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SMS short code marketing maturing: Nielsen

Advertisers are ramping up SMS short code marketing, according to a new Nielsen Mobile report.

President-elect Barack Obama's text message revealing his pick for vice president remains the most notable example of short code marketing in the U.S., but according to a report by Nielsen's Telecom Practice, Americans should expect to see more text message marketing in the future.

"The expansion of short code marketing depends largely on the ability of advertisers and their agencies to use this medium in an interesting and compelling fashion," said Nic Covey, Chicago-based director of insights for Nielsen. "The text-message audience is there, it's now up to marketers to create a reason that consumers would want to relate to them through such a personal and immediate medium.

"I bet marketers will meet the challenge," he said. "Already there are great examples for them to mimic."

According to Nielsen, Coca-Cola's My Coke Rewards program had engaged 1.1 million AT&T and Verizon Wireless customers as of Q3 2008.

"Coca-Cola has done a remarkable job of leveraging SMS for their MyCokeRewards program, creating a reason for consumers to have frequent and valuable interactions with Coke over text-messaging," Mr. Covey said.

Texting is immensely popular both in the U.S. and abroad, so marketers have ramped up their use of the medium to engage consumers.

"At 57 percent penetration, there's still plenty of room for SMS use to expand in the U.S. both in terms of penetration and sheer quantity, considering that penetration of texting has surpassed 75% in a number of European markets," Mr. Covey said. "Consider, too, that a number of contributing factors such as all-you-can-eat data packages, smartphones and QWERTY keyboards are on the rise in the U.S. and will help further drive text-adoption and use.

"From a usage perspective, the typical subscriber already sends or receives more than 350 messages a month, but older demographic groups still lag well below that average," he said. "We have every reason to believe that the universe of texters will continue to grow steadily through 2009 and the overall quantity of texting will expand as well."

Nielsen's report notes that so far marketers have used short code marketing in a range of ways, including simple information messaging, rewards programming, couponing and even direct SMS purchasing.

Subway, Arby's, Jiffy Lube, Best Buy, Papa Johns, Village Inn and other major brands have also provided special offers through text and multimedia messaging.

Short codes are also changing the way Americans engage with traditional media.

Participation TV falls into this realm -- with American Idol being the most prominent example of viewers engaging with a TV program over text messaging.

Radio listeners are also increasingly being called to action via text message.

In Q2 2008, for example, Nielsen's tracking of short codes showed more than a million transactions with the short code "A-L-I-C-E" (or 25423), a short code assigned to the station Alice 97.3 KLLC-FM in San Francisco.

Alice listeners are frequently invited to send text messages directly to the studio to make requests, win prizes, and enter polls.

The universe of texters is quickly expanding to include the full spectrum of mobile subscribers.

"In the over 35 crowd, in particular, we see more and more subscribers sending texts," Mr. Covey said. "Take subscribers 35-54: Last year just 37 percent of them regularly sent text-messages, while this year that's up to 59 percent.

"Even among subscribers 55 and older the adoption has been fast," he said. "Last year just 13 percent of subscribers 55 and older sent text messages, while this year one in four do.

"As we've seen in other markets, SMS is a data use of broad appeal, and as such, SMS is also the mobile marketing channel with the largest and most diverse addressable audience."

In their SMS marketing efforts it will be critical that marketers abide by the guidelines set forth by the Mobile Marketing Association and monitored by CTIA and the carriers.

These guidelines are in place not just for consistency and order, but to protect the overall value of the SMS medium.

"It's imperative to all of us that consumers come to view SMS as a safe, interesting and reliable means of communicating with brands," Mr. Covey said. "To ensure that, marketers need to pay careful attention to the parameters around their short code campaign."

Does the consumer know what they're getting out of it and how often? Does the consumer know how to stop SMS communications when they so desire? Do they understand they're paying for each message if they aren't on an unlimited package?

"There are those sorts of tactical best practices to study and execute, but from a creative standpoint, the short code marketing opportunity is still largely a blank slate," Mr. Covey said. "The door is wide open for advertisers and agencies to find creative ways to communicate with potential customers or brand loyalists at a pace of 160 characters at a time.

"As marketers ramp up their SMS efforts, I believe 2009 will give us a great degree of visibility into what works and what doesn't," he said.

Marketers should keep in mind that SMS and traditional media complement each other.

"One of the most compelling parts of short code marketing is that it provides an opportunity for brands to drive response immediately, wherever the consumer is," Mr. Covey said. "In that way, short codes should change the way we think about other traditional media.

"To me, short codes offer consumers and brands the engagement opportunity of a direct-response phone number, without the commitment," he said. "That is to say, brands that are not using short codes as an option for more information or engagement on all of their print and outdoor ads are probably missing an opportunity to extend the value of those media by keeping the conversation alive."

Nielsen's report states that short codes will continue to be not just a medium, but also a metric for traditional media.

"Here, I mean that we'll increasingly see short codes as a back channel of information and consumer response, such that marketers should be able to use that info to help optimize the adjacent, traditional media," Mr. Covey said.