Conversational Advertising is the agreed messaging-based communication between people and the brands they want to hear from. It’s also the title of a report from mobileSquared, a U.K.-based firm with a sharp (and unique) focus on in mobile engagement research.
It’s good to note the new term (“Conversational Advertising”) because its a marketing approach that will grow importance in 2011, driven by people’s desire to control their personal data and the aim of brands and agencies to establish an on-going dialogue with consumers and brand advocates.
Social media outreach may be part of the mix, but the advantages of being able to deliver relevant and welcome marketing messages to an audience that has effectively agreed to pay attention can far outweigh any buzz a brand can inspire on Twitter.
With this in mind I caught up with Nick Lane, mobileSquared Chief Analyst, to talk about the report and the outlook for conversational advertising in the three key markets: the U.S., the U.K. and India.
Talk to me – often!
As Nick sees it: conversational marketing is the most effective approach because it reaches engaged and delivers a higher response rate. In his report he notes that “encouraging the brand to regularly communicate with the consumer ensures that the brand remains ‘front of mind.'”
The initial opt-in provides the first level of communication (which can then be enhanced by third-party intelligence based on the person’s mobile usage and behavioral traits). But it’s the person’s response during the conversation with the brand that provides the best (and most up-to-date) information. “In effect, this third stage is real-time consumer profiling. And when applied to the power of messaging, becomes the ideal channel for brands and businesses [to interact with people].”
However, Nick observes that brands and agencies don’t yet have the mindset to get the mileage they can out of this approach. “Consumers have told a brand that they want to hear from them. If you’re a brand, you say ‘right, we’re going to run this campaign, it can last for six weeks.’ With conversational advertising, it has to be ongoing. You have to think of the approach and the kind of strategy as a 12-month play.”
In other words, this is a relationship and people want more than a one-off campaign. “As a brand, you have talk to them and gradually you’ll encourage the interaction and the engagement. And as that progresses, you’ll get more and more information which means when … you’re going to launch a particular product, you can really target how you’re going to approach this person.”
Agency pay-off
In Nick’s view, conversational advertising is a long-term commitment. However, agencies have to shift their mindset before they can reap the benefits. Put simply, agencies don’t yet see the pay-off from conversational advertising since the “actual percentage of spend per campaign a creative agency would receive is minimal.”
In reality the spend with the creative agency is quite significant.
Do the math. Sending out several messages a week/month to all the people who have opted in over an entire year is a sizeable budget indeed — and good reason for agencies to start thinking about how to use messaging to start and continue a conversation. “It’s about creating the social networking, the 24/7 mindset, rather than the we’ll just do a campaign for six weeks.”
Mobile operators value-add
Should mobile operators also see conversational advertising as an opportunity? Nick believes it is THE opportunity, provided operators use the opt-out model to encourage an opt-in database.
More importantly, conversational advertising is a format the operator owns.
As Nick puts it: “We’re not just talking about one message. We’re talking about a two-way exchange between a brand a customer over the operator’s network. So, we talk about apps circumventing the operator in terms of revenues. This is an activity that is running 100-percent over an operator’s network.” That goes for all operators — not just major players with million of subscribers. In fact, a tier-3 operator with a niche audience would potentially even have more success since its audience is already segmented for a brand campaign. (Thinking here of the fit between a youth-focused mobile operator and a sports or fashion brand, for example.)
What do the numbers say?
MobileSquared forecasts that conversational advertising will be worth a little over $2 billion by 2015.
In the U.K., for example, the market in 2010 was worth $14.9 million, and will increase to around $671 million by 2015. In India, the market will be worth approximately $238 million by 2015. (India is a market where opt-out is the norm, so Nick warns that encouraging consumers to opt-in could be more of a challenge than it would be in developed markets.) “If the whole permission based marketing industry [in India] can get it right, then that $238 million in 2015 could be incredibly pessimistic given the size of the audience.”
Nick leaves us with another number from his forecast . In the U.K. he reckons there will be “21 million opt-ins by 2015, and that’s through operators alone.”
My take:
Messaging is part of the mobile marketing mix because anyone can do it. Conversational advertising is one better because brands have the green light to communicate with an audience that can – and will — answer back. But let’s not limit our discussion to brands — or even advertising for that matter. The same approach can be used by businesses to increase interaction and improve CRM. There are many scenarios where having a conversation with people can pay off — both for the company and the consumer. This is important to keep in mind as we enter into 2011 — a year where social media has become THE focus for brands and businesses. But rather than investing resources in learning how to effectively broadcast a brand message to the masses via Twitter, for example, companies would do well to invest their effort in enabling an on-going conversation with their audience using mobile.
Listen to the podcast here. [13:10]
[audio:https://s3-eu-west-1.amazonaws.com/mobilegroove/2011/01/ALU_NickLane_podcast_1-12-11.mp3]