Nate Elliott

[cross-posted to the Forrester Interactive Marketing blog]

At Forrester (where I work as an analyst) we continue to see a lot of industry excitement around mobile marketing. In a recent survey more than 60% of mobile marketers told us they’d continue to increase their spending on the channel despite the bad economy. And according to Forrester’s latest ad forecast, mobile marketing spending in the US will more than quintuple over the next five years.

There’s just one problem: SMS is the only mass-reach mobile marketing channel, and no one — not marketers, and certainly not users — seems to like it much.

More than twice as many people use SMS as use the mobile internet — or any other mobile service, for that matter. (The mobile internet and mobile video may well become great ad platforms one day, but the fact is not many consumers use these services right now and those who do use them don’t spend much time with them — meaning there’s simply not much reach or inventory.) And believe it or not SMS can actually work incredibly well for marketers. We regularly hear that SMS campaigns get response rates of 5% to 25%. Better yet, when Calvin Klein and their agency OMD sent SMS messages to a well-targeted SMS list, fully 39% of users who received the message opted in to receive a sample of CK’s new fragrance.

But despite this success, marketers just can’t seem to love SMS as a marketing channel. Some marketers are worried about looming government regulation. And lots of marketers tell us they’re waiting for richer channels (like mobile display ads and mobile video) to come of age. But the biggest problem is that marketers are afraid users will hate them if they send SMS. According to a survey we did in the UK last year, they’re right to be worried. On average, consumers are four times more likely to delete SMS and MMS marketing messages without reading them than they are to take a moment to consider the product or service being offered:

So how can SMS marketers avoid user backlash and generate those great response rates we hear about? I think they need to follow a simple best practice that I call the “golden rule of SMS marketing”: If you can’t target an SMS, then don’t send it. After all, when your marketing is targeted well, users stop thinking of it as marketing and start thinking of it as content, or a service. That’s the reason CK did so well with SMS — they targeted users who were most likely to appreciate the offer of a free sample. In fact, in nearly every successful SMS campaign I’ve heard about, messages were only sent to users who were either pre-qualified or targeted in some other way.

There are two ways for marketers to follow the golden rule of SMS marketing:

1. Only send messages to your own list. If users have signed up to hear from you by SMS, then you know they’re qualified leads who won’t be offended by your choice of marketing platforms. Every marketer interested in using SMS should work to build a house list of SMS leads — with a contest, a lead form on your site, or if you’re in a hurry by promoting a short code in your traditional marketing efforts like Kraft has done.
2. Get access to a highly targeted list. Blyk is one good example of a vendor who can segment and target their SMS audience, but at the moment they only operate in the UK and the Netherlands. We haven’t seen many other ad sellers who can do this (if you want to recommend others, do so in the comments below) — but I’ve no doubt we’ll see more operators and vendors take this approach in the future.

If you’re a Forrester client and you want to read more about SMS marketing, check out my report The Joy of Text: Using the Golden Rule of SMS Marketing in Europe or my colleague Neil Strother’s report SMS Marketing: Leveraging Call-to-Action Features of Cell Phones to Maximize Effectiveness.

And as always, I’d love to hear your thoughts — feel free to comment below, and I’ll check back to participate in the conversation.

A quick note for clients: our new European online advertising forecast is now live on the Forrester site — and the good news is, we don’t think the market is quite as ugly as some others would have you believe. If you’re not a client, don’t worry, I’ll have a post live in the next few days with the forecast highlights. But for now, clients can get all the details here.

Over the past few weeks I’ve conducted about a dozen briefings and interviews for a new report I’m doing on online ad targeting, mostly with vendors and publishers. I’ve also spoken with a couple of advertisers, and pulled some interesting data on targeting from our most recent advertiser executive survey. But to round out the research, I’m looking to speak with a few more advertisers who have hands-on experience with various ad targeting systems: those who’ve set up segments and targeted ads with Tacoda/PlatformA, Wunderloop, Nugg.ad, Revenue Science, or others, who have used the self-service targeting available on MySpace and Facebook, or who have worked with publishers that use DoubleClick’s Adapt optimization engine.

If you’re an advertiser or agency who’s used any of these targeting systems or platforms, I’d be really interested to hear more about how they worked for you. How did you choose which targeting system or vendor to work with (or was it simply a function of which vendor your chosen media outlet was using)? How did total effective CPM of the targeted inventory differ from the CPM you pay on untargeted inventory — and what was the impact on ROI? What did you learn about how best to use targeting technologies — and what advice would you give to others who are just starting out?

I’d be pleased to see your comments below, or to speak with you in more depth — if you want to reach out to me for a detailed conversation, e-mail me at nelliott (at) forrester -dot- com.

I’m working on a number of new reports right now — I’m well into a report on display ad targeting, I’m putting together my research plan for a big report on measuring social marketing, and I’ll be working on a report soon about online video creative as well — but there’s one in particular I’d like to ask for your help on: SMS and MMS marketing.

If you’re an advertiser or agency who’s used SMS or MMS marketing lately, I’d love to hear your experiences. Why did you choose to use mobile marketing? How did SMS/MMS fit into your overall marketing strategy? How did you choose the carrier or other vendor you worked with for your campaign? How did the SMS/MMS perform — and what went well (or didn’t go well) with your campaign? Will you be using SMS/MMS again in the future? What advice you have for other marketers looking to use SMS marketing?

I’d be pleased to see your comments below, or to speak with you in more depth — if you want to reach out to me for a detailed conversation, e-mail me at nelliott (at) forrester -dot- com.

Jupiter/Forrester works with a lot of large European telcos; all the big former national telecom operators are clients, as are most of the significant new challengers that have sprung up in the last decade. But I don’t typically have much direct contact with them — they simply don’t ask many questions about advertising.

However, in the past week, two of those telco clients have approached me and asked basically the same question: what role can — or should — telecoms and ISPs have in online advertising? These companies are trying to figure out if they can capture any of the billions of Euros that are pouring into online advertising in Western Europe right now.

I’ve spent some time thinking about this topic over the past few days, and of course I’ll be brainstorming with my colleagues (especially Ian Fogg) before I fly out to see these companies and answer their questions. But I’d love to hear your feedback as well. If you have an opinion on how (or whether) a telecom or ISP can start to claim a larger share of the online ad spend — or if you have any good examples of telcos capturing significant online ad revenues, regardless of whether they’re in Europe or elsewhere — post a comment a below. Thanks!