Getting the Message
By Carlo Longino, Thu Nov 28 12:30:00 GMT 2002

SMS is quickly emerging as a valuable tool for marketers.

While SMS spam is quickly becoming as widespread – and no less annoying – than its e-mail counterpart, legitimate marketing use is exploding. And SMS is generating some substantial results, especially for the all-important teen market. But across lots of demographic groups, SMS campaigns are producing higher response rates and better ROI than comparable direct mail or e-mail campaigns, often at a much lower cost.

Not All Thumbs

The attraction of SMS for consumers is pretty clear – it’s fun, easy, cheap, and its 160-character limit puts a premium on brevity. It hold the same attractions for marketers, with the added benefits of being very personal and direct. And it offers them a chance to talk to the youth market in their primary form of communication. This gives brands traditionally thought of as old and staid a chance to recast themselves to a younger audience.

There’s no questioning the potential of SMS marketing, even at this nascent stage. SMS marketing agency Nightfly’s research says 39% of its client base prefer SMS marketing to TV or radio, and another agency, Enpocket, says it found permission-based mobile marketing to be 50% better at brand building than TV and 130% better than radio. Its reach is impressive as well, for instance in the UK, almost 90% of 15- to 24- year-olds own a mobile phone, and surprisingly, after that age group, one survey found that people over 65 had the most positive impression of SMS advertising.

Many campaigns to date have involved consumers texting a code printed on a package or label, hoping to win a contest. Pepsi, Coke, Sony, Cadbury, and Diageo have all used such an approach to name but a few. SMS messages with coupons or detailing special offers have been successfully implemented as well – UK grocers Tesco and Sainbury’s got response rates of 16% and 22% respectively with offers for discounted alcohol, and during last summer’s World Cup, 44% of people alerted by Guinness to a special offer took advantage of it.

But these one-way campaigns can only take the medium – and its messages – so far. While they’re still a novelty to a certain extent, and the prizes on offer are attractive to consumers, they may continue to attract users. As time wears on and spam takes hold, they may tend to get lost in the interference, and while they may generate footfall for retail outlets and sales volume, they don’t generally build an on-going relationship with the customers. For that, interaction or push campaigns are necessary.

Two-Way Street

One such campaign was run by Coca-Cola in China this past summer. Users were invited to send in their prediction for the next day’s high temperature Beijing, with a chance to win a year’s supply of Coke and Siemens mobile phones. Participants were emailed the previous day’s high as a guide, then replied with their guess. Over 4 million SMS messages were exchanged during the 34-day campaign, and a special Coke ringtone made available to subscribers was downloaded over 50,000 times. Another 20,000 took advantage of a mobile McDonald’s ad for a free ice cream cone they could download.

Ranganath Thota, CEO of Shanghai Shanghai Contests2win, the agency that ran the campaign, said that Coke’s initial foray in China into the space quickly and simply proved its value and highlighted the need to develop a full-fledged SMS marketing strategy for the brand. He says the campaign worked because its permission-based, interactive platform lets brands “educate, entertain, and innovate.”

Back over in the UK, K Technologies developed a campaign for BMG Music to promote Irish boy band Westlife. Users send in a code and are entered in a contest to meet the band and other prizes, and everyone that enters is called back by the system and played a preview of an unreleased Westlife track. They then get another SMS inviting them to share the promotion with a friend.

K Technologies’ CEO, Miles Kemp, says the campaign has been very successful thus far, with an initial response rate of 15% from their initial burst of messages to promote the service. But more impressive is the “send to a friend” mechanism, of which 20% of users have taken advantage. Then, a staggering 40% of people who are forwarded the service from a friend respond, meaning 10% of the users are a direct result of this viral marketing.

“A lot of people talk about the value of viral marketing,” Kemp says, “But I think ours is the first campaign to provide direct statistical proof of its effectiveness on mobile.” Kemp adds that an early lesson is that such viral mechanisms need to be built into every campaign. “The whole purpose of the mobile phone is to let people communicate with their friends – the trick of a successful mobile campaign is to harness this by letting people share cool stuff with their friends.”

The Westlife campaign highlights one of SMS marketing’s strongest points – that it allows for intensely targeted opt-in communications. Nightfly, which is owned by drinks giant Diageo, uses filed marketers to collect SMS users for its database face-to-face in bars, pubs, and clubs (it then sends subscribers a confirmation message at an hour they’re more likely to be sober). It also allows users to specify the amount of messages they’ll receive, and makes unsubscribing easy.

The company has gathered 125,000 subscribers this way, but more impressive is the qualitative data they can gather – they already know where a person drinks, but then when combined with text-to-win codes on bottles and cans, they can figure out where else people go, what they drink, how much, and so on, all creating an incredibly detailed database of their users’ tastes in alcohol.

So for instance, in K Technologies’ Westlife campaign, they used a database supplied by BMG of pop fans who had opted-in to receive messages of this kind. This gives them a jump start in getting a good response, as opposed to a direct mail piece where you may not know exactly who ends up reading your mailing.

Thota says another benefit of SMS is that it can “piggyback” existing media buys, for instance including an SMS response number on a TV or magazine ad. He says this increases ROI for existing marketing campaigns, but also allows them to integrate a measure of interaction and response tracking.

Talkin' about Evolution...

So SMS marketing is undoubtedly taking off, but is just at the beginning of it evolution. One big change in store is that smaller companies and brands will begin using the medium. The economics are viable, Kemp says, with the usual cost of SMS under USD 0.10, and even less when purchased in volume. Add this to the high response rates from a tightly targeted campaign, and it’s quite cost-effective for smaller budgets.

One company’s software enables such campaigns, as well as giving large companies an amazing degree of control over theirs. Marcom specialists Imymo and software developers march::eugenius (the company behind Diageo’s Nightfly) have joined up to market SpringPlus, a customer data and marketing application that enables all kinds of marketing communications and CRM functions, most of all powerful customer profiling.

SpringPlus is all about delivering “the right message, to the right person, at the right time,” says Paul Smith, march::eugenius’ technical director. The software is integrated with a company’s existing CRM databases (or helps to fill new ones), and aims to take all the readily available information from those databases, and enable interaction with customers, then deliver information back to them.

The software allows a user to search through the customer databases using any number of criteria, then address the customers that fit that profile via any number of media, including SMS. One selling point of SpringPlus, Smith says, is that as campaigns using the software continue, the data gleaned from customers improves in quantity and quality, allowing for even more tightly targeted campaigns in the future, and so on and so on, creating a delicious self-fulfilling circle.

Diageo’s Nightfly uses the software to power its SMS campaigns, but SpringPlus is also attractive to smaller companies, as it can be purchased as a licensed application, or as an ASP service, with fees quite palatable for smaller companies, allowing a brand of any size to capitalize on the greater targeting and cost-effectivness SMS offers over other media.

SpringPlus’ profiling features also allow it to be used for other applications. For instance, Smith sees it potentially used to schedule teachers, a recurrent problem in the UK thanks to a teacher shortage. The system could send out a message to teachers in a certain area who can teach a certain subject at a certain grade level, then those available could text back.

Apart from becoming available to smaller brands, SMS marketing will evolve in other ways, the least of which will be enabled through MMS and other multimedia technologies. Kemp says one exciting area are cross-media campaigns, such as combining TV and SMS. Of course this is already happening through text-message voting on shows like Big Brother, but Kemp’s vision is much grander.

“For example, we are working with a major TV partner on a cross-platform game system,” he says. “TV slots will encourage players to play a mobile game, the mobile game will encourage them to invite other friends to take part, all players will be entered into a global league system based online, and on the basis of their performance in the league, users will get the chance to appear on the TV slots to win major prizes.”

All of this, again, results in a virtuous cycle where each medium promotes the other, and everybody wins: the TV network gets a new revenue stream and brand awareness, and the data of figuring out who is watching, something invaluable in the TV industry; all the while users are having fun playing the game and communicating with their friends, which Kemp says is the most essential aspect, and something intrinsic to SMS.

“My personal view is that in ‘relationship marketing,’ the most important relationship isn’t between the end user and the brand,” he says. “It’s between the end users themselves. I think the most sophisticated – and successful – mobile marketing campaigns are going to be the ones that leverage these person-to-person relationships, providing a service people really want to user and share with each other.”

Carlo Longino is a freelance writer based in Austin, Texas. His previous experience includes work for The Wall Street Journal, Dow Jones Newswires, and Hoover's Online.