Companies discover marketing power of text messaging

CHICAGO — Like any normal consumer, Tom Gruss was leery about the idea of a company sending promotional text messages straight to his cellphone. Who needs a bombardment of sales pitches in yet another format?

But he found one offering a heads-up about changing gas prices at Meijer stores benign enough to sign up, especially since he could opt out at any time. Now, he says, "I'm a fan."

"In my eyes, this is an easy way of getting 'passive marketing' and having it pan out as actual savings," the Indianapolis-area resident said.

Fill 'er up

Get ready for the inbox on your phone to fill up faster. From fast-food chains to carmakers to consumer goods manufacturers and sports franchises, more and more companies are adopting text messaging as a way to target consumers on the move.

The practice has taken off in the past year and appears a trend ready to explode, according to Gerry Purdy, a Frost and Sullivan analyst.

"Probably the most important medium for advertising in the 21st century is going to be the cellphone, not print media, not billboards. It's just a matter of time — there are just too many of them," he said.

Globally, the number of cellphones in use recently crossed 2.5 billion, an increase of a half billion in just 12 months, according to Wireless Intelligence, a joint venture between the GSM Association industry group and the research firm Ovum.

It's also a matter of companies going where consumers are. After all, more than 95 million Americans are considered active text messagers, according to the Yankee Group research firm. And marketers see it as low on cost and high in effectiveness.

Unlike in other nations, where cell users typically pay for messages they send but not those received, most U.S. cell subscribers pay for both outgoing and incoming messages, often buying plans with a monthly allowance.

It's unclear, then, how many will "opt in" to a marketing campaign unless the marketer foots the bill for the incoming promotional message. That is the approach wireless carriers themselves often take when text messaging account information or promotions to their own customers.

Verizon Wireless says marketers have shown tremendous interest in arranging text-messaging campaigns where recipients wouldn't be charged, though no deals have been cut as yet.

Text messaging "provides any-time, anywhere access to the consumer because the mobile phone is always on and always available," said Laura Marriott, executive director of the Mobile Marketing Association.

Fast growth

It is just a part of the fast-growing field of mobile marketing, which also extends to other mobile-device features such as mobile Web browsing, streaming video and downloads of ringtones, video games and music.

Contests and sweepstakes that require consumers to enter via text message are among the most popular campaigns so far, according to Marriott, citing McDonald's, Burger King, Procter & Gamble, General Motors and CBS among the corporate giants that have used them.

Meijer, the Grand Rapids, Mich.-based grocery retailer with 179 stores in Ohio, Illinois, Indiana, Michigan and Kentucky, decided to be more direct — with consumers' permission.

During a time of frequent gasoline-price spikes, it launched an opt-in program in the Indianapolis market in July with mobile-marketing firm SmartReply. Consenting customers of its gas and convenience stations are sent text messages whenever Meijer is about to raise pump prices by 5 cents a gallon or more, giving them two to four hours to fill up at the lower price.

The big run-up in gas prices has reversed of late, but Meijer says the enthusiastic response has prompted plans to roll out the program across its entire chain by the end of the year.

Michael Ross, the company's director of customer-relationship management, said customers see it as fun to beat pump price increases with inside information.

Overseas roots

Text-message marketing campaigns took root first in Europe and Asia, where corporations found it easier to connect.

McDonald's cited success with its "Win World Cup Chicken" game in the United Kingdom last spring. Thousands of customers text-messaged a code they received when ordering products in the restaurants for the chance to win World Cup tickets.

Use of the tactic in the United States was delayed by technical obstacles to running the campaigns on different carriers and mobile-phone platforms. With those problems resolved, McDonald's is among the companies looking at making text-messaging a significant part of their U.S. marketing, beyond just promotions and games.

Dean Barrett, senior vice president of global marketing, said the Oak Brook, Ill.-based chain is developing a system that would allow customers to order by text message before arriving at a restaurant, with automatic billing through their phones.

"Text messaging is going to be a big opportunity," Barrett said. "In the future, it represents an opportunity potentially to make the McDonald's process even easier for consumers to use."

Privacy issues

Consultant Frederick Newell says companies using text messaging should move carefully because of privacy concerns and must get customers' permission first.

"I think the potential for it is enormous, but it puts a lot of responsibility on marketers to use it in a responsible way," said Newell, CEO of marketing consultancy Seklemian/Newell in Miami Beach, Fla. "If they misuse this in any way, every congressman in the country is going to be up screaming."

SmartReply, the Irvine, Calif.-based marketing firm involved in the Meijer campaign, said consumers need not fear a bombardment of unwanted messages from the burgeoning industry.

"Mobile marketing has the power of e-mail but we've learned from the mistakes of e-mail in that the mobile channel is regulated from the beginning in terms of spam," Newell said.

Providers of text-messaging services, he noted, also must be qualified and approved to use the carrier networks.