Community Research and Development Information Service - CORDIS

Business model VI: Private pull approach III

- Expected ad perception: affinity;
- Balance of power between mobile network operator and mobile advertising agency;
- User owner: retailer;
- Incentives for the user: guaranteed minimum discount and coupons from retailer;
- Source of payment: user;
- Revenue stream: user retailer - mobile advertising agency - mobile network operator + content supplier;

Being the establisher of the customer relationship to the users, the retailer receives payments from its subscribed customers through subscription fees, such as quarterly or annual payments. In return the users can benefit from a guaranteed minimum discount on all or at least selected items of the retailer. Additionally, the users may get coupons on special products as well. The basic idea behind this approach is to convince the users by giving them some sort of monetary compensation to equal their subscription fee. The costs for this pull service are fully covered by the retailer, i.e. the users do not have to pay anything but the subscription fee (flat rate).

Although the user is subscribed to a mobile network operator, his relationship in respect to LBA is solely referred to the retailer which, however, has to acquire the actual LBA service by itself, either from a mobile advertising agency or directly from the mobile network operator. The costs will most likely be based on the number of the retailer’s subscribers, the number of messages sent or simply through a fixed basic fee.

LBA is offered by two entities together. The mobile network operator is providing the technology whereas the mobile advertising agency is responsible for applications and content. For the retailer the service provider can either be the mobile network provider who again subcontracts the mobile advertising agency, or the mobile advertising agency with the mobile operator as subcontractor. In both cases all three entities participate in the persistent revenue stream.

The involvement of a mobile advertising agency holds the advantage in having an expert in the field of Mobile Marketing that is able to handle all the retailer requests. Due to the mobile operator’s limited resources the direct customer management of every single retailer is just not possible. Apart from that, LBA would only be deployed within the same mobile communication network. A retailer cannot be expected to pay all operators on the market just to make sure that all of its customers have access to this service. The exploitation of LBA independently from the specific network, however, seems to be infeasible because no operator will share the access to sensitive information of its own customers with any competitor. Without the interoperability, however, the development and growth of LBA will be dampened, the attractiveness of it as a advertising channel reduced, and the retailers might challenge its effectiveness.

This scenario describes a case typically for big shopping chains with a well-known label and a high customer base, e.g. Karstadt in Germany, Galeries Lafayette in France or Sears in the USA. Otherwise the costs for the implementation of LBA would be to high and hence not reasonable for small stores. Besides, a small shop on its own is just not able to make offers, which are appealing enough to convince the users. It can however increase its attractiveness by establishing a partnership with other shops.

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YellowMap AG
Wilhelm-Schickard-Strasse 12
76131 Karlsruhe
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