Archive for December, 2007

For the same reasons that people tend to think of the mobile as a fantastic advertising medium (always-on, highly personal, uniquely identifiable users, etc) it’s seen as the perfect medium for other forms of marketing as well, such as coupons and incentive programs. So I end up reading about things that the folks in the industry generally tend to term “The Starbucks Example”. It’s the example where a service could somehow figure out you’re near a Starbucks (whether it be location based services or some kind of near field communication system like Bluetooth) and push you a coupon (“RIGHT THEN!”) for 25 cents off your latte. There are a number of variants of the theme, but that’s the overall gist of it. It’s generally accepted as a shorthand way of dismissing a mobile marketing effort: obviously not worked through by anyone who is familiar with either mobile or marketing and destined for a slow and quiet death hardly worth even noticing.

Which is not to say that couponing and incentive programs don’t belong in mobile, just that folks are generally lazy and uninventive when coming up with ways to structure these systems and services. The incentives are just misaligned. The utility of the service really tends to tip toward the provider of the infrastructure necessary to provide the service and the potential advertiser who would want to deliver an incentive program of some kind. The actual end user really gets the short end of the stick. How often do I really want 25 cents off my latte? Is it really worth all the other junk I get in return for it?

In my opinion one of the best examples of an absolutely fantastic promotion and couponing system is the Coinstar Free Coin Counting offer. I hate having things in my pockets, things that jangle even less so. So I always have a cup or bowl around that I throw my change in as soon as I get it, and I never have change with me to use. So, it just piles up like this:

Coinstar has these coin counting kiosks setup all over the place that count your change for you. The way that they make money is to take a percentage of the counted coins for themselves. Simple and straightforward. But do I really want to give a percentage of my money (and it is real money, I have in my hands already) to someone else just to count it? There’s always the errant thought that maybe I will get some of those coin roll things and one day while I’m watching old episodes of Max Headroom I’ll bundle up all that change and take it to the bank. So I didn’t use Coinstar before, but I also didn’t do anything with those coins and they just kept piling up.

But then they started offering an alternative, I could get the full value of my coins back if I would just get it as a gift card instead of cash. And one of the options is to get an Amazon gift card. For me, that’s fantastic. It’s where a large portion of my money goes to begin with. But they’ve been steadily adding backends over time so that you can get your gift card or certificate from a bunch of different providers now if you happen to be one of those weirdos who spends money on websites besides Amazon. Or even worse, spends money in physical stores. They can still take care of you.

In my opinion this is one of the most brilliant examples of promotions and couponing I’ve ever seen. The incentives are aligned all over, the infrastructure provider (Coinstar), incentive program provider (Amazon in my example), and most importantly end user (most important cause in this example it’s me) are all benefiting.

Coinstar saw the problem with getting folks to pour money into their machines and I’m sure thought “Hey, wouldn’t it be great if we could find a way to get people to pour their money in without having to charge them?” Which they’re able to do by directing money down particular paths by using the gift certificates.

Amazon in this case gets to acquire a certain amount of spend on their site by giving up percentage of that spend to acquisition fees. On the larger scale I’m sure they already know that number, how much do they have to spend in marketing for each dollar of spend they generate on the site? If the percentage that Coinstar wants is less than that marketing number it’s a net win for Amazon. They’ve reduced their risk in marketing spend quite significantly, and effectively cut a few steps out of the normal flow.

And as long as Coinstar can operate their kiosks for less than they collect in fees from generating the gift certificates, they’re in a good place.

And for me, the end user, I end up getting to use this money that was sitting around before. I’m encumbered with a minimal amount of effort. And I get to spend the money at a vendor I want. It was my own money to begin with, but because it was stuck in a less useful form I see Coinstar as having done me a real service (which in this case is making my funds digital instead of physical, but we can get more into that point in another post).

I have no idea if the volume of the business is enough to make Coinstar an overall success. Maybe it costs a lot to ship around that much change and do all the accounting. And I see a decent number of their commercials on television, so they’re spending in other areas as well. But as far as structure of the program, I think it’s an awesome way to line up all the participants.

So what’s the equivalent setup for mobile? Where are the incentive programs and promotions that really leave the end user feeling like they’ve gained more than they’ve given, and leaves all the other players in a positive position as well? The “points of interest” style sponsorships in location based services are heading in the right direction. At least they’re not as user hostile as the Starbucks example. But they’re also not as integrated as the Coinstar example. At the end of the Coinstar transaction an end user has a gift certificate for a certain amount in their hand and ready to spend. With points of interest sponsorship it’s still a spray and pray effort to hope that people will notice your location on the map. If I were to wear my marketing hat I might say something like the user is much closer to the goal behavior in the Coinstar example than they are when we display points of interest. All these unique capabilities of mobile should mean that we can structure systems that will end up with users closer to desired behavior without having to be invasive. I’m not sure any of the efforts I’m seeing are doing so however.