Is SMS Marketing Healthy?

There is no doubt that the SMS Marketing Industry is beginning to consider itself mature. Following Mike Short’s opening remarks, this theme was immediately stressed by Andrew Bud of Mblox who titled his presentation “Towards the Mainstream: Growing Up with SMS”. For a technology that was to all intents and purposes an accident this is a remarkable state of affairs.

At September’s Mobile Commerce World show, one of the keynote speakers stated “SMS is becoming history” as he touted the benefits of the new graphic oriented MMS medium. There is no doubt that many of those who were at Olympia 3 for the SMS 2002 event disagree, and I think I am inclined to agree with them. For all its humble origins, the SMS text message has grown up and shown itself to be a mature and effective tool. It is also unbelievably successful in terms of message volume – more than 1.5 billion messages in a single month this summer.

For a long time SMS has been thought of as just a toy communication tool used by the young with incomprehensible (to their non text savvy parents) language to flirt or to talk to friends, about their flirting prowess. Many didn’t understand the attraction of the anonymity of the medium. What they had to understand fast was the pervasiveness of it and how it gained tremendous acceptance with the younger age groups, becoming a standard means of communication. Those that did understand quickly jumped onto the bandwagon and a myriad of ways of using SMS for sales and marketing began to appear.

The fledgling industry was smart. They quickly realised that this was a marketing tool that was perfectly positioned to address a young marketplace – 14 to 35 year olds, most seemed to assume. This in itself was a double edged sword – this age group is fast becoming highly affluent and prone to spend large sums of money on just such consumer products that respond well to “instant” marketing. The problem is that this age group is very young and very impressionable and it quickly became clear that the unscrupulous could easily use the SMS medium to target the young, socially and politically unacceptable.

The industry has moved fast to embrace and accept both self regulation and regulations from outside bodies including, of course, the framework of legislation. The SMS 2002 conference made this very clear, with the vast majority of the presentations stressing the importance of regulation and of staying within the guidelines. The cynic might say that with all this regulatory zeal a certain amount of lip service was being paid while in the background the unscrupulous were at work. That does not seem to be the case in reality. This is a fast maturing industry that is working hard to take the moral high ground in a market environment that is fraught with danger.

In addition to all this hype about SMS and the young, a new phenomenon is emerging. The so called “Silver Texter”. I’m not personally sure that I am happy to realise that I am only a couple of years away from being given such a title by young marketing executives, but there it is. In excess of one and a quarter million over 55 year olds are now sending SMS messages every month. Who said you needed a child’s dexterity to handle those keys? While this age group may never catch the younger ones for the number of messages that get sent or received, you can bet that they will be more serious and meaningful to the marketing fraternity (unless we do get a whole new concept developing of text flirting by the over-sixties).

So why is the industry moving so fast? There were many clues at the SMS 2002 event. Anne de Kerckhove from 12Snap was pretty succinct in her presentation: “Response to SMS Ads over 5 times that of direct mail; SMS brand recall over 90% (Interquest); 7 out of 10 UK households own a mobile phone (and therefore can by reached by SMS) and perhaps the most telling comment “Response to SMS marketing is time sensitive”. This last comment, I believe, holds the key to the whole SMS phenomenon:

It is as close to real time as possible whilst remaining, as far as the target is concerned, non-intrusive.

This is the key to the success of SMS. Messages get there quickly, and don’t cost a great deal, either for the sender or, even for the so-called reverse billing premium rate services, the receiver. Any response is, to all intents and purposes, immediate. The much trumpeted MMS (Multi-media Messages) will take longer and cost more. Network bandwidth constraints will undoubtedly mean that MMS messages will bed delayed and batched via low cost portals much more than SMS ones are. In addition, I contend, the consumer will be less dazzled by the multi-media content of the new system, and more annoyed by the intrusion as they take much more attention to read. SMS is dazzling simple – that’s why it has been the unexpected success. It’s quick to send, gets there almost as soon as you send it and is super fast to respond to.

So where does this leave the future of SMS? Will it die when MMS arrives? I don’t think so. Will it kill off MMS? I doubt that either – the networks have to fill up their bandwidth somehow. Will it co-exist? Yes, I’m sure of that. And I believe the smart marketer who uses SMS well will be much more effective than the one who spends huge sums on flashy MMS campaigns. Especially if he remembers some golden rules of SMS marketing:

Make sure you play to SMS strengths

In conclusion, how do I see the SMS Marketing business? I share the views of most of the people at the SMS 2002 event – it is a mainstream business. As such we can expect consolidation among the players. We can also expect further regulation, even though the industry is doing a pretty good job of regulating itself. We can expect better, more tightly managed marketing campaigns to be run via the SMS medium. We can all expect more to use SMS, more and more, but we should not fear that. In short: ubiquity for SMS here we come.

Dick Collard is an Executive-in-Residence at Ariadne Capital.
For more information about Dick, see: www.ariadnecapital.com