PLAN, DON'T SPAM, FORRESTER
WARNS EUROPE'S SMS MARKETERS
AMSTERDAM, Netherlands, January 25, 2002 . . . SMS gives Europe's
marketers a new channel to two-thirds of the 250 million European mobile
phone owners who use SMS. But while early adopters easily book response
rates five times higher than direct mail, long-term use of the SMS medium
requires careful campaign planning, according to a new report by Forrester
Research B.V. (Nasdaq: FORR).
"The 40 early-adopter marketers we interviewed gave SMS a thumbs-up
because it gives them a new channel to reach increasingly elusive
consumers anytime, anywhere," said Forrester Analyst Michelle de Lussanet.
"In November 2001, we conducted an online survey of 205 direct marketers
in conjunction with the Federation of European Direct Marketing (FEDMA).
This shows that today, 21% of respondents use SMS marketing at least
occasionally, and 12% have trialed it. However, 56% plan regular SMS use
in 2003, devoting 7% of their budgets to it on average. With a remarkable
average response rate of 11% at a low average campaign cost of 24,000
euros, SMS offers great economics, but marketers have should be skeptical.
In the past two years, they have seen another revolutionary new channel --
email marketing -- lose its effectiveness. SMS marketing differs from
email because it provides marketers with three ways of campaigning -- not
one. Marketers agree: SMS is here to stay, citing its high speed,
interactivity, and reach as the medium's top advantages
Marketers can use three types of campaigns to engage consumers through
SMS: One-off push campaigns resemble email marketing and are used to build
awareness; one-off pull campaigns are similar to retail promotions; and
continued dialogue is comparable with loyalty schemes, used for customer
retention. Each type carries a different payoff. We found that one-time
push's CPM of 107 euros beats that of email campaigns, one-time pull's
average 13% response rate undercuts phone and mail alternatives, and
continued dialogue has no comparable alternative. One-time push campaigns
need consumer permission to avoid clashing with privacy regulation and
tarnishing a marketer's brand; this brings limits to the growth of this
campaign type. Pull campaigns sail past privacy problems -- integrated
with a wide range of media channels like TV, radio, billboards, and
product packaging, this campaign type will see booming uptake.
"Marketers need service providers to execute on their SMS vision just as
mail houses handle their direct mail campaigns, but choosing one from the
70-plus in Europe today isn't easy," de Lussanet added. "Vendor
involvement will weave through marketers' planning, execution, and
analysis of SMS campaigns: In the course of this cycle, the vendor will
carry out three key processes -- creative, technical, and delivery. An
effective vendor will employ creative designers that can generate a
concept and optimize message copy for a high response. To execute, the
provider must host an SMS platform that manages the complex two-way
streams of messages between marketer and target audience. To get SMS
messages from application server to phone, providers must have access to
physical links to mobile operators' SMS centers, and they must be able to
manage a load of SMS messages scaling into the millions without creating a
crippling backlog."
Forrester graded SMS service providers for each type of campaign, and our
scoring reveals that many providers can deliver one-off push campaigns.
Buongiorno, 12snap, emunity, MindMatics, and brainstorm make the vendor
shortlist for this campaign type -- with Buongiorno ranking highest.
One-off pull campaigns present the fewest options; Reach-U Solutions,
Buongiorno, Rtn2Sndr, Wireless Information Network (WIN), and Goyada
display the strongest skills for the pull campaign. Finally, MindMatics,
flytxt, brainstorm, 12snap, and emunity rank highest for
continued-dialogue campaigns.
For the report "The Marketer's Guide To SMS," Forrester conducted an
online survey of 205 direct marketers in conjunction with the Federation
of European Direct Marketing (FEDMA). To reach a representative sample of
European marketers, Forrester worked with four of FEDMA's country-specific
sister organizations: Germany's Deutscher Direktmarketing Verband (DDV);
the UK's Direct Marketing Association (DMA); the Netherlands' Nederlandse
Associatie voor Direct Marketing, Distance Selling en Sales Promotion
(DMSA); and Spain's Federación de Comercio Electrónico y Marketing Directo
(FECEMD).
Forrester Research is a leading emerging-technology research firm,
analyzing technology change and its impact on business, consumers, and
society. Forrester's "Whole View" provides clients with a comprehensive
set of research that reveals how technology change affects their
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Francisco, Calif., and Toronto, Canada. Forrester's European Research
Center is located in Amsterdam, Netherlands, its UK Research Centre is
located in London, and its Research Center Deutschland is located in
Frankfurt, Germany. Additional information about Forrester Research can be
found at www.forrester.com.
FEDMA is the European Federation for the direct / interactive marketing
business dedicated to representing direct marketing in all its forms.
FEDMA's objective is to protect and promote the European direct marketing
business by creating, through representation, self-regulation and
information, acceptance and confidence in direct marketing within a health
commercial and legislative environment in which the sector can profitably
operate and develop.
FEDMA has more than 350 direct members and represents nearly 10,000
companies indirectly through its national DMA members