Texters push big-money buttons

By IRENE CHAPPLE

A patent claim over interactive text promotions sent shudders through the marketing industry this week - and no wonder. Text promotions are so effective and make so much money that there is much to lose.

Text message promotions mainly work like this: A mobile phone holder buys a product, enters a competition via text message, and is rewarded.

The marketers' sales go up and the mobile phone holder has a chance to win prizes, get a bargain, or be part of a rewards programme.

The promotions are proving to be a big money-spinner for marketers.

Coca-Cola's major text promotional push this year broke records, says spokeswoman Alison Sykora.

A month after it began, Coke received 300,000 entries - 10 times more than the text promotion run last year.

The key was "instant gratification", says Sykora. Texters were told immediately if they had won a prize or reward.

It prompted a response almost double that of Coke's Red Hot Summer promo, which required a traditional write-in response.

"I'm not aware of any other promotion in New Zealand that has received a response like this," Sykora said last month.

And latest figures must be making Coke's executives even happier: 940,000 entries over two months, with more than 130,000 individuals vying for $5 million worth of prizes.

Sykora says the one-month text promotion that ran late last year increased 600ml coke bottle sales 30 per cent compared with the same period for the previous year. A third of Coke's target market - 15 to 24- year-olds - got involved in the campaign, Sykora says.

For what is effectively a direct marketing campaign, those figures are astounding. In direct marketing speak, "uptake" - or consumer response - of more than 20 per cent is considered exceptional.

Overseas campaigns reflect the trend.

In Britain, Cadbury's texting campaign was declared a hero in halting the decline of chocolate sales.

The campaign required a text as the response to the traditional wrapper promotion.

From August to November last year, just under five million texts were received. Texters were battling for a share of prizes worth £1 million ($3.1 million), including televisions, Playstations and DVDs.

Cadbury Schweppes, meanwhile, was rubbing its hands in glee.

Chief executive John Sunderland reportedly raved about the campaign at the annual results meeting.

In New Zealand, texting was initiated largely by Vodafone, whose gsm mobile capabilities gave it the jump on Telecom.

Vodafone gave the concept an almighty push during the late-90s, promoting it as the new communication tool. It has since used it in high profile campaigns including Coke's and during TV4's NZ music month, when viewers voted for their favourite track.

Spokeswoman Sarah McGovern says Vodafone is looking at "opportunities to use interactivity between television and text messaging".

Such campaigns seem the way of the future. A recent interactive campaign run by Saatchi & Saatchi won the "Smart Media Idea" for the CAANZ Media Awards 2002.

In that campaign, viewers could text in their favourite movie choice, the winner of which played in a certain time slot on TV2.

Other innovations are close to release. The telcos work on innovations with young companies such as The Hyperfactory and Synapse, both registered within the past two years. Lateral Profiles - registered in the mid-90s - expanded its business into text promotions in the late-90s.

Both The Hyperfactory and Synapse turn over about $1 million annually. Lateral Profiles was tighter lipped on its finances - saying only that it was a multimillion-dollar company whose text services were less than half its business.

All are busy cutting deals on multi-media text innovations here and overseas.

In New Zealand, more than 1.5 million texts are sent a day, via the country's 2.4 million mobile users.

As Synapse's Dion James points out, even one promotional text a month on each phone is - at 20c a pop - big bikkies. And that's before you go overseas, where the potential is huge: During April last year, for example, 16 billion text messages were sent globally.

It's a marketers heaven, so long as the consumer signs up. And the incentives are growing. Recent market entrant txtsms NZ was registered at the Companies Office last month and is negotiating to sign up advertisers, whose special deals it will pass on to members of its txtsms club.

Lateral Profiles managing director Roger Grice says the text promotions market goes back to the mid-90s. His comments run contrary to the claims of Cool 123, which has a patent application at the Intellectual Property Office for an interactive text messaging system, claiming it invented the system in 2000.

Grice says he has never considering patenting his company's system, as it works in the public domain: "It's hard to patent something when it's so widely used," he says. The patent application does not threaten his business - even so, he intends to seek legal advice on the implications.

The Hyperfactory and Synapse have also turned to lawyers, seeking advice on what such a patent would mean for the industry. Both seem surprised.

"It's like trying to patent a car's four wheels," says The Hyperfactory's Geoffrey Handley.

None have considered patenting an overall system, as they say it's too general, and doubt it will succeed.

Meanwhile, the industry is trying to wrap its players into an accepted Code of Conduct, being organised by the Wireless Marketing Forum, led by Handley. Although still in draft form, the code promotes practices in line with the Privacy Act, and has general obligations on the marketer to be "unambiguous, legal, decent, honest and truthful".

Handley is gathering commitment to the code from industry. Telecom and Vodafone are signed up, along with about five companies.

"There is a huge potential to really make mistakes [in text promotions], and turn off consumers - or make them turn off their phones. [A code] is long overdue."