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Consumer Research


How phone users are upwardly mobile

How phone users are upwardly mobile

By Ben Hayey, Insight Director, Manning  Gottlieb OMD.

“We can make more money in mobile than we do in the desktop eventually… and the reason is the mobile computer is more targeted. Think about it: you carry your phone, and your phone knows all about you… we can do a very, very targeted ad.

“Over time we will make more money from mobile advertising… not now, but over time.” - Eric Schmidt, CEO, Google

There are more mobile phone subscriptions in the UK than there are people (Source 1 below), with 91% of the adult population using one (Source 2 below)

Apparently, ‘only’ 25% want to use their mobile for anything more than calls and messaging (Source 3 below). But this still represents 12 million eager users of cameras, music, games and, most tellingly of all, the internet on their mobile phones.

The functions of mobile phones are changing and evolving into something much more complex. The mobile phone is now an MP3 player; a radio; a camera; a games console; a sat-nav; even cards and cash. With third generation (3G) networks expanding and phone capabilities increasing, the time is coming when we will think of them more as portable digital (information, entertainment and communication) devices.

What it lacks in catchiness, it makes up for in accuracy. Already, 3G ‘smart-phones’ such as apple’s iPhone are changing the way the web is accessed. 81% of its users have used their phone to access the web, compared to an average of
11% across all phones (Source 4 below).

Examples of the way mobile phone functions are changing are O2 phones using RFID technology to create an Oyster card and micro-payment system; tracking friends’ and family’s progress in Adidas sponsored marathons; the long-established Japanese trend of writing, publishing and reading novels; and of course, annoying other public transport users with mobile jukeboxes.

While some of these may seem like niche interests, two key drivers for mass adoption of mobile internet are sport and social networking. Many users currently lack the technology or bandwidth (or consistent access to a 3G network) necessary to stream live sport. But live events can already be enhanced by providing analysis, discussion and statistics, through mobile internet.

The popularity of video and photo-sharing, through YouTube, Flickr, Facebook and their like, obviously lends itself to web-enabled camera phones. YouTube content filmed and uploaded from mobile phones grew 1700% in the first six months of this year (Source 5 below). The iPhone is now the second most popular ‘camera’ for Flickr uploads (Source 6 below).

Likewise,the transient nature of status updates (see Twitter and Facebook again) is more relevant to accessing the web while mobile, rather than waiting to get to a static computer. So, through both sport and social networking, the habits that
will fuel the growth of the mobile internet are already prevalent.

One obstacle to mass adoption yet to be overcome in the UK (and elsewhere) is related to prepay phones. Pre-pay users are far less likely to use mobile internet, with low-tech phones an obvious issue. Users also worry about the unpredictability of charges, whatever the prevailing economic climate.

Network providers are keen to migrate customers from pre-pay to contract, with internet access provided as part of a ‘bundled’ deal – effectively limitless access for a flat monthly fee. Much like home broadband, which has grown rapidly in the last few years, since competitive, flat rates were introduced (Source 7 below).

One of the biggest current trends is the customisation of phones. 75,000 applications (or ‘apps’) have already been downloaded to the iPhone, 1.5bn times8. Around 10% of these involving using the internet. Android, the open-source mobile platform, may only currently be available on two UK phones, but a further 18 are being released in time for Christmas 2009.

The open source nature allows developers to provide users with new technology as and when they create it. Things have come a long way since customisation meant a ring tone and a colourful cover.

Numerous different types of marketing and revenue generation models are currently being explored. Apps provide a seemingly simple way to communicate and engage with consumers, by providing something useful to them. However, there are already 16,000 game apps available9, so the key is to create something with more longevity and relevance to your brand.

With the demand for ‘free’ continuing, it’s no surprise that many more music-fans would rather put up with regular ads on Spotify, rather than pay £9.99 a month for the premium service. The Spotify app is only available to premium service users. Might micro-payments be more appealing to many consumers?

Although Blyk has recently been absorbed by Orange in the UK, its success in convincing 200,000 16-24s to receive up to six marketing messages a day, in return for free calls and texts, demonstrates that this business model has a future.

Earlier this year, The Department for Children, Schools and Families (DCSF) and COI created a weekly drama for mobile, THMBNLS, which was made available for free for 15-18s, in a bid to reduce teen pregnancy and STIs. The
costs were born by DCSF, and young people were able to interact with the drama and share their opinions.

It’s a reasonable bet that brands offering flexibility and customisation, both in terms of means of access, and payment models, will benefit most from the growth of mobile internet.

With the fragmentation of the media market, and the rise of the internet, the media we consume has changed dramatically in the last two decades. We what are now seeing is another massive change to the way we consume this media.

As today’s teenagers grow up with the technology, mobile will become a lead medium for entertainment, information and quite possibly for financial transaction too. But for smart-phone users, the future is here now, and for many more mobileusers, it’s just around the corner. The future is mobile.

Sources: 1-Mobile Operators Association; 2-TGI; 3-NVison; 4-Lightspeed; 5-Flikr; 6-YouTube; 7-ONS; 8&9-Mobclix.

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