As any CMO in a telecommunications operator will know, when quarterly revenue targets aren’t being reached, the first thing to get cut is the advertising budget. It’s a quick win on the balance sheet and the CFO who most likely holds a thinly veiled disdain for marketing’s ‘excessive’ budget will be only too glad to cut the fat.
For example O2 in the UK reduced their advertising budget from £55.5m in 2012 down to £41.3m in 2013. As organizations become leaner, they try to do more with less and this is especially true for advertising budgets, making the quality of your product or service and how you speak to your customers, of paramount importance. As Amazon founder Jeff Bezos put it: “In the old world, you devoted 30% of your time to building a great service and 70% of your time to shouting about it. In the new world, that inverts.” If a shrinking ad budget is doing the shouting, who is doing the talking?
What advertising boils down to for me in any case is a conversation primarily with potential customers. Apart from throwing money at above the line campaigns how can mobile operators talk to their existing customers without breaking the bank?
Consult your marketing books for a metric on how much more expensive it is to acquire a new customer than retain an existing one: 7x, 10x, 15x? The bottom line is it isn’t cheap! In a survey of 10 developed nations by Mobidia in June 2014 they found that about 30% of a subscriber base exceeds their monthly data allowance in a given month. This presents the operator with a choice, make off like bandits with excessive overage charges which increase short term revenue and decrease Long Term Value, or offer them a short term data pass for a small fee which can be provisioned on the spot? If an operator has 10 million data subscribers and 30% of them exceed their data limit this gives the operator the chance to have a conversation with 3m of their customers on a monthly basis, while at the same time boosting upsell ARPU and reducing churn.
Let’s take another example. Mammoth operator x announces a ground breaking new partnership with YouTube which gives customers 10 hours of free viewing on their mobile data plan for just $5 a month. The CMO wants to shout it from the proverbial rooftop but the budget isn’t there. What if the operator was able to determine when an existing customer was using YouTube and pushed them the $5 offer direct to their handset driving campaign engagement and upsell revenue? Peak mobile penetration levels make it more and more difficult to acquire new customers. Let’s focus on the ones you do have, not spamming them with cookie cutter promotional blasts but offering real time context sensitive offers that meet their needs.