Posted: August 30, 2007

Anam Mobile has revealed that global mobile operators are losing out on as much as €3.6billion (£2.4billion) of revenue per year through lost opportunities to create value-added SMS messages.

Text messaging has grown into a phenomenally popular form of communication, with research from the telecoms analyst company Informa Telecoms & Media revealing that over 600 billion messages were sent worldwide during the first quarter of this year – over 75 messages for every mobile subscriber. Yet many operators are focusing on other, less well-established, data applications as they aim to increase ARPU and profitability.

By introducing new data services through SMS, operators can tap into the existing level of comfort that consumers already feel when using the short, 160 character format. This approach will make it easier for new services to be adopted and can attach real value to the messages that individuals already send.

“After voice, text messaging is still the most popular application on mobiles,” said Dan Winterbottom, Senior Analyst, Mobile Content & Applications at Informa Telecoms & Media. “Yet when it comes to innovation and new services, text messaging is being ignored by many operators in favor of new data services. There is an innate understanding by subscribers of how texting works, this could be utilized by operators when they introduce new services.”

Currently, a large proportion of text messages are included as part of bundled deals provided by operators and therefore are, in effect, free to the customer. This means that each individual message has a low perceived value to the user and almost no financial value to the operator.

However, there are many applications that could potentially be introduced to consumers through SMS. If the subscriber is able to use SMS to interact with their device in a more efficient, more enjoyable or more productive way, then they will be willing to pay a small additional fee for those SMS messages. The subscriber will accept that these messages fall outside of the ‘free’ text bundles, or add on a new bundle to their service plan; SMS messages are one of the few services that the user will always know how to use on their mobile phone.

Gerry McKenna, CEO of Anam says, “I am constantly surprised that, until now, operators have not fully grasped the opportunities available to them through SMS. The €3.5 billion of missed revenue can be earned by simply enhancing the text services that they offer customers. There doesn’t need to be a shift in consumer mobile behavior - they can stick with their trusty SMS message, whilst the operator is able to create immediate results with additional revenue streams.”

Similarly, many advertisers have yet to grasp the potential of text messaging as an integral part of their marketing strategies. Aside from the staggering usage statistics mentioned above, SMS is the mobile service that the most users feel comfortable with and already know how to use. The only potential stumbling block mentioned above regarding the carriers does not apply to advertisers: extra cost. Since mobile marketing is handled by a company such as Cellit, and not the carriers themselves, advertisers are able to utilize the messages that most subscribers are already allotted as part of a text bundle or other plan. Thus if mobile users are willing to pay extra to “interact with their device in a more efficient, more enjoyable or more productive way”, then how thrilled would they be to do the same thing with advertisers for no extra cost, especially when they would only be receiving these advertisements and offers from companies whom they have specifically requested information from via an opt-in system?

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