M-advertisements, alerts now for a price

The mobile advertisement segment is likely to witness a southward spiral thanks to around three-fold increase in the interconnect charges being levied by the operators.

“There is a direct effect of SMS advertising on the sales of a product/service. The new prices that will be levied will not only effect the bulk SMS companies but also impact the consumers in the long run,” says Satyakalyan Yerramsetti, CEO of SMSCountry, which has recently launched international free SMS service. While earlier the interconnect charges were in the range of 4-5 paisa, the operators have recently increased them to 10-15 paisa, which is to be paid to the network operator that receive the SMS.
Given the fact that banks and airlines, among others, use bulk messages to reach out to their customers, the new prices have colossal effect. The dramatic changes in the bulk SMSes may impact the fledgling Rs 70 crore text message marketing industry as well.

The time when contextual advertising is carving a niche for itself, bulk SMS companies such as 160by2, Way2SMS, ibibo.com, sms Gup Shup are booming with their time-sensitive advertisements. The fresh rates are a disruption in the bulk messaging. Agrees Abhijit Saxena, CEO, Netcore Solutions, “Mobile advertising is doing for companies what once cinema halls did for films. With new agreement the present growth of alerts and messages will come to a halt.”
Companies like Netcore and 160by2 operate on revenue-based advertising where the advertisements are inserted with the messages.

The new stand of the operators on the raised prices can prove fatal for the mushrooming free SMS companies. Sadly, when mobile advertising started beckoning all the stakeholders, enterprises to cash in the new opportunities, the operators decision to charge the alerts, bulk messages have acted as a spoil sport.

Mukesh Sareen, Chief Manager (IT), NACIL, says, “M-advertisement has lot of potential in terms of direct marketing impact. After this decision not only the airlines but even services like health and education would suffer.” Seems that the messaging wave which has caught the nerve of the market will have to undergo strategic changes. Industry is also apprehensive that consumers might have to pay from their pockets to balance the revenues.

Analytics are forecasting that the global M-advertising industry is expected to reach $11 bn in 2009 and India should account for more than 1% of this overall value chain. Some global brands like Pepsi, Pizza Hut, Reebok are eying this emergent platform.The inability to reach a target audience is now a thing of past. Stakeholders from all part of the world - employees, customers, prospects, partners, vendors, students, subscribers, etc are able to spread their message without hurdles with a simple text.

The operators find SMS as a profitable revenue generator with a fast networking society. Rajdip Gupta, MD, RouteSms feels, “Verticals such as banks, Insurance, Entertainment, health care send alerts and time critical messages to their customer. Operators also find this service as an add-on to the facilities as they have a huge customer data base.”

The target based marketing on the mobile has seen an increase in the brand loyalty and sales. The responses that the enterprises have got from this segment has unleashed new life in their sales and revenue. Currently, SMS interconnect charges are under forebearance by Trai which means operators can charge any amount for termination. This rule has added to the woes of the companies which are the major venture capitalists of the message services.

With this medium becoming a popular one, the operators have to make sure that this medium remains a profitable platform in the long run. The benefits of the mobile marketing channels are manifold if it is strategically used, and now it is up to operators to make or mar the hidden growing opportunities in the M-advertising.

archanasi@cybermedia.co.in