NewsLine Column: Premium Rate SMS – Risk vs Reward

As broadcast media channels turn up the volume of premium rate SMS promotions, Nick Wiggin, mobile marketing specialist at WhoHow, argues that most consumers are savvy enough to know what’s going on with text promotions, while short sighted media owners risk suffering long term negative association with their brand from those consumers that do not check their phone bills regularly.

You may recall the headline news stories last week in the national news coverage: “Revenue from ringtone downloads to exceed CD sales”. Coca-Cola is no doubt particularly pleased as the number one ringtone in Europe is derived from a song on one of the adverts for their brand. Although not making much impact in the UK this Europop single has been number one in six European countries.

With over five and a half million downloads of the ringtone so far the brand association impact through this new communication channel is significant. The catchy brand related tune is heard by a target audience that actively requested this feature 10, 15 or more times a day. They probably turn it up when their mates call, they think it’s cool and therefore Coca-Cola is benefiting from a positive brand experience.

So here is an example of positive brand effect through a premium rate mobile download, ie: where the consumer is paying more than the standard price of a message for the privilege of accessing the content. In most cases an advertiser would be advised to bear the burden of the cost of SMS communication, particularly if repeated communication is desired at a low incentive level for the opted-in subscriber. However, the ringtone example shows that sometimes premium rate activity may be right to talk to consumers in a one off transaction approach. Having said this the option chosen by media owners to get the audience to effectively pay for programme production is undeniably questionable.

At a time when premium rate telephony companies are on the verge of launching their own TV channels, one should start to question the impact that over priced message costs are having on the audience. Media owners such as Channel 4 and Emap have built a strong rapport with their opted-in SMS databases by maintaining frequent and timely communication via text message, with strong incentives and relevant content. Certain breakfast channels, on the other hand, are testing the strength of their audience relationship with a deluge of premium rate competitions.

At a time when media fragmentation is rife and channel loyalty is paramount, the short term gain option is a risky route to take. Recent research suggests that there is a honeymoon window of opportunity before the audience will start to turn off.

JVTV,the student TV network of plasma screens in Unions, conducted a premium rate competition as part of its evaluation of student receptivity to interactive TV. With a one in three chance of winning a mobile voucher, which could be instantly redeemed at the bar for a free Grolsch, the response rate was low.

Interviews with students revealed that they were savvy enough to check the details on the screen with regards all promotions and didn’t believe that the 25p entry point was justified. JVTV changed the entry price to ‘the price of a standard text message’ and the response rate grew by over 200%. This should act as a wake up call for media owners and brands that want to drive impacts and interactive response rates.

In summary, if the incentive is strong enough for entry then response rates will reflect that, however if response rates start to fall after a brief window of success then the price point should be top of the list for critical evaluation.

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