SMS to drive mobile messaging ad revenue past $7.14bn by 2017

Think mobile messaging services like Whatsapp are killing SMS? Think again.

In fact, the use of location-based SMSes to deliver relevant ads will see mobile messaging ad revenue hit US$7.14-billion by 2017.

According to UK-based tech analysis company Juniper Research, targeted SMSes have significant benefits for anyone looking to push their brand. While they may lack the rich media content of other advertising formats, they are very familiar to consumers and have a much higher chance of being opened, even if unsolicited. SMS ads are also a low-cost option for those seeking large reach; in the UK, for example, a bundle of 1 000 text messages costs around £0.05 (8¢) per message, falling to around £0.03 (5¢) for larger bundles.

That said, consumers can react negatively to this kind of targeted advertising. That’s why the campaigns that work best are the ones that people have to opt in to. Juniper research reckons these types of schemes will become more common as operators attempt to look for revenue streams beyond voice and data but it is unlikely that they will become opt-out or compulsory.

According to Juniper research’s Charlotte Miller, the effectiveness of SMS, combined with location-based ads is a particularly effective one:

Sending adverts using mobile messaging gives advertisers a simple, cheap and effective way of reaching consumers. Adding location technologies is an even more powerful proposition, particularly for transactional advertising as marketers can reach consumers who are near a location where they can purchase. Knowing that the recipients of an ad have actively asked to receive it and will in all likelihood open it is also particularly attractive.

Although SMS will drive the market, companies will have to include other forms of mobile adverts, such as those that direct consumers to mobile optimised sites or content, particularly given the highly promising mCommerce opportunity.

Mobile apps meanwhile offer valuable inventory for mobile ads and, according to Juniper Research, spend on in-app advertising will increase rapidly over the next few years.