Permission Marketing of Informediaries in M-Commerce Advertising

Diplomarbeit von Ali-Reza Moschtaghi

Abstract:

The expectations for M-Commerce are very high. The mobile user seeks for facilitation of his daily habits and companies anticipate generating high revenue stream through new mobile applications. After telecommunication companies have paid high prices for the UMTS licenses in Europe M-Commerce has started to be the new hype. In those countries which did not have auctions but beauty contests M-Commerce has been also shifted into the spotlight. Although M-Commerce is still in its infancy, it predicts to have a huge impact on many ways of people’s lives. New buzz words like anywhere and anytime have evolved in order to describe the great potential of M-Commerce. Growth opportunities in terms of new arising mobile business models seem promising but only the future will be able to answer the question of success.

Mobile devices offer a broad range of opportunities from entertainment service e.g. music, games or video up to transactions e.g. banking, shopping, auctions. It is still unclear if all the emerging opportunities can be commercialized successfully. Nevertheless, many scenarios of how the world could be like in the future have been made. Below an excerpt of the daily routine of a future mobile user is presented:

„Nancy D`Amato prepares to leave her office just before five o’clock. She uses her mobile phone for a quick check of the local weather forecast, sees that fines conditions are expected for the evening, and decides to leave her umbrella by her desk. Nancy is due to meet her boyfriend Peter at seven o’ clock, so she has two hours in town to waste. As soon as the clock reaches five, she receives a text message telling her that the bar across the street has a ”happy hour“ when drinks are cheaper. Nancy deletes the message almost without reading it. She has given her mobile service provider permission to send her unsolicited local promotional messages after five - otherwise she would have to pay a higher subscription rates - but that does not mean she actually has to read the message, does it?

Five minutes later another message arrives, with a coupon offering a discount at the local branch of her favorite coffee bar. She shows the coffee-shop attendant the numbered message on her phone’s screen, and he keys in the number on the till when charging for the coffee.

Now comfortably seated with her cappuccino, Nancy begins to plan her evening. She uses her mobile to check which movies are showing nearby after seven o’clock, and soon finds one she likes with seats still available.

[…] It is better to send the details of the film to Peter as a message. She quickly sends him the cinema web address, which shows the time and location of the cinema - he can always get the review from there if he wants it - together with a few well-chosen words suggesting that it might be a good idea for him to agree to see this one.

[…] Perhaps a little retail therapy would be more relaxing. Using her mobile again, she checks to see which local shops have sales and special offers available, and soon discovers that a shoe shop is offering a promotional price on a brand she loves. She did not know the shop, but a few clicks on the mobile obtains walking directions from the coffee bar.

[…] She has just stepped into the shop when Peter replies to her earlier message. He has agreed to her choice of film, so she quickly books the tickets, which are now sent to her mobile for display at the cinema. She then searches for a restaurant nearby for dinner after the film. She knows Peter likes Chinese, and she owes him something for agreeing to her choice, so she finds a local restaurant and books a table for nine o’clock.” More than any other marketing medium, the mobile device makes one-to-one marketing reality. It gives marketers an unprecedented communication channel to deliver promotions, coupons, value-added information and other services that are uniquely personalized to the customers needs. But only if all marketing activities can incorporate the theme of permission marketing the future of Mobile-Commerce advertising will be prosperous. It will become of greater importance in M-Commerce to have a precise idea of customer’s needs and preferences. New Business Models that have the ability to capture information about mobile users and use this data for commercial purposes like M-Advertising are necessary. Information Intermediaries (Infomediaries) are such a business model. Collected customer profiles may then be used to the customer’s advantage so as to offer them exactly what they want. Advertisers have the opportunity to target their consumers with highly personalized and relevant services.

Mobile devices, used for business and pleasure, are accessible 24 hours and 7 days per week and are rarely shared with others. They are „like a personal extension of you”.

However, with this great opportunity of highly targeted marketing comes a range of extraordinary responsibilities to ensure customer satisfaction and to avoid „spam” or abuse of personal customer information. Nevertheless, if this mobile opportunity is handled with sensitivity and intelligence the advertising industry can generate high revenues. In fact, in Germany over 1 mil. mobile users have already subscribed to permission-based advertising.

At this point the question may arise of how to handle the mobile channel correctly to ensure its success. This is the main focus of this thesis. It will give a possible business model for M-Commerce advertising. The concepts of infomediary and permission marketing are carefully examined and incorporated in the M-Commerce environment. Both concepts will be converged in order to derive to a Permission Marketing Infomediation (PMI) model. This thesis will concentrate on the following research questions:

How can infomediaries use permission marketing for advertising activities in B2C M-Commerce?

Why is the combined approach of Permission Marketing Infomediaries advantageous?

General investigations on the Internet and in libraries will give the theoretical input for the concepts and models in my thesis. In addition some case examples of various companies that are aligned with the PMI approach is envisaged in order to compile empirical data.

The thesis is divided into six different parts:

Part 1: Introduction The first part will give an introduction to the M-Commerce market and its characteristics.

Parts 2: Permission Marketing The emerging marketing strategy of permission will be presented in accordance with its main protectionist Seth Godin. It will be shown how this concept can be used for targeted advertising messages in M-Commerce.

Part 3: Mobile-Infomediaries The revolutionary business model of infomediaries stamped by the McKinsey Consultants John Hagel III and Marc Singer will be reviewed here. The infomediary model will be applied to M-Commerce and will be describe according to its services to customers and vendors. Moreover, the process of building a infomediary will be shown in addition to benefits and challenges of this business model.

Part 4: Permission Marketing Infomediation In this section the two approaches of permission marketing and infomediary will be combined for M-Commerce advertising. The developed model will be compared to other ways of marketing (direct relationship marketing and interruption marketing). The chapter about location-based-advertising will then illustrate how this model can be utilized.

Part 5: Empirical Survey Five case examples will give empirical insight into the topic of M-Commerce advertising. Appropriate empirical evidence can support the developed model of Permission Marketing Infomediation. At the end the results of each case example are opposed in a table.

Part 6: Conclusion The last section will draw a final conclusion and give a look into the future of M-Commerce. The research question will be viewed again in order to show that it has been answered throughout the thesis.

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