Brandtone’s founder and global CEO Donald Fitzmaurice, speaking to Businessworld’s Abhinav Mohapatra, explains why marketers need to look at mobile as a personalised channel for marketing and advertising and how Brandtone with its use of big data and mobile marketing has played a major role in the way FMCG brands are interacting with consumers in emerging markets. He also throws light on the company’s journey so far in 12 emerging markets. Edited excerpts:
What was the thought behind the inception of Brandtone? What led you to get into mobile marketing?
The company was founded by Padraig McBride, who is our chief financial officer at the moment, and I. I had been working with a Silicon Valley venture capital (VC) firm as a partner and we invested in developing markets such as India and China from 2000 to 2008. We were the main investors in Skype, Baidu, Focus Media and a ton of investments in India. The experience taught me two things. One, the developing markets are the future of just about every vertical on the planet, and two, what was going to be very enabling in terms of business models in developing markets was the extent to which mobiles could be enabled. India is a bit different as it has a very affluent urban core, with some very rural and poor areas. Hence, developing markets was the future, and mobile was going to be the thing of the future. That was my view as a partner at a global VC fund investing in emerging markets for a decade. Interestingly, even my co-founder McBride thought the real opportunity for growth was in emerging markets, and one of the important tools to realise growth in those markets was telecommunications.
Brandtone’s core clients are FMCG companies. Is there a reason behind this?
We realised that FMCG would be the right vertical to start with because FMCG products are the first form of branded goods that emerging consumers in developing markets buy. They don’t buy a Rolls Royce or a smartphone, they buy branded washing powder, branded flour and branded goods to become branded consumers, which is same for the next one billion consumers. People in emerging markets have always bought loose tea, loose flour, but now there is a time of affluence when they can contemplate buying packaged goods of assumed higher quality. It is a part of the aspirational optimism that defines the branded consumer in emerging markets. Hence, that was the right place to start. On one hand you have the next billion consumers buying branded goods in developing and emerging markets and, on the other, you have the FMCG companies that know that they are going to grow in the next decade. So we decided to connect brands to emerging consumers with the only viable solution there is — mobile. We created a platform that links these brands with the emerging consumers, playing up our differentiator from the rest which is mobile and big data. Hence, making the connection smart.
What is the core difference between developed and developing markets, talking from a mobile marketing perspective?
The relationship of a company, say a PepsiCo or Mondelez, in developed markets, is entirely owned by modern trade markets such as Walmart or Tesco. Those FMCG companies no longer have any direct relationship with the consumer, but is mediated by the modern trade typically in the form of loyalty programmes. If a global brand wants to speak to its consumers in a major city of Europe or the US, it has to do it through modern trade. Modern trade has gained access to the consumer and is putting pressure on margins as such chains have huge aggregated purchasing power. When FMCG companies started in emerging markets, they said they would move ahead of modern trade and develop a direct relation with the consumer through mom&pop stores. They made the mom&pop stores strong enough and competitive enough so that they are able to give a challenge to modern trade as and when they arrived. On one hand, they could protect their margins by strengthening the informal trade and protect their connection with the consumer, and on the other, these companies were able to talk directly to the end consumer by making sure that it is mediated though mobile marketing.
Does modern trade act as a hindrance for Brandtone in its operations in developed markets?
We have not developed our business in developed markets. So far we are in 12 markets: South Africa, Kenya, Nigeria, Russia, Colombia, Brazil, India, China, Indonesia, Vietnam, the Philippines and Thailand. Those are the fastest growing markets on the planet, so our clients are switching all their spends in that direction. These markets are mobile first and data first because they were born that way.
What is the potential that emerging markets have in terms of mobile marketing?
If you look at where I come from, it was like a medieval society two years back, and now it is a society of 70 million people with the most advanced 4G teleco system. Everybody has a smartphone, so imagine the amount of impact it’s having as mobile has become ‘the’ channel. There is no TV, no radio, no outdoor and probably will not have anything to become the world’s most digitally advanced society. Hence, we have focused on those 12 markets because they are of utmost interest to our clients. Fifty per cent of the world population lives there, mobile penetration on the handset count is around 70-90 per cent ranging from region to region, the consumer spending power is going from $14 trillion in 2014 to $25 trillion by the end of the decade. After the initial transition to consumer goods, you are also now starting to see financial services, healthcare and education starting to take off. Healthcare especially is starting to see a 400-500 annual growth rate percentage in India. Once a family is affluent enough to buy consumer goods, it accedes to education of children, investments in healthcare and financial security for the family. All of which is going to be delivered on the phone.
Is this going to be a phenomenon across the globe as technology is rapidly changing for everybody be it a developed or developing market?
All these models of a developing market are going to be re-imported into developed countries. For example, mobile money on phones is taking off in Europe and the US now. Something they have been doing in Kenya for the last 15 years because there are no banks in Kenya. Mobile network operator Safaricom invented M-Pesa, which became the de-facto money moving mobile platform worldwide. What I am expecting to see in India and what we are working towards is the first and the next global mobile solution.
In your view, how are marketers taking to mobile in their media mix?
I think in any developing market, the relative importance of digital channels will be higher because of the limited reach and accessibility of traditional channels. Traditional channels will never have that kind of reach, affordability or personalisation in dispersed rural environment like mobile does. From a marketer’s point of view, it is a new channel and will be a dominant part of the mix. Mobile will be what TV was in the US during the 1950s — dominant and will be approached like Mad Men for TV. The people pioneering mobile marketing are called Math Men in analogy to Mad Men, and they are the cutting edge of the industry. Though it will be a dominant channel, the marketing fundamentals will not change. Hence, it will be insights, integrity and communication driven messaging, which is important in any channel that you use for marketing.
When it comes to mobile marketing, what is it that marketers need to understand?
What everyone needs to understand is that a brand does not become a new brand if it is marketed on mobile. In fact, it has to be true to the brand value and attribute; it cannot tell that it is white on mobile and pink on TV, it has to be the same. One can’t say that it is a low-cost value product on one channel and elite product on the other. Mobile becomes another way of engaging the audience, just the communication has to be tweaked for mobile. Personal devices and personalised content is the new opportunity, doesn’t matter what channel it is.
What will be your suggestion to marketers to efficiently manage mobile marketing?
Marketers need to be true to their brand. The brand does not change because the channel changes. The values, the properties, the message and insights remain the same. Marketers have to, on one hand, build a strategy and recognise the constant — the core philosophy — and on the other hand, recognise that the digital channel is evolving so fast that any strategy that they are developing is flawed because it will be tough to keep up. The strategy has to be one which really cherishes the constant, nurtures it and does not let go. It should also accept entirely the complete stage of near chaos in terms of how it is going to take effect in the new channels.
As all of this is just starting, phone is going to be a dumb term no matter what smartphone one has, it is going to be all about the artificial intelligence and the speed of connectivity which is going to revolutionise the market in the next decade. For now, marketers need to develop mobile strategies that accept 2G networks and blisteringly fast Internet in some areas at the same time. You cannot make a strategy only for 4G as there is going to be a constant state of flux for the foreseeable future. Marketers will have to make a strategy that is future safe, try-fast-fail-fast and move on.