SMS - A New Concept

By the early 21st century, the cellular telephony

revolution had radically transformed the global
telecommunications industry. Cellular phones offered a
whole new experience to people desirous of keeping in
touch with their close ones anytime, anywhere. Cell
phones (or mobile phones) became more popular, largely
due to the emergence of the Short Messaging Service
(SMS). The popularity of SMS took even industry experts
by surprise, as the service had always been looked down
upon as a 'low-end' option offered by a cell phone. As
per the findings of a study conducted about the usage of
SMS across 14 countries, over 80% of cell phone users
in countries such as Finland, the UK and many
European countries used SMS at least once a month.

In Sweden, Singapore, Italy and Germany, around 75% of the people used SMS at
least once a month. SMS was most popular in the 'under 25 years' age group. Text
messages sent across the world reached an astounding 62.45 billion per month by
December 2002 (Refer Table I for SMS growth statistics).

According to the estimates of Strand Consult1, the global market for SMS
doubled from $ US 7.5 billion in July 2000 to $ US 15 billion by December
2001, and was still growing at a scorching pace.

The firm expected the revenues from SMS advertising to exceed those from
Internet advertising in the near future.

Considering this huge pool of mobile-savvy customers, marketers could not

ignore the potential that advertisements directed towards SMS senders
had. Thus, was born the concept of SMS advertising - something that was
to influence the media mix plans of many companies in the years to come.

Background Note

The basic concept of cellular phones originated in 1947 in the US, when
researchers at Bell Laboratories got the idea of cellular communications from the
mobile car phone technology used by the police department of the country.
However, it took over three decades for the first cellular communication system to
evolve.

The public trials of the first cellular system began in

Chicago during the late 1970s and the first
commercial cellular telephone system was launched in
Tokyo. Cellular telephone services were introduced in
the US in the early 1980s, and became popular within
a short span of time.
 By the late 1980s, cellular services were operational in
many developed countries across the world. Over the
years, there was an improvement in both the number
and quality of services offered on account of dynamic
technological advancements. There were mainly two
types of cellular services offered by operators - post-
paid and pre-paid.

Post paid cellular services, also called billing card services, required the customers
to pay for the cellular services utilized by them at the end of a specific period
(generally every month). These services also included fixed rental charges for the
services provided. Pre-paid cellular services required the customers to pay in
advance for the services they would be using.

These cards were available in different denominations, and the customer could
choose one, keeping in mind his/her call requirements and budget. When
customers exhausted the call time they were entitled to, the services were
withdrawn. To attract and retain their customers, cellular companies offered a
host of other services like voice mailing, chatting, Internet browsing, roaming
services, call wait/hold/divert options and games. Customers could also
download ring tones and logos, and receive information (horoscopes, game scores,
traffic updates and weather news among others). Subscribers usually had to pay
for all the above services depending on the service provider's tariff plans.

Many of the services were priced on the higher side. SMS, however, was a service
that was generally priced low, and in a few cases, offered free of charge as well.
Simply put, SMS is a single, short message, upto 160 characters (word, numerals,
alpha-numeric, or images) that can be sent from one cell phone to another...

Exploring the SMS Advertising Tool

Realizing the benefits SMS advertising could offer, many companies such as Pepsi,
Sony, Cadbury Schweppes, Coca-Cola, Heineken and Johnson & Johnson tried
advertising their products through this medium.

In early-2002, Pepsi conducted a 'We'll Take You There'

campaign in Australia, wherein Pepsi customers could
enter into a lucky draw by submitting a unique code
that was printed on the Pepsi cans. Pepsi asked its
customers to SMS this code to a specified number,
following which they became eligible to enter the draw.

Of the total number of responses received, as many as

79% were through SMS. Pepsi also conducted a 'SMS
Concert Ticket' promotion, through the 'Pepsi Live'
program on a popular music television (TV) channel.
Viewers were requested to send an SMS with their
name and a unique keyword to enter a draw and win
tickets to famous music festivals/concerts in
Australia...

SMS Advertising - The Future

A marketing company based in the US, The Mobile Channel, conducted a survey of
1000 people regarding the acceptance of SMS advertising. Approximately 94% of
the users were positive about the choice of advertisements sent and showed that
text advertising could elicit a product response of upto 28%.

Even as corporates and cell phone users seemed to be rather enthusiastic about
the growing popularity of SMS advertising, there were a few criticisms as well.

Like many other media mix components, SMS advertising too had various
pitfalls associated with its usage - the foremost being that of 'Spam SMS'
(similar to spam e-mails, spam SMS refers to the unsolicited, unwanted junk
SMS that land up in a cell phone user's inbox). Commenting on this, an
industry observer said, "Some unscrupulous firms are bound to start sending
out spam and clogging the vastly bigger inbox of your futuristic phone with
messages that you do not want about services or offers you do not need."...

 1)Critically analyze the pros and cons of SMS advertising. Also make a
comparative analysis of using this tool as against conventional media types like
newspapers, television, radio, outdoor media and the Internet.

2)Discuss the various ways in which SMS advertising can be used by companies?
Why do you think Indian companies were not exploiting the potential of SMS
advertising even by late-2002? Which kind of SMS advertising could be more
popular in a country like India? What measures should companies adopt to be able
to reap the benefits associated with it?