Does anyone remember a time when mobile phones were used for talking to people, and very little else? Now, the humble handset is the centre of our digital world, and firms are racing to exploit the enormous potential of the numerous revenue-generating opportunities available. Whether it's texting for Live 8 tickets, voting in Big Brother, or paying for premium content online, the mobile phone has turned into the credit card of choice for a new generation of consumers.
Cash dispenser
The main problem with this new idea of cellular cash is that the transaction fees are enormous. On a credit card, a merchant can expect to lose 1-4% of the transaction value in commission to the card network, whereas a premium text message pays out only 50-70% of the ticket price to the merchant. The reason for this is twofold. First, the mobile network operator, for example Vodafone, takes a cut to cover the administrative process of billing the customer. Then, because it's impractical for a merchant to deal directly with every mobile network, another company will sit between the merchant and the networks, routing messages to, from and between different networks. They will take a further slice of the cake, albeit a smaller one, and what's left is paid to the merchant.
This means that SMS-based payment systems are inherently inefficient, but are useful when the nature of the transaction is such that the hassle of getting out a credit card is going to put off the consumer. It's easy to see, then, why the earliest adopters of SMS payment systems were TV production companies. In premium SMS, you have the ability to charge someone a very small amount of money in a transaction that takes no more than 20 seconds to complete and doesn't require the customer to sign anything. And with an audience of millions, TV shows can justify the cost of leasing expensive short codes, such as Jamster's ultra-premium 88888.
Since these early uses, selling by SMS has acquired a mixed reputation. Companies like Jamster, who sell ring tones and wallpapers for handsets (a market that, at £150m, should not be underestimated) have come under fire for continuing to bill users regularly for something they believed they were only paying for as a one-off.
Texting for tickets
On the other hand, Sir Bob Geldof has managed to orchestrate an impressive system to provide ticketing for his Live 8 concerts (a 20th anniversary celebration of Live Aid). Users texted a shortcode for entry into a ballot. The text cost £1.50 and about 1 in 50 entrants were awarded a pair of tickets. Despite the embarrassment of some enterprising recipients putting their tickets straight onto eBay, Geldof convinced the mobile networks to waive their commission for the first time, allowing all of the considerable sums of money raised to go directly to Live 8 charities.
As the technology matures, more and more firms are finding innovative uses for mobile messaging. It's no longer purely a playground of the mega corporation - any firm that does business online should consider how mobile media and messaging can be used to support sales and customer service. The National Blood service in the UK, for instance, has adopted a system to text potential donors and remind them of a donation session occurring soon. With a per-message cost of around 3p and no other overheads, this is a cheap and effective way for even the smallest businesses to add value to their online services. As a marketing tool, this is fantastic - why rely on users coming to your website for updated information when you can take the marketing message directly to their handset, and increase the return on the investment made in content.
Sites with premium content are starting to offer passes to view a single page for one-off micro payments of around a pound, and virtually any kind of information service can be offered on the same basis. With the advent of 3G networks, we now have the possibility of video and picture services too, and the market will only get bigger.
Hopefully, deals between larger merchants and individual mobile networks will eventually lead to lower commissions and the mobile phone becoming a serious rival to the credit card for transactions of less than £10. But even now, no-one in the information business, and that includes anyone with a website, can afford to ignore the potential benefits mobile messaging services can provide.
Using mobile messaging and media in your business requires experience and skills in a range of associated technologies, and with all these at our command, Assanka is the ideal choice for businesses who want to take the internet seriously.