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Getting the Message

Can EMS and MMS messaging emulate the success of SMS, and will they bring new opportunities for marketers and content providers?

Getting the Message

Report on an NMK seminar in June 2002

The mobile phone industry is hoping that MMS will prove irresistible to customers, kick starting a frenzy of handset consumption and generating enough revenue to significantly reduce the network operators’ gargantuan debts. In the process, new markets for mobile content providers, marketers and advertisers would be created. But can these multi-coloured, video- and sound-enabled text messages really take-off when they’re only available on selected networks and it takes 40 seconds to send a single message?

In this evening seminar, Dan Rosen of 12Snap, Pamir Galenbe of Flytxt and Gerard Grech of Orange discussed the evolution of SMS communications, and assessed the potential benefits of EMS and MMS to content providers and marketers.

Pamir Galenbe of Flytxt began by describing the evolution of the mobile phone message, from SMS to MMS via the dubious and temporary charms of EMS (enhanced messaging). SMS, he explained, was introduced in 1991 as a means for Vodafone field engineers to report faults, and was never intended as a peer-to-peer communications tool for customers. Needless to say, the networks were delighted when the introduction of cross-network messaging, several years later, brought about an explosion in the use of SMS by customers.

SMS

Around half of all mobile phone users in Western Europe have now used SMS, with 30% sending messages on a daily basis. In the UK, 1.4 billion person-to-person texts are sent every month. Teenagers and the 20-35 age group have for a long time been the keenest texters, but the big growth area is among older customers, or ‘silver texters’.

The text capital of the world is Manila in the Philippines, where a population a tenth of the size of Britain’s sends the same volume of texts. Philippine texters have included guerrillas and political movements, who used SMS to organise opposition to the government. SMS has also become popular in developing countries, where traditional communications networks are weak, while, in a similar vein, SMS marketing is big news in places such as Estonia, where existing advertising infrastructures are relatively basic.

In the UK, SMS marketing is in its third year as a recognised communications channel. Pamir estimates that around 10% of texts sent are commercial messages (there are no official statistics), and predicts that mobile messaging will ultimately take a large slice of the current market for direct mail, although not for some time yet. At present, texting has been adopted by particular marketing niches, such as those trying to reach a young, tech-savvy demographic, or those for whom email and SMS represent a cheaper alternative to other forms of advertising. One interesting example cited by Pamir involved the texting of clubbers in Ibiza, where printed flyers for clubs have been banned.

SMS is used today by the communications industries for sales promotion, relationship marketing and database marketing, and is increasingly used to generate revenue via premium SMS messages. Used judiciously, SMS can also be an effective means of developing long-term relationships with customers.

For the last two years, Pamir’s company Flytxt has been working with Smash Hits to build brand loyalty among teenage readers, who are spending an increasing proportion of their income on mobile phone vouchers rather than magazines and chocolate (or cigarettes). The campaign, involving everything from teasers for upcoming issues, discount promotions and quizzes to voicemail messages from Britney Spears, has helped to arrest a decline in sales, thanks in part to Flytxt’s efforts in personalising messages to prevent them being dismissed as spam. It is not a revenue generating service – Smash Hits publishers Emap foots the bill – but the kids think it’s GR8.

EMS & MMS

So what do EMS and MMS hold in store? Enhanced messaging is a slightly grandiose term for what is in effect a means of sending several text messages at the same time in order to transmit more data. This means that text messages can be sent incorporating ring tones or relatively crude black and white graphics and animations. Pamir describes EMS as an ‘incremental development’ of SMS, but doesn’t believe it is all that significant. There are no universal standards for EMS, and while some handset manufacturers endorse the protocol, others don’t use it at all, and Nokia prefers to peddle its own ‘smart messaging’ technology.

MMS (multimedia messaging) represents a greater technical advance, and an altogether more interesting proposition. While SMS is essentially a signalling technology, MMS uses WAP (yes, it’s still on the go) as its underlying bearer, and employs whatever additional resources are available, be it GSM or GPRS networks. This means that colour images and polyphonic sound files can be sent along with text messages, while the messages can be sent to email clients as well as other MMS-compatible phones.

Such services tested very well in focus groups, and T-Mobile and Orange (the only networks currently offering MMS) are hoping they’ll prove equally popular among consumers (as similar services have done in Japan). However, the previous excesses of this industry have taught us to be wary of too much hype, and Pamir suggested there could be potential problems with MMS.

Spontaneity, peer-to-peer connectivity and value for money made SMS a success, but MMS is suspect on all counts. Transmission of a picture message takes upwards of 40 seconds on GPRS, and many times more on GSM. This should become quicker as networks upgrade technology, infrastructure, software, middleware and billing systems, but it will be a long time before MMS is as fast as SMS. Cost could also be a barrier, with T-Mobile currently charging £20 a month to allow users to send picture messages.

Finally, the number of MMS handsets in circulation will play a crucial role in the success or failure of MMS. Handsets are still expensive, and if 5-10% of consumers have not upgraded to MMS-compatible phones by the start of 2003 (as the networks, retailers and manufacturers are hoping), the enterprise could turn out to be another WAP flop, with opportunities for marketers and content providers few and far between.

Drivers and Technology

SMS is not about to be superceded, according to Gerard Grech, Senior Development Manager at Orange World. Several developments look set to increase usage further, including a rise in mobile marketing and data services, and the introduction of new devices such as land-line phones and PDAs with SMS capability. SMS games and competitions are becoming popular, and WAP push – SMS text messages featuring a WAP url – could soon take off, as it has in countries such as Portugal and Holland. Perhaps the most important development has been reverse billing, which allows content providers to charge a premium for text-based services.

Gerard acknowledges that SMS is far from being an ideal medium, however. Reverse billing is not available on all networks, SMS doesn’t work in the US, and the length of messages is still limited – not to mention that too much key tapping can lead to a nasty case of thumb strain.

EMS does little to address most of these problems, but it does add some new functionality, including the ability to send and receive bar codes for the purposes of mobile commerce, such as buying cinema tickets by phone. But UK networks have not yet developed proper billing mechanisms for EMS, and Gerard believes that EMS is essentially a stepping stone, designed to introduce the concept of multimedia messaging to mobile phone users.

The real investment is going into MMS, which is IP-based (enabling the downloading of multimedia content from the internet) and has common standards throughout Europe and across all networks. Photo messaging is currently being used to sell MMS to consumers, but Gerard suggests that b2b usage, community services and (inevitably) adult content will ultimately be the biggest money spinners. Factors such as handset availablility, limited battery life and display size, high costs to consumers, the speed of 3G rollout, and lack of GPRS roaming will limit take-up in the short-term.

Ultimately, "very few understand the technology and where the money’s going to be made", says Gerard. Billing mechanisms for MMS are still not in place, while programming, systems integration, bandwidth upgrades and handset compatibility testing require massive investment from the networks. Due to the scale of this investment, however, he believes that universal standards will be developed that last for 20 years, leading to substantial 3G markets for content providers and marketers. It is therore valuable to consider the supply chain and value chain for wireless multimedia.

Wireless Multimedia Supply Chain

Production
Rights owner
Content provider

Provision
Application service provider

Packaging
Mobile portal (aggregator)

Access
Service provider

Transport
Network operator

Interface
Terminal suppliers

Distribution
Retail channels

Wireless Multimedia Value Chain

Production
Application creation
Content creation
Content rights

Provision
Application aggregation
Service management platform

Packaging
Transaction management
Service distribution platform

Access
Authentication
Service network gateways
Account bill processing

Transport
Service transport

Interface
Interaction software
Thin client

Dos and Don’ts of Mobile Marketing

Dan Rosen, Marketing Director of mobile marketing agency 12Snap, gave the following advice regarding mobile campaigns:

• Do target your audience.
• Do control the frequency with which you contact customers: people respond badly if contacted too often.
• Do run your campaign in conjunction with an event or promotion, and make it time-sensitive.
• Do add value: purely commercial messages are perceived very badly.
• Do encourage consumers to interact with your brand.
• Do make it simple and easy.
• Don’t broadcast one-way messages: the medium is inherently interactive – encourage recipients to reply.
• Don’t send coupons, vouchers or special offers if you’re not prepared for them to spread virally: the technology is not yet secure enough to limit offers to particular customers.

Case Studies: X-Box and Wella

Dan and 12Snap conducted Europe’s first EMS campaign, to coincide with the launch of X-Box and drive people to X-Box’s launch website. At the time, the number of potential customers who were able to receive EMS was in the low thousands, so the campaign employed simultaneous SMS and EMS messages, with the latter consisting of an animated logo, a jingle and higher quality typefaces than in SMS texts. Dan accepts that this does not represent a major leap forward from SMS, but responses were high, and the website saw a surge of traffic around the launch date.

Dan also describes a campaign that 12Snap conducted for Wella in Germany. Based around a flirting game targeted at teenagers, the viral campaign was so successful that it had to be turned off after three days, despite a planned duration of one month. Dan speculated that an MMS version of the campaign would have incorporated video, recorded sounds and greater personalisation, but it will be at least another year before such MMS campaigns are viable.

All of 12Snap’s campaigns use opt-in lists, mostly derived from databases generated from websites. Dan stressed the importance of complying with data protection regulations, and of observing best practice guidelines. These include informing individuals that they will receive messages when they give permission to use their data, and also letting them know what kinds of communication they will receive, who it will be from, and how often they will be contacted. Research has shown that customers are very reluctant to receive more than three or four messages a month from a single commercial source.

Dan ended on a note of cautious optimism. 3G will enhance mobile communications and marketing, he says, but in the meantime companies will have to overcome problems such as making campaigns work on different platforms and handsets, and controlling delivery times more precisely. (He predicts that it will cost more to send commercial text messages at peak hours and within narrowly defined timeframes.) However, if we want to avoid MMS going the same way as WAP, the one thing to avoid is too much hype.

Speaker Biographies

Dan Rosen, Marketing Director, 12snap (www.12snap.com)
Dan joined 12snap in January 2001 to lead the Mobile Marketing team, after two years interactive agency experience running campaigns for a variety of major blue chip brands in the UK. He also has six years client-side marketing experience for companies including a mobile operator (Orange), and traditional (Express Newspapers, News Corp) and online (News Corp) media owners.

Pamir Gelenbe, Director of Corporate Business Development, Flytxt (www.flytxt.com)
Pamir Gelenbe, was previously with Morgan Stanley Capital Partners, the private equity and venture capital arm of Morgan Stanley, in London. Prior to that, he worked for Juno Online Services, a US-based NASDAQ-listed provider of free Internet access. Pamir holds a Bachelor of Science in Electrical Engineering Summa Cum Laude from Duke University, an Engineering Diploma from Ecole Centrale Paris, and a Master of Science from Columbia University. Pamir is fluent in French, English, German and Turkish.

Gerard Grech, Senior Development Manager, Orange World (www.orange.com)
Gerard recently joined OrangeWorld, and is responsible for music community services development across Europe. Before this, he was instrumental in the set-up of Orange Consulting Group. Prior to Orange, Gerard was a business consultant working on label and artist marketing as well as new media correspondent for Music Week. He holds an MBA from Bath University School of Management and a degree in Engineering Acoustic and Vibration from Southampton University.

Chair: Tony Coyle, mTicket (www.mticket.co.uk)
Tony Coyle, 29 has been involved in digital media and the communications industries for 10 years. Originally from New Zealand, Coyle has held marketing roles with IBM and the advertising communications agency Ammirati Puris Lintas, working on digital communications work for a variety of clients including: IBM New Zealand, The New Zealand Olympic Team, New Zealand Direct Marketing Association, National Business Review and Vodafone.

Take a look at the original event here.