[via Pavan] HBS Working Knowledge writes:
Flytxt, founded in 2000, was one of the initial practitioners of mobile marketing and an early advocate of permission-based communication. The company was formed by three friends drawn from the venture capital, consulting, and technology industries.
As Flytxt’s cofounder and director of corporate development, Pamir Gelenbe, formerly of Morgan Stanley, explains it, “We were involved in the IPO of a company providing content for the ‘mobile Internet.’ Morgan Stanley invested in Iobox, a portal with a valuation of $25 million that offered free messaging to its members. The company was sold six months later to the Spanish telecom firm Terra for $200 million. That convinced us that messaging was the way to go. However, given the money flowing to start-ups at the time, the company faced a competitive landscape.” But Flytxt’s founders had a novel idea.
Flytxt’s take on the business proposed that consumers would be most interested in joining text-based “clubs” affiliated with certain brands. At first the company had difficulty convincing potential clients that permission-based marketing was both a viable and an effective model. The founders spent months working to secure a November 2000 assignment from EMAP Publishing’s music magazine Smash Hits. Flytxt’s marketing program for the magazine asked readers to text-message biographical details such as age and gender to a special number, thus enabling the magazine to alert them to news about album releases, celebrity goings-on, and other facts of specific interest to the individual. The goal was to build reader loyalty while compiling a database about their tastes through interactive dialogue.
Once potential advertisers saw the company’s marketing model operating successfully, clients as well as competitive start-ups recognized its power. Mobile marketing offered a new, extremely potent means of building affiliation with the users of a given product. And it could easily garner vast amounts of data about the product’s audience. This was a super-targeted effort that couldn’t possibly be anything other than successful.