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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, 5% 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, 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 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 WholeView™ provides clients with a comprehensive set of research that reveals how technology change affects their customers, drives their business strategies, and dictates their investment in technology. Clients receive continuous research and analysis through Forrester eResearch® Reports, an array of Advisory Services, Assessment Tools, and topical Events. Established in 1983, Forrester is headquartered in Cambridge, Mass., with a North American Research Center in San Francisco, Calif. 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.

Contact:

Clive Savage
European PR Manager
Forrester Research B.V.
+31 20 305 4868
csavage@forrester.com