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The launch of Apple's iPhone in the UK last month caused a frenzy among consumers, but for traditional mobile handset manufacturers like Motorola, it's been a less than inviting prospect. Analysts have warned that regardless of its impact in terms of sales, the iPhone's effect on handset design and user interface will be keenly felt for years to come. Yet Andrew Morley, who joined Motorola in May as vice-president, marketing for mobile devices in Europe, is bullish. "The competition from iPhone is good, it helps us to lift our game," he says. "With the mobile handset sales volumes we're witnessing, the sector is big enough for many a competitor."

Despite this optimism, Morley has his work cut out for him. Motorola sales of handsets have fluctuated and its market share has been eroded by competitors such as Nokia, Samsung and Sony Ericsson (see box, page 25).

And the stakes are being upped all the time. Search provider Google announced ambitious plans last month to create a software operating system, Android, with an alliance of technology and mobile partners, including Motorola. At present, new mobile technology isn't compatible across all handsets, but Google's proposition will be based on 'open source' technology, meaning it has the potential to work on many different networks and handsets worldwide.

Product incentives

Android won't appear until at least the second half of 2008, but Morley has no illusions that it represents the shape of competition to come, with non-traditional brands entering the handset marketplace. If his determination outside work is anything to go by, though, it's a challenge he'll meet head on. As well as being a keen cyclist - he's completed the two hardest stages of the Tour de France - this summer, as part of a charity project, he helped to build a school in Kenya.

Though he's firmly focused on how mobile and digital marketing channels can improve Motorola's sales and brand awareness, Morley could also draw on his more traditional direct marketing background. As European director of CRM at Ford in the late 1990s, his remit was to create a customer relationship programme for the car manufacturer and gather data on customers that was, until then, held at dealership level. This involved developing trigger-based direct mail centred around MOT dates. "Vehicle owners were purchasing new cars every three years - the thought of having to take an MoT would encourage them to look for a new vehicle," he says. "We targeted those customers two months before they needed an MoT and tempted them back with product incentives."

In 2000 he joined broadcaster Sky - where he rose to the position of marketing director - to develop its direct marketing and response mechanisms and encourage customers to move from analogue to digital television. He was responsible for acquisition above- and below-the-line, and developed direct mail campaigns and an outbound telemarketing programme that saw the broadcaster handling more than 40,000 calls a week. More recently, he was group marketing director at luxury retailer Harrods and launched its loyalty scheme, Harrods Rewards.

Significant online presence

Morley touches only briefly on the experience, which lasted less than a year (he is bound by a confidentiality agreement for five years). The Motorola position attracted him because of its remit, which extends across Europe, the Middle East and Africa - a responsibility that used to be shared between three people. His aim is to build the brand, strengthen "its design-led and aspirational credentials", improve retail and develop e-CRM programmes. It's about getting customers in-store, getting them to purchase Motorola handsets when they're there and encouraging them to choose the brand again when they upgrade.

Morley acknowledges that direct marketing has not been a big part of Motorola's marketing mix to date, as this has been done largely in conjunction with, and developed by, the mobile operators in the form of direct mail loyalty programmes. It's not feasible to manage the customer data in-house - many consumers replace their handset every eight months and by the time this data has filtered to Motorola, it will have decayed. But Morley says he is keen to put a bigger DM stamp on future activity: "We are now building a significant online presence and DM will be much more important to us."

In October, Morley kicked off a review of Motorola's EMEA agency roster with a view to consolidating the business into a single network. The company has worked with agencies including Ogilvy, Abbott Mead Vickers and TBWA for its above-the-line pan-European activity. It has also used DM agencies on a project basis and mobile marketing specialists such as Bluestar Mobile.

Morley is unlikely to announce his choice of agency or agencies until early next year (Abbott Mead Vickers has since withdrawn from the pitch), but he is testing pilot CRM programmes and says the agency responsible for its mobile marketing has to have "a DM mentality. They'll need to help us account for all of the budget spent and ensure we are targeting the right customers at the right time."

A campaign he's followed closely is 20:20 London's work to promote Sony Computer Entertainment Europe's Gangs of London game. This integrated, multimedia campaign, using mobile, online and DM, involved consumers taking and sending mobile camera photos to a shortcode in return for SMS clues and instructions. "We have looked at brands that have done successful CRM campaigns and are trialling similar ones on a smaller scale," he says. "We need to get consistency across three markets and we also want to simplify the agency relationship."

While mobile marketing is undoubtedly high on his agenda, he's cynical about whether agencies can meet this need. "It's the clients, rather than the agencies, that tend to push mobile marketing," he says. "Linking media strategy to digital fulfilment can be a struggle."

Morley likens mobile marketing to a bridge between traditional media and the online environment. "Consumers can take a picture of a billboard with their handset and receive a ringtone or other incentive in return," he says. "This enables us to increase our levels of engagement. The challenge for us is that consumers like the brand but we don't have a relationship with them."

Crucial to this engagement will be MMS (multimedia messaging), which Morley views as a strong response mechanism, and location-based marketing, in which multimedia content is delivered directly to the user of a mobile device, dependent on their location. The media can be delivered to any portable wireless device that's GPS-enabled and has the capacity to display audiovisual content. To Morley, it's an opportunity to move away from the 'come and buy' message to one that offers consumers something of value, thereby engaging them and engendering their loyalty.

"We can use location-based marketing to attract the consumer with something as simple as a ringtone download, a free picture message or a tool they can download to manage their contacts - the point is that it's of value at the time and place we choose to offer it to them," he says.

Last month Motorola unveiled plans to develop new software that can scan customers' text messages and phone calls and pass on the information to advertisers, enabling the handset manufacturer to understand not only where that person might be but also what their interests are. According to Motorola, it can search for words such as 'food' or 'hungry' in text messages and then send customers adverts for restaurants in their area.

Morley adds: "The choice as to which research and development innovations are applied in the real world depends on whether or not there is market demand. In the case of searchable text messages, it is operators and consumers that will determine the demand."

Bluetooth technology, which enables mobiles to communicate through radio waves, is also on Morley's radar. The target audience for this is what he terms 'generation C' - teenagers. These consumers, he says, are the early adopters of mobile and will be an increasingly important target market.

In hindsight, it's perhaps a wise move for Morley to concentrate on the digital and mobile marketing channels, as he's not afraid to admit that one DM campaign he worked on at Sky achieved a nought per cent response rate. "We thought the mail packs had not gone out as the phone did not ring once," he jokes. It's a scenario, though, that he won't want to repeat or even come close to in his new role.

ANDREW MORLEY CV
1988-1992: marketing degree, Liverpool University
1992-98: Sales and branding roles, Ford
1998-2000: European director, CRM, Ford
2000-2005: Marketing director, Sky, responsible for its launch in the
Republic of Ireland
2005-2006: Chief commercial officer, Bulldog Broadband
2006-2007: Group marketing director, Harrods
2007-present: Vice-president, marketing for mobile devices in Europe,
Motorola

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MORLEY ON ...

Mobile marketing

"It's a bridge between traditional media and the online environment. The growth of multimedia messaging will be a critical part of mobile marketing's development - it's a strong response mechanism that can engage the consumer and increase their loyalty."

Direct marketing

"Traditional DM has not been a big part of Motorola's marketing mix to date. It's not feasible to manage the customer data in house as many consumers replace their handset every eight months and by the time this data has filtered to Motorola, it will have decayed. But we're keen to put a bigger DM stamp on future activity."

Agencies

"It's the clients that tend to push mobile marketing rather than the agencies. Any agency responsible for mobile marketing will need to have a DM mentality in order to help us account for every part of the budget and ensure we are targeting the right consumers at the right time."

Apple's iPhone

"The mobile handset sector is big enough for many a competitor. Products like the iPhone will help us raise our game - it's good competition."

FACTS ON ... MOTOROLA

- Motorola is the second-largest handset manufacturer in the world. Nokia is the largest, with Samsung third and Sony Ericsson fourth. Motorola had sales of £20.8bn ($42.9bn) in 2006.

- It sold 220 million handsets in 2006, compared with Nokia's 348 million

- Shares in Motorola rose in October after it posted third-quarter earnings above Wall Street estimates and forecast a profit for the fourth quarter. Shares in the company had dropped for the first two quarters this year as a result of market share losses to rival handset manufacturers.

- Of Motorola handset owners in the UK, 75 per cent are online once a month or more often.

- 76 per cent of Motorola handset owners have a built-in still camera as a feature on their mobile phone.

Source: Forrester Research ECTAS Q2 2006 Benchmark Survey/iSupply.