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Short
Message Service Long on Possibilities
 SMS is a
roaring success on European and Asian cell phones, and will soon be
in North America. It also has a lot to offer adult webmasters looking
for new ways to increase revenues.
SMS (Short Message Service) is a feature for digital cell phones.
The short messages (generally 160 characters, although that limitation
is being overcome by some emerging technologies) can originate from
another phone or from a Web site; person-to-person or broadcast; outbound,
inbound, or two-way. SMS has taken off like gangbusters in Europe.
According to a recent study by research firm A.T. Kearney, SMS messaging
has now achieved nearly 80 percent usage rates in some European countries.
However, only five percent of mobile phone users in the US used SMS.
SMS in USA
Faulkner Information Services says SMS revenues for some European
carriers already represent more than 10 percent of their service revenues,
compared to only two percent for US carriers. While Europe and Asia
currently dominate, the US will become a major market now that carriers
like AT&T Wireless, Verizon Wireless, and VoiceStream are offering
the service.
Along with improved handsets and bandwidth, the main barrier to SMS
in North America is standards. In Europe, the GSM (Global System for
Mobile communication) digital mobile telephone system is the norm.
A United Kingdom user thinks nothing of flying to Italy and then calling
home, but in North America you need a PhD to figure out the roaming
contract. Some recent market research by Faulkner Information Services
summarizes the situation:
Although the prospects for SMS in the United States look promising,
its rollout has been hampered by interoperability problems between
different carriers. While all European carriers have standardized
on GSM, carriers in the US use several competing technologies. As
a result, AT&T's message-service has only been able to work between
other AT&T wireless customers or other carriers using its TDMA transmission
technology. Likewise, Sprint PCS message-service customers have only
been able to communicate with other Sprint PCS customers, or other
carriers using its CDMA transmission technology. Fortunately, gateway
systems have been deployed, permitting messages to be transmitted
between customers on different carrier networks. AT&T Wireless, Cingular
Wireless, and VoiceStream Wireless all launched inter-carrier messaging
services in the first quarter of 2002, allowing for the service between
customers of any carrier.
SMS Facts and Figures
Up to two-thirds of the 250 million mobile phone owners
in Europe use SMS. (Forrester Research)
365 billion SMS messages will be sent in Western Europe
by 2006, up from the current level of 186 billion per year,
and now account for 10 percent of all wireless carriers' revenues.
(Frost & Sullivan).
Brits sent 1.3 billion SMS messages during March this year,
and currently send over 43 million SMS messages every day.
(Mobile Data Association).
People in Denmark send four million SMS messages every
day, the equivalent of one SMS message per person. (Europemedia).
Mobile phone users in Sweden sent more than one billion
SMS messages during 2001. (Europemedia).
Revenues from mobile phone services in Norway reached more
than US$179 million in 2001 and will rise to US$358 million
by 2005. (Europemedia).
Over 50 percent of mobile phone users in Singapore use
SMS more than once a day, the highest usage rate in the world.
(Mobile Commerce World).
According to a survey conducted in India, Indonesia, Malaysia,
the Philippines, Singapore, Thailand, and Vietnam, 60 percent
of mobile phone owners in Asia prefer to communicate using
SMS or text messaging rather than e-mail. (Siemens)
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But, the growth prospects for SMS worldwide look so
good that traditional paging services now appear to be an endangered
species. According to Faulkner, "Motorola has already announced that
it is pulling out of the market for traditional paging infrastructure
and handsets, in favor of developing two-way technologies for use
in wireless phones. SMS is on the way to becoming the universal alerting
and notification service. The components for this universal SMS infrastructure
are rapidly falling into place."
SMS and the Adult Webmaster
Both outbound and two-way SMS communications have a lot of potential
for adult webmasters, but billings and payments are particularly intriguing.
A UK-based company, Junction20 (www.junction20.co.uk)
has introduced a range of products to enable companies to take advantage
of mobile interactivity using SMS. One of them is MobilePay, a reverse-billed
SMS payment solution. Junction20's Paul Astle (paul@junction20.co.uk),
itemized examples of potential applications:
Access to Web-based gaming sites.
Access to online information services.
Access to adult content with anonymous billing.
Payment for audio or other downloads.
Payment for "pay per view" video streaming content.
Registration payment for dating and contact sites.
Much of interest to the adult webmaster there, and the benefits
are many:
Accessible. Extensive installed base and growing.
Simple. 'Keyword' text message to one Short Code number.
Anonymous. Non-itemized charge on mobile bill.
Flexible. Multiple pricing options.
Revenues. Track sales in real time.
How reverse-billed SMS works, is that messages delivered to the
requesting handset are charged to the individual's mobile bill at
a rate dictated by you, and a percentage of this is paid directly
to you. Junction20 currently provides reverse-billed SMS services
on all four UK networks. These services are permission-based (opt-in)
and can be very quickly integrated within an existing Web site.
Astle regards SMS as a killer application within the adult industry,
in two ways:
SMS Market Trends
An excellent (and free) market research backgrounder by Nathan
J. Muller, Short Messaging Service Market Trends (Faulkner
Information Services, 2002, Faulkner.com)
offers an Executive Summary, Description, State of the Marketplace,
Market Leaders, Market Trends, and Web Links. It gives a very
positive outlook for SMS in North America:
SMS is now on a fast track to universal adoption by cellular
subscribers around the world, who have embraced it as a two-way
personal messaging medium. The global SMS market may be worth
as much as $47 billion by 2004, with market demand in the
US driven primarily by teenagers and young adults, although
older adults are beginning to embrace the technology, as well.
The market for SMS is growing so fast that it may drive older
paging services to extinction.
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(1) People opt in to receive product updates and
info via SMS. It is important that they opt in, as an adult site
sending out SMS to unsuspecting people could be quite dangerous,
the same with gambling sites. However, when they opt in it also
drives traffic back to the site. I think the successful sites
are the ones that build on customer loyalty, and keeping the customer
informed is key to this.
(2) As a billing method. I see MobilePay as a valuable add-on
to existing billing methods. I know that in the UK people like
the anonymity of MobilePay. SMS is also the language of youth-16
to 35 year-olds--and these are the people who are visiting Web
sites.
And That's Not All
Marketing is another promising application, both for attracting
new customers and also for updating existing ones. There are three
main types of SMS marketing strategies: one-off push campaigns,
one-off pull campaigns, and continued dialog campaigns. A couple
of recent Forrester TechStrategy Briefs are relevant here. First,
and especially with all the SPAM around, "2002 data confirms it-e-mail
ads and promotions are losing effectiveness and aggravating consumers."
Second, multi-channel campaigns and a resurgence in online advertising
are growing trends. "While Web marketing matures, mobile and iDTV
surface as ad platforms."
Marketing response rates are up to five times higher than those
of direct mail marketing, according to Forrester Research. The average
response rate to an SMS campaign is a very respectable 8-11 percent
and the average campaign cost is relatively low, about a fifth of
that for direct mail. Furthermore, SMS messages are almost always
read, which is not the case in an e-mail campaign.
Of the European direct marketers recently polled by Forrester and
the Federation of European Direct Marketing (FEDMA), 21 percent
used SMS marketing at least occasionally. A further 12 percent had
tried it on a trial basis, but 56 percent are planning SMS campaigns
by next year, devoting an average of seven percent of their budgets
to it. Forrester believes SMS marketing is here to stay, since the
medium is quick, interactive, and wide reaching.
Multimedia Messaging
Services
Multimedia Messaging Services (MMS) takes text messaging (SMS)
one step further, enabling users to send graphics, audio,
and video to and from mobile phones. Worldwide MMS revenues
are expected to total US$70 billion by 2007. According to
Forrester Research, SMS revenues will account for 47 percent
of total messaging revenues in 2007. Multimedia messaging
(MMS) will account for 32 percent, Instant Messaging (IM),
10 percent, Mobile e-mail, nine percent, and Enhanced Message
Service (EMS), three percent.
Frost & Sullivan forecasts that revenues from multimedia messaging
in Europe will amount to US$68 million this year, and US$26.9
billion by 2006. By that time, MMS revenues will account for
66.3 percent of all mobile messaging revenues. While only
six percent of mobile handsets (excluding PDAs) shipped in
Europe this year will be MMS-enabled, MMS is expected to reach
mass-market levels by 2005.
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You Snooze-You Lose
What is the upshot for adult webmasters? SMS obviously deserves
careful consideration as a complement to existing marketing and
billing methods. It is a strong contender for generating additional
revenues. Telephone billing has already enjoyed some success in
the industry, but the immediacy and interactivity offered by SMS
on digital cell phones seems even more promising-a natural even.
That promise is being realized in Europe and Asia right now as a
result of the large installed base and the popularity SMS quickly
enjoyed there.
North America has lagged behind in infrastructure and users so far,
but all forecasts indicate that is about to change-and quickly.
Already you can send an SMS message easily from ICQ. Now is surely
the time for adult webmasters to start exploiting this new tool.
But it is also a springboard to the next big wave-Multimedia Messaging
Services (MMS) a next-generation technology that holds even greater
promise for the webmaster. Stay tuned!
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