Market Readiness: When is an Early Mover Too Early?

​Story by Steve Wunker
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Leafing through the Wall Street Journal this week, I saw a familiar face — Cyriac Roeding, once Co-Founder with me of the Mobile Marketing Association and now CEO of a successful mobile marketing start-up called Shopkick. Nearly ten years ago, Cyriac and I led two of the first companies creating ways for advertisers to use cellphones as marketing platforms.
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Back then, consumers were keenly interested in participating in these marketing campaigns, for example through receiving special offers or engaging in SMS conversations with their favorite brands. But we were too early, and had great challenges convincing firms to spend significant sums on this new channel. In hindsight, did we miss some key signals of market readiness?

​Mobile marketing is a great idea: cellphones offer unparalleled ways to provide consumers with highly customized, interactive ads that draw people into an ongoing dialogue with their brands. For instance, people can receive special offers in their favorite retail categories when shopping at a mall. Pepsi drinkers were asked on soda cans to text in why they should be chosen to practice with the England soccer team, and then engaged in an ongoing SMS conversation about the team. The mobile medium creates possibilities for tailoring and engagement that Internet advertising just can’t match. So why did advertisers hesitate to jump in?

The problem wasn’t a lack of consumers ready to receive the ads. Cyriac’s firm (12snap) had a community of people — largely teens — who had signed up to participate in mobile auctions and other forms of mobile content. My company (initially Saverfone, later bought by Brainstorm) had deals with T-Mobile, AOL, and others to sign up their subscribers to receive special offers, and several thousand did. Technology wasn’t a significant hurdle either, particularly for SMS-based ads.

​Rather, we faced three other serious obstacles. First, advertisers were concerned about debasing their brands through too close an association with special offers and the then-nascent medium of text messaging. Mobile marketing did appeal to a few niche brands catering to teens, e.g. certain films, but for the big spenders it was just too different-seeming.

Second, hesitant advertisers lacked good reference customers whom they could see pioneering the medium. Saverfone’s first customer was Dixon’s, the UK’s largest electronics retailer, but even that company was viewed as atypical. “Of course Dixon’s is on board — they sell phones!” We didn’t understand the hesitance, but didn’t see it from our clients’ perspective. Ad planners won points by being early, but not by being first.

Third and most important, we lacked a good channel. Ad agencies detested mobile marketing. Cheap, instantly-composable SMS ads ran counter to their business model, and these agencies owned the relationship with the big spenders. Eventually they began to include mobile into their overall media plans, but they did so grudgingly and ad spend was tiny.

So, early movers can assess market readiness through:

• Gauging whether there are any chicken-and-egg dilemmas in getting a market off the ground
• Determining whether technology or regulatory obstacles, however seemingly trivial, might give initial customers pause through making adoption look difficult
• Evaluating the risk that product failure poses to customers (this is especially a concern in B2B markets where success wins few plaudits but failure is ruthlessly punished)
• Understanding whether early reference accounts really address customers’ key concerns
• Determining whether an established channel can wholeheartedly back the new offering, or conversely if the firm can ramp up slowly through selling directly to motivated buyers

It seems that all of these issues are now resolved for the mobile marketing industry, and it is growing explosively. This time around, the timing couldn’t be better.