The more relevant an ad, the more likely it is to do its job (which is to hook the consumer and lead to a transaction). Location-based SMS ads have come to be regarded as an effective way of achieving the sought-after relevancy and a spike in their use will drive spending on mobile messaging, which will hit $7.4 billion by 2017.
This is the prediction of Juniper Research, which points out that SMS ads constitute a simple, cheap and effective way of reaching large numbers of consumers. Charlotte Miller, the author of the report, said that the combination of this popular and low-cost format with location technologies creates a compelling proposition for advertisers, especially in the case of transactional advertising.
Unlike other formats, SMS ads do not boast rich media content but they have the advantage of being very familiar and are much more likely to be opened by consumers even if they are unsolicited. Their low cost is also a significant benefit for advertisers. Juniper notes that a batch of 1,000 SMS texts costs about £0.05 per message in the UK and the price drops to around £0.03 for larger bundles.
While an extremely attractive proposition for advertisers, location-based SMS messages are likely to have consumers on their guard due to concerns over privacy. But mobile operators have taken the issue to heart and existing schemes are of the opt-in kind, allowing consumers to select the types of offers they want to receive. According to Juniper, such schemes will gain in prominence as operators seek new revenue sources but they are unlikely to become opt-out or compulsory.