A CTIA panel recently proclaimed that per message fees are killing the mobile marketing industry. David Oberholzer is the Vice President of Limbo, the largest non-premium mobile entertainment community. In an article for Mobile Marketer on April 1, 2009, he proclaimed that’s for advertising-supported SMS, the net revenue per message is $0.004, and it’s unrealistic to think the CPMs we’ll be able to charge will go up dramatically, so it’s unrealistic for carriers trying to impose these types of per-message fees. While ad supported mobile marketing may be an effective on some level, I think it misses the real point and benefit: the personal and targeted messaging that happens directly between client and consumer.
Oberholzer refers to the idea of reaching a mass, general audience with a message on behalf of a paying advertiser. The model is popular with radio station, newspaper and broadcast television groups, as well as consumer focused media websites. They aggregate a large audience into their mobile club, and then insert advertiser messages into their content. Sports scores, weather alerts, traffic updates and the like are examples of content typically provided. Typically these advertiser messages are limited to 15-20 characters at the tail end of the provided content. I’m not an advertiser, but it’s not surprising to me that a generic audience would only command net revenue of tenths of a penny.
However, Oberholzer and the like apply a traditional media mentality to a very personal form of media. SMS is’t designed to reach large general audiences in the same way television, newspaper or radio would. Advertisers would need to purchase or build a television station/radio station/newspaper in every market of the country in order to have a personal relationship with the audience. It made economic sense for a media company to make that infrastructure investment, as well as investment in content, aggregate an audience and then broker out slices of that audience to paying advertisers. Broadcast television and radio still work exceptionally well at reaching large swaths of people and getting the message out regarding a new product or service.
Contrary to those traditional media forms, no such infrastructure investment is needed to begin communicating via SMS, and Brand X will own that consumer relationship in perpetuity. SMS is exceptional at directly connecting advertisers to consumers. It’s a two way communication in which consumers can request and receive information, receive coupons, and participate in promotions and contests. That communication is instantaneous, and reaches end users wherever they are (on the train, at home or at work).
Why, I ask, would advertisers want to allow a third party to filter their messages when they can talk directly to the consumer? Sure, a media campaign must be launched to create awareness and drive membership to the mobile club and I’ll add, that media spend is best played out in those traditional media outlets we spoke of before.
Marketers regularly spend significantly to produce a direct-mail piece. They pay list providers several dollars each for a “hot lead”. One only look at the Google Adwords model to understand what a interaction with a potential client is worth. Why would several cents per message, with no real production costs, even be a cause for pause?
Per message fees, when viewed in the context of general, mass market advertising is probably a negative ROI for most advertisers. However, when you look at the personal interactions developed by direct advertiser-end user communications, the ROI is well in the positive category.
