Why SMS is ideal for location-based marketing

December 15, 2009

Chris GlodeChris Glodé is senior director of product management at Useful Networks

By Chris Glode and Tom Parrish

Marketers looking to employ mobile location for advertising or marketing purposes face tough decisions on how to engage the customer. Build a downloadable application? Create a mobile Web page? Launch an SMS campaign?

While there are certainly a wide variety of factors that go into this decision, ranging from the overall goals of the campaign, desired targeting and budget, one thing is clear: the best and easiest way to create a location-aware mobile campaign with reach is to use SMS.

The reasons for SMS are: the location-based service opt-in requirement fits perfectly with existing SMS opt-in requirements, location-based SMS provides the widest reach and the cost structures line up nicely.

Once a user is reached, opted-in and located over the SMS channel, marketers have a broad range of complementary rich media options to present the user, ranging from coupons and mobile Web sites to downloadable applications to enhance the customer experience based on both location and device capabilities.

Tom ParrishTom Parrish is vice president of business development at Useful Networks

SMS offers reach
The Mobile Marketing Association guidelines are very clear when it comes to SMS marketing – customers must elect to receive SMS messages via an opt-in and be able to cancel at any time.

Not coincidentally, the requirements for use of carrier-derived LBS are almost identical.

Adding additional language to an SMS opt-in confirmation to explain how location will be used is a very natural and easy thing for the customer to understand.

Likewise, it is intuitive to consumers that to revoke consent and to disable use of their location, they need simply to opt-out of the campaign.

In many cases, marketers choose SMS campaigns because they are cost-effective and provide the widest reach.

Artificially segmenting a campaign by building an application for the latest or hottest smartphone platform is both expensive and limiting.

By location-enabling an SMS campaign, marketers get the widest reach and a unique, feature-rich way to engage all customers, not just the relatively few who are able to download an application or use the mobile Web.

Though application and mobile Web penetration is growing rapidly, SMS still rules the day from a reach perspective.

Cost-wise, SMS campaigns are typically charged on a per-message basis, with a pricing table that decreases with volume.

As it currently stands, many sources of carrier-derived location have a similar cost structure.

Marketers who can find a way to leverage location to significantly increase the value of a campaign will benefit from the alignment of these costs, especially where each piece of location data can be used to engage the customer directly.

Locating examples
Let us look at a few examples of how location can be used to enhance an SMS campaign:

 Location-based SMS campaigns are ideal for bricks-and-mortar advertisers looking to drive users to local retail locations.

The ideal profile is a national advertiser in categories such as quick-service restaurants, hospitality and retail.

In these cases, offline short code promotions in can be augmented to incorporate a storefinder component, where a user can be sent a map and directions to the nearest location, in addition to a coupon or offer to further track campaign performance.

 For service-based businesses looking to online marketing to increase appointment scheduling on call-center-based telesales, location-based SMS campaigns coupled with click-to-call-based calls to action can be a powerful component of a mobile marketing campaign.

National automotive brands seeking to increase the volume of test drives at local dealerships can use click-to-call capabilities to accomplish this.

By acquiring the user’s location from the carrier network, the calls can be directed to the local dealer instead of national call centers, which greatly improves conversion and bookings.

 Proximity alerts represent a completely different way marketers can use location-based SMS to acquire and retain customers.

A geofence (http://en.wikipedia.org/wiki/Geofence) can be created around brand-relevant locations, i.e., local retail shops, or a sports stadium, or a geographical feature like a body of water.

When opted-in customers come near the geofence, an alert with a time-sensitive offer can be used to trigger an impulse visit to the local point of sale.

For example, a ski resort could opt in customers for a campaign providing free snow reports via SMS.

During the opt-in, customers agree to allow their location to be used to send them special offers on the mountain. When skiers get to the mountain, a coupon arrives in the morning for 2-for-1 ski lessons or for a cup of hot cocoa.

Chris Glodé is senior director of product management and Tom Parrish is vice president of business development at Useful Networks, a location-based advertising service provider in Denver, CO. Reach them at // christopher.glode@useful-networks.com and // tom.parrish@useful-networks.com.

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