In just over two months, Rob Fowler, CEO of ActiveSMS, has succeeded in doing what industry observers would have considered impossible in the current economic climate; he`s sold 350 000 people on a product that is yet to be delivered, based on projected earnings that have yet to materialise.
By now, almost anyone who knows anyone who has a cellphone and an Internet connection has heard about ActiveSMS. This marketing initiative, which promises money in return for marketing messages received via SMS, is Fowler`s brainchild.
The use of SMS as a direct marketing tool is growing in popularity in SA, and is increasingly being used by businesses and service providers, much to the annoyance of recipients who have often not elected to receive these messages.
Ask and you shall receive
The ActiveSMS proposal is different, says Fowler, in that it is completely permission-based; in fact, he claims it is the world`s first permission-based SMS advertising company.
"We are a world first in terms of our model, and we`re ready to expand globally."
The biggest network marketing company in the world is Amway; they boast 2.5 million distributors worldwide. If we can get to 1% of our global market, we`re going to be three times the size of Amway.
Rob Fowler, CEO, ActiveSMS
The company has a UK office, and is taking Web-facilitated registrations from 21 other countries.
The model is based on a classic kickback system - registered database members opt in to receiving two messages a day. Should a member choose, he or she could purchase what ActiveSMS terms an independent business for R25. This entitles the independent business owner to introduce new members to the database.
"When we send an SMS out now, there are three or four transactions which have to take place in terms of royalties. It basically means that if you were to join the ActiveSMS database by way of my introduction, every time you receive an SMS, I`m going to earn a royalty paid for by the advertiser.
"In SA we`re talking of it being around R1.50 - the charge to the advertiser - of which 20% gets paid to me as a royalty for introducing you to the database. Indirectly, the person who introduced me is also responsible for you joining the database, so 10% of that R1.50 gets paid to your indirect introducer."
The remaining 70% goes back to ActiveSMS, to cover operating expenses, and of course, to generate some profit.
Nevertheless, Fowler is adamant on two points: the business model is not based on a pyramid scheme, and spamming will not be tolerated.
"Our basic model is that we`re going to guarantee that we will send no more than two SMSs per day, to a database of people who have given us permission to do it. If you were a member of the ActiveSMS database, you get your two relevant offers through us, because it`s coming through a qualified database where we`ve listed your hobbies, your interests, age, income, etc."
The service is targeted at all business tiers, but more especially, to companies that previously could not budget for direct marketing spend.
"For R150, we could send a message out to 100 people that, for example, were all plumbers. In traditional media, you couldn`t even cover production costs for R150."
Power to the people
Above all, Fowler says, the product has the potential to empower people, and channel money to rural areas, providing a residual income for people in lower economic strata.
"Our database is representative of the demographics of the country. Some 88% of cellphone owners do not have access to the Internet, so we facilitate registrations through SMS. We facilitate fax registrations, and it`s a win-win situation."
Optimistic predictions aside, the ActiveSMS offering is limited for now. Microsoft appears to be the only committed advertiser, but Fowler says the company is in negotiations with a number of national food franchises, and the local breweries.
"We had a chicken and egg situation here - you know that media buyers are going to sit back with any new channel and wait and see how it works before they start committing. So we had to build the database first before we could go and talk to them, which we`ve done. Microsoft are committed, they`re going to be advertising through us. In terms of finding advertisers, we`ve done it through three different ways; the first one is that we have a corporate and agency division, we have people who are looking specifically at the Web, and the most important one is our premium business organisation (PBOs)."
The PBOs are expected to resell the advertising channel to companies that haven`t been in the ad spend loop.
"Of the 350 000 registered users, about one-third are actively positioning themselves to earn money. This presents opportunities to people who are looking for something to do to get themselves busy and to earn residual income," he says.
"We`re talking to a lot of people. It`s unrealistic to expect that we`ll find advertisers for every person out there and we`re not guaranteeing adverts. There may well be a situation where advertisers don`t find any of our database members attractive."
The offer isn`t limited to cellphone owners; registered IBOs could receive royalties until they`ve earned enough money to buy a cellphone, Fowler says.
Fowler believes ActiveSMS has captured 3.5% of the local mobile user market, and says that with the exponential growth rate, it won`t be long before it manages to crack a million registered users. "In fact we`re forecasting that we want to have eight million within four years."
"The biggest network marketing company in the world is Amway; they boast 2.5 million distributors worldwide. If we can get to 1% of our global market, we`re going to be three times the size of Amway."
Whether ActiveSMS will be able to rival Amway in terms of revenue is another story. The latter recorded global sales of $5 billion for the fiscal year ending 31 August 1999.
Share