So when Verizon announced that they would raise their rates $0.03 per message (effectively increasing the cost of mobile marketing 2-3 times over,) were they killing the goose? Perhaps not. Certainly Verizon executives know where their golden eggs are coming from.
Perhaps the proverbial goose stopped laying eggs. In this case, such a scenario might be represented by the prevalence of unlimited and/or flat rate SMS pricing plans now being offered to consumers by Sprint, AT&T and Verizon. If the revenue for SMS messaging isn’t coming from consumers, it will have to come from somewhere. Why not those sending commercial SMS messages?
There’s some logic there. But, as many have already pointed out, such a large increase (all at once) leaves precious few choices for mobile marketers. One choice is to pass the costs on to their clients. Clients will then choose to pass costs on to consumers, or choose to cancel their mobile marketing programs altogether. In these tight economic times the choice is easy – cut the mobile marketing. This path is bad for mobile marketers, bad for the industry and eventually bad for Verizon itself. It’s bad for consumers, too, since they’ll have less access to helpful technology.
The other choice is to exclude Verizon subscribers from mobile marketing programs. This affects Verizon directly, but also limits the reach of mobile marketing programs and decreases revenue for mobile marketers. This plan may also increase mobile marketers’ costs slightly by adding complexity to systems that would need to identify and suppress Verizon subscribers.
Mobile marketing via SMS has had some trouble getting traction. Perennial announcements seem to be made that the “this is the year of mobile marketing.” Mobile penetration in the US has exceeded 100% (there are more people that have more than one mobile phone than those who don’t have a mobile phone), yet costs for SMS messaging are already higher than email and many other media, making ROI tougher to come by.
A price increase by Verizon would surely wound, if not kill, mobile marketing via SMS altogether. Convergence of networks, hardware and software technologies will make other methods of reaching the mobile handset (like email) easier in the future. Convergence and the Verizon increase work together to marginalize SMS as an effective tactic.
Verizon did back-pedal a bit, calling the increase announcement a “proposal” and noting the “draft was intended to stimulate internal business discussions and in no way should have been released to the public…as a final document.” Whether this is truth or damage control doesn’t really matter at this point. Verizon needs to find a way to monetize commercial SMS that doesn’t jeopardize this burgeoning medium.