How big can SMS subscriptions be? My belief is that each of us can receive upto 10 SMS daily without feeling overwhelmed. 3-4 of them would be content, but the rest can be either community-related (UGC) or Invertising. Assuming there are 2-3 of each, there is potential to receive 60-90 Invertising SMSes each month. Assuming a single company sends about 3-4 SMS each month, a consumer can have relationships with about 20 brands, with each brand paying about 50 paise per user per month for the relationship, creating a market opportunity of Rs 10 per subscriber per month in India. Assuming that this can reach about 50 million subscribers (top 20% of the mobile user base as of now), this is a market opportunity of Rs 500 crore ($120 million) per annum – about the same size as the current Internet advertising market in India.
In the US, brands could pay about 25c for the same relationship, creating a $5 per subscriber per month opportunity. So, if we take these two extremes, between subscribers in developed markets (500 million) and emerging markets (1.5 billion), and assume a 20% penetration, the market opportunity is 100 million x $5 + 300 million x 25c = $500+75 = $575 million per month, or about $7 billion over a year. This is where Paid Search would have been about 3 years ago (2005 Paid Search: $9 billion).
Next question: will this happen? Mobiles are great for brands to build hotlines and relationships with consumers. Paid Search on the Net hasn’t worked as well for Brands, given the text-based ads and performance-based payouts. But, Invertising on mobiles could be just the solution that brands need (along with targeted Display Advertising on the Internet). For anyone with customers, the Invertising channel is a great way to stay connected – at a cost of no more than Rs 5 per year.
In addition, there is a significant advertising opportunity on the SMS content services. Assuming 3 subscriptions a person means an inventory of 100 SMS per month or about 1000 SMS a year. With a Rs 50 CPM and a 20% fill rate in India, the monthly opportunity for advertising is about Re 1. Besides advertising, there are other services which can be targeted to the consumer base (pull, email2sms, WAP, transactions, targeted ads, paid services, etc.). It should be possible to generate Rs 5 per consumer per month. This opportunity is thus half as big as the Invertising opportunity.
Thus, together, the Right of Way model can generate global revenues (in 2 years) equivalent to that of Paid Search in 2005. Put another way, the mobile monetisation (version 2: Subscriptions Right of Way) lags Internet monetisation (version 2: Paid Search) by 5 years.