Mobile Marketing Set Back by SMS Fees

Fees for each text message may kill the business for SMS and MMS-based marketing, said a panel at CTIA Wireless 2009 today. (Edited to add: But with proven ROI, its up to the carriers to make this marketing strategy affordable.)

While the response rate to mobile advertising is high – 24% of consumers who have received a mobile-based offer respond to the message – many consumers and marketers are held back by price.

“The net revenue per message for advertising-supported SMS is $0.004,” said David Oberholzer, vice president of Limbo. “The model isn’t completely solid and it’s unrealistic to think the CPMs we’ll be able to charge will go up dramaticaslly.”

Carriers have not done much to support the growth of the mobile marketing channel, the panelists said. Verizon Wireless has helped out a bit, which told SMS aggregators it will not impose an additional 3-cent transaction fee for every outbound SMS message sent to its subscriber base, preventing the cost from doubling or even tripling.

“We don’t want to drive billions of messages and get a billion dollar invoice and $100 in revenue,” said Chip Canter, vice president of wireless platform development for NBC Universal. “That’s a fundamental issue in terms of investment, because we cannot make that investment if there’s uncapped liability on wholesale pricing.”

Still, text messages are more effective that other kinds of direct marketing: 70% of consumers that responded to a mobile marketing offer responded to a text message, compared with 41% who responded to a survey and 30% to email offers, the survey found.