Mobile marketing types like to talk about cool features like click-to-video, 2-D barcodes and interactive wireless scavenger hunts. But as the economy slows to a trickle and advertisers tighten their belts, 2009 is poised to become the year of SMS marketing.
The recession has caused more damage to the marketing industry than predicted just six months ago, according to figures released last week by the Association of National Advertisers. The group’s survey found that a whopping 93% of companies are identifying cost savings and reductions, up from 87% late last summer, and more than one-third of respondents plan to reduce budgets by more than 20%, nearly doubling the previous figure. And 61% of respondents said they were eliminating or delaying new projects thanks to economic conditions – potentially dire news for mobile, which is still very much considered an experimental space.
But 4INFO CEO Zaw Thet paints a far rosier picture. January – a month typically known for its slow business pace – was the best month ever for the SMS-based company, Thaw said last week, and February revenues are on track to set a new high-water mark.
“We’re excited, and we think that’s the general sentiment around the country” when it comes to text-message advertising, Thet continued. “SMS, despite being just one of the tools in the toolkit we have, is still our biggest business. It definitely has the most reach, and we think there’s huge room for growth in that market. As marketers get more interested in performance, as they shift more dollars into mobile, you’re going to start to see even more” activity around text ads.
Indeed, major brands are slashing budgets from traditional media outlets and endorsement deals, citing a lack of ROI visibility and an inability to reach coveted young consumers. Nike Inc., General Motors Corp., FedEx and Century 21, among a host of others, have reined in ad spends in an effort to reduce expenses and weather the economic storm.
But those budget cuts may not cripple SMS marketing campaigns, industry players insist. Not only do text messages provide a cheaper way to get a marketing pitch across, they allow advertisers to reach the 57% of U.S. mobile consumers who use their phones to send and receive texts, according to recent figures from Nielsen Mobile. (The figure is much higher in some other markets, of course.) That reach far outpaces other mobile applications such as the Internet, which is just beginning to get traction, and video, which has yet to find a sizable audience.
And unlike, say, a banner ad on a Web page designed strictly to create awareness, SMS can leverage a call to action and lure a consumer to interact with a brand or promotion, noted Eric Harber, president and COO of HipCricket, a Seattle-area firm that offers a host of mobile marketing and advertising services.
“We love the power of the direct response feature” with text messaging, Harber said. “We like that because you can drive people to a call to action. A lot of times we counsel our customers to do that.”
HipCricket claims to have found success with a recent promotion with an Iowa radio station and Jiffy Lube outlet that offered listeners a chance to win free oil changes and other goodies by texting “JIFFY” to a short code. Roughly half of those who redeemed coupons for prizes were new customers, according to Harber, more than doubling the performance of other Jiffy Lube campaigns.
“Stories like that make this economy a lens to focus on what is the true efficacy of mobile,” Harber continued. “The economy is something you can’t ignore. It’s the elephant in the room. But given that there’s a focus on the aspects of mobile that are measurable, it can result in a return on investment.”
That data regarding ROI can be surprisingly granular compared to other advertising methods, also. Companies can use different short codes to determine whether a user saw the campaign in a newspaper, on a billboard or in a television commercial, allowing advertisers to determine which media platform is most appropriate. And SMS ads – as opposed to interactive marketing campaigns – can tap a variety of information to deliver targeted pitches. 4INFO, which last week launched an ad-serving offering for text ads, delivers different ads based on the type of content a user is looking for, the time of day, geographic location and carrier, among other information.
And the number of players in the space seems to increase by the day. Mobile messaging and m-commerce company Sybase 365 has a new platform for targeted in-message advertising, providing a way for content owners and advertisers to reach users via SMS and MMS. Netxcell Systems announced a new platform called Ad-Junction, which the company claims was designed to handle high volumes of in-message ads to targeted users. Direct media company ID Media earlier this month said it is teaming with ShopText to offer a cost-per-response mobile marketing service centered on SMS.
And they’re all wagering that advertisers will spend money in mobile even as they cut budgets for other media channels.
“I think in ’09 the watchword for advertisers is going to be ‘pragmatic,’ ” HipCricket’s Harber predicted. “No. 1 is, is it interactive? No. 2, is it measurable? Can you demonstrate an ROI? I think that’s what customers are asking for; I think that’s what’s critical this year.”