A New Kind of Marketing Magic
By Carol Posthumus, Fri Jan 25 00:00:00 GMT 2002

A South African SMS permission-based marketing company has made inroads all over the place to build a community of 650,000 people in five months.

When SMS marketing company ActiveSMS took off in South Africa earlier this year, I watched as some of my friends connected with the concept. It was almost as if they were going through some sort of religious experience or philosophical renaissance.

And, as they had seen the light, they wanted to share it with me in e-mails or over lunch. People who I assumed would be cynical about new mobile marketing schemes (and definitely not spam-is-cool believers)- even some friends working in traditional media advertising - went into an altered ActiveSMS state of being. It appeared they had all taken a sip from a mobile marketing magic potion.

In emails inviting me to join ActiveSMS (asking if I would consider giving my permission to receive two advertising SMS messages a day and become part of a database) I could see senders who were flush with gambler's glee. This was the kind of communal playtime excitement you sense at a horserace when punters have their money on the day's sure thing.

And, while South Africans are known as gambling fanatics, and, as one, love a flutter on the twice-weekly lottery or in casinos, the hard facts around mobile in South Africa do, after all, provide good looking odds for new mobile services innovation. According to Cellular Online the country has 9.8 million cellular phone users and GSM networks now covering more than 71% of the population.

A formula with magical powers touching people

One taste of the "make money with your cellular phone by introducing your friends" ActiveSMS formula, though, seemed to have special power that went beyond the counting of huge numbers. I felt that it wouldn't be long before ActiveSMS fanatics would be grouping in pubs - or gathering in on-line chat rooms - like those flocks of high energy sales people one spots from dieting produce groups. Soon they would be wearing ActiveSMS badges, jumping up on the tables and punching the air in victory in synch with classic sales songs like "You're Simply the Best."

Meanwhile, over the months, with more SMS marketers starting to compete in the space, it looked like ActiveSMS was becoming one of the "viral marketing" successes of the year. This despite flaming anti-SMS spam discussions on a media community web site - and some purist style privacy preservationists (no advertising on my mobile device at any cost!) debating the arrival of SMS advertising. SMS marketing was the talk of the town, thanks a lot to ActiveSMS.

Moreover, just about anyone I spoke to about mobile in South Africa apparently had been touched by ActiveSMS in some way. I became accustomed to people ranging across our culturally and socio-economically diverse society, from chief executives to students at the Soweto Digital Village, asking me in conspirators' tones: "Hrm mobile in my life: so have you heard about ActiveSMS?" The Digital Village in Soweto, famously opened by Bill Gates a few years ago, was, in its previous incarnation, a karate center.

SMS marketing: Talk of the town, and beyond

Some folk in the community initially objected that the karate space was going to be taken up by computers, but now the Center is widely enjoyed. The Center Manager Joe Mphahlele said the youngsters had been talking about and exploring the ActiveSMS concept with enthusiasm. Notably, mobile and digital tools, and especially the Internet, play a big part in opening new vistas for young people in Soweto, whose employment opportunities are often limited and an entrepreneurial approach is often a must for survival and growth.

Innovative opportunities to expand horizons - on-line learning courses, competitions or a company such as ActiveSMS - using communication and information tools are gamely taken up. Communication technology-saturated folk may feel fatigued, nonchalant or even spoilt for choice by the array of competitions promising big prizes, for instance, that the Internet brings.

But for people with limited access to fixed computers or Internet connections - and often no landline at home - experiencing the chance to play in new places, whether on your mobile or a visit to a place like the Digital Village, is viewed very differently.

Indeed, on the day we visited the Digital Village, the community was planning to hold a thanksgiving celebration in honor of one of the students who had won a dream trip to New York, London, Hong Kong and Sydney in an on-line MSN portal competition. Mphahlele observes: "The world is now open to us for opportunities, thanks to new digital tools.

The Internet has brought the world together, it gives us the tools to interact with and talk to other people and understand other cultures. Everyone needs to be part of this. The gift of facilitating understanding may be the most revolutionary aspect of the Net for mankind."

Shows mobile Internet potential in Africa

The CEO of ActiveSMS Rob Fowler likewise feels the rapid growth of ActiveSMS reveals the staggering potential for the mobile Internet in Africa - and it's even better than we ever imagined in the baby shoes years of earthbound Internet.

"The bottom line is that more people are connected on mobile. You reach so many more people who do not have landlines, computers or old-fashioned Internet. The mobile Internet will enable Africans to be part of communication systems as never before - and it is looking to be huge on our continent. Mobile is growing so fast and so dynamically here that within a day of getting your consultants' report for your business in the sector, it is probably already out of date."

In five months, says Fowler, ActiveSMS has built a community of 650 000 people, over a geographically diverse range. For instance, even in rural areas in South Africa that are isolated from business opportunities, Fowler says that they have community members. ActiveSMS is known and represented even in places like Butterworth: a pastoral and tranquil area in the Eastern Cape where there may be more cows than cars ambling on the roads.

"Thanks to mobile technology being widespread, our model offers a very realistic opportunity for the transfer of cash to people in rural areas. It brings people into the food chain that don't usually even get a bite at new opportunities. For advertisers that use our service, we offer a very attractive proposition for them to easily access people they usually cannot even connect with through traditional media forms."

From karaoke to mobile mania

Thus far ActiveSMS has run sharply targeted campaigns for a range of businesses: from a large financial services sector group to a steakhouse chain and a wine estate. "We ran a campaign for a savings plan recently and the advertiser received a 15% response rate. This was excellent, considering that in the direct marketing sector, a 0,1-1% response rate is considered good."

Fowler is a techno-hobbyist entrepreneur, who has always enjoyed spreading new and fun trends in technology that sing out for people's attention. He has the distinction of having been the introducer of the first commercial karaoke machine to South Africa. Fowler's very first business venture was bringing video games (like Pacman) to the local market. This track record, it appears, has made him attuned to what it takes to build communities of people around technology. Notably, Fowler, with his techy-culture leanings, stresses that he holds "no ways will we deliver spam" views.

"Part of our success has been our philosophy on spam: there is no way unsolicited SMS advertising should ever be sent to people. Ascertaining people's permission is a key to SMS marketing. Without permission from people and without strict privacy conditions for the community you cannot build an advertising database. SMS advertising has to be very relevant to the person it reaches: and for this time has to be taken to build the database and the community."

Fowler reckons that the group's allure for people has been that the concept is "simple, believable and sustainable" and that they focused energies on getting people's "opt-in" to the venture. No money is paid to people to receive advertising. "Making money on your cell phone" means getting compensated for the introductions you make to the community.

Explains Fowler: "Basically, income is generated from introductions: whether you introduce your friends or advertisers as participants. Introducers get 20% of what advertisers pay us to send their friends or associates advertisements. While for the introduction of an advertiser people can earn a royalty to the tune of 20% on an ad campaign. We network a lot in our business with other groups: therefore a classic marketing company who wants to offer our service in the market will also, for example, act as one of our introducing partners."

SMS and mobile Internet protoganists bloom in Africa

In a similar fashion to Fowler, other SMS-focused technology and services companies (who are blooming in the market place) in South Africa, see SMS and mobile Internet as a huge growth area. Airborn, a start-up, described as a digital incubator, concentrating on FMDG (fast moving digital goods), has patented a system worldwide known as RIVR (remote interactive voice response). RIVR uses a short voice call as a trigger to a network, touching it very briefly (and cheaply), fetching data.

Comments Sam Michel, Chief of E-Business at Airborn: "RIVR is a hybrid that came from combining voice and SMS technologies - and enabling the fetching of data from a third party via a very short voice call." RIVR is used in the South African market, and is also being used in the Italian cellular services market. In the African market, groups like Airborn and ActiveSMS see no halt to the opportunities for mobile Internet, SMS and combinations of communication technologies.

Michel observes: "Our essential belief is in technology for humanity. And, constantly through our business and community projects we look at ways in which technology can improve people's lives. And that means addressing what they need from their communication tools for work, home or play. A greater concentration on people - shifting away the technology focus to the consumer focus - is a most compelling and important move and will continue to be so in the future."

Carol Posthumus is a freelance author, analyzing how mobile technology impacts our lives. She lives in Midrand, South Africa.