• by Alan Pascoe , November 18, 2009

Last December, marketing and media information firm The Nielsen Company, in "The Short Code Marketing Opportunity" report, captured why short message service (SMS)-based advertising campaigns will flourish: "Where there's an audience, marketers are not far behind."

Mobile advertising offers brands an unprecedented ability to build highly targeted, personal relationships with their audiences. Advertisers have two options with SMS: a dedicated text message ad or in-message SMS advertising, which enables operators to insert sponsored content into the unused portion of text messages. In either form, SMS provides the widest possible consumer reach of any mobile channel.

As advertisers and operators get more sophisticated with mobile advertising campaigns, subscribers can expect several changes to their user experience in the coming years.

Demand for Opt-In Messages.
Advertisers and operators have to tread carefully on consumers' privacy and be diligent to not send unsolicited advertising. The key: getting users to opt in to receive sponsored content. The goal is a win-win situation with mobile advertising offering consumers something in return - either rebates, coupons, prizes, or extremely relevant and targeted advertising that is perceived as valuable and "inside" information.

Location-Based Offers.
Subscribers' usage profiles, combined with location information, provide dynamic data that can be the foundation for highly targeted advertisements. Subscribers can receive personalized SMS ads for a neighborhood restaurant or retailer when they enter a one-mile radius of the business. Group-based ads would contain sponsored content which would be sent to all subscribers attending a sporting event, waiting at a subway station or sitting in an airport terminal.

Twitter and Social Network Ads.
In-message SMS advertising can also be appended to social network SMS messages, allowing operators to insert sponsored content to fans of a specific celebrity, sports teams or brand. Operators can piggyback on highly-followed celebrities by selling advertisements, for example, for Oprah's Book Club to Oprah's followers or a band's latest album when the group tweets. Because subscribers opt in to receive updates, advertisers and operators have confidence about the audience relevance.

Operators Enriching Voicemail Notifications.
In addition to selling white space to third parties, operators can capitalize on it as well. Subscribers should expect that their voicemail notification messages (which are, in fact, SMS messages) will contain enriched content to better engage them. For example, operators can add holiday greetings or promotion of new services, differentiating their voicemail service from what competitors offer.

Machine-to-Machine (M2M).
In a few years, M2M communications will be a significant contributor to SMS traffic, and could correlate to companies' advertising efforts. For example, vending machines in shopping malls could send SMS messages to distributors about inventory status. Depending on the volume of beverages, brands could then send text ads to mall shoppers offering discounts or letting them know when new products become available.

The benefits of SMS advertising provide long-lasting results to all parties, and add new dimensions to advertising campaigns. Most importantly to operators, SMS advertising increases revenue. This is especially important as message volume is forecasted to outpace revenue growth. According to Frost & Sullivan, the number of text messages is forecasted to expand at a compound annual growth rate (CAGR) of 15.6 percent from 2007 to 2011, while SMS revenues are only expected to grow at a CAGR of 5.9 percent over that same period (Frost & Sullivan, 2008).

Operators will soon take more advantage of the pervasiveness, immediacy and relevance of SMS. If done correctly, all sides - subscribers, operators and advertisers - will benefit.