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Papers

Text message advertising:


Response rates and
branding effects
Received (in revised form): 16th February, 2005

Ruth Rettie
is an ex-Unilever brand manager and a senior lecturer in internet marketing at Kingston University, specialising in new media
and communications. She is also doing a PhD on mobile phone communication at Surrey University.

Ursula Grandcolas
lives in Paris and teaches at several French business schools. She is also an industrial fellow of Kingston University. Her
research interests include e-marketing, international marketing and sustainable development.

Bethan Deakins
completed her marketing MA at Kingston University. She is currently European Marketing Manager for BT Global Services.

Abstract The development of internet-based mobile electronic commerce


(mcommerce) has been slow, but commercial applications for text messages have
developed rapidly. This paper explores the role of SMS or text message advertising.
Although SMS advertising is strictly a form of telemarketing, it shares features with
e-mail marketing and mcommerce.
An analysis of 26 text marketing campaigns (5,401 respondents) demonstrates the
surprising effectiveness of this new form of telemarketing. SMS advertising is effective,
both as a branding vehicle and in stimulating response; this was demonstrated by
significant improvements in brand attitude and purchase intentions.

INTRODUCTION advertising, including branding and


The development of internet-based purchase intention effects. The paper is
mcommerce has been slow in Europe based on the analysis of the market
and the USA. SMS (Short Message research findings of 26 commercial SMS
Service) text messages, however, have campaigns, which were conducted in the
continued their explosive growth. SMS is UK by Enpocket UK, a provider of
proving to be an effective new tool in permission-based mobile marketing
marketing communications, used either services in the UK.
Ruth Rettie
Kingston University, on its own, or integrated interactively
Kingston Hill, Surrey with television, print and poster
KT2 7LB, UK.
advertising. CONCEPTUAL FRAMEWORK
Tel: 44 20 8547 2000;
e-mail:
The objective of this research was to Mobile electronic commerce, or
RM.Rettie@Kingston.ac.uk examine consumer response to SMS mcommerce, has been defined as the use

304 Journal of Targeting, Measurement and Analysis for Marketing Vol. 13, 4, 304312 Henry Stewart Publications 1479-1862 (2005)
Text message advertising: Response rates and branding effects

of mobile, wireless (handheld) sent by mobile phones, but can also be


internet-enabled devices to communicate computer-generated. Recipients can
and conduct transactions through public generally store a limited number of
and private networks.1,2 Some definitions messages; unlike e-mail, messages usually
of mcommerce include mobile marketing do not have a subject line that can be
which refers to marketing activities that read without opening the message.
deliver advertisements to mobile devices;3 SMS has grown rapidly. In the UK
this includes both SMS advertising penetration reached 78 per cent in 2003,
pushed to mobile phones and advertising when 20bn text messages were sent,
pulled down from mobile internet sites. more than either letters or e-mails
Worldwide mobile marketing revenue together.24 Direct marketing includes
(mainly SMS advertising) is expected to direct mail, direct response advertising,
be in the range of US$1623bn by the telemarketing and digital (e-mail)
end of 2005.4 marketing; it is often seen as intrusive.
The development of mcommerce has Intrusive advertising can negatively affect
been comparatively slow:5 research consumer attitudes and brand
suggests that it is seen as expensive, perceptions.25
with poor service and usability.68 SMS shares features with both
There are, however, indications of telemarketing and e-mail marketing.
growth in consumer interest in Leiderman26 defines telemarketing as
mcommerce services. For example, any measurable activity, using the
Strategy Analytics9 research in West telephone to help find, get, keep and
Europe found that consumer interest in develop a customer. Telemarketing has
mobile payments and services had the advantages of impact, persuasiveness
increased from 23 per cent in 2001 to and interactivity; its major disadvantages
39 per cent in 2003. In the UK added are high cost and intrusiveness, which
value services grew by 29 per cent to reduce consumer acceptance.27,28
1.4bn, which was 4.3 per cent of Research29 suggests that the initial
total mobile revenue.10 Global research acceptance level for proactive
by ATKearney11 found that consumers telemarketing may be as low as 13 per
claiming to have made payments by cent. Although SMS advertising is
mobile phone rose from 3 per cent in delivered to the phone, computer
2003 to 10 per cent in 2004. This mediation reduces costs and
was predominantly payments for ring intrusiveness, giving it some of the
tones, logos and games. advantages of e-mail marketing.
The effectiveness of mobile marketing The advantages of e-mail marketing
has been related to timing;1214 include low costs and digital
localisation,15 relevance;16 consumer value processing.30,31 Its major disadvantage is
and entertainment;17 and the proliferation of spam, which taints
personalisation.18,19 It is suggested that the reputation of e-mail marketing and
mobile marketing is useful for affects response rates.32 Mobile phone
relationship building, particularly when spam is relatively undeveloped, but
used with permission.2022 Japanese already spam text messages that trick
research23 suggests that click through recipients into phoning premium rate
mobile internet advertising is seen as messages have caused consumer
neither entertaining nor informative. concern.33
SMS or text messages were first In addition to the impact of
introduced in 1992. They are usually telemarketing and the automation of

Henry Stewart Publications 1479-1862 (2005) Vol. 13, 4, 304312 Journal of Targeting, Measurement and Analysis for Marketing 305
Rettie, Grandcolas and Deakins

e-mail, SMS advertising enjoys perceptions.3941 Li and Hairong42


advantages specific to mcommerce. Rask speculate that intrusiveness may be
and Dholakia34 describe it as your best related to the utility and expectedness
salesman in the pocket of your best of the interruption; this suggests that
customer; the consumer is accessible at incentives, targeting and permission may
any time, at any place. Like other direct mitigate intrusiveness. The concept of
marketing, SMS can be personalised and intrusiveness is related to permission. If
customised, in addition, targeting can be consumers have given their permission,
based on time and location, so that they are less likely to construe
advertisements reach consumers at point marketing as intrusive, as it will be
of action.35 SMS advertising includes a anticipated.43 Factors that influence
viral element as recipients can forward consumer attitudes to permission
messages to their friends. The main marketing include message relevance
disadvantage is its 160 character text-only and monetary benefit.44
format, but MMS messages can
incorporate pictures or video clips.
SMS advertising pioneers initially used METHODOLOGY
it as a form of passive advertising and The research amalgamated data from
were surprised by consumer responses. separate research surveys that were
Advertising varies from simple branded originally undertaken to evaluate the
slogans at the end of sponsored subsidised effectiveness of 26 different SMS
messages (eg alerts when football goals advertising campaigns. For each of the 26
are scored), to special offers and sets of research, approximately 200
promotions. Research suggests that there people were randomly selected from
is a branding effect36 but, like other those who had received the campaigns.
direct marketing, SMS advertising is The campaigns and research took place
thought to be most effective when it between October 2001 and January
invites a response and includes an 2002. The interviews were conducted by
incentive. phone and were conducted two days
Barwise and Strong37 report a trial of after the consumer received the last text
incentive-based text message advertising message of the campaign. The campaigns
in the UK. Respondents, who were paid had a strike or response rate of over 25
a 5 fee on recruitment, and 0.05p per cent; this is more than twice the
per message, received over 100 messages industry average of 12 per cent, probably
during the six-week trial period. Almost because Enpocket used mobile phone
all respondents were satisfied or very numbers.
satisfied. Most (81 per cent) read all The 26 questionnaires shared a
messages, 63 per cent responded or took common thread of questions, with
action and 17 per cent forwarded at least modifications relevant to the specific
one message. brand advertised. The population for this
Industry studies suggest that in SMS study was held on Enpockets database;
advertising relevance and added value all respondents had given permission to
(discounts or special offers) reduce receive third-party marketing. Responses
perceived intrusiveness and increase from all the campaigns were merged into
acceptance.38 Intrusiveness in advertising a single database of 5,401 post-campaign
has long been recognised as a cause of interviews. The objective was to assess
annoyance that can negatively affect the relationships between response, brand
consumer attitudes and brand attitude and purchase intention.

306 Journal of Targeting, Measurement and Analysis for Marketing Vol. 13, 4, 304312 Henry Stewart Publications 1479-1862 (2005)
Text message advertising: Response rates and branding effects

Table 1: Range of acceptability, interest and relevance

Acceptability Interest Relevance


(High or fair) (Very or fair) (High or fair)

Highest figure 60.5% 29.8% 27.3%


Lowest figure 16.1% 4.2% 6.5%
Average 42.3% 15.5% 16.2%
Valid responses 5,360 2,485 2,013

Table 2: Response to advertising messages

Any Text Watch Visit


Response action % back % television % Website % Purchase % place %

Highest 67.7 51.6 38.5 25.0 21.6 19.7


Average* 31.3 15.7 10.6 11.3 5.2 4.8
Lowest 3.1 1.2 2.3 1.5 1.0 0.8
S.D. 17.3 15.4 9.8 8.3 6.5 6.0

*Averaged for those campaigns where this response was relevant. 5,401 respondents.

RESULTS wide ranging. Responsive actions ranged


from text back, which had the highest
Acceptability, interest and relevance response rate, to place visits, with nearly 5
Overall, 44 per cent of respondents per cent claiming to have made the
found receiving campaigns on their relevant visit. For most of the campaigns
mobile phones very or fairly acceptable, (20 out of 26), respondents followed the
with only 21 per cent finding it fairly or specified call to action, with the most
very unacceptable. Acceptability was frequent response following the message
inversely related to respondents age directions. These included calls to action
(younger people have more favourable involving physical travel (eg visit
views; Chi-square, p 0.01), but not McDonalds or the Carphone Warehouse).
related to gender. Acceptability was also There was a relationship between level of
significantly correlated with campaign relevance and action taken. Where people
interest, campaign relevance and found the campaigns relevant they were
monetary incentives. Campaign interest significantly more likely to take action.
and campaign relevance are strongly Those who took no action were more
correlated (Spearmans Rho correlation: likely to say the campaigns were not
0.679). Interest and relevance are both relevant at all.
significantly correlated with each form of
action. Table 1 indicates the wide
variation in acceptability, interest and Branding effect
relevance by campaign. Overall, spontaneous recall of brand
advertised was 16 per cent. Prompted
brand recall was 43 per cent on average;
Response significantly higher rates were found for
Most messages were read (89 per cent), campaigns including monetary incentives
and 5 per cent were forwarded to friends. (Chi square, p 0.01). Spontaneous
All campaigns included a specific call to brand recall was significantly correlated
action (eg visit a website, reply by text, with all forms of response: (Chi square,
visit an outlet). Response rates were high p 0.05, for each response type).
(31 per cent on average, see Table 2) and Respondents were also asked: Did this

Henry Stewart Publications 1479-1862 (2005) Vol. 13, 4, 304312 Journal of Targeting, Measurement and Analysis for Marketing 307
Rettie, Grandcolas and Deakins

Table 3: Range of brand attitude change

More positive about Less positive


the brand % No change % about brand %

Highest 35.4 93.3 8.5


Lowest 6.7 60.0 1.1
Average 18.4 77.9 3.8

2,651 valid responses.

Table 4: Range of purchase intention

More likely to buy % No change % Less likely to buy %

Highest 70.6 78.3 17.2


Lowest 15.6 25.9 2.0
Average 36.1 56.3 6.9

2,557 valid responses.

campaign make you feel more or less wide variation in purchase intention, by
positive about xxxxx (eg Expedia.co.uk.) campaign.
or did it not change your impression at Positive brand effect and purchase
all?. Unsurprisingly, for most respondents intention are significantly related to all
there was no change in brand image (78 actions, ie visiting the companys website,
per cent average over all the campaigns), visiting a shop, calling a number,
but there were also considerable replying to a number, supplying an
improvements, for example, 35 per cent e-mail address, watching television,
felt more positive about the brand in one buying the product, visiting a WAP site,
campaign. Table 3 indicates the wide buying a newspaper, requesting a
variation in brand attitude change, by brochure and visiting a restaurant
campaign. Positive change of brand (Chi-square, p 0.000). Figure 1
attitude was related to spontaneous recall illustrates the response pattern overall,
(Chi-square, p 0.01) and occurred for demonstrating that those who act on a
campaigns that did not necessarily text message are much more likely to
produce high response in terms of action. purchase.
Ordinal regression was used to model
the dependence of change in purchase
Purchase intention intention (an ordinal measure) on a
Respondents were asked about purchase number of predictors. Ordinal logistic
intentions: Did this campaign make you regression was used because the
more or less likely to consider buying dependent variable, purchase intention,
from xxxxx (eg Expedia.co.uk) in the was measured with a three-item scale.
future?. Increased likelihood to purchase The final model includes age (recoded
was significantly correlated with into four categories), positive brand
improved brand image; generally the attitude change and message relevance, as
positive effect on purchase intention was factors. The resulting goodness of fit was
approximately twice that of the positive significant at 99 per cent with an
effect on brand attitude. 85.7 per cent of appropriate predicting power (Cox and
those who felt more positively towards Snells pseudo-R squared 0.26), see Table
the brand claimed they were more likely 5. The estimated coefficients in an
to make a purchase. Table 4 indicates the ordinal regression cannot be directly

308 Journal of Targeting, Measurement and Analysis for Marketing Vol. 13, 4, 304312 Henry Stewart Publications 1479-1862 (2005)
Text message advertising: Response rates and branding effects

More likely 51.3%


to purchase

10.6% 51.8%
Not read
Less likely to 2.5%
Action purchase
100%

26.4%
Read 89.4% More likely to
purchase

No action
48.2%

Less likely to 7.3%


purchase

Note: Neutral values omitted

Figure 1 Relationship between response and purchase intention

interpreted. Rather, the impact of a these three campaigns varied from one of
change in a particular variable can be the best to one of the worst campaigns,
determined by examining the change in reflecting the importance of the text
the predicted probability (holding other message creativity and contents. The
variables at their means). To do this campaign rated highest included a much
Long and Cheng45 xpost spreadsheet was better promotional offer. The other two
employed. This showed that increased were similar, and, in fact, had a similar
purchase intention was related to positive response in terms of action, ie visits to
brand attitude change and relevance. The the website, but they had very different
youngest age range, 1624, was also branding and purchase effects. These
significant. effects may be the results of the website
experience and unrelated to the text
content.
Creative execution
The campaigns diversity made analysis
difficult, but it was felt that promotions RESEARCH LIMITATIONS
that were more explicit, with greater This research is based on claimed
added value, or more involving, had a response and attitude change. It is likely
stronger effect. For example, the two that respondents are exaggerating their
campaigns beginning want to win receptiveness and response to this new
1,000 did well, as did an offer of 20 medium. In addition, as the campaigns
for opening a bank account, and riddles took place over three months, some
or jokes. The research included three respondents will have received several
campaigns for Expedia. Responses for advertising messages and responsiveness

Henry Stewart Publications 1479-1862 (2005) Vol. 13, 4, 304312 Journal of Targeting, Measurement and Analysis for Marketing 309
Rettie, Grandcolas and Deakins

Table 5: Ordinal regression model

Parameter estimates
Estimate Std. error Wald df Sig.

Threshold [PURCHASE More likely] 2.908 0.413 49.509 1 0.000


[PURCHASE No change] 1.162 0.403 8.306 1 0.004
Location [POSITIVE More] 5.269 0.316 277.867 1 0.000
[POSITIVE No change] 2.806 0.275 104.152 1 0.000
[POSITIVE Less] 0a . . 0 .
[AGE_NEW 1624] 0.412 0.182 5.138 1 0.023
[AGE_NEW 2534] 4.53E-02 0.184 0.060 1 0.806
[AGE_NEW 3544] 0.123 0.202 0.370 1 0.543
[AGE_NEW 45+] 0a . . 0 .
[RELEVANT Not] 1.789 0.276 42.061 1 0.000
[RELEVANT 2.00] 0.838 0.284 8.724 1 0.003
[RELEVANT 3.00] 0.334 0.281 1.416 1 0.234
[RELEVANT 4.00] 0.115 0.304 0.143 1 0.706
[RELEVANT Very] 0a . . 0 .

Link function: Logit. aThis parameter is set to zero because it is redundant.

may decline over time. The authors were recipients may be looking for
unable to determine, from these data, entertainment. The mobile phone,
whether response declines with repeated however, is also perceived as extremely
exposure, or how creative content affects personal,49 so that SMS may be an
response. invasion of privacy. There is scope for
further qualitative research on this area,
which is pertinent to the timing and
DISCUSSION creative style of SMS advertising.
SMS advertising is an effective interactive These 26 campaigns demonstrate the
medium that combines the impact of effectiveness of text message advertising.
telemarketing, the digitalisation of e-mail, Response rates varied from 68 per cent
and the localisation of mcommerce. Its to 3 per cent, with an average of 31
precise targeting makes SMS advertising per cent. This compares very
particularly suitable for time and place favourably both with direct mail, with
sensitive advertising. reported response rates between 1 per
The overall acceptability of SMS cent and 5 per cent,50,51 and
advertising was 44 per cent, significantly permission-based e-mail marketing, with
higher than the acceptability of reported response rates from 1 per cent
telemarketing.46 This more positive to 8 per cent.5254 The average
attitude could either be the result of the response rate of 31 per cent compares
novelty of the medium or an intrinsic reasonably well with the 63 per cent
aspect of SMS advertising. The authors found by Barwise and Strong,55 for an
suggest that it is the latter; the medium incentivised scheme where respondents
is less intrusive than traditional were paid both to take part and per
telemarketing, because respondents can message received. The correlation found
choose when and if they read a message, between acceptability, relevance and
unlike the telephone which produces a interest supports Godins56 argument for
summons which evokes a conditioned permission marketing; moreover, these
response.47 Moreover, unlike traditional three dimensions are also related to
direct mail, text messages on mobile response.
phones are available in otherwise dead SMS advertising has three different
time,48 eg while travelling, when effects: response, branding effect and

310 Journal of Targeting, Measurement and Analysis for Marketing Vol. 13, 4, 304312 Henry Stewart Publications 1479-1862 (2005)
Text message advertising: Response rates and branding effects

effect on purchase. Respondents reported these response rates may be due to


considerable effects in all three categories. novelty: the proliferation of text message
The branding effect found does not advertising and spam are likely to reduce
imply that SMS advertising could be the effectiveness of the medium over
used for its branding effect alone. All time. There is a need for future research
these campaigns included some call to of this medium which measures actual as
action; the authors found a significant opposed to reported behaviour to
correlation between action and brand facilitate this Enpocket is developing
recall. The nature and direction of the bar-coded SMS coupons that enable the
causality is unclear however; it may be tracking of actual responses.
that better known brands have a better
response, it may be that text messages
improve brand recall or it may be that References
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312 Journal of Targeting, Measurement and Analysis for Marketing Vol. 13, 4, 304312 Henry Stewart Publications 1479-1862 (2005)