Web Producer at Freelance
27 July 2001 12:45pm
I am currently working with a high profile youth brand and am interested in hearing about the realities of using SMS to generate revenue to compliment a web based solution. I am interested in hearing about success stories targeting a youth market (16-24) .
Any information gratefully received
Digital Lead, Asia Pacific at Ogilvy
27 July 2001 18:14pm
Good and bad news....
Generating revenue through SMS is STILL not as easy as it should be. "Reverse billing" - which enables companies like your own to derive some revenue from SMS usage by charging the recipient of the message rather than the sender - is only available through the Vodafone network and through Contract BT Cellnet customers.Orange have promised reverse billing for a long time, One 2 One say that they will have reverse billing capabilities by Autumn.
Without reverse billing there is no way to generate revenue. In fact you simply stand to generate huge costs by sending SMS messages. [Cost vary from 1p -10p per message depending on whether you can purchase bulk messages].
The net outcome is that you can only provide a profitable SMS service to VF and BT C. customers. If you provide a service to Orange and O2O users... you'll end up having to subsidise the cost.
The way many services now try to turn profit is by asking users to pre-register on a premium rate number. The call might cost the user £1- 3.50 per minute and the registration might take from 30 seconds to 3 minutes. By using this income a service provider can then afford to send the user several SMS messages. The Channel 4 cricket service works in this way.
Although SMS is very compelling, not until all operators have reverse billing, will it be a revenue generator.
Another key thing to bear in mind is that any service you provide must be very simple to explain to users... and ideally you don't want to restrict the service to just 2 networks.
A further disadvantage of premium rate lines is that some phones - especially pay as you go - are barred from using them. If you are targetting the youth market - which has a high usage of PAYG - this could prevent them from signing up.
The most profitable services out there are those for logos and ringtones... these are often restricted to nokia and motorola phones, as not all phones support these functions... the conumdrum goes on.
Success stories? Bridget Jones and Go For IT (both film promotions) were both well publicised and were both good executions, but the uptake was not huge. Channel 4 has had a successful cricket service; Channel5 had a succesful service with its blockbuster films; I think News International and several sports sites have also had good take up of services. However, all of these services are launched on the back of huge distribution / marketing channels.
The reality of SMS revenues is that they are small at best and non existant most of the time.
I am looking forward to the day when this is not the case.
On 12:45:36 27 July 2001 aim72 wrote:
>I am currently working with a high profile youth brand and
>am interested in hearing about the realities of using SMS
>to generate revenue to compliment a web based solution. I
>am interested in hearing about success stories targeting a
>youth market (16-24) .
>Any information gratefully received
Managing Director at Steelside
30 July 2001 16:10pm
Not sure if you've tried a white paper search on e-consultancy.com, but the following site often provides useful m-commerce information (although more technology-focussed than user-focussed):
Have a look through their SMS section for a good introduction to the technology and terminology. The free white paper they recommend "Success 4 SMS" could also be of value. The following paragraph is extracted from that:
"The next quantum leap in SMS traffic volumes is caused by the introduction of SMS for prepayment customers. These customers pay for their cellular airtime as they go rather than having contracts. Enabling the prepay customers to send short messages causes
large traffic uplifts because the typical young person who is the main user of prepaid services is also ready, willing and able to manipulate the phone keypad and originate short messages. When customers are cost conscious, they tend to use SMS to let their friends know about changes in meeting arrangements and so on, calculating that this is
less expensive than making a voice call to communicate the same information. An increase in SMS traffic of 100% (sometimes more) is not unusual when SMS for prepay is introduced.
For example, as we saw at the start of this guide, whilst Vodafone in the UK had more postpaid customers than prepay (three million postpaid, two million prepaid), the prepay customers sent more than twice as many short messages as the postpaid users."
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