But Will U.S. Consumers Use Cellphones to Do More Than Talk?

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NEW YORK ( -- AT&T Wireless is on the verge of kicking off a wide-ranging marketing effort to drive consumer use of wireless short message service with the Jan. 21 debut of American Idol II on News Corp.'s Fox.

The nation's No. 3 provider of wireless services is poised to unveil a multimillion-dollar campaign to support its sponsorship of the hit Fox show, including retail promotion, direct mail, online marketing and TV advertising. AT&T Wireless executives declined to comment.

Through its sponsorship of the first American Idol series last year, AT&T Wireless offered subscribers to its service the ability to vote on contestants' performances using their wireless handsets. The company had a 27% opt-in rate among the program's target audience of 18- to 43-year-olds.

Looking for a viral effect
With American Idol II,

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AT&T Wireless is expected to push SMS beyond voting, offering subscribers with SMS-enabled wireless phones the ability to engage in text-based messaging activities such as gossip, games, jokes, quizzes and real-time chats with fellow American Idol fans, the contestants and possibly the judges, as well as other interactive experiences. Most importantly, AT&T hopes the program, which will start later this month and run through mid-May, will stimulate a viral effect among 18- to 30-year-olds.

"They're trying to tap into this enormous cultural phenomenon and into a community that already exists that watches this show and drive revenues and usage on their network," said Linda Barrabee, senior analyst for the Yankee Group. "SMS is one of the most significant short-term opportunities for the carriers and could potentially lead to additional revenues vis-a-vis premium content. ... It provides an entry point for consumers to use their handsets for things other than voice."

Revenue generator overseas
The goal of the program is to stimulate SMS usage in the U.S. where it is quite low compared to Europe and Asia. For example, 56% of all wireless users in Europe are using SMS where it is a $14 billion market, compared to the U.S. where SMS accounts for only several hundred million dollars in revenue, Ms. Barrabee noted.

The low cost of wireless voice calling, competing messaging technologies and infrastructures, as well as the predominance of e-mail, have impeded the growth of SMS in the U.S.

Up until the middle of last year, consumers on different carriers couldn't message one another. Intercarrier messaging is expected to spur SMS usage.

AT&T Wireless, like rivals No. 1 Verizon Wireless and No. 2 Cingular Wireless, wants to boost revenue derived from SMS and wireless data as the wireless voice calling becomes increasingly commoditized.

10ยข per message
It will cost an average of 10 cents per call for a subscriber to send a text message to a friend. The recipient of the message does not pay. AT&T Wireless had 22.1 million subscribers as of the third quarter or 17% of the wireless market, according to Yankee Group.

WPP Group's Ogilvy & Mather Worldwide, New York, is AT&T Wireless' agency of record; its OgilvyOne unit is handling direct marketing for the program, while Aerodeon Ltd., a London-based mobile marketing agency, is directing strategy for the Idol program.

"The core idea is to take consumers through increasingly complex SMS experiences," said Chris Bourke, managing partner at Aerodeon.

AT&T Wireless subscribers who have SMS-enabled handsets are given an opportunity to register and opt-in for the American Idol II content. If they opt in, they'll be prompted to respond with a text message. They'll be offered an average of four content prompts per week throughout the show's run.

Turning users into 'textperts'
"The key strategy is ensuring that AT&T enjoys sustained SMS peer-to-peer usage," Mr. Bourke said, adding that the goal is to educate consumers on how to send text messages and making them "textperts."

Yankee Group estimated by yearend 2002, 60% of all wireless handsets in the U.S. were SMS-capable. By the end of this year, it projected that more than two-thirds of all handsets will be SMS-capable, spurred, in part, by the replacement market.

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