COMM 2037 Marketing Management

Current Event -
The Uber Effect and its Impact on Mobile Marketing

Presented by:
Introduction
https://www.thestar.com/news/insight/2015/05/22/the-uber-effect-how-on-demand-apps-
are-changing-our-habits-and-our-economy.html

This recently published article from the Toronto Star demonstrates the effect of
mobile apps on consumers and businesses. Taking the Uber app as an example, the
article illustrates the explosive success of on-demand mobile services. Simply put,
these apps are conquering the service sector. The usage of mobile apps as a service
ordering tool is spreading rapidly across the globe and represents a new marketing
opportunity for a lot of businesses. The Uber effect refers to the possibility of receiving
services at the touch of a button and its fast gain in popularity. Putting aside the legal
issue the company is facing, the article is telling a great success story about the
opportunities of mobile apps and their prospect of reaching new target markets. The
service industry is large and competitive; the example of Uber shows the opportunities
companies will have if they invest in the development and implementation of mobile app
technologies.

Already, the great success of this business model is widely recognized, and more
and more companies are adapting their business strategies to accommodate it. Apps
like Uber offer a whole new market opportunity for businesses all over the world; from
grocery orders, to child care provider searches, to laundry pick up orders, mobile apps
are entering the customer service industry and their popularity is spreading fast. Taking
Uber as an example, the statistics show that in only 2 years the app has grown from
operating in 60 cities and 21 countries to now covering over 300 cities in 58 countries.
The numbers of consumers being reached by the Uber app quintuplicated in just 2
years. This impressive growth rate confirms the increased marketing opportunity mobile
apps offer to their businesses. Apps can be used to market products, reach customers
and offer services. In addition, mobile apps are a new tool of the promotional mix and
are increasingly part of companies’ integrated marketing communication.

Relation to Module 5 – Direct Marketing and In-app Advertising

From a marketing perspective, mobile apps offer a new channel of
communication. Direct mobile marketing and in-app ads are growing marketing
strategies used to communicate products and services directly to consumers. Direct
marketing is a tool to improve customer relationship management. Providers of mobile
apps have a very good understanding about the demographics and locations of their
users. This knowledge offers a great opportunity to combine services with products, as
the target audience is easy to identify. The ability to connect directly with consumers
and the knowledge of consumer related information such as age, gender, interests and
location offers the opportunity to send individual messages and to use personalized
marketing. An example for this personalized marketing strategy is the smartphone app
Yummly, who partnered with grocery delivery service Instacart. One app offers instant
recipes to its user; the other allows consumers to instantly add the ingredients in a
shopping cart and order them to be delivered directly to their front door.

Another promotional element often used with mobile apps is in-app ads.
YouTube is an example of a company that offers their app as a platform for product
advertising. Selling advertisement minutes to companies allows app providers such as
YouTube to offer their service at a lower or no cost. It also allows companies to
individually advertise their products based on the app users' demographics. In-app
advertising can be adapted to each consumer individually and customized to meet a
specific target market. Traditional advertising is targeted to a mass market and it is
difficult for companies to receive good feedback. However, in-app advertising is more
individual and can trigger immediate feedback with the push of a button.
 The following statistics, published on www.smartinsights.com, demonstrate how
many consumers can be reached through in-app advertising, considering the amount of
time mobile device users spend on apps:

Considering these numbers are from 2012 and 2013, and the fact that according
to our textbook (Crane, Kerin, Hartley & Rudelius, 2014) web advertising is the fastest-
growing advertisement medium, market researchers are not certain about the
effectiveness of in-app advertising. Evaluation of an advertising program is an important
step to measure the effectiveness of an advertisement campaign. Different from direct
marketing, the effectiveness of in-app ads cannot be measured using direct sales
results as an indication of effectiveness. As the Interactive Advertising Bureau of
Canada is working on understanding the effectiveness of web based advertising, Jupiter
Research, as stated in an article on www.clickz.com, estimates that by 2018, $16.9
billion will be spent on in-app mobile advertising. This statistic suggests that businesses
are counting on the value of in-app advertising and consumers will see an increase of
this type of advertisement in the future.
Questions
1. As the marketing manager for a laundry service company located in downtown
Toronto, would you consider direct marketing of your service through the use of a
mobile app? Why?

2. How effective is an in-app advertising campaign versus a traditional TV

advertising campaign? Why?

References
Allen, K. (May 22, 2015). The Uber effect – how on-demand apps are changing our

habits and our economy. The Star. Retrieved June 22, 2016 from

https://www.thestar.com/news/insight/2015/05/22/the-uber-effect-how-on-

demand-apps-are-changing-our-habits-and-our-economy.html

Chaffey, D. (April 27, 2016). Mobile Marketing Statistics Compilation. Retrieved

June 22, 2016 from http://www.smartinsights.com/mobile-marketing/mobile-

marketing-analytics/mobile-marketing-statistics/

Crane, F. G., Kerin R. A., Hartley S. W. & Rudelius W. (2014). Marketing (9th ed.).

Toronto, ON: MCGraw-Hill Ryerson.

Shaul, B. (January 5, 2015). Yummly Partners with Instachart for On-Demand Grocery

Delivery. Retrieved June 23, 2016 from

http://www.adweek.com/socialtimes/yummly-partners-instacart-demand-grocery-

delivery/555051

Yuyu, C. (January 6, 2016). Why in-app ads may be the future of mobile advertising.

Retrieved June 22, 2016 from https://www.clickz.com/2016/01/06/why-in-app-

ads-may-be-the-future-of-mobile-advertising