Want to make money in local mobile? Be the platform.

By Steve Safran 

A local business gets called on 28 times a month for local advertising. That’s nearly every frickin’ day. You think they want to see you come through the door, too? What makes your product special? Well, if you’re helping stores to sell text message ads, you already stand out. Consider some of these numbers:

  • About half of small business owners have smartphones
  • Nearly 60 percent of small businesses haven’t been pitched a mobile ad campaign in the last year
  • 80 percent of businesses haven’t tried a mobile campaign in the last year
  • What does that mean? On the whole small business owners understand texting, don’t have a text campaign and aren’t even being pitched one. Sounds like an opportunity.

    But you need to go beyond the concept of selling “the message.” With text ads, you want to help sell the tools that build the database. Don’t just say “hey, we’ll put your ad on our phones.” It will kill you. You want to supply them with a platform upon which they can build information about their customers and then send messages.

    “The first thing in talking to local business is this: Become the SMS text partner,” said Bill Caudill, the VP of Sales and Training for Borrell Associates. “A local business will be a lot less likely to change its text provider once it has a relationship with your company.”

    This, Caudill points out, is far less spooky than it sounds. After all, every time to go to a CVS or Best Buy and use your “points” card with them, you’ll telling them more about you as a consumer. Information about consumers is what we’re all about. “Collecting a database about people interested in a product or service may be the very first aspect of the campaign,” said Caudill. Local businesses are not going to be collecting hundreds of thousands of numbers – each will be gathering, maybe, hundreds.

    Caudill gave some real life examples of SMS ads leading directly to business:

  • A nightclub on – that’s right – the Jersey Shore, added 1,000 subscribers in a month.
  • An organic restaurant sent out a text for a free quesadilla, and added 70 customers that night.
  • Another restaurant put out an SMS and had more than 30 customers come directly for lunch.
  • These may seem like small numbers to you. We’re used to dealing with numbers with lots of zeros after them. But ask a small sandwich shop what it would be like to get 30 extra customers for lunch? That’s, what, $250 extra that day. Not much? Trust me, they will hug you. Not only have you built their sales that day, you have acquired a new customer that potentially will be a regular. Businesses spend on promotions, too. For every dollar they spend on ads, they spend $1.45 on promotions. They have the budget.

    Have a promotional mindset. If there’s anything Caudill wanted to hammer home, it’s this: Think simple. Two-for-one offers work best. Have some urgency to the ads by having expiration dates (Groupon is the Lord and Master of this). Show advertisers how they can bump up their business on slower nights. In TV, the ad message is “We will show a lot of people your ad.” In SMS, the message is “a small number will get the ads, and they’ll be much more likely to respond.”

    What should you charge? Caudill suggests a $500 per month package:

  • Integration with other media
  • SMS Call to Action
  • Print and Online Promotion
  • Mobile Promotion
  • Stand alone tiers can start at $25 – $100 a month. But think big – once you have your system built out as the local mobile ad system in your marketplace, you have a regular, steady flow of income that scales wonderfully. Once you are in place with these stores, you’re the provider. I don’t want to say “the money keeps rolling in,” but the money comes in without you having to traffic and produce every single ad.

    The saying I often quote is: “When the gold rush came, the people who made money were the one’s who sold the shovels.” You don’t want to pan for gold – you want to be in the supplies business.