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,Â 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.Â 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.
As I look at our customers business, one common phrase underlines each of our clients campaigns: stndrd txt msg rates aply (which translates in English to ‘standard text message rates apply’). Many end users confuse this to mean that Cellit, or the message sender, will impose some fee for receiving the marketing messages that are being sent out – a subscription fee, if you will. Rather, it refers to the various fees carriers charge each of their mobile customers for sending and receiving text messages (regardless of who they come from). Since I have a comprehensive plan (including all data, SMS and cell phone calls) – I rarely think about how many text messages I send or receive. However, many end users have limited SMS plans or pay on a per-text basis.
I recognize that a limited plan, or a per-text plan, would significantly alter my behavior patterns and does alter the behavior patterns of those end users I speak of. I would be more selective about which mobile clubs I subscribed to and how often they communicated with me, reserving the bulk of my available text messages for those critical 156 character blurbs of wisdom from friends and family.
There are two ways to solve this problem. First, encourage the carriers to include unlimited text messaging as a standard feature on all of their cell phone plans, or second – a concept called FTEU. Free to the End User (FTEU) refers to the sending company bearing the full cost of any associated fees. FTEU is a common practice in the European Union, as their revenue model has always relied on the sender (whether an individual or company) to bear the cost of the message. However, in the US, the sender and the receiver jointly bear that cost – which makes for some tricky accounting on the part of the carriers, and thus – delayed adoption of FTEU.
Market forces will eventually force carriers to bundle unlimited text messaging into all of their service offerings in much the same way we’ve seen data limits on internet access disappear from the landscape (remember those great AOL CD’s that offered 160mb of free data downloads for only $19.95/month!). I’m not worried about that, as I can’t control the speed at which the market adopts this mentality.
However, I’ve begun to engage the carriers on the issue of making FTEU easier for individual companies to implement. This I can impact. Imagine how many more end users would engage our mobile marketing messages and subscribe to our clubs if they knew that 100% of the cost was being born by someone other than themselves? While we wait for unlimited text messaging to become universal, FTEU offers a solution wherein marketers can benefit from the end result in the here and now. Sure – there’s cost associated with it, but I think it is great business practice, and eliminates one potential barrier for consumers to opt-in to your marketing messages.
I was riding the EL home the other night, and sat next to a guy reading diligently on his Kindle (Amazon’s attempt at making a Ipod-like device that revolutionizes e-books). Without trying to be obvious, I was fascinated by how friendly and intuitive the device was. Through a click of a button, he was able to turn pages as if he was reading a book.
This is a mobile blog – so why do I write about the Kindle? Well, Google has just announced something dramatic that potentially trumps all the inroads that the Kindle has made. Just last week, Google made available 1.5 million e-books that are available online, for free, to users of their Android operating system (the Google Phone) or to users of Apple’s iPhone.
Granted, these books are all in the public domain – so while there are some great classics, there are plenty more that are obscure and haven’t been in print in many, many decades. Eventually, this model could be extended to include more recent titles as part of an ecommerce solution.
The implication is clear, however. The phone is the new laptop; and the addition of features like e-books is only more proof that this little tool is becoming an increasingly important portion of consumers lives.
Many people use mobile marketing and mobile advertising as synonyms. Even I’ve been caught taking the shortcut and lumping the two together. However, they are not. And that’s an important distinction.
Mobile Marketing, or the act of using mobile to market your product or service, is definitely here and doing well. This is the activity that (at least in Chicago) I’m starting to see pop up everywhere. I was out for Mexican food on New Years Eve, and the waitress tried to get me to sign up for their mobile coupon club. It’s at the barbershop, grocery store and lots of the little boutiques that dot my neighborhood. Mobile is really good for this type of activity; a close, personal interaction directly between brand and consumer.
Mobile Advertising, however, is still in its infancy. I read a great article about why that is and the pitfalls we should avoid as usage grows. The big stumbling block is two fold: fragmentation (as each carrier has different standards, along with the multitude of phone models available at any given point in time) as well as compelling creative standards (there’s no equivalent of the banner ad).
The two activities have polar opposite advantages and disadvantages. In mobile marketing, the marketer owns the relationship but reaches a smaller audience initially as they grow their own database of phone numbers. In mobile advertising, someone else owns the relationship but the marketer gains access to a much larger network of people faster.
While the road may be a little slower, it would be my recommendation that businesses looking to experiment with mobile take the path of mobile marketing and build their own database while controlling the relationship. Not only does this prove (in my mind) to be the better longer term solution, but also avoids all the uncertainty and growth pains that mobile advertising is going through.