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Challenging Carriers with Content
Content owners and aggregators are gearing up to go direct to consumer with content options

More than 90 percent of mobile content sales in the U.S. today come directly from wireless carrier stores, via handsets or through commercial Web sites. That’s why content owners and aggregators are gearing up to challenge this carrier dominance and are now aiming to sell content directly to consumers (D2C).

With this buildup in the competitive pool comes the promise of an explosion of mobile content sales; however, major carriers have been reluctant to give up the tremendous leverage they have over the value chain. It’s no surprise that they want to prevent cannibalization of their established content stores and revenue streams.

For this reason, companies hoping to operate successful D2C content stores must not only build a superior and differentiated offering, but also compel consumers to change their current purchasing behavior. The following chart is a simplified blueprint for building a successful D2C content business:

direct_to_consumers

Building Traffic

Building store traffic is the first hurdle. Two things must be in place:

A trusted brand name or source of content
A campaign for making consumers aware of this direct offering

Trusted brands like Apple, Sony, Disney, NBC, MTV can leverage their existing customer relationships and rely on the trust they have built with those customers. Others with less well-known brands and smaller customer bases will need to launch campaigns that are expressly designed to build awareness and consumer trust.

To compete among large companies for the brass ring of consumer awareness, upstart companies should be willing to invest large amounts of time and money to develop and launch creative, targeted and integrated marketing and advertising campaigns.

Converting Traffic to Purchases

Once a company has built both awareness and trust among a target consumer group, the challenge shifts to converting raw traffic to actual purchases. To facilitate this transition, two other key ingredients must be present:

High-quality content
Optimal pricing for consumers

Stocking content can take the form of a very narrow offering built for a specific customer group, or a very broad selection that offers something for everyone. In either case, the content must be top-notch. Also, successful companies must have real music ringtones, top game titles, high-quality images and video. Providing samples and demos of the content is a simple way to show what’s available to consumers and ease the decision to purchase. Without high-quality content, consumers will turn around and walk right out the door – likely never to return.

With regard to pricing, recent NPD data shows that high prices are one of the biggest inhibitors for people who have never purchased mobile games or ringtones. In addition, many consumers prefer to pay once to own content (39 percent) versus paying a monthly recurring subscription for content (seven percent). Since D2C content stores need to not only attract new buyers, but also pull them away from carrier stores, pricing must be attractive. In general, this means offering a price point lower than the average prices offered by carriers.

Converting One-time Buyers into Repeat Buyers

Smart companies consider the first content transactions as a small win, but not the ultimate prize. There is one more challenge to address before business becomes sustainable: repeat purchases.

There are many things that go into building long-term, loyal customers who make repeat purchases, and the most crucial step is providing a quick and easy purchase and download process. This means following the rules:

Short-codes and content IDs must be simple to remember and triple-tap into the phone.
After the message is sent, the opt-in messages and purchase confirmation must be quick and easy to get through.
Finally, the content must download into the correct locations on the phone and not harm or disrupt the device itself.

Remember, in most cases, content purchases are impulse buys. A cumbersome check-out process will inhibit future purchases.

The Year of Off-Portal Content?

While the business blueprint put forward in this bulletin is simplified, the challenge remains daunting. However, if each of the checkpoints is addressed and met, we might finally be able to say with some truth: “this is the year off-portal content will take off.”

– Drew Hull, Research Director, Mobile Content