• by Steve Smith , Staff Writer @popeyesm, October 18, 2007

One of the core lessons of mobile marketing is how, in the right context, a little goes a long way. In an uncluttered and targeted environment, a small call to action can have a tremendous impact. Dynamic Logic just pushed a case study over to me that showed a 27% "brand favorability" lift from a display ad campaign on a major WAP destination. A mobile marketing company tells me they can get hundreds of thousands of pageviews to their music content portals off just a couple of display ads a month on the Sprint WAP home page. And now 4Info CEO Zaw Thet tells me that little 40-character SMS ads running in text alerts are pulling down 5% response rates, even in general branding messages. "High end response rates are 22% to 23%," he says.

Even as other providers are developing SMS ad networks, 4Info has been quietly aggregating messages it serves for 700 partners, amounting to about 50 million messages in the last quarter. The company has already flown campaigns for Chevy, Borders, Citibank, MobiTV and 1-800-Flowers.

Curiously, at the same time we hear of strong response to SMS ads, a Nielsen survey of consumers shows that text ads on mobile phones are the least trusted form of marketing messages. Only 18% of respondents say they "trust" SMS pitches, compared to a TV ad, which gets a 55% trust rating. Of course, we don't know how consumers are defining a text ad, whether it is a bug attached to an alert from a known publisher (like 4Info's opt-in system) or just a random spam message.

I always find the numbers around mobile marketing surveys like this a little hazy. The formats are so new that consumers themselves can't define precisely what kind of marketing pitch they are talking about. Of course, we are also in those early days when too many cheesy ads sully the market. How many young mobilistas have been pulled in by "free ringtone" offers that result in consumers "opting into" $9.99 a month mobile content subscriptions?

I think mobile marketing should be honest with itself about its own terrain. Sure, we all want the big brands to take the platform more seriously, but until then we also suffer from a lot of crap in the pipeline that turn consumers off.

User skepticism and the nano-ad format force marketers to innovate. Thet is already seeing a range of creative uses for the micro-ad format. Obviously, there are the pushes to WAP pages and click-to-call options. But some brands are using the text message to initiate a trivia game or even push immediate benefits to the user. The Borders campaign involved a phone coupon for the latest Harry Potter book. While enabled for performance, the ads are selling on a CPM basis, at $40. Is the price worth it? Well, even a Chevy branding campaign is getting 5% and up response rates, in large part because they are changing out the creative on a daily basis.

One of the potential beauties of an SMS ad network is that it allows dense user profiling without involving the carrier. Every message sent from a publisher to an opt-in recipient is going to a specific phone number, and so 4Info can track the types of content the user is subscribing to across partners. "The phone number acts as a permanent cookie," Thet says. For now, the targeting is rudimentary - demographics, contextually by content channel or geographically. But ultimately the profiles can be tied back to age, gender and income - information that the publisher may also be gathering through registration vehicles. It was only a year ago that everyone was asking how much targeting information carriers would offer up to marketers out of their highly detailed trove of customer data. Increasingly, as I talk to off-deck marketers like 4Info, it is becoming apparent that Web publishers will hold important user data that can be leveraged against mobile -- even without the carriers.

Even Thet admits that some of the high response rates on SMS advertising come from the novelty factor. But, if it follows the patterns of other ad formats, we may continue to see impressive response rates from all forms of mobile marketing because of the nature of the screen itself. Share of voice counts for a lot. Moreover, despite what the Nielsen survey says, I think people who opt into SMS alerts regard it as a service, and they are not likely to spam themselves with too many opt-ins. The environment seems right for artful marketers to add value -- either with genuinely relevant offers or with creative executions that make the ads as welcome as the alerts.