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Mobile Commerce – A discussion at Affiliate Summit 2011

by Navin Ganeshan on January 24, 2011

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Woman using Windows Mobile device in park with child
Where is mobile commerce headed?  How will location-based targeting change shopping behavior?  What is likely to become the ubiquitous mobile payment platform?  These are some of the questions we tackled last week, at the Affiliate Summit West 2011 conference, where I had the pleasure of leading a panel discussion on trends in mobile commerce.  The conference is the largest gathering of  marketers, advertisers and other experts in the performance marketing industry.

The panel, a true dream team, consisted of executives representing all corners of the mobile commerce ecosystem – Sarah Hodkinson from the mobile advertising firm, Where.Com, Pinkard Brand from the mobile presence provider, dotMobiAdam Viener from the performance marketing company IMWave, and Barg Upender from the mobile app developer Mobomo.

Here are some highlights from the discussion.

Are buyers mobile yet?

This question was settled quickly with some overwhelming stats…

  • Over half of all smartphone users have used their phone for a purchase.
  • Purchase of digital goods increased 50% year-over-year.
  • According to Forrester, by 2014, over 50% of ALL shoppers in the US will use mobile phones to influence their purchases in some form.

So the discussion moved quickly into what this means for the different constituents in the mobile commerce ecosystem – the merchants, the advertising networks, the service providers, and the performance marketers who have largely stayed away from mobile marketing.

What the most relevant trends in platforms and behavior?

  • Android is overtaking iPhone as a mobile platform in terms of usage, but the level of innovation is only accelerating on iPhone.
  • Equally important, “mobile web” apps that run inside of a mobile browser making them platform-agnostic, are making a significant impact by providing compelling experiences similar to native apps, while steering clear of provider-controlled app-stores or payment systems.
  • So the near-term future is likely to be driven by service innovation and not by dominance of any single platform.

What is likely to be the ubiquitious payment platform for mobile?

  • Few technology areas have received as much attention as mobile payments, and innovation is occurring on multiple fronts.  Established online payment platforms sduch as PayPal are retooling to be the back-end-provider within mobile apps.  Apple is unlikely to let up on pushing the convenience of iTunes “in-app-purchase” ad the easiest way to buy products, not just apps.  But they will soon see competition from a consortium of wireless providers called ISIS that will enable “carrier-based-billing”.  So your wireless bill may soon displace your credit-card bill as the record of all purchases.
  • The panel agreed that the economics of payment platforms will change dramatically (currently Apple charges 30% commission on each transaction) and the fragmentation of options may not be great news for credit card companies.
  • Additionally, mass adoption of a single payment platform that provides built-in support for affiliate tracking will finally allow performance-marketers to jump in with both feet and start driving transactional volume.
  • New technologies such as bump and NFC are promising catalysts for adoption, but still face many hurdles including technology, standards and consumer-behavior.
  • While there are plenty of reference points outside the US that might be an indicator of how mobile payments may evolve, the panel conceded that US consumer behavior,  wireless provider standards and regulatory dynamics makes it difficult to point to a specific path.

How will location-based services change purchasing behavior?

  • There is no doubt that consumer acceptance of location-based services has been phenomenal, but we are only scratching the surface of what’s possible with the data that is now available based on their behavior.  And advertisers and networks are racing to translate this into more meaningful targeting.   Imagine a scenario where you might see a special offer for coffee because you happen to be down the block, known to frequent coffee shops, and happen to be listening to folk music on Pandora.
  • While this should present a new channel for performance marketers to creatively drive traffic, there is still substantial lack of clarity over what consumer actions should be commissioned, and how.  Will advertising drive a click-to-call action, or an online sale?  RingRevenue is a great example of how new models are being explored for affiliate commissioning for a mobile context.

What role with mobile-apps and mobile-web play in search and purchase?

While creating a mobile app is easier than ever, the panel agreed that the app-store is unlikely to replace search as a means for finding businesses.

  • So, Mobile-Web is likely to be the primary discovery mechanism – where consumers search for and are first introduced to a merchant.
  • And mobile-apps (native apps) may serve as a means for ongoing engagement and repeat purchases.

So, you may first find that dry cleaner through a mobile Google search and by exploring their mobile presence, and then later on choose to download the Dry Cleaner’s app for tracking your cleaning and making payments.

Predictions for 2011

  • Location-based targeting will become more mainstream and start to add value in real-time contexts (Sarah)
  • Apple will unveil new payment platform and policies that are more palatable for merchants selling products  (Barg)
  • Tracking of click-to-action and revenue attribution will NOT be solved this year,  but new innovators will enter the vacuum to provide full-cycle tracking and a more affiliate-friendly commerce platform.  And affiliate-marketers will start to dabble in mobile marketing (Adam)
  • Mobile-presence will enter the mainstream as the most impactful means for a local merchant to be found by mobile visitors (Pinkard)

Image on Flickr via gailjadehamilton (Creative Commons)

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