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SMS and Mobile Marketing
SMS and Mobile Marketing

At the end of December 2001, 30-billion SMS messages a month were being sent on GSM networks around the world. Not bad for a technology that was meant for a corporate market. The explosive growth of SMS, especially in Europe, can be attributed to many factors. But let me state the obvious. It's easy to use and you don't have to talk to someone! All this from a voice-based device - go figure!

Thus, SMS has been, and looks to continue to be, a resounding success and its users segmented and profiled. Great. Then a few years back, someone said, "Let's use it as a marketing tool!" The SMS value chain was born. From the creative (yes, people get paid to write copy of 160 characters) through to the transmission, companies are taking a serious look at how SMS might improve response, add value to their CRM strategy, and increase recognition of their products.

For many companies, the under-30 marketplace is ripe picking, but an inherent battleground with many casualties. Finding new ways to attack the marketplace is always on a marketer's radar. Traditional ways of marketing are trusted and tested and prove to be a stable base from which to pitch forecasts and revenue.

But how is SMS marketing received as a proposition? You would think that with our understanding of SMS users, it would be an easy sell. Companies in sectors from publishing to leisure are only now looking to build SMS into their multiplatform marketing strategies. Heavyweights such as 20th Century Fox, United Airlines, BBC, and Virgin are jumping on the bandwagon.

This is all great news for an embryonic industry outside of the MNOs (mobile network operators). WAP didn't help the cause, but without WAP, I doubt we would see such an onslaught of new companies springing up pitching for this spotlighted SMS business. Even some major interactive agencies are now turning attention to SMS as a revenue generator and almost ditching WAP activity at the same time.

Usage Has Grown
Let me spell out the most common uses of SMS to date. We have had banks use it for CRM activity, letting customers know their bank balance every Friday, or even that they're overdrawn. We've seen movies adopting SMS to help push upcoming film launches, drinks brands using it both as a sponsored medium and to push new brands with "coupon" type activity. Radio stations and TV channels are now taking SMS voting and messages as an extension to normal voice lines and e-mail. You can even get flirted with, at your expense, by an artificial intelligence engine via SMS. It goes on and on.

A Major Marketing Tool
SMS has now been actively welcomed as part of the marketing mix. As with all other media, it's now open to abuse as well. SMS spamming is nigh and it's going to create a major dent in all the good work being carried out. Next to your house or apartment, your mobile phone is one of the most personal areas of sanctity you have. You don't let just anyone into your house uninvited do you? Unsolicited communication is an issue for any form of direct marketing activity. You can't get more direct than your mobile phone. The truly personal nature of this device means it's very emotive.

The Mobile Marketing Association, the name of the newly merged WMA and WAA, is an organization that aims to police the airwaves, rescinding those who abuse the medium and working closely with operators to halt unsolicited SMS messages from reaching us. The Direct Marketing Association also recognizes the potential issues. Just how successful they will be is another matter. There's no doubt that the motive is honorable, but surefire ways of executing this could be considered as draconian. Who do you blame? MNOs will not take responsibility for others' actions. Do you enforce responsibility on connectivity providers and in turn create a virtual monopoly on who you can and can't use as a provider of SMS facilities?

They're just starting on the quest and as an industry we all need to aid their plight, but plugging the hole at one end isn't the answer. One positive factor against SMS spamming that is unique versus e-mail spamming is that it has a direct cost. You are charged, unless you hack into an SMSC direct, by the message. DoS attacks using SMS will prove very expensive indeed.

Another major factor for the uptake of SMS in the CRM and marcomms arena is the cost effectiveness of the channel. For example, information that you can request and receive via SMS has major cost-saving implications because it means you don't have to pay for a bum on the seat answering the phone. You can reduce the personnel needed for this and redirect them into other productive areas.

Take the banking example mentioned earlier. This bank operated a virtual banking environment. Things were done via the Web and a phone. There were no branches you could walk into, so the call center was the major hub from a CRM standpoint because the real-life interaction was done there. Requesting account details was done by either speaking to someone or by IVR if you couldn't get to the Web. This was a top-ranking customer request of those who rang in. Enabling its account base to have these details pushed to them on time intervals via SMS allowed the expensive customer service staff to spend more time on other calls and increase the perceptive experience of the brand. It wormed out a great deal of the run-of-the-mill requests. Why not WAP-enable the service? Well they did, but SMS is a part of every single GSM phone and with poor WAP handset sales during last year, SMS was the key to reaching a larger portion of their customer base.

The last year in Europe has seen the power of this medium begin to shine. It has made an impact across many consumer sectors and with the forthcoming Enhanced Messaging Services (EMS) and Multimedia Messaging Services (MMS) coming in the next few years, it will be an exciting time for those of us involved in this segment of the industry.

5 on 5: The Mobile Generation Meets Marketing Head-on
We took five industry leaders and asked them five critical questions about mobile marketing.

  1. What do you think are the key business drivers for companies employing a mobile marketing strategy?
  2. How effective, in your opinion, is the use of SMS as a marketing mechanism?
  3. In the future, with technologies such as multimedia messaging and always-on connections, how will wireless marketing change?
  4. WAP failed to make a significant impact on mainstream phone users in Europe. How will 3G capture the public's imagination?
  5. How are we, as an industry, supposed to curtail the misuse of pervasive marketing communications?

Craig Parnham is head of marketing at Anthropics, a provider of interpersonal multimedia messaging for existing (GSM and Web) and future communications networks.

The key drivers should be to improve the customer experience, reduce cost to market, provide access and channels to a wider demographic, and increase revenues. Most important, all mobile marketing must be personalized. It will be perceived as a new form of spam unless the messages being sent are relevant not only to the target market but also to their current location and habits. The difficulty is that mobile network operators will hold on to this information religiously as it provides them with the valuable information they need to maintain and strengthen their customer relationships through service differentiation.

Today it is relatively effective as it has enough of a novelty factor to be read, but once it becomes saturated the way e-mail has, it will lose its edge.

Longer term it may have a place in the youth market, which is why mobile network operators such as Orange (UK) are hiring youth-generation staff to assist with developing targeted campaigns. Among other target markets it may be seen just as mobile spam. Using our text-to-video mobile messaging, it is possible to send a streamed video of a talking person to humanize the communication and add to the novelty value, which could potentially lead to viral mobile marketing.

The "always-on" nature of 2.5G and 3G networks will allow delivery of more innovative messaging formats, such as moving pictures, color, and sound. Multimedia messaging is a new technology that will take nonvoice mobile and Web communications beyond today's largely text-based services, toward a multimedia application environment where voice, text, images, and video applications can be integrated and exchanged between Web and wireless networks.

When WAP was initially launched it was limited by device and network capabilities, but 3G will remove those barriers. WAP-based services will continue to thrive as part of the innovation and delivery of 3G phones and services. With 3G, consumers will be offered content and services that will enable them to communicate in ways that have not been possible in the past. Anthropics Synthactor technology complements 3G services by making streaming media more cost-effective as well as optimizing communication channels that can work in parallel with future content and services.

There will always be companies that insist on promoting through pervasive marketing, even though great attempts have been made to address this in the Web environment, with such things as "opting-in" clauses and the development of filters, which has largely been promoted by reputable companies and industry associations. We add digital signatures to all of our images so that we know who has created an image, and can shut down people who insist on using our technology in inappropriate ways.

David Kaye is business development manager for the mobile marketing division at Lycos Europe.

Right now, I'm seeing a lot of clients using SMS as a shortcut to being "cool." Used properly, SMS is very good for both customer acquisition and retention.

In its current guise, SMS is a great direct response and sales promotion tool. It is also great for marketing communications that hijack existing communities for their own purposes, although this takes a great deal of sensitivity to "tribal" sensibilities to pull off effectively. The other major area is CRM - SMS is great as an economical means for getting the right information to the right person at the right time, and we are already seeing some great executions along those lines.

There's no question that MMS will make mobile advertising more appealing to mass marketers, because of the greater creative flexibility it offers. The most obvious advantage is that visual brand-oriented advertising suddenly becomes much more viable, because you can offer far more than a grainy logo or "blippy" ringtone. If and when this can be combined with a seamless transition to a transactional environment (which is certainly possible with WAP over GPRS), you have a very compelling platform.

3G will capture the public's imagination by helping them to improve the things they're already doing with their mobiles - express themselves, identify themselves, amuse themselves, and communicate with people who are important to them. SMS will probably not be wholly supplanted by MMS - there are many situations where the written word is preferable to the visual - but when people want to convey a sense of their current surroundings and experiences (e.g. New Year's Eve, your friend's birthday, your trip to Thailand), they will pay to do so.

I think the only answer here is cooperative efforts with the mobile operators to bring effective legal and technical sanctions against those who misuse mobile communications. Right or wrong, it's the operators who are often ultimately seen as accountable by the consumer for the messages they broadcast; therefore it is strongly in their interest to shut down the "spammers." 

Jeremy Wright is cofounder of Enpocket, the wireless media sales house that represents BT Cellnet and Genie in the UK. Formerly MD of Engage Media Europe, Jeremy is also a board member of the MMA.

Wireless is an important medium. It has the reach of television, the targeting of direct mail, the interactivity of the Web, the immediacy of radio... I could go on. In particular it is a strong relationship-building medium, with great potential for developing brand equity in the minds of the target audience. No previous medium has had the capability to do this cost effectively. Also, as an always carried, always-on communication tool it integrates brilliantly with other media. The key business drivers are: use this potent new medium now to take market advantage...or ignore it at your peril.

Outstanding. Despite the limitations of 160 characters, SMS delivers exceptional response, awareness, and brand affinity results. In part this is due to the novelty of SMS marketing and the fact that it is not yet heavily exploited. But in the main it's due to its unique characteristics: standalone personal messaging, tight targeting, minimal production costs, ease of response, and dialogue capability.

Mobile phones will transition into handheld communication devices used for information and entertainment as well as basic voice/text communication. I would predict that personal profiling will progressively enhance the targeting capabilities within the medium to make marketing increasingly valued and relevant; meanwhile the multimedia capabilities will open up a raft of creative opportunities for exploiting this tight targeting. However, agencies, marketers - and their production budgets - will take time to adapt to this untapped potential for driving better customer relationships and ROI.

Handheld multimedia is a far more compelling proposition than handheld text from the Web...and provided it's not limited, clunky, and slow, it should spread like wildfire. But content and the user experience is everything.

There has been much debate about opt-in and opt-out, but the real key is "managed" communications for which the carriers are ultimately responsible. In the customers' relationship with their carrier there is the opportunity to build on the trust that already exists to deliver an exceptional service that progressively tailors content and advertising to their personal needs. However, if the carriers do not take up this challenge and work fast to provide services in these ways, then I fear marketers - attracted by the exceptional performance of the medium - will be driven to seek access to their customers through all types of other channels, good and not so good, as has happened in Japan.

Permission is important, but so are effective controls to stop duplication of messaging (which users hate) through overlap of opt-in lists, personal means to control the volume and type of messaging, and simple, effective ways to opt-out at any time. The EU draft directive and legislation at country level will hopefully help and not hinder this process, but self-regulation through the activities of the MMA and their members and the actions of the carriers are key.

Stephen Flaherty is an independent mobile data and wireless consultant and a founding associate member of

Brand interaction and, hence, strengthening of brand image and equity within the target market is a prime business driver for adopting a mobile marketing strategy. The personal nature of the mobile device can assist the marketer in enhanced brand perception by leveraging the users' personal relationship with the device.

Three of the most popular styles of SMS marketing are:

  • TV program interaction: This is very effective if response volumes are the metric used to measure success (e.g., MTV, Big Brother). Here the object is to get the audience to interact with the TV. This creates a feeling of belonging to the brand community of the TV program.
  • Sponsored content: I used to get my football results sponsored by sports-related brands. When my team (Chelsea) won a game, the results text would be sponsored by Sporting Bet, with the strap line "look at what you could have won!"
  • Cross-promotional movie advertising: The best example I have seen to date is the Bridget Jones's Diary text promotion. The opt-in user received diary entries in the run up to the movie premiere, thus building character profiles before the movie was viewed.

There are many other flavors of text marketing and I'm sure that clever mobile marketers will invent many more. I think that what these examples show are, that for success, the message must carry value to the user and not just a brand strap line.

One of the barriers to using new services is the cost. When we move to MMS it is likely that the message will be charged depending on its size. Football content seems to be one of the more popular premium services paid for today and suits MMS. For example, if during the World Cup I sign up for the delivery of MMS goal services from a carrier's portal, when Michael Owen scores a goal I can be sent a picture of the goal with a short audio commentary clip. This might cost me 50p; if a brand marketer could sponsor this for me and bring the cost of the MMS down to 35p I would be only too happy to accept their ad on my phone.

Much has been said about sophisticated services and content delivery over 3G networks. I think the services that will catch the public's imagination first will be that 3G allows for more sophisticated communications between people and between groups. In today's 2G world we are limited to person-to-person messaging. In a 3G world I will be able to use my phone to set up a group of my friends, family, or colleagues. I will then be able to send one message out to all inviting them to an "event." I will then be able to send them all a map of the location and, if need be, a real-time exact location of myself. Services like these will ease social and community interaction that I feel will take off before the sophisticated content services.

In these early days of mobile marketing there has been some misuse of the medium. It is, however, nice to see a general consensus from marketers that opt-in permission-based campaigns are the only legitimate format. If I look in my Hotmail junk mail folder I am still inundated with adverts. Spamming users on e-mail is fairly low cost; with interconnection charges or international SMS delivery agreements coming into place, there will be a cost for broadcasting SMS messages. This alone should keep the unsolicited messages from our phones. Keeping unsolicited messages from our phones should be the work of the wireless operators. If they grasp the value of controlling the ads to our phones as a way of subsidizing their services they will then be profit motivated to keep unsolicited ads off our phones and mobile devices.

Steve Wunker is CEO of Brainstorm Marketing and also UK country director and European co-chair of the Mobile Marketing Association.

Mobile marketers need to create sustained, interactive dialogues with consumers if they're to fully exploit the potential of the medium. This facilitates not only immediate ROI in terms of sales promotion, but brand building and possibly new customer acquisition as well. Therefore mobile marketing should fit into an overall media plan, though isolated tests can amply prove the potential.

For most companies employing it, SMS has been astonishingly effective. A message priced at 20¢ can yield a 10% response rate. This is orders of magnitude better than traditional direct marketing. It's critical though, to look beyond these figures. SMS is even more effective at brand building and customer relationship management than at new customer acquistion. It allows for real-time, impulsive interaction between consumer and brand.

MMS and GPRS can make a big impact on mobile marketing. Brands will leap at the chance to enrich their message with color, video, and easy links to WAP sites. These technologies enable brands to draw people into even deeper relationships than SMS offers today.

3G will start slowly, given that coverage will be quite limited and handsets scarce. Operators will have to provide a reasonable amount of compelling content. Brands can supplement this content with sponsored games, video clips, and other intriguing applications. Some of these may even reside on the client and be downloaded over-the-air.

The MMA has a strict code of conduct requiring that consumers give prior consent before receiving marketing messages. This code is enforced through tools such as excluding violators from the association, publishing a blacklist, and ultimately cutting off abusers from operators' SMSCs. We supplement the code with an active campaign that educates advertisers about permissible uses of the medium. Finally, the EU has mandated their member countries to enact legislation prohibiting SMS spam.

About Tom Dibble
Tom Dibble , a wireless entrepreneur, is a cofounder of
Global Wireless Forum, a forum dedicated to dealing with commercial, strategic,
technical issues on the evaluation of the wireless age in Europe and
the U.S.

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