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Feb. 20, 2009

Some wireless industry analysts are predicting that this year should be good for SMS (short message service). According to numbers just released by the Association of National Advertisers, the current global financial meltdown has caused more damage to the marketing industry than predicted just last July.

The group’s survey found that a surprisingly huge 93 percent of companies are identifying cost savings and budget reductions, up from 87 percent just last August.

More than 36.2 percent of respondents plan to cut budgets by more than 20 percent, nearly doubling the previous number.

Overall, about 60.4 percent of all respondents said they were eliminating or delaying new projects thanks to the current negative economic conditions, potentially dire news for mobile, which is still very much considered an experimental space.

Indeed, major brands are drastically cutting budgets from traditional media outlets and endorsement deals, citing a lack of ROI visibility and an inability to reach coveted young consumers.

For example, Nike, General Motors, FedEx and even Century 21, among a host of others, have reined in ad spends in an effort to reduce expenses and weather the economic storm.

However, those budget cuts may not cripple SMS marketing campaigns, industry players insist. Not only do text messages provide a lower-cost method to get a marketing message across, they allow advertisers to reach the 57 percent of U.S. mobile consumers who use their mobile phones to send and receive texts, according to recent figures from Nielsen Mobile.

The numbers are much higher in some other markets, as could be expected. 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.

But 4-INFO CEO Zaw Thet paints a far rosier picture. January was the best month ever for the SMS-based company, Thaw said and February revenues are on track to set a new high-water mark.

He added “we’re all excited here, and we think that’s the general sentiment around the country when it comes to text-message advertising. Despite being just one of the tools in the toolkit we have, SMS is still our biggest business. It definitely has the most reach, and we think there’s some room for growth in that market. As marketers get more interested in overall performance, as they shift more dollars into mobile, you’re going to start seeing even more activity around text ads."

Unlike a banner ad on a website 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.

Harber said “we love the power of the direct response feature with text messaging. We like that because you can drive people to a call to action. Often, we counsel our customers to do just 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.

About 47.6 percent of those who redeemed coupons for prizes were new customers, according to Harber, more than doubling the performance of other Jiffy Lube campaigns.

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Source: ANA.