21st Century SMS

DM: So give us the low-down on Gemalto please Caroline.

CD: Sure. We are a global company, with 85 offices in 45 countries worldwide. We employ more than 10,000, people, 1,400 of whom are research scientists. In 2010, we generated revenues of €1.9bn (£1.7bn), 19 per cent up on the previous year. And our software and services business, which includes the mobile communications business unit, generated €252m, which was 54 per cent up on the previous  year.

DM: So tell us more about that division if you would please?

CD: OK. Gemalto´s claim is “we make personal digital interactions secure and easy”. We started out in secure and personal devices, such as the chip on payment cards, SIM cards and electronic identity papers like passports. Then we moved into the area of allowing customers to manage their hardware over the air, so for telecom operators, provisioning the SIM card over the air, and now we have broadened this out into a much wider range of services.

The mobile comms business unit is responsible for half of Gemalto’s total revenue, including hardware and software. It breaks down into the secure transactions business unit, which is 27 per cent of total turnover. This is mainly supplying hardware and software to banks.

Then we have the security business unit. This is 15 per cent of the business, handling enterprise customers and government programmes, hardware and software, all related to security or identity for enterprise and government customers. These include blue chip companies such as BNP Paribas, Santander, Citigroup, Barclays, Microsoft, Shell, Lloyds and Pfizer. We also work with 450 operators worldwide, including Telefonica, Vodafone, America Movil, Orange and MTN. 

And then we have the mobile marketing business unit. It was created in 2009 as a dedicated team to provide mobile marketing services. It is dedicated to mobile operators, but we also have agencies and brands as customers, and we try to support any customer who wants to use mobile as a media channel, using our Interactive SMS offering.

DM: It’s interesting that you have chosen to focus on SMS, given the predominance of apps. Why?

CD:  One reason is market-oriented. When we first got involved in the mobile marketing business, we tried to understand what was going on and why, because everyone was claiming that mobile was a superior marketing channel.

So the question we asked ourselves was: “Why was the market not developing as quickly as people imagined it would?” So we analysed this by talking to the players in the ecosystem, and we concluded that the true value of mobile is in providing the best reach ever. It’s also very personal, available anytime, anywhere, it’s interactive, and you can measure your campaigns.

So when we talked to people, it was obvious that reach is very important for marketers, but when you talk about apps or the mobile web, even in advanced economies, the reach is not there. Lots of brands have developed apps, but the reach is very small compared to messaging, and they also face the problem of how they can drive traffic to their app, how can they get downloads. We also feel that the user experience with the mobile web is poor, because there is often no relevance  to the user and clicks through rates are quite low.

So we came to the conclusion that mobile is a below-the-line media for direct marketing. That is why we started to focus on permission. As we see it, to start mobile marketing, you first need the user permission, and then you have to ensure that you only send targeted, relevant marketing messages. This way, you will get good response rates, and grow sustainably the market.

We also tried to identify where we Gemalto could bring value and be legitimate, and we realised that over the past 10 years, we have been deploying technologies for other use cases that we could use for mobile marketing. So this tool that we have renamed as Interactive SMS is actually an application based on the SIM card that dramatically changes the messaging experience.

DM: So how does it differ from regular SMS?

CD: It uses the operator’s SMS bandwidth, but that is the only similarity. The message comes on the screen as a popup, not in the inbox, so it opens a dialogue, and you use the phone to navigate in the dialogue. It is always seen because it stays on the idle screen until you press ‘OK’ or ‘Cancel’, and it is compatible with 100 per cent of handsets. 

It is the same technology that we have been deploying in our SIM cards to support mobile operators in deploying mobile content services. It has been particularly successful in emerging countries. When the GSM operators started launching services, they wanted to deploy voice services, but also basic data services, and as the handsets were really basic, they wanted basic services that were compatible with 100 per cent of handsets, and this is the technology we are using to provide this Interactive SMS experience. It is unique technology, and we have patents on it. 
We started out providing mobile content services to mobile operators. We gave them the technology to build services, and were asked by some of them in EMEA and Latin America to analyse their services, analyse the traffic, and build a marketing plan to stimulate usage of services over time, so between from 2006, we ran a lot of direct marketing campaigns for mobile operators using our Interactive SMS technology.

Between 2008 and 2009, we started working on broader mobile marketing opportunities, , and we have been improving the product offer to enable usage of the channel by marketers, investing on the server side to create a nice interface for marketers to build campaigns and analyse results, because all clicks can be tracked and responses gathered.

DM: And is it still being used mainly in emerging markets?

CD: When we first deployed it for mobile content, in advanced economies, they already had WAP (Wireless Application Protocol), so they were reluctant about it initially. But now when we pitch it as a value-added direct marketing channel, it is not seen as old fashioned technology. The feedback we get from talking to brands is that they perceive it as a very innovative channel, and nothing to do with SMS. They do not even want to compare it to SMS, because the user experience is so different.

And when we ask how they position it compared to other below-the-line channels, they say you may cannibalise SMS traffic to some extent, but you will enable us to run campaigns that we were unable to run previously, or to transfer some campaigns we were running very expensively through call centres to the mobile, in a much more cost-effective manner, and some have also told us that they can imagine moving some campaigns from the web to mobile using this technology.

Sometimes operators need to run campaigns on the web, questionnaire activity to collect preferences, so they have to drive traffic to the web, which is complicated. Or they allow the user to register for the survey via the internet, and obviously, it makes much more sense to do it via mobile.

Wherever the technology is deployed, we get the same feedback: this is very powerful and interesting because it is innovative in terms of the user experience, and it fulfils the promise of reach, because it works with 100 per cent of handsets. And response rates in live conditions are very good, as high as 10 per cent. And we have had cases of response rates reaching 30 per cent.

DM: And once a brand decides to run an Interactive SMS campaign, how involved are you in that process?

CD: If a brand wants to run a campaign, either they have their own database that is opted in and they approach us or the operator, or if the brand wants an awareness or a recruitment campaign, they need a channel and an audience (opt-in database), which may come from the mobile operator.

For  a brand private campaign with its own customer list, we need, at country level, all the operators to make the channel available, and this is where we come in, because we provide that service to hide the complexity to brands and make it simple to access their audience across operators.

This is important, because brands and media companies say it is too complex to do stuff on mobile, and this is why they want iPhone apps, because then it is very simple, but also, then you do not have reach. Our ecosystem is friendly to the brand, to enable them to advertise easily, and most importantly it has the reach they need.

For an awareness or a recruitement campaign on the mobile operator’ audience, we need to make the channel available, but also the audience available. We get involved in deploying the right technology, but also in creating and managing the operator opt-in database. To be considered as interesting for a brand, you need a minimum of 10 per cent of the operator’s user base, and at least 500,000 users in the opt-in database.

So, to conclude, Gemalto supports mobile Operators operators in monetizing their network assets with permission-based marketing. We collect opt-in and qualification, to better engage with users and secure response & and ROI. And we have a unique differentiator: Interactive SMS. It provides superior user experience with maximal maximum reach, not to mention mention skilled teams to support the deployment of mobile marketing strategies. With all that in place, we achieve amazing response rates: time 2 to 10x the same campaigns delivered with simple SMS.