Ticket to ride

Finally! The mobile coupon, an application that seemed so obvious to succeed, has gained some foothold in laggardish (…) Sweden. As the name suggests it’s a digital version of the same thing you used to cut out of a direct mailing and present to a store attendant in exchange for a price reduction. Mobile coupons have been around in large scale for long in Japan and for some time in the US but Sweden just hasn’t caught on. Strange as that may seem, there are four general factors that affected growth of mobile services such as this:

1) Ease of use for the end consumer

2) Perceived value for the end consumer

3) Perceived value for the supplier (e.g. an advertiser)

4) Incentive for the third-party service provider (e.g. a mobile coupon supplier)

Looking at each of these factors to analyze how the situation has improved we can see why the mobile coupon service didn’t happen earlier:

1) Ease of use for the end consumer

A few years ago: As a consumer, you had to download an application to your phone or in other cases receive offers as an SMS or MMS. Application downloads was a cumbersome and sometimes costly task while SMS and MMS based services required you to register your phone number with some company you had never heard of. Messages then came beeping when you least expected it. Not very convenient.

Now: iPhone and Android allows people to easily install and use apps anonymously, usually at no extra SMS/MMS/data cost. The consumer adoption barrier has become significantly lower and apps offer much improved user experience today, allowing the people to choose when to receive offers among other things.

2) Perceived value for the end consumer

A few years ago: If you got around registering for a service, it was often only to find a lack of interesting offers/coupons pushed at you. Some services required you to register and grant the company to access your positioning information at any time. The value consumers obtain from the service, even if free, was not high enough to justify lost privacy.

Now: Offers from retailers increase, probably because they can be offered on a “super local” basis with simple and non-intrusive positioning. Integrated maps let you be guided to deals in your vicinity or search in a place you’re going to. Or why not be reminded when your favourite stores have something special for you? Clear value for the end consumer, but still plenty to add with more and better personalized offers.

3) Perceived value for the supplier (e.g. an advertiser)

A few years ago: People had a lot of different mobile phones with varying screen sizes, operating systems and other capabilities. The amount of work needed for a marketer outside the biggest brands or small shop owner to reach a larger group of consumers in their mobiles simply didn’t justify the cost.

Now: Now that some 10% of Swedes reportedly owns an iPhone and Android is rapidly growing towards (and likely soon beyond) that number we have reached a tipping point. By creating or participating in an app for both OSes, you have the potential to reach a very large group of consumers. Not bad.

4) Incentive for the third-party service provider (e.g. a mobile coupon supplier)

A few years ago: In addition to all problems mentioned above, a service provider also had to convince advertisers to offer coupons in a mobile service used by few. And if the provider wanted to offer “super local” deals he would have to pay for positioning data on top. Positioning information aggregators hasn’t always been around either: in the worst case a service provider would have to sign positioning agreements with each operator individually. The business case did not look good.

Now: iPhones and Androids are everywhere. Apps are a breeze to develop and distribute compared to the pre-iPhone and Android days. Positioning information is available for free. The start-up costs for a mobile coupon service as in this case has decreased dramatically and profit is much more likely.

So, everybody wins?

The quick spread of iPhone and Android with their app stores, availability of key information such as maps and location along with plans not charging by the megabyte eventually made coupon services happen. This is good news for almost everybody as there are plenty of opportunities to seize. That’s “almost everybody”, because mobile operators may have missed an opportunity to capitalize on information assets by being too closed or too greedy, or both. You have to know when it’s best to give some away for free and find revenue in other areas. Swings and roundabouts still holds true, after all.

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