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As the Data Race Enters a New Phase, Mobile Operators Need to Adapt Their Marketing

Mobile & Apps

For some time now, the received wisdom in the wireless world has been that as smartphonesand other mobile devices proliferate, data consumption will increase exponentially. Carriers have been trying to fight this battle on two fronts.

On the supply side, they have been investing heavily in new technologies such as 4G/LTE that facilitate increased consumption through faster downloads. On the demand side they have tried to slow the growth through tiered pricing as well as other means to throttle consumption, such as identifying the real data hogs and slowing their downloads, offloading consumption to Wi-Fi networks wherever possible and exploring ways around net neutrality.

Recent reports, such as this one from the Wall Street Journal, on how quickly the recently released iPads (which are enabled for 4G) can suck up data plans, seem only to confirm these predictions of ever increasing data usage. But there is also emerging evidence that many of the actions that carriers have taken to control consumption, including tiered pricing as well as the throttling of extremely heavy users (i.e. band width hogs) is starting to have an impact in slowing down consumption. A recent report from Telco 2.0 highlights this phenomenon by showing how mobile data traffic growth has slowed to a 8% quarterly growth rate, still pretty impressive but a far cry from the 20+% growth rates seen previously. The report predicts an increasing flattening of the data consumption growth curve, as late adopters who are not heavy data consumers adopt smartphones but not the data habits of the early adopters and users.

This has serious implications for mobile communications service providers and their marketing messaging. They may have to pivot quickly from finding ways to slow down the increase in overall data usage to pricing and messaging that is designed to encourage usage, particularly during off-peak times and in less used locations. This is particularly because, as Walt Mossberg’s excellent column in All Things D points out, 4G/LTE is often much faster than Wi-Fi! Many customers may not appreciate being offloaded to Wi-Fi at lower speeds and may prefer being given a choice. On the other hand, overusing the 4G/LTE network is easy to do, precisely because it is so fast but it can also be very expensive – leading to bill shock. So carriers may find themselves in a position where they delight their customers initially only to anger them later. This dilemma is going to place a premium on mobile carriers’ ability to truly understand individual user behavior across time and across geographies. They have to attempt to influence behavior in a positive way, one customer at a time with a view to truly balance customer experience and customer value which may end up conflicting each other at times. I agree with Telco 2.0’s projection that this may result in more loyalty-type schemes that are focused on impacting data usage in specific ways in particular circumstances.

Mobile operators continue to lag behind in their ability to truly tailor marketing offers and pricing schemes to adjust to the needs of their customers. They need to catch up and learn to be flexible, timely and personalized in their marketing. Will operators adapt quickly to the newly emerging trends? What do you think?

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