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iPhone Seeds Mobile Marketing Growth

Joyce Schwarz
iPhone Seeds Mobile Marketing Growth Joyce Schwarz

The interactive media community is buzzing about how Apple's iPhone handset, bundled with top search and portal leaders Google and Yahoo!, may ring in new apps and revenue models for content and commerce. Savvy analysts and media planners realize that combo-marketing with Apple's iconic brand and co-marketing to the company's early adaptor audience may justify larger budgets for multi-platform brand campaigns that run across three or more screens.


Beyond the research
The research continues to support mobile marketing as the next-gen "killer app" for advertisers. Last week's eMarketer report, for example, predicts that brands will spend nearly $5 billion on wireless advertising, up from $421 million in 2006. Sure, you've heard before that mobile marketing is heating up, but in the long run mobile commerce will dwarf those projections.


That's why the real edge for Apple's iPhone may be in exploiting the iTunes' platform across channels. Can Apple's iPhone really impact the interactive marketplace if it only reaches CEO Steve Jobs' projection of 10 million iPhones sold by 2008?


Yes, because its buyers promise to be the much-desired social influencers in next-gen mobile media and commerce. Think about iPhone partners' Google/YouTube deal and Yahoo's foray into mobile social networking.


Rival Nokia may brag that they shipped 140 million phones with built-in cameras and 70 million with MP3 players worldwide last year, but look behind the stats and you'll see Nokia's past success largely confined to the low-margin, bottom end of market and it's multimedia arm controls little or no media to play on those handsets. Last summer, Nokia bought Loudeye, a startup digital music distribution platform and is offering that online media storefront. MSN Music shut down last November and redirects buyers to the Zune marketplace. But Apple's iTunes Music Store market stronghold dominates. 


Apple's iPod commands more than a 70 percent market-share in the United States according to The NPD Group, a retail consumer and market research firm. Other handset manufacturers don't run on iTunes and their carriers don't have the love affair with their provider that Apple enjoys.


Content sell-through is key
By 2005, only four years after its launch, Apple's iTunes reached the 500 million mark for legal downloads and 1.5 million songs from more than 1,000 labels. Its "for purchase only" model set the stage for sell-through of 50 million television episodes and more than 1.3 million feature length films in an era when other online video sources were still testing rentals or dealing with a generation who thought everything should be free. (It's amazing to think that NetFlix just launched downloads last week.)


Try as they may, the studios' and recording companies' own online sales efforts pale in comparison to iTunes'. If Apple's iPhone makes it easier than ever to sync desktop or even living room content to mobile than the Pandora's box of content is unleashed forever. Plus, Apple may be able to usher in the next gen of m-commerce from ticket sales to coupons to the ever-inviting electronic wallet by offering partners the proven iTunes' platform.


Mobile marketing may be in its infancy but what is clearer than ever is advertising is only one element in a successful brand campaign. Promotion, sales and customer loyalty are key in any medium; Apple trumps those areas. Plus, Apple paved the path to linking the virtual world to the real world with content 24/7/365 at prices hard to beat. Brands like Pepsi jumped on the iTunes' promotional bandwagon early by offering free iTunes with purchase.


Underwriting of content is catching on for TV specials and at broadcaster websites for encore viewing of shows and even previews of new series, but ad-supported content on mobile is still scarce other than the occasional mobisodes that pop up as promos. At NATPE, mobile market measurement firm M-Metrics reported that music player-enabled mobile phones will sell 300 million units this year, "driving an explosion in music download to mobile phone services, which will net $15 billion by 2010," boding well for the potential for Apple's iPhone and the proliferation of its iTunes' platform for content distribution.


Ad-supported programming
It was fascinating to see Eric Schmidt, Goggle's CEO, invited onstage with Jobs during the launch. Not too long ago Schmidt made headlines by stating mobile phones should be free for consumers willing to watch targeted forms of advertising. I found a Reuters' quote where he says, "It must make sense that subsidies should increase as advertising rises on mobiles."


Apple iPhone's bundled partners Google and Yahoo are both selling mobile banner ads and sponsored search now. AT&T joined other carriers in announcing it is adding ads to its mobile offerings but that's small-time in comparison to what Job's exclusive U.S. carrier is planning in the future. A Wall Street Journal article stated AT&T's goal to be: to generate several billion dollars within the next five years and use multi-platform deals to do it. AT&T offers Apple and future promotional and advertising partners an edge over other media companies because it can sell space on all "three screens"-- computers, TVs and mobile phones. That triple play may pay off for both consumers, who want byte-size content, and commerce leaders like JP Morgan Chase's Card services division, who is said to be the first to test AT&T's multiplatform offering with an ad campaign.


Repected partners and expanded retail opportunity
And I haven't even touched on the power and past success that both Cingular and AT&T bring to the table with their own marketing prowess. Fox's "American Idol" phenom turned to AT&T first and then successor Cingular wireless as its exclusive text voting platform that processed more than 570 million SMS entries in its fifth season. In other marketing arenas both AT&T and Cingular are well-respected sponsors for such majors as NASCAR (Cingular/Nextel) and Pebble Beach and more (AT&T).


Apple's retail window expands dramatically from 160 Apple stores to more than 2,000 Cingular retail outlets and kiosks that are now being rebranded with the AT&T image. Radio Shack also sells Cingular in its thousands of outlets. According to recent announcements, AT&T will spend millions in the debranding and re-birth of the "new wireless by AT&T" and promoting its multiple platforms now rolling out. It would be naïve to think that Jobs didn't realize that when he tied in with Cingular and offered them initial exclusivity. If you read the fine print, the retail roll-out for Apple's iPhone is controlled by Jobs and Cingular officials have already stated that it's up to Apple to bring in other retailers. Wal-Mart in summer is a fairly busy place; I wonder if they were up at Macworld?


Joyce A. Schwarz is an author, analyst, futurist and principal of JCOM. .

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