SMS – Africa’s coming media generates millions of responses and revenues
Mobile SMS messages are Africa’s coming media. The Ethiopian Government banned them because they were used to organise opposition protests but found it impossible to let them stay banned. They featured as a medium for spreading insidious rumours about candidates in the recent Kenyan election and more tragically, as the means for organising post-election violence. But beyond these high profile political campaigns, SMS messages are one of the developing service businesses in the mobile sector. Before Kenya’s recent election, Russell Southwood spoke to Kenya’s Karanja Macharia, CEO of Mobile Planet about the potential of this new business.
Q: What’s Mobile Planet’s business and where are you operating?
A: We provide promotions for FMCG products using SMS for companies like Kenya Breweries, Coca Cola and Unilever. All their promotions are now SMS based. They used to have people send in paper coupons or bottle caps but it’s cheaper to do them on SMS. For example, now when a soft drinks company runs a competition, those responding can simply send the unique number on the bottle cap by SMS to the company. We also support Safaricom’s existing SMS products and are developing new products with them. Finally, we provide SMS voting services for broadcasters like MTV.
At present we’re only in Kenya but we have done some work for a brewery across Kenya, Tanzania and Uganda where we’ve used other service providers in those countries outside Kenya. We have plans to move into Tanzania and Uganda. We want either to try and replicate what we’re already doing here in Kenya or sell services directly to subscribers. We’re trying to have a two year product cycle where we offer a new product once every two years.
Q: So how does it work financially?
We split the SMS revenue 50/50 with Safaricom and in turn split our 50%, around 50/50 with the client, depending on the client. We used to have an exclusive deal with Safaricom but that’s no longer the case. There are 21 licensed premium rate service providers, of which there are 18 who are actually connected to networks. Four of these companies do ringtones and the others offer infotainment or directory services.
Celtel may soon follow in offering our service. We’ve had our platform in place since 2002 but Celtel bought its own system.
The advantage for the client is that there is no cost for media advertising. It is entirely paid for by the consumer. The business used to be split between SMS and IVR business but it is now mainly SMS because the revenues are much higher.
Some FMCG companies want to have free calls for those responding but we have always pushed our clients away from this because it could be open to abuse.
Q: So what level of responses are your clients getting?
The brewery client has had 2-3 million SMS messages per promotion. The lowest response for a client was 600,000 and the highest was 4-4.5 million over a 6-8 week period.
So for example, if the client puts out 10 million products with a unique number to enter for a competition, we would expect a 5-10% response rate. Anything below 5% is considered a bad response rate. The highest was 15% with an FMCG product.
Q: Is it just FMCG products?
No, recently we’ve been doing a lot of media promotions. It’s the same approach as with FMCG products except no purchase is required. Both TV and radio companies have been using SMS as a way of encouraging viewing or listening. So for example, the host of a show asks viewers or listeners to call in or there is a programme response number at the end of a show or programme. These often generate 4-5 million SMS messages over a six week period. It’s an interactive activity for users and it helps reinforce the station’s brand.
We also run the voting for competitions like Idols for local TV stations across East Africa and this is sponsored by East African Breweries. In this case users phone in a code to indicate their rating of contestants. It was the first major reality TV event focused on East Africa.
Q: So what are the products you work with Safaricom on?
There’s its infotainment service which users can get by dialling 411. That’s their oldest service and it can get up to 15 million requests but it fluctuates. Then there’s SMS to e-mail which has had about 1 million users. The infotainment service is about 40% news use and around 20% religious texts which can be verses from the bible or from the Koran. Everything else, including sport, horoscopes and events is below this.
Q: Will you be doing MMS message services?
We have tested MMS messages (sending out to over 1 million users) on the Safaricom network and are awaiting agreement of the revenue share structure. The MMS content will be offered on 411 and so for example, it will be video clips of breaking news from NTV. We’re not currently doing anything on the mobile TV front.