ARCHIVES: This is legacy content from before Marketing Dive acquired Mobile Marketer in early 2017. Some information, such as publication dates, may not have migrated over. Check out the new Marketing Dive site for the latest marketing news.

Verizon rejecting new standard-rate mobile coupon programs?

Verizon Wireless, one of the largest carriers nationwide, is said to be rejecting new standard-rate mobile coupon programs, thus thwarting many marketer plans.

While executives from key brands and mobile companies are reluctant to go on the record for fear of upsetting the carrier, they claim that Verizon considers standard-rate coupon programs as third-party advertising.

"They are still in discovery mode on how they will support this model," said one mobile executive.

"The restriction on mobile coupons should not be very long as they plan to release new guidelines soon," the executive said.

Verizon, Basking Ridge, NJ, is not rejecting standard-rate mobile coupon programs already running.
A standard-rate mobile coupon program functions just the way standard-rate text messages do -- consumers are not charged for the SMS except the standard rates.

Verizon's rejection seems to fit a pattern of tough stands against mobile marketing.

The carrier is said to be extremely slow in provisioning short codes once they have been approved.

In other words, marketers and content providers are waiting months to run text message campaigns to their own opted-in database once the short code has been granted.

Also, Verizon gained notoriety last fall for a decision to levy a 3-cent transaction fee for every outbound SMS message sent to its subscriber base (see story). That move could have potentially threatened the viability of legitimate text messaging.

Also, the charge would have either double or triple the cost to marketers who send out SMS text messages to opted-in consumers who are subscribers of Verizon's mobile phone services. The planned fee hike was supposed to be effective Nov. 1, 2008.

But market outcry forced Verizon to rethink the issue -- at least for the time being.

Verizon then told SMS aggregators it would not impose a new 3-cent transaction fee for every outbound SMS message sent to its subscriber base starting Nov. 1.

Now, with this issue of mobile coupon programs, Verizon is set to raise frustration levels even higher.

Depending on the new mobile coupon program guidelines, Verizon's move may drastically increase CPMs from the $3-$5 band to $5 to $7, one executive said. Adding a couple of pennies to the text message rates -- zero at the moment -- would do just that.

Verizon matters simply because its network coverage nationwide is topnotch.

The company also boasts a subscriber base that is the largest among all carriers including AT&T, T-Mobile, Sprint and all regional and prepaid rivals.

Hence, Verizon's slowdown on approving mobile marketing initiatives is felt by all players in the ecosystem -- aggregators, mobile marketing firms, content providers, publishers and ad agencies.

Carriers such as Verizon are aware of their clout in the mobile marketing area, particularly in a channel they completely control -- SMS. One of the two ways of running coupon programs on mobile is through SMS and camera-click bar codes.

In fact, mobile coupon programs are developing into effective traffic-enabling tools for consumer packaged goods companies, food and beverage players, retailers and sellers of tickets for movies and entertainment.

Very often, these marketers use other media such as outdoor, print, television, radio, mail, print coupons and inserts to encourage recipients to double opt-in for offers and coupons delivered via text to mobile phones.

"If it's only building your database, it's not third-party advertising," a mobile executive said.

But Verizon may have a different interpretation. Is it a play for a cut of mobile-coupon revenue? Or is it a genuine worry that mobile coupons constitute third-party advertising whose increased deployment may harm the relationship between carriers and their subscribers?

"They're going to say if you're doing some third-party advertising, you must talk to the ad team to find a way to pay for the ad buys," one mobile executive said. "The goal is, how does Verizon make money off standard-rate messaging."