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Advertising on wireless SMS: another dot-com bubble?

It can't last. In a world where advertising is a shrinking market, the boom in SMS message adverts can't be sustained, says IDC.

LONDON, June 20, 2002 - The mobile advertising market has only been with us for approximately two years, but has enjoyed considerable success, thanks to the acceptance of SMS. Despite having started off as a niche market, it appears that everybody now wants to jump on the mobile advertising bandwagon. However, the novelty might wear off among users, who will continue to be targeted by an increasing number of players, and it will be difficult to evaluate how effective campaigns are. Nevertheless, IDC believes that there is big potential for the market to expand and returns could be even greater.

"This market has come about as a result of the huge popularity of SMS and the willingness of companies to promote their brands further. Fundamentally, SMS is one area in the mobile data world where operators are making money, as users are increasingly willing to pay for premium SMS content," said Paolo Pescatore, Senior Analyst from IDC's European Mobile and Wireless Communications program. "The channel itself is accepted and very personalized and allows for greater interaction to take place, enabling a relationship to be formed. Campaigns, however, need to be targeted, personalized, and must provide value to consumers. The message needs to be kept as simple as possible, as well as being entertaining and interactive, so that the user is acquired, which increases loyalty."

However, there are several key issues that need to be addressed. Primarily, there must be clear opt-in and opt-out routes for users, maintaining the integrity of databases and ensuring these databases are not misused, leading to spam. There are other issues, such as different handset standards and the current limitations of SMS (only being able to send 160 characters, for example). With the advent of better quality handsets and the introduction of next generation messaging services, these issues will disappear, and pictures and graphics will improve the messages that companies want to send.

IDC's bulletin, Mobile Advertising (IDC #HM21H), looks at the history of European mobile advertising and marketing, and covers drivers and inhibitors for this market. In addition, the study includes examples of companies involved in this area, as well as examples of SMS-based marketing campaigns. Finally, the study contains information on location-based services and regulation. This study is available to purchase from your local IDC office.