WRITTEN BY: ERDOLO EROMO
The mobile industry is growing rapidly both domestically and internationally. Many aggregators such as Mobile Messenger (MM) are concentrating on this industry as a new and thriving market.
Annual wireless data revenues are up by 20.8% and are expected to increase for the next 10 years before reaching a plateau. SMS advertising volumes are up 31.3% per year, while voice annual volumes are down 1.5% each year. This demonstrates the strength and potential of new markets for mobile content and billing. In this industry there are typically two client groups: large brands who simply want brand awareness and clients who pursue a quick but high return on their investments by lowering their cost per acquisition (CPA). In order to understand the needs, trends, and growth projections, one must first analyze the demographics and their behaviors.
Market Demographics
The content delivered in the mobile industry in the U.S. can be broken down into two categories: premium services and standard rated messages. Premium services are often used by advertisers and application service providers (ASP) who have a virtual product that they wish to sell using the mobile billing mechanism. The standard side of the industry is used by mobile marketers and broadcast brands to communicate information to their customers in avenues outside emails and phone calls.
Market Geographics
An aggregator’s direct connections and contracts give it the ability to deliver content and short code messages as well as processing virtual good payments for over 98% of North American mobile phone users. Since most cell phone service providers stopped charging long distance and many offer unlimited data plans, the physical location of the customer has now become irrelevant. For an aggregator it is crucial to create and maintain the direct relationship with the carriers that give them the ability to deliver the content both domestically and internationally.
Market Psychographics
Over 5 billion text messages also known as “short messaging system” (SMS) are sent each day by Americans. In the fourth quarter of 2007, the average number of texts by consumers surpassed the average number of calls and the disparity has grown significantly since then. Of those who text message 26% said that they have opted in to receive text message marketing messages. This is a huge demographic to target. The typical individual in this demographic comes from a generation that is used to getting what they want when they want it. They also have disposable income, which allows them to buy virtual products on impulse.
Table 1: Average Number of Monthly Calls vs. Text Messages Among U.S. Wireless Subscribers
The introduction of the mobile phone has forever transformed communication. The device that was introduced only to make phone calls is now used for texting, calendars, clocks, cameras, social networking, calculators, email, and a whole array of additional applications. The utilization of one device for many separate functions is known as device singularity. The “one stop shop” has become a socio-cultural phenomenon in the U.S., whether it is at a mega-store like Wal-Mart or at a gas station with a car wash. With the introduction of the iCloud and comparable platforms which allow data, apps, and virtual goods bought on the phone to be accessed via the desktop and vice-versa, it would be a major shortcoming of the industry to miss the opportunity to capture that market via SMS marketing.
Market Forecast
Since 1995, there has been a significant yearly increase in mobile phone usage. Currently, 92% of the U.S. population has access to a mobile phone. From June 2005 to June 2010 there was a 20% gain in the number of households that replaced their landlines with mobile phones. With the increase of smartphone usage, annualized wireless data revenues have dramatically increased from the millions to billions with SMS increasing at the same rate. No other recent technological invention has been so quickly embraced by the population at large.
Within the premium and standard rated verticals there are five mobile content types that are expected to assist the continued growth of the mobile industry. The content types are mobile music, mobile games, mobile video, mobile graphics, and mobile information services. Combined revenue from these content types is expected to triple over the next three years.
The Cellular Telecommunications Industry Association (CTIA) annual wireless survey shows that wireless data revenue has been significantly increasing each year since 2002. This has been a strong indicator of the growth of the off deck mobile billing platform. Over the next year the annual volume of data is expected to grow by 31.3%. This has positive implications on aggregator’s premium and standard business.
The mobile phone is utilized widely across most US demographic classifications. With most Americans owning or using a mobile phone, the success of the mobile billing via SMS marketing is inevitable.
Sources:
1. “CellSigns – Mobile Statistics.” CellSigns – Mobile Marketing, Mobile Real Estate Search, Mobile Newspapers, Text Message and Mobile Marketing Platform. http://www.cellsigns.com/ (accessed April 18, 2012).
2. Defakto Group. “Text messaging and mobile statistics.” Upload & Share PowerPoint presentations and documents. http://www.slideshare.net/ (accessed April 18, 2012).
3. “Mobile Payment – Advanced Technologies (NFC), Strategies And Future Of Remote & Proximity Payment In U.S.” ASDReports. https://www.asdreports.com/ (accessed April 18, 2012).
About the Author(s):
Erdolo Eromo moved to South Los Angeles from Addis Abbaba, Ethiopia at the age of eight. A natural athlete, he played football for powerhouses Crenshaw High School and UCLA. He went on to earn his Executive MBA from Pepperdine University in 2011. Climbing up the corporate ladder in 6 years, Eromo is one of the youngest senior executives in the mobile industry. He now serves as Senior Vice President of Sales and Client Services at Mobile Messenger (MM), the largest off deck mobile aggregator in the United States. He is responsible for identifying opportunities and designing strategies for sales growth. By many, Eromo is considered to be an expert in identifying trends in the mobile commerce space as well as finding new opportunities in which the mobile phone can be used as a billing platform.
