Per-Message Fees May Kill The Business Model For SMS-based Marketing

CM Comment: Something to keep an eye on as the casino industry looks to mobile as a marketing channel.

April 2, 2009: summarized from Marketing VOX -- 24% of consumers who have received a mobile-based offer respond to such messages, according to a July survey by the Direct Marketing Association. Given that more than 2.6 billion text messages are sent every day in the US, mobile boasts the broadest reach of any mobile channel.

Text messages are also the most effective: 70% of consumers that responded to a mobile marketing offer responded to a text message, compared with 41% who responded to a survey and 30% to email offers, the survey found.

Still, many consumers are held back by price. Marketers, too, have to consider the potentially high cost of sending text messages. Advertisers and aggregators don't find the messaging business model viable, panelists said - and they are hesitating mostly because of the per-message fees.

Carriers have not done much to support the growth of the mobile marketing channel, the panelists said. One of the only breaks they've received has been from Verizon Wireless, which told SMS aggregators it will not impose an additional 3-cent transaction fee for every outbound SMS message sent to its subscriber base, preventing the cost from doubling or even tripling.

Other panelists agreed. "SMS is great when you weave it in as part of your overall mix, but it's not incredibly exciting as a stand-alone," said Eric Harber, president/COO of HipCricket, which said some of their larger brands, Jameson and Nestle, are increasing their investment in mobile this year. If you think of a pyramid - the bottom foundation layer is SMS, because it has the broadest possible reach and you don't have to change behavior because they're already doing it, he added. Then layer the mobile Web or WAP on top, for richer engagement, then on the very top rich customized apps.

But in the long run, mobile marketing will progress faster than the internet, some panelists noted. Mobile analytics are able to show and demonstrate ROI, which is super important, Harber said.

Full story at: http://tinyurl.com/cfvx25