Can Companies Turn SMS into Cash?

Companies have been wondering how to tap into the marketing potential of mobile phones since they fell beneath the size of a brick. With the advent of SMS, the potential is staggering. Local company ActiveSMS believes it has the model that it takes to turn SMS into cash.

It’s a simple model: people opt-in to receive no more than two SMS messages a day, either via a Web site (the preferred method), SMS or fax. During registration, the company captures information relevant to advertisers: they started with name, age, gender and postcode, recently adding a lifestyle questionnaire to capture interests.

Rob Fowler, chief executive officer and founder of ActiveSMS, claims his database is currently around 350,000 — reaching this figure after 10 weeks of business — with 10,000-15,000 new users registering a day. The key to this growth: what Fowler calls network marketing.

If you introduce someone to the service, ActiveSMS will pay you 20 percent of their fee for sending an SMS to that person. And should the person you bring into the fold introduce people in their turn, you will receive 10 percent from this second layer.

Fowler hopes this will make ActiveSMS attractive to the broad market.

ActiveSMS charges advertisers R1.50 (US$0.18) per SMS per person (on a sliding scale, ignored here for simplicity). So youd get R0.30 (US$0.03) for every SMS sent to someone you introduced and R0.15 (US$0.01) for every SMS sent to someone they introduced.

This income is guaranteed for as long as the person introduced is an active cellphone user. There is a R25 (US$3.06) administration fee for becoming what Fowler calls a “Sales Manager,” but this is guaranteed against future earnings. I.e., if you don’t ever recommend anyone, you never have to pay the R25.

This money is paid electronically to a savings account or credited to your airtime. Fowler says they are in the process of contracting a large accountancy firm to audit their books, to assure users of fairness.

While ActiveSMS is talking to “anyone” at this stage, they’ve received a lot of interest from Microsoft and SAB. Fowler believes SMS marketing is perfectly suited to the small business market — e.g. a restaurant could SMS 100 people in its area about a Sunday lunch special.

It’s a powerful tool and Fowler doesn’t doubt that competitors will appear — indeed, two competitors have appeared from within his own organization.

“This is the Holy Grail of Direct Marketing,” says Fowler, “and the only real barrier to entry is the first mover advantage. We believe we’ve successfully managed that.”

The company has also opened an office in the UK and is planning to expand across Europe, Australia and the US.

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