Going Mobile in the People’s Republic of China

04 Jun 2008|Added Value

The mobile phone is much more than the grandchild of Alexander Graham Bell’s revolutionary invention.  In developing markets, mobile technology is now outpacing traditional media as the ultimate “in” to consumers’ worlds.  As the technology advances, it is connecting people in ways that far outstrip the predictions of even 10 years ago.  SMS, MMS, WAP, 3G (See sidebars 1 & 2); the applications of the ubiquitous cell phone has made it the most attractive channel for marketers in recent years. 

The mobile market in China is no exception.  The country is ripe for mobile (and internet) usage; and in turn, mobile marketing.  The sheer size of the country creates a need for people to communicate with faster, broader channels, particularly where land line services are significantly less developed. And more diverse service offerings and affordable handsets are attracting a broad base of users. 

Higher income consumers are increasingly mobile, both domestically and internationally, and are demanding more telecoms flexibility.  Similarly, mobile phones have become a badge for the trendy China youth, who use them as brand accessories. 

Even more attractive, is that with the advent of WAP and later 3G, Chinese consumers have access to an online media world that is far less controlled in a country traditionally known for its strict censorship.

This has resulted in a mobile explosion.  As of May 2007, the People’s Republic of China’s (PRM) Ministry of Information Industry reported  that almost 495 million Chinese were using mobile phones and indicated that that number was growing by 5 million a month.  The same report indicated that consumers aren’t just using their phones to make calls.  SMS usage is predicted to be up to 446 million users by 2008, while MMS and WAP users should reach the 300 plus and 230 million marks respectively. 

The size of the mobile communication pie is growing too. Traditionally, mobile advertising was considered a static, passive platform, used in taxis and public transport to reach on-the-go consumers. Mobile marketing, specifically targeting and using cell phones, however, is changing the mobile communications landscape. 

While still a small percentage compared to total traditional media spend, the budget allocation for mobile has steadily increased and is predicted to show double digit annual growth until 2011 and beyond .  The Beijing Olympics is seen as a key trigger to this growth.  SMS advertising still dominates this spend, but more and more brands are investing in WAP based campaigns.

The interactive and often viral nature of MMS and SMS gives marketers an opportunity to be more targeted and precise with their mobile campaigns, as well as providing scope to datamine useful and relevant consumer information.  With WAP, and soon 3G enabled phones, marketers can also draw consumers into their online space, engaging with people in far more active ways.

This interactivity is at the heart of what makes mobile marketing so powerful.  Mobile functions now allow marketers to adapt traditional media tools, including audio, visual, video and copy driven content with the instant, viral and interactive channel of mobile. 

In his book “Mobile Marketing – Interactivity of the 5th Media” , Chinese Advertising veteran, Zhu Haisong refers to the 4Is of Mobile Marketing:  individual (messaging), intention (call to action), instant and interactive.  By tapping into an information hungry generation with the right message, the right incentive and in the right way, marketers can execute successful campaigns right in their consumers’ hands. 

Both local and international brands are venturing into the mobile space in China. The likes of BMW, Pepsi, Pampers and the Bank of China have all executed successful campaigns to either drive sales, loyalty or consumer datamining.  Pepsi, for example, launched a campaign which tapped directly into the zeitgeist of an expressive, always-connected youth by encouraging them to use the camera functionality on their phones to upload images of themselves to the Pepsi website.  Great photos were then printed on limited edition Pepsi cans.

However, many brands are still battling to bridge the divide between what consumers consider spam versus meaningful brand relationship communication, and this is where brands either succeed or fail in the mobile environment.

These are just some of the barriers, and possible solutions, facing mobile marketers in China:

Consumer Database Management
One of the biggest barriers is the establishment of accurate and useful consumer databases. 

To date, not all existing brand databases (typically members or VIP clubs) have captured mobile phone numbers, while in the mobile market a high percentage of pre-paid users means the personal information is often inaccurate and incorrectly captured.  Additionally, there are few database suppliers offering services in this space.

Fortunately, this can often be fairly easily overcome by including an incentive to sign up for mobile benefits, like value-added services or special offers, through traditional channels.  A considered sign-up process can also give marketers an unparalleled opportunity to understand their mobile users and target future campaigns with more focus and accuracy. 

Consumer Perception
There is high resistance to mobile marketing from consumers who are media-weary and consider mobile advertising to be invasive.  Similarly, little or no differentiation means messaging is often lost or irrelevant.

To overcome this, messages need to be laser accurate and relevant to consumers.  Again, customer database management becomes a critical tool.  Iconographic, fully branded messages, preferably in MMS or WAP enabled, also cut through the “spam perception” barrier in space currently dominated by text based SMS campaigns.

Accessibility
Currently, mobile marketing is limited by phone functionality and the broad based accessibility of high-end, application rich handsets. Similarly, 3G licensing has been delayed and there has been an uneasy relationship between service providers and carriers. 

The majority of these issues will be resolved in literally a matter of time.  3G licenses have been issued, and the service is imminent.  Restructuring in the China telecoms industry is likely to see more powerful carriers screening and promoting service providers.  Similarly, as more entrepreneurs and young talent are attracted to the booming industry, so more mobile advertising and marketing applications will be developed, providing more opportunities to first-to-market marketers.

With this unprecedented growth and changing industry landscape, mobile marketing is predicted to become one of the key advertising channels in China. 

Sidebar 1:
Short Message Service (SMS) is a communications protocol allowing the interchange of short text messages between mobile telephone devices.

Multimedia Messaging Service (MMS) is a standard for telephone messaging systems that allows sending messages that include multimedia objects (images, audio, video, rich text)

3G is Third Generation mobile cellular technology in the context of cellphone standards. The services associated with 3G provide the ability to transfer simultaneously both voice data (a telephone call) and non-voice data (such as downloading information, exchanging email, and instant messaging).

Wireless Application Protocol (WAP) is an open international standard for applications that use wireless communication. Its main use is to enable access to the Internet from a mobile phone or PDA.

Sidebar 2: A snapshot of application users in China:
SMS Users: High penetrations, close to general population
MMS Users: Skew to younger, higher income, trendy people
WAP Users: Mainly business people, higher income, higher education and middle aged

By Magdalena Wong, CEO, Oracle Added Value, China

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