| A measure of success |
| Wednesday, 26 November 2003 | |
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New Media Age 27th November 2003 - Wireless industry specialists discuss the merits of opt-in and opt-out marketing campaigns and how the new regulations will affect the future of SMS. Lars Becker: It will help the industry grow. All the legislation is calling for is for companies that weren't in line now to run opt-in marketing campaigns. It's good news all round and will hopefully have a big impact on the sort of spam campaigns that we're seeing at the moment, the ones that say 'call this number now, you've been selected, you've won $1000'. It's those types of campaigns that will be affected by this legislation. They'll become illegal. Dan Rosen: The main bonus is stopping these spam campaigns that are going round and giving everyone a bad name. It's only going to be once someone polices them adequately, in other words properly fines those responsible, that this will stop. With this legislation hopefully there are going to be resources dedicated to tracking the perpetrators down and slapping a big fine on them. At the moment there are fines of, say, £5,000, and these guys are making tens of thousands of pounds every time they do a campaign, so a £5,000 fine isn't going to stop them. Penalties have to be big enough, and there have actually got to be resources dedicated to actually tracking them down. Suki Kainth: From the consumer point of view there's a lot of cynicism out there at the moment. As an agency, you hear about how much more cut-through you've got to be with SMS campaigns and yes, the response might be good, but I think consumers read the message, then don't bother responding because they get so many of them. It's a real problem. Chris Bourke: We're seeing a lot of confusion on the brand side. We're waiting for the ratification of the European directorate, and my understanding is that the DTI is going to be releasing a paper in December. But the stuff that we've been doing since day one, the self-regulated best practice, pretty much constitutes the bulk of the directive. Having the legislation in place will eliminate spam and it will improve the overall perception of SMS and other mobile marketing tools. Becker: Our biggest concern with new legislation is also enforcement. In theory, the new legislation will have to be enforced by the Office of the Information Commissioner (IC), which is a large organisation responsible for the Data Protection act, and it's probably not even properly resourced to enforce that, never mind the new directives. The most interesting aspect of the new legislation is that it makes spam illegal. Icstis is another body which is effective, very lean, and very targeted, and it goes after the money, which makes much more sense that going after the person responsible for a campaign. In the future spam companies, such as the 'call this number now', will be violating legislation and Icstis will have the right to go after those people, fine them and shut them down. Rosen: There are some premium rate SMS campaigns which are legal, which are okay as long as you tell people that it's going to cost £1.50 per minute and you can structure the SMS correctly. At the moment you're not breaking the law. Becker: At the moment. But if spam is illegal, those things will be illegal as well because they're obviously not opt-in numbers. Trevor Rudder: But isn't there a discussion about the level of opt-in? A lot of people won't even know what database they've actually opted into and what they've agreed to. Gillian Kennedy: So the new legislation will grow consumer confidence to engage with brands via their mobile, because it will get rid of the bottom end of the market. I certainly just see this as an area where it can only be valuable to the medium. Pearse: This legislation will mean there has to be a previous relationship for a company to continue to send mobile messages to a consumer. How is this affecting what you do with your client's databases? Kennedy: A good example is the Kiss database. We get people to opt in to the information from Kiss, and then we get them to further opt in to receiving information from a third party, and that kind of model is really beneficial to all. It's beneficial in our customer relationship marketing, plus it's valuable for our advertisers to actually tap into, because it's a really hot database. Rudder: The most important thing for us from a marketing point of view is getting people to opt in to a community, not just necessarily a technology. Kennedy: You can also reinforce that by making it really easy for people to get out of that database at any time. That should increase consumer confidence about the medium. Rudder: There's a level of honesty as well, and because we're being upfront about allowing people to opt out easily, we only get a low unsubscription rate when we send out messages, and it means we've got a database that's active which people want to be on. Kainth: Do you think the reason you've got such a low level of opt-out is because of the relevance of the message being sent out and how often you're communicating with them as well? If they're being privy to eight or nine different messages in a week and they've only opted for say three or four of them, that's a lot of messages. Whereas if you're only communicating with them say once every two weeks, then at least there's value there. Rudder: It moves onto content, and content is very important. When we first started doing this people always used to talk about the volume of messages, but when you're targeting the youth market, the volume doesn't matter. It's just the content. Becker: There's no real limit to how many messages you can send. Kainth: But do you ever set how many messages you're going to receive? Is it ever said 'are you willing to have eight messages from me a week'? I don't think that's communicated from a customer point of view. It's interesting to know what level is an acceptable level and what's not. Hugh Griffiths: You have to set a very clear expectation. It helps because whether you're paying for it or not it's an intrusive medium. If brands take that on board it will some way help to set expectations, even if it's just telling consumers they'll receive weekly updates, daily updates, two or three updates a week or just once a month. It makes a big difference to the way people are going to feel because at that point they can make a decision that yes, I'm prepared for this level, I understand what I'm going to get and I understand how frequently, and at that point, they decide whether they want to buy into it. Rosen: I know it's part of the DMA guidelines, the frequency at which people should receive messages. I think if you stick to the guidelines, that's what you're supposed to do, and I think it does go some way to gaining or managing levels of expectation. Also, companies have databases of customers and, going back to the traditional industry, they have a database which they've used to sell all their products for the last however many years. But now, with this new legislation, they're being told by a regulator that actually that data is strictly illegal. It's having a big impact on them. It's important to know that anyone who's a customer before this comes in, even if they are a customer obtained via an opt-out process, you're still legally allowed to communicate with them in the way that you have been before. There's a lot of fear out there in the industry. They want to know that the data they've got, which is opt-out, is still usable. Kennedy: Doesn't that then raise the question that what we're trying to do is get an industry standard on an essentially new medium that we're all happy and comfortable with? Rosen: Oh, completely. There's no argument here in terms of what everyone's trying to get to. My point is that there's a lot of rear among certain commercial businesses that customers they've created relationships with, and who are responding to their campaigns, they can no longer communicate with legally because they initially acquired them via an opt-out basis. People need to realise that ultimately, they should be moving towards an opt-in basis, but retrospectively this doesn't mean the curtain is falling down on all of their customers in a different environment. Becker: What you're referring to is the idea of the soft opt-in described in the legislation where it just means that if you're negotiating a sale of collecting information as part of an interaction relationship, then you need to talk to your customers on an opt-out basis. Rudder: The good thing about it is it gives an opportunity to create new relationships. Bourke: It's going to be interesting to see how minors are treated, and there's always been the issue around explicit parental consent, and how that's going to manifest itself on mobiles. One approach to obtaining parental consent is to capture a mobile number of a parent or guardian and make the assumption that the mobile number could have come from the handset of this parent or guardian. But of course, that is debatable. The other approach is explicit. You have to obtain a consent form from the parent or guardian, but of course your opt-in rates are dramatically lower. Kainth: I don't think the new directive will really touch on that and it's more a matter of opinion at this point in time. I don't think we can expect an opinion for at least six months to a year, if we get it in that timeframe. It will really have to be the Information Commissioner who says how to interpret it. The current state of play is that for below 12 you need to get parental consent and above 12 you don't. A more sensible approach is to start thinking of age brackets. Below 12, of course, you need parental consent, then there are certain things you can do between 12 and 14, 14 to 16, 16 to 18. So start being a bit more granular. Rosen: The DMA guidelines are quite granular already, aren't they? Under 12 is a no-go at all. I think 12 to 14 you can promote your brand but there's no direct selling, and 14 to 16 you can promote a brand and enter competitions but you can't direct sell, and over 16 you can direct sell. Kainth: It depends on the mechanics you choose to use. So, if you're going to do an instant win for example, then you've got this whole issue of they've got to be over 16 otherwise it's an illegal lottery. Then you get into the issue of how you then get parental consent. Becker: The industry just has to find solutions that work for everyone. No-one wants to prevent a 15-year old from getting some text alerts from their favourite brand. Rosen: That's an interesting point. On Saturday morning show SMTV, for the landline they say you must ask for your parent's permission, but for the text they don't say you must ask for permission. I think that's based on a legal ruling that if you own your own mobile phone then it's reasonable to assume that you pay your own bill, because most of them have pre-paid handsets. So the law does treat a mobile quite differently. Pearse: Are there any issues around costs for consumers of getting involved in marketing campaigns? Kennedy: It depends which model you look at. Most models in the market are where the consumers do pay for it. A typical example is on Big Brother where you pay X amount to get whoever out of the house. If the content is strong enough, people are really happy to pay for it an engage in something, but at the same time a brand can harness the model where you pay normal network tariff rates to get a much wider audience, which can be valuable when running an ad campaign. Becker: And we'll probably even see the increasing use of free text numbers where it doesn't cost anything for the consumer, like an 0800 number. That makes it quite interesting because brands don't want to have anything between them and the consumer. Griffiths: Isn't that a great endorsement for the industry though, because when this all started out brands were very concerned about the cost of all this, and all of a sudden now they're accepting that this is an attractive medium and are prepared to make the investment in terms of the costs of running it. It illustrates just how far the industry has developed. Kennedy: If 10 years ago someone had said you were going to pay 25p to vote for somebody to get out of the house in a big TV programme like Big Brother, and the likelihood was you were going to be voting again and again, you'd have thought they were barking mad. But the whole thing has moved on so much that you do want to vote again and again. Griffiths: The other thing we found is the propensity for people who want their 15 seconds of fame as their text message ran along the bottom of the screen. That drove huge volumes. And while the total number of votes was slightly down on the previous year, the propensity for people to use SMS was higher. We saw 25% increase in the number of people actually using SMS to interact with the show. Becker: The premium gives the brand a bit more flexibility. In an advertising context, we for instance ran an on-pack campaign which cost 50p to participate, which is expensive. Obviously you have to have the right product - this was an alcoholic beverage - but what it enabled the brand to do was give everybody a great prize. Everybody won a ringtone or logo. So you get something back which has a perceived value of £3. Rosen: You've got to compare text to other media, and typically, for things like a competition entry, no one would say a thing if a brand asked consumers to send their entry in a stamped addressed envelope. No one would mention the fact that the customer has to pay postage. But as soon as there's anything related to telecoms, suddenly brands are fleecing the customer. Kainth: When you run competitions with entry via a postage stamp, you always have to give another route which is free, for example, no purchase necessary. What's the SMS comparable route? You need to find a solution for a way you can do it via SMS. Kennedy: If you go to the post office, you buy a stamp and post it, what's the experience? Pearse: How far has the mobile market come? Are your clients seeing it in the same way as other media? Bourke: It's still very niche. But we're at a really exiting juncture in the industry. I'm sure when we all sat round hatching business plans for our prospective businesses five years ago, we all thought we'd like to start working with brands who we could take through the world of ever-increasingly complex mobile technology. We all probably realised this was a market that would grow over the next decade, and my feeling is that we're almost half way through now. We do the mass market and youth market, we've got exiting services kicking in. So our feeling is that the market is set to grow rapidly over the course of the next 24 months. Rudder: It will grow in quite an unusual way. It hasn't grown as quickly as I thought it would. The use of SMS had kind of tailed off. There are a lot of brands that look at it and they're looking for reasons not to do it as opposed to do it. Some of the things I hear from brands is that they're not sure if they really want to pester their customers with SMS messages. I say well, what if they want to tell you something? Why do you think that this technology is about bombarding customers with lots of information they don't want to receive? There's this whole image thing that actually needs to be addressed. Griffiths: First of all on SMS, the issue about being pestered, that was the first point we talked about, about legislation, and I think that's going to make a massive difference to people's perception. Second, you said that SMS is tailing off. We've got 60% penetration of the use of SMS within the marketplace. I'm just now teaching my mother how to do a text message and it's taken me months, but I know once she's done it that she will use it. There's no doubt in my mind that there's still going to be growth in SMS, and if we look at the reasons why there's going to be growth, it's going to be yes, peer-to-peer is king, as far as text messages are concerned, but moving on from mobile marketing, the big area of development is around CRM. Kennedy: The customer relationship bit is really interesting, because the activity that we have marketing our brands is in magazines like J17. While we send out text messages to help drive circulation of our products, we also have a number that consumers can immediately text back on. Griffiths: Coming back to my point about penetration, if you look at the point at which people now start to send text messages, at that point they can understand they can receive information. So, they can get their account balance from the bank, or they can send or receive the text message from the RAC when they're stranded. To penetrate older demographics it becomes almost invasive throughout the whole market who have mobile handsets. That's where I think there are massive growth opportunities. Rudder: That's where a lot of brands or businesses have actually failed in the last 12 months. This technology hasn't been exploited at all. We've been doing SMS for years and found it really hard to make a business out of it just because the brands weren't willing. Kainth: Brands see the limitations as opposed to seeing the positive. If someone asked me if it had grown I would say yes, there's no doubt that SMS usage has grown, but I don't think the mechanics have evolved. Becker: One way to look at it is there's limited innovation and yes, we've been doing text'n'win campaigns for a few years now and we continue to do that, but I think another way to look at it is text messaging is just another communication channel. So, an instant win mechanic just hasn't been done by text messaging for three years, it's been done for 30 years on other media. It's not that we want to recreate the wheel, we just want to offer another communication medium. Griffiths: The most important thing is that this medium is measurable. TV, radio, newspapers to a large extent are not measurable marketing media. Mobile is measurable. © Copyright Flytxt Ltd 2006. Unauthorized use of any content constitutes a material breach. |
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