Permission crisis: End of line for SMS marketing?

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By: Wise Marketer Staff |

Posted on February 5, 2008

There is a three-fold crisis facing mobile marketers whose choice of communication channel includes SMS (text messages), according to Tim Beadle, director for Marketing Improvement Europe Ltd, who in this article explains some of the pitfalls to be avoided at all costs.

The UK population reached 60 million in 2007, yet there are some 75 million active mobile phones in the country. And in 2008 the Mobile Data Association estimates that British mobile users will send more than 60 billion SMS messages (that's 1,000 messages per person). So far, the use of SMS for marketing has been quite limited, accounting for only about 0.8% of digital advertising expenditure in 2007, according to Berg Consulting. But this is expected to grow ten-fold between now and 2012, worldwide.

In the UK in 2007, digital advertising was worth 1.3 billion - of which 0.8% is approximately 10 million. At current rates of transmission for bulk SMS messages of 0.03 per message, this suggests that a total of 333 million SMS marketing messages were sent nationwide in 2007. That equates to only 8 messages per adult, per annum, which is certainly not much compared to the 1,000+ other messages those same people sent and received.

Why so little SMS marketing?
So why has SMS not taken off as a marketing medium in the same way as email? Well, there are three issues. The first and most significant is cost. At 0.03 per message it is expensive, especially when you are limited to just 160 characters and some of those (by law) have to say who the message is from. The second is, of course, the law itself. And the third is a very natural concern among marketers: that SMS marketing could prove to be highly intrusive (and therefore counter-productive).

There are two pieces of legislation to consider. The first is the Data Protection Act (1998). A mobile phone number, in itself, is not considered to be personal data. It does not identify in any way a living human being. Therefore, collecting mobile numbers does not contravene the Data Protection Act at all. That being the case, using them for marketing can no more contravene the Act than pasting poster ads on lamp-posts in the street. But there are also the Privacy and Electronic Communications Regulations (PECR), which is far more specific. It covers "any text, voice, sound, or image message sent over a public electronic communications network which can be stored in the network or in the recipient's terminal equipment until it is collected by the recipient and includes messages sent using a short message service".

Official guidance
The UK Information Commissioner's guidance to marketers makes the following points very clear:

  1. You cannot transmit, or instigate the transmission of, unsolicited marketing material by electronic mail to an individual subscriber unless they have previously notified you, the sender, that they consent, for the time being, to receiving such communications. There is an exception to this rule which has been widely referred to as the 'soft opt in'.
  2. You cannot transmit, or instigate the transmission of, any marketing by electronic mail (whether solicited or unsolicited) to any subscriber (whether corporate or individual) where the identity of the sender has been disguised or concealed, or where a valid address to which the recipient can send an opt-out request has not been provided.

When is soft opt-in allowed?
There are very limited circumstances where the so-called "soft opt-in" applies. You may send or instigate the sending of electronic mail for marketing purposes to an individual subscriber where:

  1. You have obtained the contact details of the recipient in the course of a sale or negotiations for the sale of a product or service to that recipient;
  2. The direct marketing material you are sending relates to your similar products and services only;
  3. The recipient has been given a simple means of refusing (free of charge except for the cost of transmission) the use of their contact details for marketing purposes at the time those details were initially collected and, where they did not refuse the use of those details, at the time of each subsequent communication.

A waste of space, or not?
So, not only does the SMS message have to say who it is from, it also has to provide a means of subsequently opting out. All of this reduces the available text characters for the actual marketing message itself. For example, messages from my mobile phone provider usually contain "From Mobyfone" and say "to unsubscribe text 'STOP' to 10876". That's 48 characters gone, leaving only 112 for the message.

But, while the Data Protection Act states that data "cannot be held indefinitely", the PECR says that the consumer's consent is only "for the time being". As yet, there is no guidance on what this means in practical terms. However, given the ephemeral nature of electronic communication we would suggest that consent cannot be deemed to last more than 12 months. Consumer opinion (which matters greatly to responsible marketers) seems to confirm this, in that marketing consents that are not refreshed (by giving the option to unsubscribe) on a monthly basis tend to be considered invalid by most recipients.

What about Telephone Preference services?
This service applies only to voice communication, and not to electronic messaging, so there is no requirement to run an SMS campaign through the service, even though mobile phone numbers are used in conducting an SMS campaign. Although mobile phone numbers are stored by the service, it is made clear (in the UK at least) to subscribers that this will not stop SMS messages from being sent to their phones.

Underage marketing
But that is not the end of the marketer's problems. Millions of children now have mobile phones, and many products cannot be marketed to them by law (for example, alcohol, tobacco, and financial services, to name a few). Given that it can be impossible to discern who a mobile phone is actually being used by (i.e. it may be purchased by an adult but used by a child) this represents a serious legal risk factor for marketers.

Advertising standards
One thing that is often overlooked is that the UK's Advertising Standards Authority's rules also extend to many aspects of data privacy. While the authority cannot actually fine a company that breaks its guidelines, its ability to generate press coverage for its adjudications is far superior to that of the Information Commissioner and therefore makes it the greater risk to marketers and their brands.

For example, there is no requirement in Data Protection law to avoid sending marketing messages to the dead (because they're dead, and no longer have any legal rights). But the Advertising Standards Authority does have a very specific requirement that companies should not market to the deceased. But matching mobile numbers with deaths is fraught with difficulty, especially within the older community where a mobile phone may very well be shared. If a partner dies, should you stop marketing to the survivor? In some circumstances the answer would be a clear yes, but the answer is not always so clear, and would require specific knowledge of each family's circumstances and preferences - something which no marketer can be expected to have.

So, this leaves marketers with the challenges of (a) gaining consent, (b) constructing a message within the limitations of the technology and constraints of the law and (c) getting the campaign to work.

Gaining consent
Marketers talk about "opt-in" and "opt-out" as if they are enshrined in law. But they are not. Nowhere does legislation use these terms (in the UK at least). Instead the law talks about "informed consent" and "positive consenting acts". So, in the context of SMS, the following would be completely valid: "Please ONLY provide your mobile number if you are willing to receive marketing and other promotional messages by SMS."

The very act of writing down or typing in your phone number would therefore be the positive consenting act and the subscriber has been told of the consequences so the consent is, therefore, informed. Interestingly, this is an approach that has not yet been seen in general use. In fact, even web sites aimed largely at the youth market are not currently attempting to gain specific consent for SMS marketing. It appears that very few marketers are bothering to gain legal consent for SMS campaigning.

Is SMS a dead end?
In Beadle's opinion, the short answer is "yes - it's a dead end for marketers". The practical challenges of creating a compelling message, the cost of transmission, and the legal issues all come together to make SMS marketing a relatively costly and ineffective communication channel, if it's done legally. The fact is, if anyone wants to undertake e-marketing they tend to turn to e-mail first. After all, it is far less costly (almost free), there are no practical limitations on what you can say or how you say it, and it has proven to be an effective and measureable medium in a way that SMS has not.

Light at the end of the SMS tunnel
There is, however, some light at the end of the tunnel, in the form of SMS vouchers. Customers are encouraged to send a text message to a number displayed in an advert. They then receive an SMS voucher - delivered directly to their mobile phone - which they can take into town and redeem at a retail store.

So here is the vital question: If the ad makes it clear that, by requesting the voucher, the consumer is "opting in" to SMS marketing, does that constitute a positive consenting act? It certainly appears to. If so, this also goes a long way toward mitigating the cost of SMS messaging because the marketing only sends text messages to people who are already predisposed to purchase their brand or product.

Why retailers are so keen to use this approach? The latest phones include GPS, and there is a real possibility that the phone could be asked to report the user's physical location (although obviously only with the user's permission), at which point "location-based marketing" will become a major new discipline.

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