Having an app-based mobile strategy is not a guarantee for consumer engagement, but is SMS?
By Ivan Maksic, a regional manager at Infobip
If a legacy tech continues to be so widely used by a range of different corporate users, where does that leave smartphone apps?
The mobile ecosystem is rapidly changing and what was a success only a few years ago is not guaranteed to work or be profitable today. Smartphones and apps are becoming increasingly prevalent, but having an app-based mobile strategy is not the guarantee for consumer engagement or app monetisation.
On the other hand, SMS persists as one of the most efficient mobile channels, and even more so in marketing. Being surpassed in person-to-person traffic by OTT apps such as Viber, Whatsapp or even Skype, SMS as a mobile marketing channel is well accepted by consumers because it is familiar and discreet.
SMS continued successThe reason for SMS' continued success is its cross-platform functionality. Smartphone ownership is on the rise (it is forecast to reach 70% in UK in 2013), but not all smartphone users use apps. As for those who don't use smartphones, that is still a large proportion in both developed and emerging markets. SMS has the potential to reach all of them, regardless of their handset or geographic area.
SMS can be easily combined with social media, mobile apps or mobile web sites as a notification, confirmation and interaction tool. More importantly for marketers, SMS offers significantly lower costs, but also the most favourable usage statistics of all mobile channels. A report by Frost and Sullivan says that SMS has a 98% rate of opening. Compare that with email's 22% and the picture is much clearer.
The most typical examples of SMS used by a corporate client would be a bank sending various notifications or alerts, an online retailer sending a purchase confirmation with a reference code, or an airline relaying boarding times and other vital information to passengers. And let's be frank, there are few among us who have never received this type of text.
So, if a so-called legacy tech continues to be so widely used by a range of different corporate users, where does that leave smartphone apps, once regarded as the only way to engage smartphone users or monetise a mobile service? How do you monetise an app, or maintain high user engagement rates now that the novelty of the app has all but disappeared and the digital attention span is at an all-time low?
Quite simply, reallyFree apps, designed to engage fans or users of a brand and promote it, fall into disuse without a strategy of regular engagement either through SMS or push notifications. Freemium apps, on the other hand, constitute a large proportion of today's mobile gaming and rely on mobile ads to provide revenue for the developer.
While it was once an acceptable trade off, ads are now seen as a nuisance and the user soon abandons the app, the developer loses ad revenue and no-one wins. There is an elegant solution to this; direct billing.
A well known technology, direct billing charges small amounts directly to the user's mobile bill. Commonly used for over a decade for ticketing or parking, with the advent of smartphones, direct billing has emerged as an excellent, hassle free and efficient way of charging digital and virtual goods, tapping into the potential of this industry.
Direct billing enables access to a wider audience, especially those without a credit card or other online payment method, which makes it attractive to teenage demographics, as well as unbanked customers. More importantly, pesky ads are no longer needed to monetise an app when a subscription-based model offers a better user experience. Combined with SMS to deliver credit status reminders or purchase information, the cycle is complete, ensuring user engagement and loyalty.
SMS and direct billing have been around for a long time, but as consumer focus has shifted to a whole new territory, the versatility, reliability, and ease of use they offer to both developers and consumers make them the ideal addition to any smartphone app. When engagement has become the prerequisite for success, using familiar and intuitive methods such as SMS and direct billing is an asset to any consumer strategy.
Infobip is an international provider of mobile messaging and mobile payments. Its inhouse developed solutions are used by businesses and organizations around the world.