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Why 'Free' Text Messages Will Cement Mobile as a Critical Component of the Marketing Mix

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With short message service (SMS) reaching 5 billion mobile phones around the world, marketers can no longer ignore the significance of this marketing channel. Applications may be making a lot of noise in the mobile space right now, but the truth is only 17% of mobile users are capable of accessing the Internet from their mobile devices. Texting, however, is almost universal.

Although many top brands have adopted SMS-based mobile marketing, some consumers are hesitant to take advantage of those mobile marketing programs. The fees associated with branded messages are a key factor in that hesitation.

Most mobile subscribers have plans that restrict the number of texts they can send and receive per month. If their messages exceed that number, they are charged exorbitant rates. Some consumers have adopted an unlimited-text-messaging package for a flat rate, but the majority does not have that type of plan—and it's the majority of customers we want to reach.

You did read that correctly above when I said "send and receive," as in US consumers' message plans typically count both incoming and outgoing texts. That is not common practice in Europe and Asia, where they have a "Sender Pays" model.

Understandably, some brands fear that the US pricing model will lead to limited adoption of mobile programs among customers. If it's going to cost consumers 25 cents to receive a mobile promotion, they may think twice about texting in to get it.


FTEU to the Rescue

So what is a brand to do if it would like to target a user base that may not have unlimited texting plans? Charging customers a quarter each time you send them a note is a quick way to have them unsubscribe from your list—and once you lose them, they most likely won't come back.

A good solution to that common mobile-marketing dilemma is FTEU (free to the end-user) messaging, which allows the carrier or a brand to pick up the tab on messaging so the marketing texts don't count against the customer's monthly bucket of messages. And for those customers who use an a la carte plan, FTEU means there is no charge on their monthly bill for those messages.

Who Is Using FTEU?

There is a chance that you've received an FTEU message. Recently, I came across an article in Mobile Marketer http://www.mobilemarketer.com/cms/opinion/editorials/6078.html  that explained how Wal-Mart uses FTEU messaging to alert customers of discounts available at its supercenters across the United States. Wal-Mart has found great success using SMS as a tool to drive foot traffic to stores.

Compared with other marketing channels, the cost of the service is minimal, and in this example it allows Wal-Mart to deliver timely messaging. The calls to action are simple and related to Wal-Mart's weekly special offers.

A sample message from Wal-Mart's FTEU campaign read as follows: "FREE MSG: Walmart Rollbacks. 40oz Heinz Ketchup $1.98, was $2.42. Slimfast RTD Chocolate now $5.00, was $5.97. Reply HELP for Help;STOP to Cancel"

If the message indicates that it is "Free," then it is likely part of an FTEU plan that has been established between a brand and a large carrier.

Another sector that is successfully using FTEU technology is the financial industry. Banks across the United States have adopted this form of communication and have been very happy with the results.

Banks are sending messages that range from alerts of potential fraudulent activity on a user's credit card to credit reports and bill-payment notices.

Innovators in the healthcare industry have also adopted the FTEU strategy. Health-care provider Kaiser Permanente experimented last year with texting appointment reminders, which resulted in 1,837 fewer patient no-shows to appointments.

That's 1,837 fewer calls that need to be handled to reschedule appointments and 1,837 fewer unhappy customers calling about being charged no-show fees. By simply implementing the text reminders, Kaiser has been able to provide superior customer service to its patients—in a way that saves the healthcare provider real money and real time.

Challenges With FTEU

The major hurdle with FTEU campaigns has been the struggle that marketers face when attempting to get in the middle of automated carrier-billing relationships.

SMS messages are typically sent through an aggregator and tagged as "standard" or "premium" messages, which the carrier then either bills to the subscriber or subtracts from the user's monthly plan.

Since some carriers do not have an easy way to allow third parties to pay for a free SMS campaign, that presents a challenge for brands that would otherwise prefer to employ FTEU messaging.

Delivering FTEU is not technologically difficult, but the often byzantine process of negotiating carrier clearance makes certain campaigns difficult to implement. Currently, FTEU is available on all major carriers such as AT&T, Sprint, T-Mobile, and Verizon.

The brand is going to pay a premium for FTEU messaging over standard mobile-message programs, because you are asking the carrier to forego its revenue. And certain carriers do have high-message minimums, and so FTEU is not quite a ubiquitous solution just yet.

We've seen significant progress recently, however, so we are hopeful FTEU will become much more common.

The Bottom Line

Advertisers and marketers can significantly increase mobile campaigns' reach by targeting budget-conscious consumers—and making them aware that the service is free.

FTEU messaging has the power to change mobile marketing as we know it. With all the headway mobile marketers are making, FTEU messaging is in a position to further cement mobile's position as an established, aboveboard, and cost-effective direct-marketing channel—one that generates real results for brands.

Here's the bottom line: Texting allows brands to reach 270 million US mobile consumers through the most personal and effective marketing technology available—the mobile phone. Taking the steps to turn "standard message and data rates may apply" campaigns into FTEU messaging incurs minimal incremental cost and can deliver a huge return on the marketer's investment.


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Matt Silk is the SVP of Waterfall Mobile (www.waterfallmobile.com) and can be reached at msilk@waterfallmobile.com.

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  • by Howie at Sky Pulse Media Tue Sep 21, 2010 via web

    I think SMS and 2-D Bar Code (like JagTag) are very powerful for call to action campaigns. They offer immediate gratification and can be used to launch a mobile user into anything..coupon, video, offers, games, mobile web.

    What SMS should not be used for is push advertising which most loyalty programs are. If one signs up for a ton of these then SMS gets cluttered like email and everything gets ignored. Even worse users get pissed. I think if one uses Google Voice where messages get saved in email format that might be different.

    The key is conditioning users to engage. If I know that when I go to Best Buy for example I can send an SMS for specials unique to me I would do it every visit. Do I want an SMS back from Best Buy every day or week..not likely. Let me start the engagement.

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