Advertising on mobile phones or How to create a user-centric community - the free SMS service. Why the “How to create … ” alternative? When I think about developing a service, I think about the users of this service and I ask myself: what would be their benefit from using this service (value added), what would make them keep using it (usability), why would they tell their friends about this service? And the most important question: “Would I use this service?” I think the best way to create a great community is to give people access to things that they already use or would like to use on a daily basis, and give it away for free.

Why?

I have started exposing the idea of services that split money with the users in Advertising Industry Crossroad - why not sharing the money with the consumers? I’ve also started to describe my business plan in Advertising and Communities - Developing a Business Plan. The first step in my plan is developing a free SMS service. This might sound pretty simple or unimportant, but SMS is the second most used service by mobile phone users, voice being the first. So it has a lot of potential. Advertising on mobile phones is a pretty hot topic these days so there’s already a need for this kind of services.

How?

Telf is a service which allows the users to send SMS messages for free. They can send as many messages as they want to as many friends as they want. All they need to do is log in, and they’ll be able to type the message, type one or several phone numbers, and click Send. Remember the holidays, when you have to send a lot of messages to your friends and family? It would be very simple to do it with this service.

Registration for the service I want to avoid “SMS spammers” so the service will be available only to registered users. The users will register, they will receive an activation code on their phone and they’ll use that to activate their account. And because this concept (of giving stuff away for free) is pretty new, the users will not be able to register as they register to a normal email or other type of service. The users will be able to join only by invitation (only at the beginning, until the service is well known). I want people to hear about this service and wish they were able to access it. So I’ll send invitations to 100 users, which will be my beta testers, and then I’ll give them invitations to send to their friends, and so on. I’m pretty sure a service that looks a little exclusive is more desired than another one with free access. Remember Gmail, it was in beta version for 2 years and it was available only by invitations.

Where do the money come from? I know, I haven’t told you yet how will this service pay for the SMS messages. It will insert short ads at the end of each message. One SMS message has 160 characters length, so the users will use 120 chars and the last 40 will be used for short ads. like “visit www.sergiutruta.com” or “open your own blog at…” or “visit the new club…” and so on. Each ad message insertion will be charged the cost of the SMS message. And that’s how the service will give SMS messages for free. The ads will be related to the message, so for example to a message saying “Let’s go to that new club that just opened” will be appended a related ad: “Visit www.clubs.com” or something like that. The ads will be contextual adds, related to the message. There you go, targeted ads And of course, the users will know when they register that short ads will be inserted at the end of the messages, in order to pay for the messages.

Will the SMS message recipients agree to receive the ads? The SMS messages are not unsolicited ads messages sent by Telf.ro They are actually messages sent from friends to friends. If I send a message to a friend saying “Meet me at the coffee shop downtown”, the final message might look like this: “Meet me at the coffee shop downtown. Telf.ro: Try the new Frappucino from Starbucks!”. It might look odd to the users at the beginning, but they’ll come to accept it pretty quickly.

The last, but not least It sounds nice being able to send messages for free to your friends from a web page. But what if I’m on the move? What if I’m waiting for someone in a coffeeshop or in a park? Well, I’m also working at a simple J2ME client which will be deployed on any java enabled mobile phone. That J2ME client will have a really simple UI, with a textbox for recipient’s phone number, textbox for message and a send button. When the send button is clicked, it will send the message through GPRS to Telf.ro, which will do the rest. This means I’ll be able to send SMS messages from my mobile phone really really cheap. Imagine typing the message, then typing 10 phone numbers, and clicking send. Normally it would cost probably 40 - 50 cents, but with this solutions it will only cost 1 cent or less, for the GPRS traffic.

In How to evaluate a Startup Idea I’ve described a criteria for evaluating a startup-idea. Here’s what Telf looks like analyzed through these criteria.

What effort is necessary to implement the idea?
As you can see the first page, it’s really really simple to implement. There’s a little more work at the profile area, where the users can send invitations, the publishers (the ones paying for their ads being inserted in the SMS messages) will be able to manipulate their ads and will know all the time what messages and how many of them have been sent. Also, the admin of the entire service will be able to manipulate users, publishers and global settings. I’ve chosen Ruby On Rails and it should take like a week.

Also, for the J2ME client, a midlet doing this is a 2 hours task. So no sweat here either.

What is the initial investment?
If we don’t count web hosting, no initial investment is necessary. At the beginning I’ll support the costs for the messages sent (I’ll promote my own products, of course ), and after I make sure everything runs as planned, I’ll start inserting ads from other publishers. For 5 cents a message, 1000 messages cost 50$, so it’s not a big deal while in beta testing.

How will the new service/product attract users?
I see two reasons that will attract users: sending messages for free and sending them directly from the phone or from a web page.

How will the new service/product make money?
If the cost for a message is 5 cents, I’ll charge the publishers 6 cents for each inserted ad.

Are there any other external dependencies?
There’s one external dependency. The connection to a company like Orange, Vodafone or others. Because they make money when the SMS service is used, I don’t see any problem here.

Once your service is running, what effort will it need from your side?
Very little, admin check-ups once in a while.

I’m only developing this service for Romania, so I’ll upload the source files for both the web service and the J2ME midlet and attach them to this article as soon as they’re working.