Getting the SMS-sage across

The freshest concept in viral marketing is currently in action at Thurrock's Lakeside shopping centre. A new mobile marketing...

The freshest concept in viral marketing is currently in action at Thurrock's Lakeside shopping centre. A new mobile marketing service works by sending shoppers special offers on their mobiles via Europe's first commercial trial of SMS. Fiona Harvey reports.

If you should ever happen to shop at Thurrock, next time you go keep an eye out for all those youngsters with their mobile phones. You might notice some interesting behaviour.

Thurrock's Lakeside shopping centre - the second largest in Britain - is home to what claims to be the first commercial trial in Europe of a mobile marketing service. It works by sending out SMS (short messaging service) messages to mobile phones, offering users special deals in shops in the centre - anything from a free drink to 10% discount on purchases over £50 in Dixons. If the analysts are right, this is an indication of the shape of mobile commerce to come.

One man who certainly hopes they are right is Bill Green, the founder of Spotflash, the company running the Zagme marketing service. He has authorised the spending of a sum approaching £1m for the IT infrastructure.

The aim is to target the young and upwardly mobile. Time-rich, cash-poor teenagers with their mobile phones and penchants for text messaging are likely to be more interested in Zagme than their adult counterparts, who have less patience with intrusive marketing messages and can live without the special offers. With studies now showing that mobile phones are having the unexpected effect of keeping teenagers from smoking - they would rather spend the money on mobiles - the constituency of teen mobile users is growing rapidly.

"This is a novel approach to marketing with a certain buzz that will appeal to the youth market. It is also a social phenomenon, as people can send special offer messages to each other, and create hook-up groups, which will show them when their friends are in the centre," Green explained.

The service presages the kind of mobile commerce that analysts are predicting for third generation (3G) mobile phones. One disadvantage, though, is that it lacks an important 3G facility - location-awareness.

Awkwardly, users have to alert the service that they are in the Lakeside shopping centre by sending a text message to the Zagme server. Once they have told the server of their presence, and the length of their likely stay, they will start receiving the messages at a rate of one or two an hour.

Crucially, the service does not rely on people having Wap phones - a recent study by media research group BMRB International showed that only one in 50 of the population have one - but uses the plain old SMS messaging that every mobile user has access to, and which has ballooned in popularity, with half a billion text messages sent in the UK last month compared to 14 million in June 1999.

Growing popularity

The SMS technology behind the service has been available for more than two years, but only now has messaging grown so popular that companies feel ready to try to cash in.

People are encouraged to sign up for the Zagme service by the offer of 500 free Zagme points. These points are worth 1p each and can be exchanged for pre-paid mobile phone vouchers. More points are on offer for signing up friends, so the phenomenon is supposed to spread by "viral marketing".

In order to sign up, users ring the service's number and leave some demographic details on an interactive voice response system. Their calls are put through one of 30 incoming phone lines to Spotflash's server, hosted by ComputerAid in Farnborough, and routed through a Dialogic card into Parity's Call Suite Voicebocx software.

The system is CLI (call-level interface) enabled, so it can track the identity of the mobile phones calling in - this should prevent people fraudulently registering for the service more than once, or using stolen phones. It will not accept calls from land lines or non-UK mobiles.

Users reluctant to spend their own money on the call can send a text message to the service, which will then phone them back and put them through to the same interactive voice response system. SpotFlash would have preferred to make the calls free, but not all mobile phone operators make toll-free numbers available.

The user can decide how often to receive messages - once or twice an hour - and veto messages from any shop they dislike. Their details and preferences are kept in a Microsoft SQL Server 7 database.

Then they walk around shopping, receiving the messages and, so Green hopes, respond to them by hurrying to the shop in question to redeem their special offer.

The Zagme software, developed by Logica, can sort the messages merchants want to deliver according to the demographic they want to target.

The messages are sent and received through a Siemens N20 terminal attached to the same server that holds the interactive voice response system, and processed through Derdack's Message Master software.

A second server at the Farnborough centre hosts Zagme's two Web sites - one a consumer site for users to check their profiles, the other a site for merchants, which is not yet fully functional.

At present merchants send in details of their offers by phone or fax, but in future they will be able to access an extranet with software developed by Logica to enable them to specify what messages they would like to send, to what demographics, and at what times of day. A second SQL Server database holds the merchants' details. Coreview, a Web design agency, developed the look and feel of both sites.

This server also handles e-mail for Spotflash, through Microsoft Exchange. A third server holds the database, and a fourth is kept for redundancy. All four servers are Compaq Xeon 7 dual processor models with between five and 10 18Gbyte hard discs and 520Mbytes of Ram running Windows NT.

SpotFlash leases a 2Mbyte pipe to the Internet from the Farnborough centre, and four dedicated 256Kbyte kilostream connections to each of the four mobile operators' SMC message centres. ComputerAid handles 24-hour monitoring and maintenance of the service, and Logica, which developed most of the system, handles second-line support - Spotflash employs only three in-house technical staff.

Spotflash's system took about four months to set up, from late June to early November this year. The service went live in Thurrock's Lakeside on 11 November.

Green said the company could have gone for a cheaper system, but wanted to ensure it would be scalable. "We see this growing to become a very high-volume service, so we needed to have that additional capacity," he said.

If the Lakeside experiment proves successful (and 2,000 users signed up in the first four days of its operation), Green plans further "Zagme" zones, first in the Bluewater shopping centre in Kent in time for the January sales and then in other shopping centres.

Green said the response from merchants has been good so far, with 150 joining up in Lakeside. Gartner Group analyst Nick Jones said his research has found teenagers "very responsive" to this kind of direct marketing on the mobile.

However, he warned, "The messages are intrusive, and people will quickly tire of irrelevant marketing, so merchants must respect their audience and make sure their messages are being accepted - you don't want junk."

Fiona Harvey is former editor business technology bible PC Week and business monthly Internet World. She now writes for the Financial Times

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