SMS comes of age

The growth in text messaging traffic has been one of the surprises of the last five years. But what does it mean beyond teenagers chewing the fat? Mark Graham looks at the big picture.

Try finding evidence of a mobile network operator that predicted the boom in text messaging, or SMS (short message services). It isn't easy.

Millions of tech-savvy, nimble-fingered teenagers were the ones to kick-start the SMS boom, just as the rest of us were concentrating on something so passé as talking on the phone.

Only now it's plain to see this simple form of mobile communication isn't just a passing fad for the young - SMS texting is being used in increasingly sophisticated ways, and is fast becoming a huge money earner for operators as well as a tool for businesses.

I'm sold

Example one - advertising. Research from Hindsite on behalf of ucp, the global outfit behind uboot, a mobile portal aimed at the youth market, revealed that between the ages of 14-25 there is 100 per cent awareness of text messaging. And this makes ucp happy - currently it delivers 52 million text messages every month from its sites to phones.

The company is now rubbing its hands with glee because the study indicates teenagers are willing to receive promotional text messages. ucp clearly sees an opportunity for more advertising and more revenue.

Advertising potential was also highlighted in another recent survey, commissioned by the Mobile Channel and carried out by the NOP Research in association with the London Business School. It revealed 63 per cent of 1,000 trialists aged between 16-30 replied or took action as a result of receiving a text message advert. Try finding the same level of response with other media.

Andy Richmond, head of account research at MediaCom, a leading sponsor of the trial, reckons SMS is an ideal way for advertisers to reach target markets. "The trial showed insights into what it takes to establish a one-to-one relationship with the consumer, which is every advertiser's ultimate aim," he said.

The 'value add'

Growth in the SMS market is also spiraling upwards in the area of value-added SMS services, which range from simple ring tone downloads to news and sports updates. This market will generate £2.4bn annually in Europe by 2006, according to Spectrum Strategy Consultants.

Janice Hughes, Spectrum MD, said consumers are now willing to pay more for premium SMS content.

"Mobile operators need to exploit this trend and act quickly to build on current momentum," she told silicon.com.

SMS is now also being used for transactions. Some might say internet businesses could even consider the technology a means to accept micro-payments for content and services. With premium-priced SMS messages customers simply find something they wish to purchase from a website, then send a text message to a specified number, including a product code, and moments later a reply is received with an access code.

Once a code is used for a purchase, via the phone, a charge is debited on a customer's phone bill or - in the case of a pre-paid mobile phone - directly. It's simple, secure and quick.

US laggards

Interestingly, while text messaging took off quickly in Europe, it has not grown in the US with anywhere near the same acceleration. Globally last year 20 billion text messages were sent but of that total only 750 million were sourced from North America. However, according to Mobile Lifestreams research, this disparity will soon change. By 2004, the estimated global figure will be 82 billion text messages with the US expected to account for 10.5 billion of the total.

There are a number of reasons for the slow uptake in the US. Probably the most significant - and the reason it has boomed in other parts of the world - is that at the moment only 36 per cent of US young people use mobiles, compared to 77 per cent in the UK and 80 to 90 per cent in Scandinavian countries, according to Yankee Group figures.

However, the Yankee Group predicts that text messaging will soon rise significantly as 75 per cent of young Americans come to own a phone by 2005.

Cultural impact

Unsurprisingly, mobile phones and text messaging are slowing changing cultural interaction. When asking a girl out these days, 50 per cent of 16 to 18 year old boys in the UK now use SMS.

The art of penning a letter to win a girl's affections or going through the nerve racking process of making a call while hoping her father doesn't answer seems to be dying. Today success comes with the reply: YES IMHO (in my humble opinion) U (you) R (are) Gr8 (great), BCNU (be seeing you).

Indeed, this language has now become so entrenched it has won inclusion in the revised edition of the Concise Oxford Dictionary, which went on sale at the beginning of July.

SMS now has its own glossary and as well as abbreviations, such as those above, the dictionary devotes a section to 'emoticons', which are representations of facial expressions.

The future

Mobile Lifestreams research also indicates a strong demand for next generation services and the company's director, Simon Buckingham, believes text traffic will be further enhanced by new messaging standards.

EMS (enhanced messaging service) and MMS (multimedia messaging service) will begin to enter the market when networks begin to be based on 2.5G and then 3G technology.

SMS is predicted to be worth $6.5bn annually with up to 80 billion text messages sent globally each month by 2003. In the UK, 950 million text messages were sent during June, according to Mobile Data Association figures, bringing this year's total to 5.3 billion messages so far.

Buckingham draws a parallel between the evolution of text messaging and that of the PC, predicting a future as a major business tool. He told silicon.com: "It's a transition, and it's like moving from DOS, where we are now, to Windows in about three years."

SMS is continuing to evolve. It is already proving to be far more than a dating tool for teenagers. It's clearly for all age groups and helpful for various businesses

But with next generation services around the corner, it promises to be about more than sending a message to a group of salesmen on the road simultaneously, or being notified of email when out of the office. That familiar beep-beep on the phone could signal the arrival of a video message via MMS.

One thing is for sure - a technology born out of a strong consumer pull has opened up a range of possibilities to businesses.