It sounds too good to be true: a message sent directly to an individual promoting a particular soft drink when the consumer is passing a participating kiosk – when, and only when, the temperature rises above 25°C.
What would have been dismissed as a marketer’s fantasy only a few years ago is now reality; thanks to mobile phone technology. This temperature-triggered campaign was a real one implemented in Australia, and made possible by location-based SMS (short message system) communication.
The campaign, linked to a two-for-the-price-of-one promotion, illustrates perhaps the greatest strength of SMS – its instant effectiveness. The man who dreamt it up, Martin Lindstrom, is now senior vice-president of Digitas Europe, a marketing and technology company that uses a range of interactive techniques.
Lindstrom says the second reason why mobile messaging is such a powerful medium is the conciseness of any communication. He says that this imposes a valuable discipline on the company that is communicating. Finally, it is the individual nature of mobile phones that makes SMS effective in its targeting. He says: “The mobile phone is one of the most personal devices you own. In this, it performs better than-mails, faxes or most other electronic media.”
While SMS is not as big in the US as it is in Europe, there are parts of the world where it is becoming a more far-reaching medium than television. It is particularly effective with younger, brand-aware consumers.
Lindstrom says that it is also far from being limited to only certain socio-economic groups. In the Philippines, he reports, about half of the 72 million population has mobile phones, while only a minority owns a TV. The average Philippino is estimated to send 23 SMS messages a day.
Given that mobile phone ownership – already widespread in many markets – is likely to grow further, combined with the direct and immediate benefits, in terms of message targeting, SMS marketing is set to expand at a speed comparable to, or even greater than,-mail marketing. The burning question for both is: what regulation, if any, is required?
Lindstrom takes the relatively extreme view, for someone so closely involved in the industry, that messaging must be permission based, resting on the consumer’s active opt-in, and must be regulated by law. In Australia, he says, opt-out only messages are banned (messages where the consumer has no chance to opt-in), and the Direct Marketing Association (DMA)’s equivalent in Australia supported this regulation. Lindstrom says: “There should be a sign-up procedure so that people can opt in.”
The argument of people such as Lindstrom is that mobile communications and-mail are quite different from other media. The nuisance factor from unsolicited messages is much greater than general direct mail. They argue that, as the volume of messages grows, this negative impact on consumers will increase.
John Stone,-mail messaging company Xpedite’s European managing director, says that whether it’s mobile phones or-mail, the implications are clear. He says: “Spamming in whatever form damages the recipient’s perception of the product, but it also undermines the legitimacy of the whole industry. Our company is, and should be, a proponent of permission-based, opt-in marketing.”
He explains that the service has moved on from fax to-mail and now to SMS messages for existing customers.
In Stone’s experience, having an opt-in or even double opt-in – where the consumer has to actively confirm and re-confirm that they do want to receive messages – ensures a far higher response rate. The company says it will not deal with clients that do not provide a return address and easy opt-out. Stone says that if these priorities are important for-mail, they are even more important with SMS.
But predictably perhaps, despite these strongly-held views Stone, like other service providers, shies away from any regulatory solution. He voices a common position saying: “I’d prefer to find a self-regulating solution, rather than relying on government legislation.”
As an example of the way that self-regulation works, Stone cites the way in which-mail addresses found to have been the source of spamming are likely to be blocked from sending messages through their Internet service provider. He also notes that Xpedite itself requires strong evidence that users’-mail lists are permission-based and that they target individuals.
As the EU debates legislation on both SMS and-mails, new and established industry associations are manoevering to make their positions clear and, where possible, harmonise their demands. In the UK, the DMA advocates a legal minimum of an opt-out. Legal manager Jodie Sangster says: “But if people want to use opt-in, we will support that, too”.
According to the DMA, there is already sufficient legal protection against spamming, with both the 1998 Data Protection Act and the E-mail Preference Service covering this area. The Data Protection Act requires companies sending-mails to provide an opt-out. The effects of signing onto the Preference Service seem mixed, though. Sangster adds: “You will at least receive far fewer-mails, if you do this”.
The argument of those favouring self-regulation tends to be that companies that spam in the true sense of the word, buying-mail lists without the consent of individuals or indiscriminately trawling chat rooms for addresses, are breaking the law already. No amount of further legislation, the argument runs, will bring them into line.
Sangster says that Europe’s initial approach on both these technologies was in favour of regulated opt-in requirements. The-mail component has since been amended to take a more liberal opt-out approach. But whether this amendment is accepted, or the draft legislation sent back for further work, will only be known when the European Parliament votes on it on September 5 – just as this article is hitting the newsstands.
Sangster says: “SMS is in an even greater state of confusion than-mail”. Currently, as part of the Electronic Communications Directive, the EU is treating SMS as a form of automated calling system. If this definition is upheld, the DMA reports, it will be subject to an opt-in. This could take another six months to be adopted by the European Parliament, and maybe another two years before being implemented in the UK.
Alongside the DMA, new channel-specific associations have sprung up, each arguing for the interests of its own particular part of the industry. In some quarters there is a feeling that the DMA does not necessarily understand the precise needs of these newer media.
A key distinction for the newly-founded E-mail Marketing Association (EMMA) is between data collected and used by a company that the consumer is already in contact with and third-party lists. In the case of third-party contact, says founder and co-chair Chris Combemale, it advocates an active opt-in by the consumer.
Like the DMA, EMMA would prefer a self-regulatory approach and has published its own charter. But it is less vehement in its opposition to additional legislation. Combemale says: “EMMA doesn’t particularly object to the EU wanting to impose opt-in as a standard, but it feels it can get there through self-regulation.”
Working in tandem
Similarly, the Wireless Marketing Association (WMA), which groups companies operating in the mobile messaging arena, is establishing a joint approach with EMMA, based on an opt-in standard. By setting up the association last year, chairman Steve Wunker says that members were sending out a clear signal that SMS and other wireless systems were qualitatively different from-mail messaging and alternative direct marketing methods.
Wunker says: “EMMA wanted to underline the fact that wireless marketing is a new medium, but it also wanted to head off spamming. It thinks that consumers will be quite upset if the level of spam already reached in-mail migrates to mobile phones.”
The WMA identifies different levels of opt-in, from the strict confirmed opt-in favoured by Xpedite’s Stone, based on a positive reply from the recipient, to an active expression of consent on a website, for instance, involving some sort of tick-box mechanism. The least strict option, and one already used in much direct marketing literature, uses a clause in the general terms and conditions to which the consumer is assumed to have agreed, for instance, when they enter a competition or promotion.
Like EMMA, the WMA believes that a self-regulatory approach will be sufficient. Since the technology operates across borders, even EU legislation would not eradicate abuse, since operators could simply, as Wunker points out, set up in Switzerland. He emphasises that the key to stopping this kind of abuse of the medium is to make it clear that it does not make commercial sense.
Wunker says: “That said, if legislation was brought in based on an opt-in approach, we could live with it, so long as the opt-in wasn’t closely defined. We don’t want governments telling us how boxes have to be ticked. Wireless technology moves very fast in this area.”
It is, perhaps, on the status of the third “passive” type of opt-in mechanism detailed by Wunker, that the two newer associations differ from the DMA. There is, after all, a major difference between the consumer positively signalling that he or she wants further communication and merely being assumed to have given that permission. If the DMA is reluctant to put its weight behind a stricter definition of opt-in, it may well be because it fears the “migration” of those stricter standards from electronic into more traditional media.