What’s The Future of Bulk and Premium SMS?

When it comes to brand marketing, messaging still has an important role to play. When many marketers are thinking about fancy apps or mobile sites, many are overlooking the ability of SMS to drive users in a cheap and universal channel. Whilst free to user SMS is growing, premium SMS (PSMS) has a less optimistic future.

Both short codes and bulk SMS have been the mainstay of mobile marketing and
mCommerce for over a decade. With the advent of smartphones, new communication
channels and new payment systems are their days numbered?

As a mobile marketing consultant I’m often asked if we’ll have SMS in the future. Given
that most people can get emails on their phone, message through Facebook or access
instant messenger, why would they use SMS at all? Many teenagers have switched to
BlackBerry’s IM system, BBM. They can use it even if they have no phone credit, have group
conversations and forward messages anonymously. And surely what teenagers are doing
today, the rest of us will be doing tomorrow?

In spite of all of that SMS is still growing each year. In 2010 there were 6.1 trillion messages
sent globally by 4 billion individuals. That’s more messages sent than voice calls made from
mobiles, not only that, but SMS is growing by nearly 30% each year. It’s not just consumers,
brands are using SMS more and more for communications from service to marketing. So
why does SMS remain the ‘killer app’ for mobile? The answer is, in short, that nothing
comes close in terms of immediacy, speed, discretion and most of all, universality. Everyone
has SMS and everyone knows how to use it. BBM, for example remains niche and there’s
no evidence of wide adoption beyond anyone other than teenagers. A recent study by the
DMA and IAB into brand messaging found that SMS opening rates were above 92%. That
is consistent with other studies into messaging. That’s good, but even better when you
consider that less than 25% of brand emails are opened or read. What’s more, people read
text messages quickly. In the study we found that 65% were read within 5 minutes and 85%
within an hour.

In the last few years many brands have been developing apps and within the last 12 months,
many retailers have created fully transactional mobile sites. In spite of these new exciting
channels, SMS is still the driver for brand activity. They use it because they know it works.
The UK retailer Marks and Spencer have a very successful mobile site, yet text messaging is
an important element of their mobile strategy. They have over 1 million people who have
opted in to receive weekly offers by SMS. Argos use SMS as a service tool with their ‘Text to
Take Home Service’. In Australia, the IT retailer, Leading Edge Computers found that they
tripled their response rate over print advertising when they switched to SMS . In the US,
men’s retailer K&G created an SMS-based coupon channel for their customers. 93% of them
used a coupon during a three month period. Whilst these are all large, well-known brands,
many smaller businesses have benefitted in a similar way by using SMS to send promotions,
support their service or just allow customers to engage with their brand.

Whilst SMS is on the rise, it would appear that Premium SMS has fared less well. A few years
ago, mobile content in the form of games and ringtones was largely billed through PSMS.
However, figures now show a dramatic drop in revenue. When it comes to content, these
days most of it is delivered through app stores, such as iTunes, where payment is made by
registered cards, not a phone-based payment. When it comes to shopping, mobile users
are also using their credit cards and one-click payment by the likes of Amazon and M&S
have shown that we trust brands enough to buy through our phones. Looking a little further
ahead, contactless payments or NFC is rolling out on a global scale. BlackBerry launched a
handset earlier this year, Google have been trialling NFC and there are strong rumours that
Apple will include contactless in their next major handset.

This leaves PSMS as something of the poor relation when it comes to payment. That
isn’t a great surprise. From a merchant perspective, whilst the credit card companies
take a small fee, up to 35% of the value of a Premium SMS is taken by the operators. For
customers there is considerable distrust. Numerous scams and errors with premium SMS
that have led most people to believe that they will be charged unexpectedly. However,
many people are still cautious, and in the UK the BBC no longer uses premium rate services.
SMS plays an important role in mobile banking. There are 2 billion people without a bank
account globally, yet most of them have a mobile phone. SMS is now becoming a means
of transferring payment or phone credit. In the Philippines for example, SMS has replaced
wire-transfer as a means of moving money between individuals. But this is not Premium
Rate Messaging, this is SMS as the trigger for the transaction. Perhaps the only exceptions
where PSMS is on the rise are the charity campaigns. Both the Haiti campaign in the US
and the UK’s Comic Relief have raised considerable sums through text-based donations.
However, these are the exception to the trend. These charities have achieved 100% out-
payment from the operators and have been backed by massive media coverage. Smaller
charities and most brands don’t have the same luxuries.

When it comes to free-to-user SMS, the future looks very bright. It gives brands a universal
and immediate call to action that no other channel can create. It drives other campaigns
both on and off mobile phones. However, as a means of payment, issues of cost and trust
means that PSMS has a much less optimistic future.

Accident Claims and Loan Protection Spam SMS

Following on from the previous blogs about unsolicited texts for accident claims, it seems that some of the spammers have switched to mis-sold load protection insurance messages. Much as the accident claims texts, they start in exactly the same way …

Free Msg: Our records indicate you may be entitled to £3750 …’

Clearly, it’s coming from the same source as the accident claims texts. Both types of marketing message are regulated by the Ministry of Justice, who are well aware of the problem. A spokesman for the MOJ was on Radio 4’s You and Yours yesterday explaining the problem. You can listen to it on iPlayer here (the interview is 21 minutes in). He said that thousands of people had received this message. In fact, it’s probably many more than that. A few quick surveys show that up to half of everyone has got such a message. That’s millions of messages.

The good news is that  something is being done. As mentioned in the Radio 4 interview, they are working closely with the DMA to resolve the problem. We (the DMA that is) have created a working group which includes the regulators (MOJ, ICO), experts from the mobile marketing and telecoms industry, and mobile operators. The problem for the MOJ is that whilst dealing with the unsolicited messages are high on their priority list, they don’t have the technical resources to identify the culprits. By bringing together various industry experts, we can make it easier to identify the spammers, also look at how they got hold of the data and even take some preventative measures to stop the messages reaching the handsets.

There will be updates on the progress in this blog. Click here if you want to read more about the claims texts and what to do about them.

It’s all in the messaging

The DMA and IAB have just released some joint research into mobile messaging, which shows that SMS and MMS have an important place in mobile marketing. One of the main findings was that consumers would not only like to receive vouhcers and offers by SMS, but that at the moment they do not feel that brands are giving them enough offers. That’s clearly an opportunity. However from a marketing perspective, it isn’t a case of just shoving the offers out there on SMS. What was also very apparent is that mobile users want to opt-in directly to a brand, and even within that, they want to choose what offers (and when and where) they will receive them.

When I speak to advertising agencies, they often consider mobile messaging to be ‘a bit rubbish’ (as one industry journalist described it). Rubbish and old school seems to be the current agency thinking on SMS and MMS. Their focus is on apps, and in particular, iPhone apps. But when people say those kinds of things about mobile messaging they’re missing the point:

Firstly, there are many highly creative and successful mobile messaging campaigns. In my article, The Business Case for Mobile, I give a number of examples – Orange and Walkers Crisps are two obvious ones. They have run imaginitive and successful campaigns using just SMS. They’re far from rubbish and the creative element comes from the idea itself.

Secondly, SMS and MMS are the drivers for many different types of marketing. SMS is a good response mechanism, not only in mobile but across other channels such as TV or outdoor advertising. At the other end of the customer journey, messaging is a great call to action. It can be a reminder to do something (or buy something) and the immediacy of messaging makes it happen.

Thirdly, SMS and MMS are a good delivery mechanism for other types of media. For example, NatWest used O2 More’s opt-in network to send an SMS to customers on the iPhone to download their app. What happened was that 36% of those people downloaded it. By identifying only those people who banked with them and had a compatible handset, there was zero wastage in the messaging and a very high level of engagement. Could you have got that level repsonse through email or TV? I very much doubt it.

Fourthly, people remember SMS and MMS. The study found that almost everyone (98%) remembered the mobile marketing message sent to them. How many other channels can do that? The reason people remember them is that mobile is a very personal device, and SMS is a very personal channel. When we receive an SMS we check it on our phones very quickly. Over 90% of text messages are read whether they are personal, or a marketing message. A number of brands are spending a lot of money developing and promoting iPhone apps to create greater brand awareness, maybe they’re focussing in the wrong place. If you want to create brand awareness, how about using SMS or MMS? It has nearly 100% recall!

In this age of smartphones and convergent devices, apps, web, location or AR etc have an increasingly important place in marketing. There is an argument to say that with such devices there will be a move away from SMS into messaging through IM (and BBM) or through social media, such as Facebook. Whilst there is some element of that going on, there is no evidence that SMS is on the wane. In fact the reverse is true. The universality and immediacy of the channel has seen SMS continue to grow. It has an important place in mobile marketing, and at the end of the day, it simply works!

The full research is only available to DMA and IAB members, but contact me through this blog if you woulde like a copy.

NMA Article on the research is here

Mobile Marketing Magazine article on the research is here

Twitter acquires Cloudhopper: new opportunities for mobile marketing?

Twitter announced yesterday that it is to acquire start up company, Cloudhopper. This will enable the micro blogging site to provide users with the facility to send tweets directly to mobile phones by SMS or MMS. Twitters move seems to be to allow anyone to interact with their platform even without an internet connection. Besides the huge potential to significantly increase the Twitter user base, it could also create a brand opportunity to send tweets as text messages directly to their followers phones. It will require brands to carefully work out their engagement strategy for it to work for them … and in the meantime Twitter will have to work out its revenue strategy.

SMS. It’s still the killer app for mobile

Since the early noughties SMS has seen a steady rise in usage of over 30% a year. Even in 2009s resessionary environment, it still grew nearly as much as the previous year.
However, do iphones, Blackberrys and Nokias pose a threat to good old fashioned SMS? With the trend towards always on, data connected phones are users likely to switch to free forms of communication such as mobile and email?
Not according to a study by Tekelec. Their research in Sept 2009 looked at global SMS use. Not only did it seem that SMS was on the rise, but much of that was due to increased adoption by older generations. 60% of over 45s said they were just as likely to send a text as they were to make calls. In the youth sector SMS was the preferred method of communication (38%) over email (28%) or voice calls (33%).
Why SMS and not email? The main reason cited was that SMS gets a faster response. It even gets a faster response than email. However, it would appear that social media may actually be helping the growth of SMS, for example with text-based updates to Twitter.
Another point, not included in the study is that most users have bundles or subscriptions which include a certain amount of SMS. From the user perspective therefore, texting has the functional benefit of speed, but without any additional cost.

SMS Spam: taking it personally

We have just release a survey and white paper into mobile user’s attitude towards spam messages. It revealed some interesting results – one of them was that people take SMS spam very personally.

68% of our respondents had received some kind of SMS spam.

If you’ve received a spam SMS, do you remember what it was? Chances are you do. How many spam messages have you ever received? One or two? I suspect it’s a handful at most.

Now compare that with email. Do you know the last spam message you got? Quite unlikely. Do you know how many you have ever had? Or how many in the last week? Or last day? I doubt that many people know the answer to this.

So why do we remember mobile spam so clearly? Naturally there are relatively few spam text messages, so that is part of the reason. But the other part is that most of us take it very personally. When you think about it, that’s hardly surprising. Most of us are just a few feet away from our mobile phone at all times. If we forget it when we leave the house most of us feel lost without it. It’s the device that we text our loves on. We customise them with backgrounds and ringtones. Increasingly it’s also the place where we store our personal photos. How many other technology devices do we have that kind of relationship with?

So, the mobile phone IS personal. If you are marketing to phones, you need to understand that it is the case, and be very mindful of the relationship through the phone.

That’s not to say that we don’t want marketing messages on our phone. We do. The study also showed that 55% are happy to receive offers and promotions from brands that they have selected. The point is that mobile users want CONTROL. And lots of it.

The other day I received messages from two restaurants. I had given them my mobile number as part of a booking over a year a go. They didn’t ask me if I wanted to receive these messages. They just assumed that I did. It was quite within the regulations to send such messages as a soft opt-in, but I was understandably put out. I complained to both restaurants.

The study also showed that we want to choose the time of day and frequency of the messages we receive. So, if brands want to market to mobile phones, there are plenty of people happy to receive that information. But they shouldn’t assume that we all automatically want to be told about everything. Brands need to seek permission and give users control over what and when they receive their messages.

Please click the following link if you would like to read the Mobile Spam Survey in full.

Top Ten Tips for Mobile Marketing: SMS

SMS marketing may appear to be very simple, after all it’s very direct and there’s just 160 charcters of text. However as mobile is such a personal yet interactive medium, many campaigns are over complex, poorly targetted and lack a simple offer.

I have writting a Top Ten Tips for Mobile Marketing guide focussing on SMS. Hope you find it useful.