Cloud Four Blog

Technical notes, War stories and anecdotes

First Signs of SMS Disruption?

The Washington Post is asking if new messaging apps are going to disrupt the carriers’ SMS cash cow. I’ve read articles like this in the past, but two seemingly unrelated news items from yesterday and today make me wonder if we’re finally seeing the first signs of this disruption.

First, Boy Genius Report had an exclusive that BlackBerry Messenger will launch on Android and iOS.

For those unfamiliar with BlackBerry Messenger, it is texting like service that allows you to send instant messages to any other BlackBerry for free—bypassing SMS charges.

BlackBerry Messenger is one of RIM’s greatest assets and is the reason why BlackBerry phones remain popular among youth in Latin America and the Middle East.

Second, Facebook acquired Beluga, a group messaging service. This was both a talent and technology acquisition indicating that Facebook has designs on some sort of mobile messaging solution.

When Facebook Messages was announced, everyone talked about it as a Gmail killer, but my first thought was it could take on SMS eventually. Facebook Messages are intended to be short messages without subject lines and the formality of email. Sound familiar?

More importantly, Facebook is the number one app on nearly every mobile platform which means it has an installed base that likely the nearest competitor to the pervasive presence of Facebook. When you consider that people normally text those they know best and Facebook has the largest social graph in the world, it seems like a natural fit.

Sooner or later someone is going to take on SMS with an alternative service. SMS is just too lucrative and addictive for other companies to stay away.

I wonder if this Blackberry and Facebook news is the first hint of that players lining up their pieces to make a run at replacing SMS.

BMW MMS Ad Campaign Generates $45M in Revenue

We hear a lot of stories about the power of mobile advertising, in particular text messaging advertising and despite that fact, we’re still in awe of how BMW turned approximately $60k in MMS ads into $45M in revenue.

The ad campaign was for winter tires and targeted to Germans who had bought their cars during the summer months. Because it is nearly impossible to make it through the winter without snow tires in Germany, BMW knew they would have an interested audience.

The ad itself was very innovative as Tomi Ahonen describes:

So BMW designed an MMS campaign, where they customized the picture of the car to be the model of the car that the customer had, and the colour of the car, with the wheel rims that the customer had bought. Then BMW virtually fitted the suggested winter tyre for that car and wheel. And this image was to be sent to the customer.

…Because this was mobile, BMW had prepared the campaign, and waited for the exact right moment. The day the first snow started to fall in Germany, that was when the MMS messages went out.

And best of all, the MMS message included a link to come to BMW’s mobile website, to select alternate tyres (and wheel rims) to upload to the tyre simulator, so that the customer could experiment with other variations and see their prices and compare.

What a great advertising campaign. Timely. Personalized. And immediate via text messaging. Dave Winer once said that as advertising becomes more personalized and useful, that it stops becoming advertising and simply becomes information.

The results are astounding as shown in this breakdown by Ajit Jaokar:

Cost of winter tyres c. $700
Cost of tyres & rims c. $2500
Approximate average sale $1300

Total potential customers: 117k
30% response rate = 35,000 customersHence, 35,000 customers spending $1300 each = $45,500,000

Given that the cost of the campaign was approximately $60,000 – at German MMS rates, for each MMS sent, the average return on investment was 758 dollars.

$45 million dollars generated by a small amount of MMS advertising. Amazing.