Monday, July 02, 2007

A twist on text marketing

Text marketing is not new.
According to Frost& Sullivan, text marketing will be the most important medium for advertising in the 21st century, outperforming print media and billboards.
Wireless Intelligence, a joint venture between the GSM Association industry group and the research firm Ovum, estimates the global number of cell phones at 2.5 billion; an increase of a half billion in just 12 months.
Of the cell phone users, over 95 million in the US alone are active text message users.
(Source: the Yankee Group).

For marketers, it’s a marketing dream: a low cost/high effective marketing & promotion tool. The potential customer can be reached anytime, anywhere.
The first area where text messaging has become successful is entertainment.
Using text messaging to vote off candidates on reality shows worldwide has become popular.
To give an example: the 2004 season of "American Idol" generated 13.5 million text messages.

As a marketing tool, text marketing is currently mainly used for participating in contests and sweepstakes.
McDonald's, Burger King, Procter & Gamble Co., General Motors Corp. and CBS Corp have all launched campaigns that require consumers to enter via text message.

Text marketing first took off in Europe and the Far East for two main reasons:
1) In most countries, cell users typically pay for messages sent, but not for those received.
2) There are less technical obstacles , since there are not that many carriers/mobile phoneplatforms.

One way of approaching potential customers is with an opt-in program.
The US grocery retailer Meijer (based in Grand Rapids, Michigan) launched an opt-in program in the Indianapolis market with mobile-marketing firm SmartReply Inc.
Using the fluctuating gasoline prices as a hook, consenting customers of its gas and convenience stations were sent text messages whenever Meijer was about to raise pump prices by 5 cents a gallon or more, giving them two to four hours to fill up at the lower price.
A great way to build customer loyalty!

A new twist on text marketing comes from New Zealand.
The company Hoo Haa believes that the key to successful text marketing is paying the customer to receive the ads.
This way, nor customers, nor the phone companies get annoyed.
It works is as follows.
Cellphone users registered with HooHaa by listing their name, age, location and buying interests.
These data go into a database that can be accessed by advertisers, who can send text messages.
Each contacted customer gets a 10 cent credit for each advertiser text message received.
The credits are accumulated into lots of $2.50 that are then reduced from their mobile accounts.
Since its launch in January 2007 close to 45,000 people have signed up for the service.The HooHaa database has a broad cross-section of consumers, with people aged 18-30 being the largest demographic group.
HooHaa is now moving into the Australian market.
CEO Brian Hawker is cautious and points out that it’s still early days.
"We've been surprised by the swift uptake and to be honest there is an element of our touching wood. But we think that we might have happened on a business model for marketers to reach mobile customers with tailored messages."
He could be spot on with his observation.
Cellphones are a great marketing tool, since it gives marketers direct one-to-one access to consumers.
In contrast, traditional direct marketing sends out 100,000 pamphlets or messages trying to reach 1,000 customers.
Rapp Collins Limb Walker direct marketing executive Robert Limb sees the appeal of text marketing in the permission to communicate that the customer has to give.
This could develop into close ties with between the customer and the advertiser.
The HooHaa business model is also based on the cooperation of the cellphone companies. Vodafone, Telecom and Pago are currently participating.

Will this concept become successful in other countries?
In my opinion, Europe and the Far East are more likely to adapt it than the US.Paying a customer to receive a message will not work in the US, where consumers must pay for incoming calls and text messages.
But one thing is for sure, it’s a great and creative way to use text marketing.

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