• by Steve Smith , Staff Writer @popeyesm, September 4, 2007

According to some recent stats, there are over 20 billion SMS messages passing across the ether each month in the U.S. market alone. As the father of an adolescent, I am not surprised. I think my daughter's teen suitors alone account for a good chunk of that figure. The signature beeps my daughter assigns these incoming SMS flirts are bad enough even when she doesn't answer them right away. Just walking down the street, she sounds like a truck backing up.

But if you are a resourceful media innovator rather than the father of a teen girl, all of those SMS alerts sound more like ad inventory being wasted. It was only a matter of time before someone came along to knit this flow of messages into networked ad inventory. While I am sure there are others working on a similar idea, MoVoxx is the first company I have seen that is starting to serve ads into a collection of SMS publishers. Using inventory from SMS alerts by NASCAR, newspapers and some major league sports groups, MoVoxx is hoping to transform a 2-cent-a-message expense into a ten-cent-a-message revenue opportunity.

"We are able to charge high CPMs because most publishers have data on their cell phone users," says managing partner Alec Andronikov. In most cases, the publishers are getting just age, gender and zip code, but that is already enough to do more precise targeting than many mobile campaigns. When users opt into the NASCAR mobile alerts, for instance, the publisher gets basic demographics and zip codes. If NASCAR has 200,000 subscribers nationwide, there is enough mass there to net perhaps 80,000 users in a general geographic region for a supermarket chain to target. MoVoxx will split a CPM of up to $100 with the publisher. The company devised an opt-in series of alerts for dining out specials from Mercury News and nightlife offers for San Francisco Guardian.

Ultimately, MoVoxx should be able to fly campaigns across multiple publications as it aggregates audience. Of the many billions of SMS messages that are moving each month, Andronikov guesses that 500 million of them are some kind of publisher-pushed alert that conceivably could be sponsored. Right now, he claims about 3.5 million uniques with sports, travel, dating and newspapers comprising the largest content categories. The creative is a very simple call to action that has to occur in a limited 20 to 80 characters of space. The character limitation of an SMS makes it difficult to include a full URL link to the sponsor within the message, especially if you are trying to meter the response by sending the user to a precise and lengthy URL. Generally a reply to the alert will trigger a return message that then includes a link to a Wap page. Andronikov claims a response rate of 2.5% to 4% on the SMS ads.

This sounds like an ingenious plan to me. It gives publishers a revenue stream that only encourages more content development. For advertisers, it offers mobile targeting on a text platform that people really do focus on. Just given the brief, concentrated nature of an SMS message, those 4% response rates don't surprise me. It is almost impossible not to read the ad in the context of an SMS screen. The only downside to ubiquitous SMS ads is the larger issue of mobile ad clutter. As much as the sponsorship model makes such great sense for expanding a media platform like mobile quickly, it also stuffs even more promotions into a small space. Most of the consumer research we have seen shows little negative impact on carriers and publishers from mobile advertising. Indeed, I suspect that most mobile users don't mind a text link or banner ad in their WAP pages, and if marketers get the formats right, I imagine even some kind of mobile video advertising also will fly without much complaint. And generally, I am a big proponent of ad-supported mobile media. As much as I like having games, news, and some distractions on a phone, I don't believe these are high-value items to most users that a fee-based eco-system can bring to its full potential.

But there is the real risk of choking the platform with ads coming from too many directions at once. As each piece of the mobile media environment -- text, WAP, video, MMS, voice, games, etc. -- looks towards ad models, someone has to start asking how it all adds up in the user experience as she traverses the deck that she still pays $60, $70 or more a month to use. A single banner on a WAP site is no big deal. A three second pre-roll on a video clip (if marketers can be this disciplined) is also reasonable, as is a text ad on a search result or some branded entertainment slipped into a mobile video library. Without a shred of supporting evidence, however, I do have to wonder about the cumulative effect of consumers encountering ads at every turn.

At what point does the phone go beyond delivering welcome messages from NASCAR, and start looking and feeling itself like a NASCAR racer, stuffed to the windshield wipers with branding messages?