M-Commerce Requires Collaborative Marketing & Revenue Sharing
Valista's Craig McDonald argues that new models will be necessary for m-commerce to become a commercial success.
In order for m-commerce to go mainstream, content providers, carriers, and service providers must collaborate to provide consumers with an easy solution for purchasing a variety of digital content and services through any mobile device. This approach, called collaborative commerce, enables new marketing opportunities and allows consumers to access more interesting content which meets their buying patterns and accelerates premium services in the mobile environment. There are two main components of collaborative commerce 1.) collaborative marketing and 2.) revenue sharing.
Collaborative Marketing
Content providers and mobile operators need to create awareness, and to present and price products for sale both on and off portal. However, in order to accelerate sales within the commerce ecosystem, enhanced product offerings such as subscriptions and product bundles, which cater to the way in which consumers wish to buy, need to be supported. In addition, incentive programs such as discount and loyalty promotions are required to spur consumption. By joining forces, content providers and operators form a "content value chain" based on various collaborative marketing efforts.
There is an increasing demand for an operator to flexibly configure relationships with content providers quickly, in order to develop and sell digital content. In some cases, an operator may wish to act as the retailer. In other instances, parties who own strong brands want to own the customer experience, for example, Disney or Madonna want to control their own marketing. Operators need to define the terms of collaboration, the business rules and contracts that go along with each relationship, in a flexible way, on a case-by-case basis. This can be a very complex process. For example, in the Apple and Bose scenarios, they are the only players who can discount items in the offline retail environment, but in other scenarios, retail outlets will discount the goods. The online situation is much different. For digital goods, collaboration between suppliers and intermediaries is vital. The parties must cooperate on promotions and marketing initiatives to successfully reach a large customer base and close the sale. In the creation of heterogeneous multi-vendor bundles, operators need to define the settlement rules that describe how the funds are apportioned to the participating suppliers.
Revenue Sharing
Support for business processes such as payment processing, customer care, fulfillment, exception-handling, and settlement are vital for this value chain to flourish. As the operator creates more highly innovative marketing offers, these programs have a direct impact on the revenue-sharing contracts it holds with its content providers. This creates the need for operators to have a system capable of interpreting these impacts, ensuring revenue assurance and proper settlement to all parties involved in the transaction.
If a new Spiderman movie comes out, a game, wallpaper, ringtone, and other ancillary products may be added to create a bundled offer. A mobile operator can bundle these products and promote them to a customer base of aficionados. If there is discounting in the bundle, who bears the cost in a revenue-sharing relationship? If the operator offers a 20 percent discount on the bundle of a wallpaper, ringtone and game because it will drive more purchasing and make everyone more money, it is important to highlight which suppliers are willing to sponsor a portion of the discount or if sponsorship of the discount will fall solely to the operator. Currently, operators are at different stages in establishing relationships with content providers, and they are beginning to work together on joint discounts and loyalty programs.
For a successful revenue sharing model, mobile operators and content providers need the freedom to define their contracts according to what makes sense from a business perspective, without being constrained by a technology's ability to support these contracts. Revenue Sharing technologies will enable service providers and merchants to guarantee accurate and timely transaction settlement covering terms such as payments, payment schedules, discount sponsorships, and liability for exceptions, refunds, non-payments, cancellation fees, and fraud. This ensures that the revenues and costs are appropriated to the correct parties per the contractual arrangements.
Conclusion
Collaborative commerce based on collaborative marketing and revenue sharing, opens up numerous distribution channels to content and services providers, enabling content innovation and offering new opportunities for promotional programs, joint discounts, and loyalty programs. Similar to an e-commerce platform, mobile operators need to link the offering with the generation of accounts receivable, accounts payable and settlement for multiple parties. Collaborative Marketing and Revenue Sharing solve a difficult problem that operators and content providers are faced with today. With this new approach, consumers will be able to access more interesting content allowing content providers and operators to increase their revenues, creating a win-win-win situation for all players in the mobile content ecosystem.
Craig McDonald is vice president, North America for Valista.