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There are 291million people in America, three major TV networks, hundreds of cable and satellite channels, and 10,000 commercial radio stations. There are also some 1500 daily newspapers.
Small wonder then that One World Interactive and US Cellnet are rubbing their hands with glee to be among the first global operators to launch premium rate short messaging services (PRSMS) in the United States.
While One World Interactive provides the technical platform and the applications, it has secure billing agreements with the major carriers through US Cellnet. It is an ideal and pioneering partnership.
In Europe, broadcasters and media groups are already well advanced with the development of interactive networked billing platforms that use PRSMS for competitions, polling purposes, product and service retailing and data-collection.
As Nigel Tatlock CEO of One World Interactive says: "Media houses now know in Europe that they can get between three and four times the revenue yield per column inch using PRSMS initiatives. That message is now beginning to be heard across the Atlantic although the market has a long way to go before it catches up with Europe and the UK."
Clearly the scale of the opportunity in North America is immense. Figures from technology research firm IDC reveal that, as of March 2002, there were already 130million mobile subscribers in the US a figure that continues to grow exponentially.
And it is not just the media houses and the broadcasters that are waking up to the potential of PRSMS. Consumers are increasingly wanting to make lifestyle choices with their mobiles, access new content and develop new platforms for interaction. Premium rate short messaging is geared to facilitate the rapid transmission of valued information with the minimum of fuss. Images, data, audio-files can all be sent through this medium opening up a plethora of opportunities for content providers across a huge range of interests from sport to dating services.
One World Interactive, partnering with US Cellnet Information, are the first group to provide carrier-grade SMS equipment in North America and establish third party billing and connectivity agreements with four of the seven major US Carriers.
This is significant. It opens up vast new possibilities for the development of SMS-based services in a country that one might reasonably have expected to be leading the field, but which to date, has been around 18 months to two years behind Europe and Japan.
But analysis by TABS Top 35 markets for SMS adoption shows that, in the States, during the past 12 months there has been a steady increase in texting rates especially among the young. Indeed, among what TABS categorises as 'Youths', texting rates in the year almost doubled, increasing from 37 per cent to 63 per cent.
The same survey shows Generation X text volumes increasing from 25 per cent to 42 per cent over the same period, Baby Boomers from 16 per cent to 27 per cent and even 'seniors' increasing from five per cent to 10 per cent.
The Challenges
There are, though, some challenges for PRSMS in America. Currently if you want to send a text in the US it will cost you around 10 cents a premium rate text message will typically cost around $5 or $6. Added value will need to be perceived as 'high' to drive up PRSMS traffic levels.
Other concerns centre around the fact that US legislation means customers can refuse to pay telecoms bills where there is a risk the call charges could have been accrued by unauthorised users.
Anne-Marie Fahrenkrug-Ortiz, chief operations officer at US Cellnet , says: "In the US one of the key barriers to entry has been the fact that the seven major mobile operators in America operated on four different platforms. In Europe there is just one platform that all operators adhere to. We have made progress though, and the infrastructure has now been adjusted to allow synchronisation between the platforms."
In terms of content delivery US Cellnet already holds ringtone licensing agreements with the major performing rights agencies, all major music publishers and many independent music publishers. Its distribution licenses cover more than 2500 popular ringtones in the United States and Europe. It also has customized tracking software to assure accurate and on-time royalty payments.
In the more mature markets, One World's sports, information and news alerts applications have generated significant interest and this is an area where older information-hungry Americans are expected to be particularly active.
The mainstream market though is likely to be firmly routed in the Youth, Hispanic and Generation X market segments, where the focus will be on interactivity with the broadcast networks, the downloading of music ringtones and high-volume competition activity.
Ringtones alone show fantastic potential in America. Figures from IFPI, a trade group, show that in 2003 young people spent between $2.5billion and $3.5billion on ringtones worldwide the year before the global music industry sales were valued at $32billion. In 2004 cellphone users in the States are expected to spend $200million on ringtones even though, in the US, the industry is around 24 months behind Europe and Japan.
To succeed in the American market requires credibility, stamina and the ability to network in all senses of the word. One World Interactive has broken into the market ahead of the pack by partnering with US Cellnet thereby gaining access to a number of US mobile operators with other carriers pending.
As the American market wakes up to the delights of wireless tie-ins with shows like American Pop Idol and Temptation Island, industry observers can sense a feeling of momentous change just around the corner. Nigel Tatlock says: "From a marketing perspective, this is a good industry to get involved with. We offer a low cost of entry, a high response rate, and two-way communication to drive and get feedback from the premium rate sms value proposition."
"The challenge for US marketeers will be the same as it was in the UK and Europe to begin with namely to get consumers used to paying for something that they used to get for almost nothing."
Tatlock says One World Interactive believes this is more than just a technical revolution "it is a cultural revolution" and the evidence is, the world is taking it seriously. The initiative is not aimed at providing adult services.
In the United States, over the next three to five years, there will be a rapid blossoming of relationships between operators like One World Interactive and advertisers, television network operators, radio networks, news sites and public sector agencies as the PRSMS information/data bandwagon gathers momentum.
The skilful will build relationships with care, crafting the end-to-end processes required for smooth operation and customer/provider satisfaction with great precision. Their reward will be a lucrative revenue engine that operates 356x24x7 on the back of automated processes and guaranteed levels of service. For many this is the dream business model. One of the big tests will be can the States come up with new applications and services for the business model which allows America once again to set the pace rather than play catch-up?
The launch of One World Interactive PRSMS services in North America is a landmark development in the evolution of the short messaging service. Its impact should not be underestimated. PRSMS in America means new levels of interactivity with customers, new revenue streams, new channels to market and new levels of market intelligence.
The biggest and most influential economy in the Western world is about to introduce a new set of dynamics into an environment where media appetites remain voracious and the marketing machine is king. It is a potent prospect and one which the rest of the globe might want to observe with interest.
All the evidence suggests that SMS and associated technologies could represent a US profit potential unparalleled since the early days of the pay-per-call audiotext movement.
"We are now seeing broadcast networks and media partners show real interest in the power of premium rate based systems for interactivity. It is almost as if they instinctively know that if they fail to do so, they risk being left behind at the starting line. The next five years will be a watershed for these industry sectors. How they react to the challenges these years bring will shape their fortunes for many years to come," says Tatlock.
Author: Christabel Farrah is a freelance journalist
Information
w: www.oneworldinteractive.com |
