R U ready? | Portland's ADMedia becomes one of the nation's first firms to provide text message marketing

When Andrew Newman and David Sullivan left corporate jobs and set out to launch their own Portland-based marketing firm, one of their founding principles was that they would cater solely to small business owners.

Other firms could compete for the big national accounts, but the partners who set up ADMedia Communications in 2004 decided they wanted to offer affordable marketing services to entrepreneurs and family-run businesses that might otherwise not do any marketing at all.

“I’d spent my whole career serving anonymous shareholders,” Newman explained. “One of the rules from the beginning was we’re not trying to fight with the big fish.”

Five years later, Newman and Sullivan have remained faithful to this vision, creating a niche for themselves designing corporate logos, websites and other materials for scores of small businesses owners, most of them based in Maine. And while ADMedia’s revenues have climbed from $82,000 in the first year to more than $500,000 last year, according to Newman, the partners are also small business owners themselves and watch their costs accordingly.

ADMedia is a three-person firm located in a second-floor office in an unadorned building on outer Commercial Street. Newman, 43, who handles the day-to-day business operations, also takes out the trash. Sullivan, 44, the firm’s creative director, is responsible for watering the office plants. The partners said it all goes along with where they’ve chosen to compete in the marketplace.

“It’s hard to position yourself as the low-cost provider when you’re in the high-rent district,” Newman said.

But as much as they prefer to think small, in the last few years Newman and Sullivan have also been trying to spring to the forefront of what they believe may be the next big thing in marketing. Within the past year, ADMedia became one of the first companies in the nation to design and launch a service, TextMoreInfo, that allows businesses to advertise and interact with customers through cell phone text messaging. It may be one of the only companies to design a service of this sort with small businesses in mind.

Texting — the exchange of short, written messages from cell phone to cell phone that is especially popular among young people — is one of the few forms of communication not yet widely utilized by marketers, at least in the United States. Many in the marketing world believe this form of immediate, interactive communication has the potential to become a powerful new means of reaching customers, as well as a significant industry in its own right. New York-based Internet marketing researcher Emarketer estimates that revenues from ad-supported mobile messaging in North America will soar from $400 million in 2006 to $3.8 billion in 2011.

The fledgling marketing method has also raised questions among some who anticipate that text marketing will also spur the proliferation of the text messaging equivalent of junk mail.

“Clearly, if people respond and it’s profitable then irresponsible marketers will do that,” said Nancy Artz, a marketing professor at the University of Southern Maine.

This is a familiar concern to Newman, who designed his first foray into text message marketing with privacy issues in mind. Despite the potential pitfalls, Newman said he still sees great promise in text message marketing, so much so that he has closely tied the fortunes of his young company to the new marketing method and invested many “tens of thousands” of dollars in developing TextMoreInfo over the last couple years.

“I feel like we’re ahead of this and there’s enough growth here that the possible rewards justify this kind of investment that I’ve made,” he said.

Design and deploy

For a groundbreaking marketing initiative, TextMoreInfo is fairly straightforward in its design. A company that subscribes to the service, which runs between $30 and $300 per month depending on the number of messages included, receives a five digit number, or short code, that it may incorporate into print, television or other advertisements. When customers text this number, a computer server automatically responds with a pre-written text of the company’s choosing.

In future versions of TextMoreInfo, the partners intend to develop features allowing customers to sign up for periodic updates from subscribers, according to Newman. He said the system would be ideal for any business that has frequently changing information, such as a restaurant with daily specials or a store with rapid turnover of inventory. Wherever the technology leads, Newman said the system will always be set up so that interactions occur on the customer’s terms. Companies never receive the cell phone numbers of people who text them and therefore cannot broadcast unsolicited messages.

“People using it are going to have their privacy protected or I don’t want to play,” Newman said.

As Newman and Sullivan see it, the promise of this marketing device is that it provides an affordable and convenient means by which businesses can instantly engage with customers, and vice versa.

“The immediate gratification factor is right there,” Sullivan said.

With the ubiquity of cell phones, text messaging is a means of communicating with people almost anywhere and anytime.

Although a phone number attached to an advertisement could accomplish the same thing as inviting customers to send a text, and the 160-character limit on most text messages is certainly a constraint, many people prefer to communicate through short, written messages on their cell phones. In fact, in the second quarter of this year, North American cell phone users for the first time sent more text messages than they dialed calls, according to Emarketer.

Text messaging, which was originally developed for hearing impaired cell phone users, has been growing at an explosive pace in the United States after catching on earlier in Europe and Asia. Monthly text messages sent by cell phone users in the United States increased more than tenfold in the last three years, from 7.2 billion in June 2005 to 75 billion in June 2008, according to CTIA-The Wireless Solution, an industry trade group based in Washington, D.C.

ADMedia’s growth has been more measured; the company has signed up about two dozen subscribers for its new service since its launch in April.

It has proven popular with real estate agents, who add text options to their for-sale signs, and to businesses trying to stay ahead of communication trends, especially those attempting to reach a younger demographic. Several customers said they are adopting the new technology not so much for what it can do now but for what they expect it will become in the future.

Doug Finck, general manager of WPXT television in Westbrook, said he saw a subscription to the new service as the next logical step in the station’s effort to keep up with viewers’ preferred means of communication. WPXT has long held on-air contests inviting viewers to contact the station to win prizes. Originally, viewers did so by mailing a letter. In the mid 1990s, the station invited people to email and within a few years the balance tipped from a pile of envelopes and a few emails to the other way around.

At present, Finck said he is receiving a couple dozen text message responses per contest but he expects the technology will become a standard means of communication.

“It reminds me so much of 13 years ago when we started doing email,” he said.

Though text messaging is not exclusively an activity of the younger generations, it is heavily skewed in that direction. Figures from Emarketer show that 65% of cell phone users between the ages of 18 and 29 sent text messages in 2006, while that dropped to 37% of those in the 30 to 49 age bracket and 13% of those between 50 and 64.

Another TextMoreInfo customer, Michelle Raber, the owner of a State Farm insurance agency in Scarborough, said she saw text marketing as an ideal way to reach out to younger customers. In a recent print advertisement campaign, she invited people to text her company and in return she invited them to call her and receive a $10 ITunes card along with an insurance quote. The ad generated about 20 responses, which was nearly the same as when she ran the same promotion and simply included a phone number, Raber said.

Though it’s hard to see the impact text messages have had on her business yet, Raber said she thinks the medium itself helps to enhance the image of her company with a younger clientele. “The company I represent, I don’t think they’re thought of as a hip, cutting-edge insurance company.” she said. “I think they’re thought of as their parents’ insurance company and this is a way to re-brand State Farm.”

Artz, the professor of marketing at USM, believes there are many more ways text message marketing will grow. She said text messaging could be combined with GPS technology so that, for instance, someone driving through a city could request a text showing all the nearby Thai restaurants. The professor said the technique also has great potential in combination with product packaging. She said she can envision consumers picking up an item off the shelf and texting a code to learn more about the product’s energy rating or other sustainability issues.

Text spam?

If text marketing does become widespread, it seems almost inevitable that the same market forces that created spam, telemarketing and junk mail will come to bear on cell phones. Although indiscriminate promoters are almost sure to try these methods, Artz said there are tools to thwart them.

Text messages should be easier to regulate than email because the developers of text message marketing systems must obtain permission from cell phone carriers to receive the short code that is the link between customers and businesses. If a marketer abuses the system and cell phone users complain, the company can deny the marketer access to the phone network.

Artz said it’s likely consumers would find unwanted text messages more obtrusive than email spam. They might also have greater objections to the text messages because cell phone users often pay a small fee for each message received.

With wide public support for the recently enacted do-not-call list and the early norm that establishes text message marketing as something consumers choose to receive, she said it appears likely that the public would have little patience with unsolicited text messages.

The partners who developed TextMoreInfo, and the customers who subscribe, said they have a stake in avoiding the abuse of text messages as well. In order to ensure that people feel comfortable using their service, Sullivan said he and his partner have to be able to assure users they won’t be opening themselves up to a barrage of spam.

ADMedia’s Sullivan and Newman would be the first to admit there is really no telling how technology and the marketplace will shape the rapid evolution of text message marketing in coming years. As the co-owner of a small company that has gotten out ahead of what could be a big trend, Newman said all he knows is that he will have to work to stay there.

“We’re not of the belief that anything we do is going to have a shelf life of a decade,” he said.

Seth Harkness, a writer in Portland, can be reached at editorial@mainebiz.biz.