Adding context to SMS usage in the U.S. - from a Mobile Marketer’s viewpoint

October 3rd, 2008 The Insider Posted in Reach, SMS, Shortcode Marketing No Comments »

Nielsen Mobile has garnered quite a bit of press - including mainstream coverage - of their recent survey results regarding the amount of text messages an average wireless subscriber sends per month.

From CBSnews.com... “For the second quarter of 2008, U.S. mobile subscribers sent and received on average 357 text messages per month, compared with making and receiving 204 phone calls a month, according to Nielsen.”

“…The surge in text messaging is being driven by teens 13 to 17 years old, who on average send and receive about 1,742 text messages a month. Teens also talk on the phone, but at a much lower rate, only making and receiving about 231 calls per month. The report even suggests that tweens or kids under the age of 12 are also heavy text users, averaging about 428 messages per month.”


WOW! That’s quite a lot of text messages, however a couple things are worth noting as a Mobile Marketer:

  • If you look at data from either comScore/MMetrics, Nielsen Mobile regarding the percentage of U.S. subscribers that actually send at least 1 text message within a month, than these aforementioned numbers are essentially generated by approximately 50% of the total wireless subscribers in the U.S. (Note: Jupiter Research states that approx 62% of wireless bases uses text messaging)

Just 6% of teen mobile users responded to a poll or contest via short code–i.e., voting for an “American Idol” contestant–in the past month, slightly higher than the overall population (4.5%) but still not a critical mass. Even fewer teens responded to a text-message ad (1.6%), in contrast to the 2.4% of overall mobile users. And just 1.5% of teens responded to an offline ad that directed them to text a short code in.

  • Also — VeriSign’s wireless aggregation business stated that A2P, such as news alerts, ring tones, promotional video clips, and enterprise messages sent to mobile users rose sharply in Q2 2008, from approximately 186 million messages in Q1 2008 to approximately 249 million (A2P) messages in Q2 2008, an increase of close to 33 percent. NOW, Verisign processed a total of 52 BILLION messages in Q2 2008 - which would mean that less than 1% of these SMS being sent were A2P or marketing-based (in some sort of fashion)
The good news is that all of this supports the fact that text messaging is a legitimate medium that more and more of Americans are embracing. The challenge now is for Marketer’s to find ways to encourage texters to participate more often in their mobile programs.
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Uh-Oh! U.S. Senate antitrust panel investigating rise in text messaging rates

September 10th, 2008 The Insider Posted in MMA/Carrier Compliance, SMS, Shortcode Marketing 3 Comments »

According to an article on REUTERS, Senator Herb Kohl, the chair of the U.S. Senate’s antitrust sub-committee, sent a letter to the “Big” four U.S. mobile phone companies (ATT, Sprint, T-Mobile, Verizon Wireless) on Tuesday (Sept 9th) asking them to explain what he said were a doubling in the price of text messages in three years.

Kohl, noting the four companies served more than 90% of U.S. mobile phone users, said the cost of sending or receiving a text message had doubled since 2005 to 20 cents on all four carriers.

“What is particularly alarming about this industrywide rate increase is that it does not appear to be justified by rising costs in delivering text messages,” said Kohl.

“Also of concern is that it appears that each of companies has changed the price for text messaging at nearly the same time, with identical price increases,” he wrote. “This conduct is hardly consistent with the vigorous price competition we hope to see in a competitive marketplace.”

Kohl asked the four companies to explain why the price of texting had risen, and how the price of texting compared with sending e-mails or making telephone calls.

Props to reporter Diane Bartz for this story! Nothing like a Senate subcommittee to stir the pot and place the U.S. Carriers on notice ;-). I am not well versed on how these sub-committee processes work so I won’t comment on that angle.

However…..On the Carrier side of the business, perhaps these price increases are being used to ‘influence’ subscribers to sign up for a recurring messaging bundling where revenue recognition is greatly enhanced?? Are these higher prices designed to ‘milk’ the increase in SMS traffic all of the Carriers have experienced year over year??

While text messaging functionality may be ubiquitous on today’s U.S. installed handset base, not everyone is using SMS nor is every wireless sub signed up to a text messaging plan. Mmetrics/comScore peg the number of active (sends at least 1 message per month) at around the 50% mark.. other analyst firms come in around that figure as well. Yes, frequency of use does differ across demographic profiles e.g. Gen Y are heavy text users -72% text at least monthly according to Forrester Research. PLEASE ALSO KEEP IN MIND that the overwhelming majority of the text messages being sent are Peer-to-Peer (P2P) versus Application-to-Peer (A2P) aka Mobile Marketing programs.

Regarding a messaging plan - I have seen where Jupiter Research estimates that 2/3 of all wireless subscribers belong to some sort of text messaging plan. (I’d like to confirm with each U.S. Carrier what they actually see)

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Free-to-End-User (FTEU) Mobile Messaging Programs - why the delay?

August 6th, 2008 The Insider Posted in MMA/Carrier Compliance, Mobile Advertising, SMS, Shortcode Marketing 2 Comments »

The Mobile Marketing Association’s (MMA) recent update to their U.S.-focused Consumer Best Practices document (SEE HERE) has added additional language pertaining to Free-to-End-User (FTEU) messaging programs. These are essentially programs in which the consumer does NOT incur ANY charges (e.g. 20 cents in many cases if consumer does not have messaging plan) for the delivery of program-specific messages to their handset. Advertisers/Marketers would subsidize the delivery costs for the messages in their program.

The promise of FTEU messaging for Advertisers/Marketers is that they can increase their campaign participation rates because they can promote to cost-sensitive consumers that their campaigns are indeed Free (MMA states prefix of “Free Msg” can be used in outbound text messages) and the programs will require only a single opt-in mechanism (e.g. consumer sends keyword to shortcode to participate).

To date, the only major U.S. Carrier that is supporting FTEU mobile programs is Verizon Wireless. The other major Carriers may claim they do on a case-by-case basis, but it’s my understanding they have yet to launch any off-deck programs. To boot, the only off-deck FTEU programs that I am aware of running on Verizon Wireless are SMS only and Charity-related (aka mobile donation programs - e.g. UNICEF).

So what’s the hold up? One of the major hurdles to overcome is the ability of the wireless Carrier’s existing billing systems to process FTEU messages. Generally speaking, all messages sent through Aggregators for off-deck marketing programs are either tagged at a Standard or Premium rate and are processed accordingly by the Carriers. Technical changes need to be made by both parties - especially on the Carrier’s side.

In addition to technical enhancements, I suspect the Carriers need to map out the business processes for these FTEU programs. At a high level, the current process for off-deck messaging programs works like this: The Carriers receive messages via their Aggregators. These messages are “tagged” as either Premium (if they carry a charge) or Standard Rated. In either case, the Carrier is responsible for billing the consumer and/or debiting the user’s message allotment if the consumer has a messaging plan. For Premium programs, the Carrier will send the Aggregator a record of successful billing attempts and will pay the Aggregator their negotiated share of revenue. The Aggregator then pays the Marketer their share of revenue. Everyone is happy.

For Standard rated programs, the Aggregator more often than not simply tallies the number of messages processed via their gateways to the various Carriers and charges the Advertiser/Marketer the pre-negotiated messaging delivery fees. (NOTE: I am aware of only one major U.S. Carrier that currently charges their Aggregators for Standard rate messages (MTs only) once a specified threshold is hit. Another major Carrier has stated it is well within their rights to charge for Standard MTs, but has yet to enforce this.)

The FTEU business model poses some interesting challenges and questions. A possible scenario will have Advertisers/Marketers negotiating FTEU message delivery rates with their Aggregator (assume the Carriers will have special rates for Aggregators as well for these programs). Unlike the current Standard rated process, the Aggregator may be forced to reconcile these FTEU messages with the Carriers especially if the Carriers are charging per MT and/or monitoring the delivery of these messages on their end - all of which requires manpower and system changes.

QUESTIONS FOR FUTURE: what happens when Advertisers want to run FTEU programs that establish a 2-way dialogue with a consumer - who will pick up the tab for messages sent by consumers (MOs)? What happens when Marketers start inserting advertisements in their FTEU messages and the Carriers want a cut of the advertising revenues?

SIDE NOTE: I am aware that one of the major Carriers is working on their FTEU business model now and we would hope to see something from them by the end of 2008.

 
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Top U.S. Carriers to take a position on text-based advertising.

June 26th, 2008 The Insider Posted in Mobile Advertising, SMS, Shortcode Marketing No Comments »

At least 2 out of the Big 4 U.S. Carriers have informed their wireless Aggregators that they are in the midst of establishing their SMS advertising policies -no additional details have been made available. (Names TBA).  Presumably the primary focus of these policies will be advertising within standard rated off-deck SMS campaigns. To date, no specific timelines have been issued by the Carriers as to when they will release any new guidelines, however there are some indications the market could see something from them by the end of this year.

 

This should prove to be an interesting development within the Mobile Marketing community especially as premium off-deck revenue continues to decline and the demand for Standard rated messaging programs continues to increase. There’s already enough “tension” between content providers, brands, advertisers and aggregators with the collective group of Carriers over revenue share splits, message delivery costs, compliance regulations and potential MMS MO delivery costs. Now throw in the idea that each Carrier may possibly want a cut of the advertising revenues for messages traveling over their networks and you’ve got a bit of a maelstrom.

It will also be interesting to see the impact this pending development will especially have on the Mobile advertising players, mobile marketing providers that power Std. rated programs and of course the advertisers footing the bill for any ad campaigns. Suddenly the relatively high CPM rates mobile has commanded for SMS ads seem like a necessity with all extra hands in the cookie jar.

INITIAL QUESTIONS:

  • will each Carrier outlay their own set of payment and reconciliation policies?
  • will MMS carry different policies due to higher costs?
  • will the Carriers share demographic information to improve targeting of ads?
 
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