Monthly Archives: May 2009

By: Nic Covey, Director of Insights, Nielsen Telecom Practice Group

Was it history in the making when Barack Obama’s presidential campaign attempted to announce Joe Biden as the vice presidential candidate over SMS (short message service) text-message in August? If it was, the cutting-edge “attempt,” was scooped by the mass media and it ended up as a breaking news story before the campaign scrambled to send the text-message to supporters at around three o’clock in the morning.

Nielsen estimates that the Biden text was received by 2.9 million mobile phone users in the U.S. over the course of that weekend. Whether or not the text-message was able to beat cable news to the punch, Nielsen still reports that it was one of the biggest and broadest mobile marketing events to date.

New mainstream medium
The Biden announcement over texting is a highly-visible example of something called short-code marketing—marketing messages that are sent over text-message through a Common Short Code (CSC), or short code. A short code is essentially an abbreviated phone number used for text- (SMS) and multimedia- (MMS) messaging.

Today, short codes are being used to market everything from TV shows and cars to soda, deodorant and dozens of other goods and services. In the past two years, the medium has become a mainstream marketing vehicle—so much so that Obama’s use of the medium yielded not just buzz, but also a large and engaged audience for the Biden announcement.

Flying fingers
In the U.S. today, about 200 million of the 259 million wireless subscriber lines subscribe to or purchase text-message capability. Of these, 138 million (or 53% of all mobile subscribers) use text-messaging on a regular basis. In fact, text-messaging has become so pervasive that U.S. mobile subscribers now send and receive more text-messages in a month than they do phone calls.

Nielsen recently reported that as of Q2 2008, mobile subscribers sent or received an average of 357 text-messages per month, compared with 204 phone calls. And while the average number of text-messages sent or received has increased 351% (from 79 text-messages sent or received last year), good old fashioned phone calls have not become less popular—that average has stayed fairly consistent over the past two years (from 216, on average, in Q2 2006). Not surprisingly, teenagers average the greatest number of text-messages sent or received, at 1,742 messages per month in Q2 2008.

Text-messaging is embedded in the American communications lifestyle. For that matter, texting has been an important part of the mobile experience internationally as well. Nielsen’s most recent estimates for text-message use in 11 countries show that, while 53% of American mobile subscribers send text messages each month, texting is even more ubiquitous in countries such as Italy and China.

Given the immense popularity of texting in the U.S. and abroad, it’s not surprising that marketers have been ramping up their use of the medium to engage their customers.

Cracking the code
In the U.S., short codes are administered by the Common Short Code Administration (CSCA), a service of CTIA – the Wireless Association, a trade group for the wireless industry. Short codes come in the form of either vanity codes, or random digit codes. While vanity codes are more expensive to lease, they are increasingly discouraged due to the expanding prevalence of cellular smartphones with QWERTY keypads (the most common keyboard layout on English-language computer), which can make it difficult for users to identify the vanity’s number to dial.

Marketers have used short-code marketing in a tight, but creative range of ways: from simple information messaging, to rewards programming, to couponing and even direct SMS purchasing. Tracking the audiences of short codes through the world’s largest telecommunications bill panel, Nielsen tracks all billing activity, including text-messages sent and received, applications and games downloaded, and other aspects of a subscriber’s billed mobile use for AT&T and Verizon Wireless.

Coca-Cola has engaged in some of the most prominent short-code marketing in the past year. As of Q2 2008, about one million AT&T and Verizon Wireless customers were actively text-messaging with Coca-Cola as part of their “My Coke Rewards” program.

Through “My Coke Rewards”, Coca-Cola customers collect unique codes found on various Coca-Cola products and enter them into an account they’ve registered at mycokerewards.com. Points are collected and redeemed for rewards. The mobile component of the program allows consumers to enter the codes over their mobile phone, on the go. According to Nielsen, Coca-Cola’s mobile users typically send about nine messages a month to Coca-Cola.

And short-code marketing is not just for kids and teens. In the Coca-Cola program, half of users were 35 or older. That age diversity is not unique to Coca-Cola, either. Overall, 57% of the standard rate short codes are sent by persons over the age of 35. For an audience accustomed to traditional channels of marketing, the opportunity to engage with brands in a new way is proving to be a welcomed experience.

Profitable returns
Rewards programs are not the only way to use short-code marketing—direct couponing has proven to be a lucrative venture as well. A group of Ashley Furniture Homestores in the Carolinas bolstered sales during a slow time this summer when they sent 6,000 text-message coupons to existing customers. Billed as a four-day “secret sale,” the local chain of eight stores also sent nearly 29,000 e-mails to the general public. The text-messages ended up paying off. Almost two-thirds (63%) of the revenue generated from the sale was attributed to the SMS coupon. The group further estimated that for every $1 spent in executing the text-message campaign, $122 was generated in revenue.

Subway, Arby’s, Jiffy Lube, BestBuy, Papa Johns, Village Inn and other major brands have also provided special offers through text- and multimedia-messaging. For most brands, mobile coupons have been delivered through text-message as codes that are manually entered by a cashier. Alternatively, brands may also use multimedia-messaging (picture/video-messaging) to send barcode coupons that can be scanned as a traditional paper coupon might.

Active audience
Short codes are changing the way viewers engage with traditional media as well. “American Idol” is arguably the most prolific example of viewers engaging with a TV program over text-messaging. In participation TV, viewers vote for contestants, play along at home or get additional information around a television program over SMS text-messaging. Already millions of mobile subscribers, in the U.S. and abroad, are participating with their favorite TV shows over text-messaging—some at standard rates and others paying a premium for the opportunity to vote or enter sweepstakes.

Increasingly, print and outdoor media are also employing text-messaging to engage readers. The most interesting case may be with two startups: ShopText and SnapTell, who work with publications to embed SMS interactivity into publications. While ShopText uses straight text-messaging and keywords to allow readers to request information, coupons and samples, SnapTell uses a multimedia-messaging approach to allow users to take a picture of a print advertisement, using their phone (Nielsen reports that 73% of U.S. mobile subscribers had a picture phone as of Q2 2008) in order to receive information, discounts or even free samples.

Total recall
So what affect does short-code marketing have on consumers? According to Nielsen, in Q2 2008, 16% of texters in the U.S. see some form of text-message advertising each month. Not surprisingly, teens are the most likely to engage with short-code marketing—35% see some form of text-message advertising in the course of a month. African-American and Hispanic mobile subscribers are also more likely than the average texter to engage with some form of text-message advertising in a month, at 24% and 23% respectively.

Of those texters who recall seeing some form of advertising while using text-messaging, 45% say they have responded in some way. And the most popular response to any type of mobile advertising (text, video, Internet, etc.) —s ending another text-message. Fully one-quarter of responders sent another text-message—emphasizing the interactivity and engagement this medium presents.

Connection protection
As text-messaging further expands in the U.S., so too will the opportunity to engage with customers over this highly personal and interactive medium. While consumers today may look at every text-message they receive, over-exposure to mobile text ads or sloppy targeting techniques could contaminate marketer’s ability to effectively connect with consumers.

As marketers consider this new medium, they should look at SMS and see an opportunity to engage with their core customer base in a new and unique fashion. Short-code marketing has all the potential of a mass medium in terms of reach, but requires a very personal execution. Perhaps more than any other advertising medium today, text-based marketing is as simple as a conversation.