the slightest polling disadvantage they had just held. This 2% boost in actual turnout over the findings of dozens of polls for the past weeks would be a huge upset too. And it was real. The traditional demographics based ‘shotgun’ approach of blast advertising can yield results (just like a steam-powered vehicle can get you moving and a telegraph can deliver your greeting etc). It seemed like they had decided the elction.
Until we see what Team Obama did with their Narwhal miracle machine, big data and mobile and direct personal measurements, and precisely targeted voter turnout activities. A precision instrument. The Obama campaign on election day, with 62% of the voters still not having voted, achieved twice as many contacts as the Romney machine. They hit three times more registered Democratic voters than the Romney team hit their side. The Obama team reached four times more contacts with actual voters (as distinct from registered voters who don’t vote) and worst of all for Team Romney, the Obama ‘Narwhal’ team ACTIVATED nearly five times - FIVE TIMES - more voters on election day, with this radical marketing machine and method, than Team Romney.
The Romney campaign was ‘state of the art’ in old-fashioned and about-to-be-obsolete demographic targeting (imagine receiving a state-of-the-art fax machine today? A useless paperweight no matter how state-of-the-art). It achieved a strong increase in its voter turnout. If the Obama campaign had only produced the same voter result as four years before in the McCain election, then Romney would have won enough of these 9 ‘battleground’ states to be President today. But team Obama used their ‘Narwhal’ system and activated 9% more voters on election day than previously! 7% more than Romney’s team. It was not even close. These nine states with 40 million voters, were supposed to be within one percentage point, 0.7% undecided and razor-thin. Obama won these 9 states with 3% margin. This inspite of Romney pushing his side up by 2%. So on election day Obama achieved 9% boost to his side. For every one voter the Romney side Demographics system could activate with blast advertising, a targeted personalized and direct effort produced 4.5 votes. The new system is 4.5 TIMES BETTER (lets sell the steam engine and buy a car).
This is the future of all advertising and marketing. Data is the new black. This case study has been examined throughout the professional data mining marketing experts and is being now adapted and taken into use. By moving beyond demographics, your advertising and marketing yield - effectiveness - is improved by a factor of about 4.5. Note, twice better would mean if your current multi-million dollar ad budget resulted in 50 million dollars more of sales, a twice better effect would be 100 million more in sales. DUH. Four point five TIMES better means 225 million dollars of sales vs 50 million. This is what big data can do for you, if you go deep and detailed, personalized, consumer behavior data, not demographics. The sooner you remove all demographic nonsense, the faster you unleash this power.
And the problem is CMO and VP of Marketing level executives, who were trained at top MBA schools, who built their careers on this knowledge, back when it was the only thing going. They ended up commissioning huge databases for marketing - but all designed to work with demographics. Imagine building a massive garage, with heavy concrete floor to park your 5 ton steam powered vehicle, and then the support systems in the garage to power it up, the water storage etc. All that is wasted when your wife convinces you to abandon the silly steam car and buy a Ford Model T ‘automobile’ instead. This crisis is going on in all big organizations right now. What the hell do you mean, we will abandon demographics? Are you nuts? Do you have any idea what this all cost and what all it can do for us?
And they do work! Look at Romney, his demographics based system did work and would have tilted the election into his favor. But its now obsolete. And all those data mining engineers who have invested their careers into building this monstrosity that is now about to be eclipsed. They created the fastest fax machine just when the world discovered email. Sadly most of those datamining experts are blind to this, as are most of their CMO and VP of Marketing bosses too. Because they KNOW demographics can deliver results, they don’t want it dumped, and they will be very skeptical of the new untried ‘shiny new objects’ haha. They all have been brainwashed by the mantra of demographics. But we now have the first tug-of-war, definitive proof, a modern system built on big data consumer actual individual data, preferences and performance is so much more powerful than averages built on demographics, the consumer targeting yields 4.5 times better results. Total blowout.
One of the tools Team Obama pioneered in the previous 2008 election against McCain was the voting-day SMS reminder. Now in 2012 both sides used that but look at who made their campaign ‘mobile first’ and for who was mobile an afterthought. So in the critical battleground states with 19.2 million voting on election day, the Obama campaign delivered SMS text messages to 9.5 million supporters. They had 9.7 million votes that day. As they knew who had voted, they hit with an SMS text message almost every person who finally also voted for Obama.
Contrast that with the Romney campaign which was only able to send out SMS text messages ‘remember to vote’ messages to 3.8 million Republican supporters that day in the battleground states. And one third of those had already voted so they achieved messages through to 2.6 million actual voters that day. Obama reached 4 times larger target audience and if normal statistics hold, the net-result in voting (and SMS reminder results in typically a 50% actual vote result - its the most powerful thing you can do to boost your voter turnout) just by ‘voting day reminder’ SMS received by unvoted supporters, Obama team crushed Romney team by 4 to 1. And the vote margin generated this way is 3.6 million votes. Obama’s actual vote margin was was only 900,000 votes in these 9 battleground states, so it was indeed headed to a Romney victory if it was not for Team Obama’s Narwhal voter activation and targeting system.
THE MOST POWERFUL SMS EVER SENT
There were a thousand ways the Obama campaign used modern digital interactive media that the Romney campaign used poorly or in many cases did not even try. The Romney campaign was built with an old-media focus (TV and radio ads, voter brochures and leaflets and doorhangers, robocalls, direct mail) while the Obama campaign was using modern media (Facebook, Twitter, YouTube etc online social media, plus email and .. SMS). Yes both sides held rallies for their voters, had yard signs, etc, but all pundits will admit the Obama campaign used modern media far more, and far more effectively than the Romney campaign did. Some pundits will even attribute part of Obama’s victory to the better use of social media. But I haven’t seen anyone other than this blog discuss the most powerful single SMS message ever sent, in human history. The message that changed an election.
The total number of Obama ‘supporters’ is far larger than the voters who turned out. There are some voting age citizens who are not registered to vote. There are others who are registered to vote but don’t bother to (the Democratic party suffers more of this than the Republican party whose voters are more reliable). Then there are the youth, under 19 year olds who are too young to vote but can be supporters. There are people living in the USA permanently or temporarily under permits, who cannot of course vote in the elections. And there are illegal aliens too. A lot of people who can’t vote but will have many who still support one party or another.
So there is a huge pool of ‘supporters’ who cannot vote on election day. And one third of the total voting public had already voted before election day. Nearly 40 million Americans. So if we say it was half-split, about 20 million had already cast a vote for Obama in the preceeding weeks and months. These are mostly very loyal, very committed supporters, who did ‘all they could’ and maybe even donated money etc.
But now its Tuesday, voting day, and if you had already voted, there is nothing more you can do. And yet, in those 9 battleground states there are 28.6 million registered voters, who had not yet voted today. The election is not decided in the other 41 states, it is decided in these 9 states. All polls say its too close to call. And roughly half of those voters support Obama say 14.3 million, and who could be - with the right targeting - activated to vote today.
What if there was a ‘magic bullet’ to achieve that? The Obama 2012 campaign did invent the magic bullet for elections. They sent the most powerful SMS message ever delivered. Like all of the greatest messaging uses, this too was meticulously planned and prepared in advance. They had carefully mapped out their supporters. They knew who had already voted. They knew who were only lukewarm supporters of Obama and who were very strong supporters. They knew their BACKGROUND of each supporter. Who was a teacher, or a nurse, or a retired military veteran, or a college student, etc. And they sent a precisely targeted single SMS message to all strong Obama supporters (whether had voted or not, and including all supporters who were not even allowed to vote) with this simple message:
Would you like to make one phone call on behalf of the President? Reply to this message, we'll send you one phone number to call a voter.
WOW. And remember, Team Obama’s Narwhal system knew every voter. The one phone number you would get would be - someone who has not voted yet but is eligible to vote. That one number is to a person who is a likely Obama voter but not definitely going to vote today for Obama. And then they matched you like the Amazon book recommendation engine matches customers. A teacher would get a number of an unvoted teacher. A retired factory worker would get a number of a retired factory worker, etc. And the Obama campaign only funded the first outbound SMS and the follow-up SMS with the number and name (and job/status) of the target to be called. Two SMS messages. The volunteer would pay for the cost of the response SMS to the Obama campaign saying ‘yes’ and the subsequent telephone call to that mysterious voter..
I used very conservative numbers and estimated that this one SMS went to 6 million Obama supporters on election day 2012 (am certain it went to more) and even at that level it would have yielded at least half a million votes cast for Obama. See the full math here if you’re interested. But yeah, for context, the entire Romney army of phone-banking volunteers was 34,000 people - biggest phone banking effort ever by the Repblicans - whose demographics based robocall spam yielded 200,000 votes. This one SMS alone decided the election by producing at least 2.5 times a better effort than the 6 million robocalls pushed out by that Repbublican volunteer army. The 40 million dollar ‘Orca’ killer-whale database driven voter turnout machine built by Microsoft for Team Romney did work as advertised but the methodology and the resulting tool was outclassed by the 100 million dollar ‘Narwhal’ system by Team Obama built for this century running on Amazon cloud services and developed with help of Google and Facebook.
One SMS message (delivered to dozens of millions of supporters) decided the election. Would you make one phone call today to support President Obama? We’ll send you one phone number. What a brilliant, brilliant, election-shattering idea. I do hope some day to meet that person who came up with that idea, and shake his or her hand, that is pure genius.
Note. It cannot be done by fax, by telegraph, by landline phone, by email or even by Facebook or Twitter. It can only be done if you have the mobile phone numbers not just of all supporters but of all plausible target voters. Not their landline number, not their email, not their FB. This can only work if you have their mobile numbers. And the Romney campaign didn’t bother to collect mobile phone numbers and permissions, while Obama campaign used all sorts of tricks to collect mobile numbers. Those included concerts volunteered by superstars from Bruce Springsteen to Beyonce. All those rock concerts were proclaiming to volunteer the mobile phone numbers to the campaign to get updates via SMS. Consistent pattern. All the time, the Obama campaign worked relentlessly to get the random contact to agree to - opt-in - to receive communciations from the Obama campaign. When the Romney campaign leaders were asked, why are you not collecting mobile phone numbers, they actually responded: ‘The juice is not worth the squeeze’. There is not enough for Romney campaign to ‘gain’ out of the ‘pain’ of attempting to get opt-in on mobile numbers. The Romney campaign actually believed, in 2012 mind you - that a landline phone number, or email, or snailmail address is ‘as good as’ a mobile phone number. What idiots!
Notice, every one of the Obama volunteer phone calls via this magical SMS went to a registered voter, who has not yet voted today, but who is either leaning to vote for Obama or perhaps not yet convinced. But obviously not to those who have already decided to vote for Romney. Imagine the power of this. The voter might be - as some of us are in so elections literally still on the line to the voting booth - undecided. Truly undecided. What if you then at that point get that one reassuring voice of reason, from a stranger who is clearly another teacher, who points out the teacher and schools related issues where Obama is on your side and Romney not. That could decide the vote right there. That call arriving while you are in line. How magical is this. The next stage of this, in a commercial setting, is that when you are at Burger King, inside the store, your pocket vibrates and you discover a message from McDonalds haha. Trust me, this is coming soon to a pocket near you. It will come via SMS (and MMS).
One SMS that decided the election. Let me repeat that. Imagine you are a big supporter, you saw Obama speak live at the local event, you donated 150 dollars to the campaign and you voted early. You told your family & friends to vote for Obama and you have a ‘Vote Obama’ sign on you yard and a bumper sticker on your car. What else can you possibly do. Now its Tuesday, you await eagerly for the results, when your phone beeps at about 11:00 in the morning, and you receive this message: Would you like to make one phone call on behalf of the President? Reply to this message, we'll send you one phone number to call a voter. Yes of course you would! Its something concrete you can do, even if you live in a state that is solidly red and conservative like Kansas, and Obama will never win there, but you can help. They give you the number of an undecided voter in next door Colorado, where the voting is very neck-to-neck. And you are so proud to do that one little bit to help win the election. This one SMS message alone (sent to millions of opt-in supporters) outperformed a dedicated all-day phone bank army of 34,000 people pushing 6 million robocalls all day to ‘conservative’ districts by demographics.
The well targeted, personalized, individual message to a pre-screened opt-in audience will outperform the demographics based mass market approach every time. Every time. Not a slight gain of 20% better or 33% better. By a factor of four to five TIMES better.
IS A JOURNEY NOT ONE AD CAMPAIGN
This is engagement marketing. It is the process of enabling supporters to co-create the marketing experience. Again, there are tons of examples - from the mobile side - to show it works, but this is as far as I know, the only published case of a comparison of the two systems going against each other. A Big Data, mobile-first system, opt-in, built with all power of social media and digital, but ‘leave no phone behind’ it starts with SMS, and it delivers its crushing final blow - with SMS. This outperforms a mass-media blast advertising ‘shotgun’ approach done with demographics by 4.5 to 1. Any measurable END results (votes in an election, sales in business) are 4.5 times better this way. This is so much crushing the opposition, there is no way for the old way to survive. And who learns fastest? The young new companies. Who suffer the longest? The old tired bureaucratic giants who are built on tools and methods of the past (Demographics, mass media blast interruptive advertising). Like Microsoft vs Google haha.
But the big lessons here are a radical shattering of the classic advertising model, that is causing enormous headache at most advertising heads and strategists. The old model nurtures advertising ‘creative’ genius, and rewards it with Cannes Lions awards etc. The Palm d’Or. So the brilliant creative genius at the ad agency takes George Clooney to a deserted island with precise sunset setting, and hires at massive expense that one tune from the Beatles or Rolling Stones or some icon, to be the soundtrack of this iconic ad. Total creative effort. A one-time monster ad. Like typical Superbowl ads, ads that are designed for months in advance for that one moment.
Its all the old obsolete way. What the Obama campaign showed that if you go to the trouble to talk to the end-consumer (voter, buyer) and get their permission (opt-in) and ask for their preference, and even ask them to join you, to co-create the marketing experience (would you make one phone call today), that is how you win. Decisively. This is the very essence of our book Communities Domninate Brands. It is the very essense of the book! Remember, the Obama campaign ALSO knew who were strong Romney supporters! They knew who to avoid. Don’t send Coca Cola offers to Tomi Ahonen.. This took them a year, cost them 100 million dollars and they had every American voter in every state, collected into their system, and they had made at least one contact to every registered voter in the 9 battleground states! Most Obama supporters had spoken to the campaign in some way, whether in-home visit, or spoken on the phone! Not just received a leaflet or direct mail letter or a robocall. Spoken in person! So the Obama campaign had truly ‘engaged’ with these voters through the past year leading up to the election. They knew INTIMATELY what was on the minds of voters.
TO INTIMATELY KNOW WHAT NO ONE HAS KNOWN BEFORE
That is why Obama locked the state of Colorado in June - five MONTHS before election day. The voter insights collected by this system and frequent contact with voters, found that the Colorado voters hated Romney’s statements about immigrants (‘self-deportation’). The sentiment was very strong against Romney. So Obama played one clever bit of politics in June, pandering to all Latino voters, but sealing this ‘battleground’ state. President Obama signed the Dreamers executive order allowing young non-registered immigrants to stay in the USA (ie not be deported) if they were in school or in the military and didn’t have a criminal record. The exit polls of 2012 show that the State of Colorado had a massive 74% of the voters already decided by the month of August. The election was in November but Colorado voters decided before August (ie in June, that action by Obama). There was no contest left in Colorado. The consumer (voter) insights of the Narwhal system by Team Obama had spotted a specific opportunity in one state, Colorado, and sealed that state, five months before the election. (Colorado which was supposed to be close, went for Obama by 5%). Now because Team Obama knew they ‘owned’ Colorado, knew that the only way left for Romney to win, was if he was able to sweep the three remaining large battleground states that were close - Florida, Ohio and Virginia. If Obama won just one of those three, Obama would be re-elected. Now the close election politics Obama played with Virginia and the women’s issues there (Sandra Fluke etc) and the Ohio car industry became far more obvious. Obama just needed one of those three states and he was re-elected (he won all three).
Back to lessons for marketers. What you need is opt-in. You have to collect mobile phone numbers of all your customers. You need to ask them to give permission to talk to them via their mobile phones, opt-in. (And obviously also use all other digital means too, from Facebook to Twitter to Instagram to Snapchat to the plain ole email address). And when you do, you have to respect your customers, don’t spy on them, don’t spam them, and give them real value for engaging with you. Like McDonalds in Japan. McDonald’s a youth restaurant chain in a country with the largest percentage old population, Japan. McDonald’s a burger restaurant chain in a nation of sushi, yes fish-eaters. McDonald’s a foreigner company in a fiercely nationalistic nation. McDonald’s a company headquartered in the USA, the laggard in the use of mobile, in the counry that first launched mobile, and has the most advanced mobile ecosystem. How is McDonald’s doing in Japan? 20 million Japanese consumers have opted in, yes opted in, for McDonalds mobile marketing. That is 1 in 6 out of every Japanese person alive!
If McDonald’s can achieve this in Japan, you can do it too. One in six Japanese citizens of any age, has opted in to receive mobile advertising from McDonalds, and Infinita reported as far back as 2011, that half of those consumers redeem McDonalds offers regularly. Regularly. That is what I mean. You must not spy on your consumers and spam them. You have to deliver such good experiences that half of the audience redeems your offers regularly! This is what must be done. It is not done with one award-winning TV ad campaign by your brilliant creative head. It is a collaborative and precisely targeted effort. Some like Bruce Springsteen, others like Beyonce. Give your audience, consumers, voters, a targeted, specialized, customized offering that suits their needs. Yes of course use all media and yes, use other digital media too, but it all starts with mobile. As the China country-head of WPP the world’s largest advertising agency empire (Saatchi, Ogilvy etc) Bessie Leo told the MMA Forum in Singapore two years ago - in China all smart marketing campaign are mobile-first but if you don’t have a big budget, then you go mobile-only. Yes.
Is that YOUR marketing budget today? No. As we learned from Forrester, most marketers are stuck still doing the basics. But in China, the world’s largest economy, the reality is already going from ‘mobile first’ to ‘mobile only’. And even I am not that crazy to suggest to you, my readers, to go mobile-only. But mobile first? Its high time. Mobile first means, you start with mobile. So your internet web ad is not REPURPOSED to mobile via adaptive design nonsense. It is mobile first. You start off a clean sheet, design the best mobile website - THEN you modify THAT to fit larger screens like tablets and PCs. That is mobile-first. And Mobile first of course starts itself with SMS (and MMS).
Now can you imagine the despair at that big award-winning creative hero of the best and most expensive ad agency, if he or she has to abandon all the sexy TV work and all the cool videos and graphics that slow up mobile pages to a crawl. (In most countries this side of Japan and South Korea, there are plenty of consumers who don’t have 3G data connections, and you HAVE to design your mobile website to load on 2.5G speeds - yes GPRS and EDGE speeds not 3G speeds! Even in America. Not just the smartphones that four out of five Europeans and three out of four Americans now carry. It has to reach all pockets, so yes, I mean that old crummy basic Nokia dumbphone that doesn’t even have a camara and a lousy little color screen. THAT phone. Design mobile-first so that THAT customer doesn’t feel it doesn’t work. If it works on the smallest screens of non-touch screen operation, THEN you have true mobile-first. From that, its easier to build to larger screens, the smartphones and phablets. THEN you start to go to tablets and PCs.
But mobile first. No silly pre-roll video crap no matter what awards it won by some INTERNET ad awards, this is not mobile first. It CANNOT have those forced fancy welcome screen corporate videos (click here to skip) nonsense. That is just idiotic in mobile. The marketing professionals are under tremendous strain to learn, and to be brave to dare to let go of the past, the era of TV dominating advertising is coming to an end. Its a brave new mobile-first world. What was that MMS thing again and where was that case study I once read?
Same with the iSyndrome (Martin Wilson’s brilliant observation, that an iPhone app does not a mobile strategy make). Chief Marketing Officers are all Mac-heads. They love anything Apple. And they want their cool iPhone app to show the CEO how brilliant that device is, and ‘prove’ to the CTO and the IT department head why that particular corporation had to make its exception with IT rules and allow iPhones to the marketing department. I get it. But iPhones only reach 7% of all mobile phones in use on the planet! So if you do an iPhone app, you are spitting in the eyes of 93% of you customers. Is that smart, or is that totally ludicrous? Now, in the USA, iPhone’s best market, you can reach about 30% of consumers with an iPhone app but EVEN IN THE USA an Android app has a larger reach. Even in the USA. And mobile web? HTML in the USA reaches a 3 times larger audience than an iPhone app! SMS (and MMS) reaches 3.3 times larger audience. Duh! This is so basic. But as Martin said, there is that nonsense about the iSyndrome. You have to get past that. But use the Obama Romney race as your guide. If Obama had only had an iPhone app to activate his voters, he would not have won even in Massachussetts haha (Romney’s old home state). Only SMS reaches every pocket!
IS THIS RELEVANT IN BUSINESS
So yeah, Coca Cola vs Pepsi. McDonalds vs Burger King. Golgate vs Pepsodent. BMW vs Mercedes. iPhone vs Galaxy. Take whatever area you want. That was a huge volume of text about an election. Who cares! Can we do this in business, you ask. Well good that you asked. I do not have any side-by-side case study as pretty as the Obama-Romney campaign in comparing the old and the new, but the beauty of the new is, that it truly works EVERYWHERE and delivers MASSIVE gains in PROFITABILITY.
What was that word? Yes. Profitability. Wherever clever consumer data ‘post demographic’ systems are deployed powered through partly or wholly with mobile, collecting ‘big data’ from consumers, and then deploying deeply personalized solutions - VIA MOBILE - that is pure gold. Pure liquid platinum. Its Star Trek’s Gold-pressed Latinum indeed.
So imagine being an airline. One of your expenses is the exclusive monopolistic-priced space at the airport hub you want to use. You have to check in your passengers. That means humans. Yes, you can also use those automated check-in kiosks that print out boarding passes. But they too have to be installed into the airport with room for lines of people to wait. Isn’t there a better way? Of course there is. Finnair invented the mobile check-in 14 years ago and most airlines offer it now - get your whole boarding pass experience done on a mobile phone. NOT ON AN APP. It can be done on SMS and if you really want to get pretty, you add MMS. Nothing wrong with ADDING an app later, but the mobile-first strategy always - ALWAYS starts with SMS. So do SMS based mobile check-in - like most airlines offer. The latest SITA survey of 2014 found that 5% of all airline passengers worldwide used mobile check-in. On Finnair its well past 50% of their passengers. Think first of the convenience to the passenger. You don’t have to stand in line. You don’t have to get online either. You don’t have to find a WiFi hotspot or take out your laptop or tablet. You just receive the message into you pocket, you can check in now. If you have a smartphone and have downloaded the airline app, sure, the SMS directs you to the app, but it can also give you the option to confirm the suggested seating.
So the flying public LOVE this. Being able to do their own seat selection, to do it in their own privacy, and for frequent fliers especially, that its the earliest possible moment to confirm seating - when most seats are unassigned and if you want to change, the best options are available in seating. Its a win for the public.
And its a win for your cost-control. The costs at the airport. As Finnair reached its 50% using mobile check-in level, it meant Finnair could cut down about half of its check-in desks and staff related to check-in. Thats a direct cost savings, this is profit. Exact same service - boarding pass issued - but at a tiny tiny TINY fraction of the cost, doing it self-service via flying public’s mobile phones, than by humans at the airport or even self-service kiosks. Not to mention saving a few trees too, for paper saved. (I’m from Finland, we love trees.)
THOSE EMPTY SEATS IN BIZ
Now lets get to the magic. What if mobile could sell on your behalf? Sell an upgrade to an EXISTING customer who already has OPTED IN to mobile? Again a Finnair innovation obviously as they had the highest use of mobile check in, so they were first to be able to do this. Now today, on any random flight where Finnair has at least two classes of service (aka Business Class and Economy Class) the Finnair system will do an up-sell check when ticket sales closes for that explicit flight. Say its Finnair AY 832 from London Heathrow to Helsinki on an Airbus A321. And today’s flight ticket sales have closed now, its 45 minutes before the flight takes off and the last passengers are now doing their check-in (which closes 30 minutes before the flight takes off) and most are going through security check at Heathrow. Some frequent fliers are in the business lounge of BA for One World alliance passengers, some travellers are shopping in the big dutyfree shopping area and some just sit at some restaurant or cafe or the seating area.
And the Finnair sales system sees of the 16 Business Class seats, 5 are unsold. They also see, that of the 177 seats in economy class, 180 seats are sold (its overbooked, this is quite normal in airline management). The system does not know if those 180 passengers will be on time at the gate because some of those passengers are connecting at Heathrow, arriving from other flights. They will know somewhat better when check-in closes in 15 minutes.
So what all other airlines (and Finnair in the past) would do, is be prepared to ‘upgrade’ or bump up 3 of their ‘best customers’ from economy to business class. They paid economy class tickets but as the plane economy class is overbooked and there are seats in business class, some lucky Finnair or One World platinum level (aka Emerald level) passenger(s) might get upgraded this flight. Also if there aren’t three such passengers, one or two (or even three) Gold level passengers (Ruby Level on One World) would be prepared to be upgraded. Finnair doesn’t know yet if this is necessary. At the gate, when boarding, this will be determined, if the total number of economy class travellers indeed is that 180 (a connecting flight might be delayed, or some passenger(s) may be ‘no-shows’ who did buy a ticket but won’t fly today on this flight).
Lets say all 180 show up. Finnair doesn’t really lose money by upgrading 3 frequent flier Platinum or Gold level passengers from the economy class seat they paid for, to the business class seat. Yes, there is a more expensive meal and free drinks, but that is still a very modest expense, even as we Finns do like to drink those free vodkas if they are offered to us (keep the drinks coming..).
But what if there was some magical way to sell instead of give away these seats? And yes there is. Its something that comes out of big data, on a system built on mobile, on SMS, and on an opt-in basis. The pioneer here was indeed Finnair. Finnair’s sales system knows, REGARDLESS of if those 3 extra economy class passengers do show up, that there are 5 unsold Business Class seats. Rather than give away 3 of those (possibly) and not get any money - its in Finnair’s best interest to SELL all FIVE of those business class seats. It cannot sell them to other fliers - there is not enough time to process new ticket sales at this point. The only people they can possibly be sold to - are such passengers who are ALREADY ON THIS FLIGHT, who have been checked in! And obviously its an upgrade, so ignore those in business class, this offer goes to those who paid economy class tickets. Their check-in baggage is already being processed to the luggage hold. They are already going into the airport through security checks, etc.
So now Finnair prioritizes its loyal customers. Platinum level most premium VIP uber-frequent fliers get the first and best offer. The normal upgrade cost for a full-fare economy seat up to business class would cost about 600 Euros (more if you paid less for economy class ticket). So lets go to the Platinum class Finnair frequent fliers who are on this flight - and who have given us their mobile phone number. The moment check-in ends (30 minutes before the flight) and no new passengers can be accepted to the flight, the system automatically sends the personalized offer - via SMS - to only the Platinum level frequent fliers. We have a few seats available in Business Class on your flight AY 832 to Helsinki today. Because you are a Platinum level VIP customer with us, we want to offer you a one-time upgrade option of 300 Euros (normal upgrade one way costs 600 Euros). Would you like to upgrade? You can pay by Euros with the credit card you have registered with us, or you can pay with half the number of frequent flier miles that this normally costs which is (x miles).
HALF PRICE UPGRADE? Wow, it is good to be Platinum, isn’t it? Every passenger loves to receive that message. I am really being treated well. Gosh, Finnair truly knows travel - and tech... One or two will buy it, not everybody takes the offer. Then 5 minutes later Finnair sends a similar offer to its Gold level travellers already checked into this Finnair AY 832 flight today from London to Helsinki, about to take off in 25 minutes. Now for Gold customers, the upgrade offer is 400 Euros, still a huge discount vs regular price (and similar discounted upgrade offer via FF miles). Then if a seat is still left with only 15 minutes before the doors are closed and most passengers are already inside the plane, Finnair send its final offer to its Silver level frequent fliers, fly in Business Class and take upgrade at 500 Euros vs regular 600 Euros (and this discounted FF mile cost).
So Finnair sells - not gives way 3 - sells 5 upgrades to Business Class on this flight. For one they got a payment of 300 Euros (Platinum level flyer), three paid 400 Euros (Gold passengers) and one 500 Euros (Silver). Even if we assign 50 Euros for the cost of the Business Class meal and alcohol consumed per passenger, this flight just made 1,750 Euros more of PURE PROFIT. One flight. Multiply this across x airplanes and y routes and z available unsold premium seats.
So? All other airlines (and Finnair before) in this same situation would have been forced to give away free upgrades to 3 premium level frequent fliers, and take a hit of 150 Euros in the meals served to passengers who paid economy but now fly business class. Instead Finnair is able to collect in this hypothetical example 1,750 Euros extra profit rather than 150 Euros less, ie net gain to Finnair profitability 1,900 Euros.
(ok ok ok there is the ‘airtime’ of those SMS messages. Ok, ok. So it was a plane where 180 economy class tickets were sold. So about half of these would be Finnair frequent fliers - 90 people, and probably - I have no numbers on this - maybe half of those are premium level ie Platinum, Gold or Silver FF members. So I had to send 45 messages. At 10 Euro cents per message its what? 4.50 Euros total cost in airtime. I don’t need to beg for bulk discounts from the operators for this haha. That still leaves me with what, 1,895.50 Euros in pure profit added to the profitability of this one flight)
If you think thats peanuts, think again. The global air travel average profit per seat in 2014 was 6 US dollars. So about 1,000 Euros on this type of plane if its flies reasonably well loaded. Now you get it. Yes, by this method, Finnair is TRIPLING its profit per flight !!!! Same plane, same passengers, all exactly the same as before, except we introduced mobile interactivity, some clever math and big data, and voila! Its as I keep teaching, Mobile is the Magical Money-Making Machine! Tripling not revenue, but tripling profit! Triple the profit. TRIPLE. Three TIMES the level of profit your airline was making before this. And notice - no human was involved. No human sales, no clumsy ‘hard sell’ announcements at the airport or onboard the plane. Automatically, via the mobile phone. The CFO of any airline will drool if we promise them tripling, not doubling, tripling profits.. Why isn’t every airline doing this already? Hello British Airways! Hello Lufthansa! Hello SAS! Hello Air France, Cathay Pacific, American Airlines...
This is why we collect MOBILE numbers. Because - say it with me - only SMS reaches every pocket. Even in such an impossible up-sale instance as this. Airline ticket seat upgrades after airport ticket sales for that flight have closed, and indeed, after check-in has closed. There’s no way to do this with Facebook or Twitter or Instagram or Whatsapp or iMessage or landline phone or telegram or fax or semafore or the Aldis lamp or carrier pigeon. You have to reach a lot of passengers every flight for this to work. And that means.. SMS (and MMS). Today this is upselling available seats to Finnair frequent fliers. Tomorrow this is better seats still available at the Dallas Cowboys live football games or Real Madrid or Silverstone Grand Prix.
Oh. Do we happen to have any numbers of how this is received by Finnair passengers? You betcha we do. Get this: BookIt the Finnish tech providers behind the system, report that 23% of Finnair passengers who have received this offer - have already used it. 23% of Finnair frequent fliers who have received a paid upgrade offer (with discounted cost) have used it already! That is a monster high number. It means, that with a little bit of testing of price elasticity per flight, essentially for every flight Finnair can now sell out business class.
(Did you faint? Was this article worth reading? Is this the PERFECT business case example to follow Obama’s amazing case study?)
WHAT ABOUT PRIVACY
Yada yada yada privacy yes. Read Tony Fish’s book My Digital Footprint and shut up. Ok, thats a bit harsh. Yes, privacy matters A LOT. And yet nobody complains about unwanted ads or privacy invasions when we go to Amazon and it offers us those amazing recommendations. We indeed LOVE it that Amazon gives us book recommendations (or DVDs or CDs or whatever). We fear people spying on us - when they do it SECRETLY with cookies and spamming us and suddenly noticing my location (why is Google now showing the search page in Vietnamese?) That we hate. Opt-in marketing? We LOVE it (when its done well). We - consumers - have to receive a real value out of it. One sixth of Japan’s total population has signed in to McDonalds offers and half consume them regularly. Finnair’s paid upgrade has already been used by 23% of Finnair frequent fliers who received the offer. Those loyal Obama supporters on election day, when they received that ‘would you make one call today’ message? You think they hated it, or they loved it? These supporters had ALREADY voted for Obama! They would not want Obama to LOSE now! This is how you serve your customers. Don’t spy. Don’t spam. Ask permission. Be open and honest. Give a good value to your customers. Reward their loyalty. Engage with your customers and let them co-create the marketing experience with you. They love your brand, don’t be afraid of that support.
Make the mobile channel their best friend. And you discover benefits such as Seattle’s Sun Tan Salons. Its a small local chain of suntanning salons, 35 locations in Seattle, up in the corner of the USA next to Vancouver Canada. They did a basic SMS based mobile loyalty program. It was a simple 20 dollar discount coupon to entice new customers to sign up, but also existing customers could redeem the coupon. It yielded nearly 5,000 new customers to the chain. The average salon boosted monthly revenues by nearly 6,000 dollars and the whole chain revenue up by 200,000 dollars - per month. Yeah, thats a 2.4 million dollar per year revenue boost. For a small chain of 35 establishments. And best of all - did this shrink or increase the business? That kind of loyalty, via mobile, was so appreciated by the customers - as existing customers also could use it - the average spend of customers using the discount coupon was 500% more than the average spend of the rest of their customers!!! (Thank you Tatanga for this case study). Mobile IS the Magical Money-Making Machine. Mobile simply works, time and again, you do it with SMS, reach every pocket, do it with opt-in, serve your customers what they want, and they will love you. This is how you do mobile marketing. Don’t spy on customers, do ask for silly demographic data. Don’t spam them. Give them value. They will love it and mobile will work for you.
HEY TOMI, SMS IS DEAD ... BECAUSE OF WHATSAPP
Haha yeah sure. If you’re a telco who made HALF of its profits through SMS, you will cry big crocodile tears about the end of the most profitable 100 Billion dollar industry the planet had ever seen (still in year 2010 the SMS industry, worth $100B made - get this, hope you are seated down - over $95B in profit globally). Any math whizzes out there? Its yes 95% profit margin !!! or the other way, its a 1,800% markup!!! Thats what SMS used to give totally undeserved accidential bonus profits for the mobile industry, for more than two decades. Yeah. Cry me a river. Or if you’re the owners of Whatsapp or some other ‘OTT’ (Over The Top) messaging start-up and want to be sold for billions, I’m sure thats ‘newsworthy’ that x trillion FREE messages were sent by your users. For the consumer its wonderful, free messages between friends who happen to be on that same platform. And x trillions of messages are sent. Free. Whooptedoo. I’m so underhwhelmed.
If you are a consumer like you and me, and want to have a cheap or free messaging method, yeah, Whatsapp and its various clones is a good value indeed. If you are a media or any entity dealing with consumers or employees or voters or patients or students or whatnot, if you want to communicate then the only number that matters is: reach. Whatsapp - the biggest of the OTT messaging services - has 800 million active users today. It grew by 100 million in one quarter (wow, you think that is big. You clearly don’t know mobile. Its like calling Luxembourg a big country in Europe haha). SMS text messaging has 6.0 Billion active users according to Acision. Yes. If this is Whatsapp user base:
Then this is SMS user base:
Now if you’re a media which do you want. WAIT. Thats not it. Reach is what really matters, not active users. Whatsapp reaches that number yes all its active users of 800 million and no more. But SMS reaches not just all active users, but literally every one of the 7.4 Billion active mobile phone accounts on the planet. So the real comparison is this
So Whatsapp is growing at 100 million new users per quarter. If it manages to grow at this incredibly fast pace, and if SMS stops growing, then in users, Whatsapp will catch up to SMS by year 2031. Yes. Year 2031. Wake me when we’re there. I may have been in retirement for a decade before that but hey, you love Whatsapp haha... This is a silly argument.
WHY DO YOU TALK ABOUT MMS
Well, then the other silly bit of ridiculous vs fact. MMS yes Multimedia Messaging Service - that utterly hopeless ‘picture messaging’ service you may have tried once or twice and found to be a waste of human effort and useless. Yeah. That nobody uses. And I agree with you! MMS is a hopelessly poor technology for ‘sharing pictures’. It was never intended to be PMS. Picture Messaging System. It is a MULTIMEDIA messaging service. Does that strike any chord in my readers, media ahoy? MMS is the ultimate SMS for marketers. It is everything - EVERYTHING you wanted SMS to be that it isn’t.
If you don’t like the 160 character limit of SMS, MMS solves that! There is no 160 character limit, you can put far more text into an MMS. Did you want to put your colorful logo or a picture - like Obama’s campaign colorful letter Oh, or with that Finnair upgrade, you want to show the picture of the two seats side-by-side. A picture tells a thousand words. You can put pictures into the MMS! If you wanted to include a sound, yes, you can send sounds - its MULTIMEDIA messaging. Sound clips! Your corporate jingle or the joke by your celebrity etc. Music touches us at a far deeper level, it touches our soul. You can include VIDEOS in MMS. A video tells the story of a thousand pictures! Yes, send videos. An SMS that can include videos? Its no wonder Tomi loves MMS, its really everything you wanted in an SMS. What about weblinks. YES, you can include a weblink. What about QR codes, yes you can include QR codes and old fashioned barcodes too for old-fashioned barcode scanners. MMS is everything you - a marketer - ever wanted in a mobile messaging platform.
Does it have reach? Well, the latest txtfeedback study from 2014 counts total active MMS user base at 4 Billion users. Four yes Billion with-a-B. Thats yes ten times bigger reach than total newspaper circulation of all daily newspapers on the planet. No wonder Chinese branded news send ‘tomorrows headlines today’ to paying premium news customers - via MMS. Four BILLION active users. Thats 3 times more than Facebook, two times the number of TV sets, 1.5 times bigger than global email user base and 30% bigger than TOTAL INTERNET on PC, tablet and mobile. THAT is MMS. The second largest digital interactive media platform on the planet, behind only SMS.
And best of all, if you send an MMS to a consumer, the consumer thinks its an SMS with a pretty picture or video or sound or coupon. They don't need to download an app (or indeed discover the app). They don’t even know its an MMS. they think its just an SMS with a picture. Every consumer knows instinctively how to respond to an MMS - because it is exactly like an SMS. They just love the pretty picture they just got. MMS has open rates of 97% !!! MMS gets BETTER response rates than SMS even!!!! Gary Shwartz in his brilliant book Fast Shopper, Slow Store quoted L’Oreal measurements side-by-side which found that MMS achieves 3 times better response rates on the same campaigns as SMS. If you include a weblink to the MMS, it achieves... SIX TIMES better response rates than a standard SMS. Are you still doubting me? Why are you not using MMS? It does not matter one iota that we don’t use MMS much for picture-messaging as there are far better ways to share pictures... person-to-person. I am not writing this blog to you as a consumer for picture-sharing. Go to Instagram.
But if you are a MARKETER and you don’t do SMS and MMS first, in whatever you do in digital, you are a dinosaur. Get with the program - or retire. Don’t talk to me about iPhone apps or pre-roll video or banner ads. Do it the way ALL the professionals teach. ALL OF THEM. It starts with SMS and MMS. And MMS. And MMS. And MMS. I’ve been teaching this part of the story - with MMS brilliance case studies literally from the start - as I chaired the world’s first MMS Congress in Vienna thirteen years ago haha.
SMS has 6 Billion active users and reaches 7.4 Billion mobile phone accounts today. MMS is next best at reach, reaches 4 Billion active users and about 5.5 Billion phones that are MMS-enabled with the right settings (not yet all but soon will be). HTLM web reaches 3 Billion active users, about three quarters of those use mobile all the time or at least part of the time. Email reaches 2.5 Billion people, more on mobile than PC. Smartphones across all types only have 2.2 Billion users, most on Android of course. Facebook has 1.4 Billion users today, most are now on mobile. Whatsapp, who cares...
The math is so simple. As I say, numbers are my buddies. When you get it around your head that SMS - and only SMS - reaches every pocket of every economically viable person on the planet, you will become a ‘mobile first’ person and very fast. As you do, and you learn to use SMS, you will find incredible - MEASURABLE - results. (Remember the Forrester survey of marketing professionals. 6 in 10 companies in the world doesn’t even collect ANY mobile data on its users and most who do, only collect the near-useless metrics of banner ad click-through rates. If you start to measure your SMS and MMS performance - you are AHEAD of the game!)
And then as you mature past SMS, you discover the incredible power of MMS. You supercharge your marketing. Then, yes, later you will also do HTML mobile web if you’re in an advanced Industrialized World country, or WAP if you’re working in Africa or poorer parts of the world. You then may add voice services and USSD if that is a media choice (in Africa, India etc it is very widely used). You can explore emerging mass market tech like missed calls in India for example. When you get around to doing your apps, you of course do Android first, even in the USA. And tons tons more from QR codes to AR Augmented Reality to mobile payments and mobile wallets, etc. But if you are new to mobile, it starts with SMS. SMS and start to collect that consumer data for your big data based power. Ask always for permission from your customers, voters, patients etc and don’t spy on them and don’t spam them and give them good value. Then you too can achieve performance in the 20% to 40% response rates, and you can start to be a winner like the Obama campaign in 2012 or say Finnair.
Now. A brilliant marketing campaign run on the most advanced tech cannot change the mind of someone who is decided already. A Republican loyalist who already contributed money and time to support the Romney campaign, will not vote for Obama no matter what pretty messages arrive on an SMS or MMS haha. Just like how Tomi won’t buy a Coca Cola even if hell has frozen over. But most consumers in most consumer situations (including me) are not fully decided. They often have a preference but can be persuaded. And of course, marketing communication can find new customers (or in case of the election of 2012 - new voters) for whom this will be the first time. With that, the best techniques on the best technology reaching the widest audience always wins. Today that is SMS and MMS tied to a big data operation, via opt-in marketing, with engagement marketing methods used for a longer period of time. Its like the Amazon recommendation engine but turbocharged. Its like what Stephen C Jones former Chief Marketing Officer of the Coca Cola company wrote to the signature book of this blog, Communities Dominate Brands, exactly ten years ago. Its like... the Obama 2012 campaign. Its like Finnair upgrades.. Its like Sun Tan Salons of Seattle. Its like McDonalds in Japan. Oh, and what was it about stealing customers from inside your store?
Its been done. Guatemala saw the first case of a mobile ad campaign to - opt in - loyal customers of a sporting shoe store chain (called Meat Pack). They had mapped out the exact locations of all their rivals, and then one week in their campaign, when a loyal customer stepped inside a competitor store, he or she received a flash offer onto their mobile phones, come to Meat Pack instead. Yes. This is also reality today. You get an offer from Burger King while you are in line at McDonalds. This is only possible via mobile but will it change consumer marketing forever? It already is doing that. Whats in Guatemala shoe stores today, will be in yourtown, any retail, tomorrow. It was done.. by SMS.