SMS marketing—how AI and data crackdowns are reviving the strategy

AI is starting to be used to create copy and push out SMS marketing faster.

For online bridalwear retailer Azazie, SMS is a critical part of its marketing strategy. It’s a huge driver of online sales—73% of the company’s website traffic and 45% of all sales come from mobile “and this is thanks to using SMS as the strategy,” said Azazie Senior Brand Marketing Manager Keily Hernandez.

Hernandez said Azazie started to invest in SMS marketing in 2018, when the company noticed an uptick in mobile web traffic and saw an opportunity to use texts to drive that further. The company has refined its strategy to make it perform better—including by using AI chatbot ChatGPT to write texts for campaigns such as its recent Barbie-inspired Doll House collection—and now it’s looking at ways to also add customer service capabilities via SMS, she said.

Even though some ad professionals, including Campbell and Joshi, argued that generative AI still sounds too robotic to use to write texts, AI is improving fast and it will likely be used to fully automate SMS marketing, and soon.

Also read: AI is revamping out-of-home advertising

“You can automate the entire process, which obviously saves a ton of money,” said Matt Null, co-founder and head of AI for brand and communications agency Human. “If you don’t know you’re interacting with an AI, it blends in a little bit more with just getting spam email or any sort of cold text from any number of services you’ve signed up for.  We have a long way to go but we’re going to be there very, very soon.”

Navigating risks 

Text message marketing isn’t without its risks.

Unlike email, where unsubscribing is usually a pain and takes time and multiple steps, all a person has to do to opt out of receiving texts from a company is reply “STOP.”

“There’s a huge risk,” Joshi said. “If you’re not fun, not providing value, if you’re sending too many text messages, people will leave immediately.”

Email is less effective because it’s become so spammy, Campbell said, but texts can be just as spammy, too.

“It’s a very personal media,” Campbell said. “If I send you a message every Thursday at 5 p.m. talking about a sale this weekend, that gets old and I don’t care about that. I expect you to know who I am and use that information to communicate with me via SMS.”

Collins said it takes The Container Store only about 15 minutes to set up its texts to send out to customers via Vibes, which makes it easy to send out a lot of messages if the company chooses to do so. But it has had to take a more careful approach in using SMS only for events and promotions that make sense, such as around new products or as a way to let consumers know when a promotion is ending.

“It’s not for everything,” Collins said. “It has to be used in the right way. You can use it to engage with some fun events. And then we’re using it for order tracking updates, which customers definitely want.”

Segmentation is also key to its success.

When Azazie first started using SMS marketing, Hernandez said the company didn’t segment customers, so sending different texts to different customers based on their individual needs, such as whether they are shopping for a mother of the bride or bridesmaids dress. It also previously sent out texts monthly and now “it’s part of the weekly strategy that coincides with email,” she said.

Before it revised its SMS marketing strategy, most of Azazie’s sales were still coming from email and its website, Hernandez said, rather than the 45% that now come from mobile. “That’s only going to increase now that everyone is on their mobile,” she said.

For Azazie, SMS marketing is now both easy to deploy and yields great results.

“With SMS, it is so much easier and faster for communicating promotions and also targeting and retargeting customers because we can instantly target a customer who is, for example, viewing a pink dress, with just a text,” Hernandez said. “Whereas with email and a social media campaign, you need a lot of planning in order to execute a campaign.”

To have a successful SMS marketing campaign, you also have to know your customers well, so it does work better for companies such as retailers that have a wealth of first-party data. Consumer packaged goods don’t have as much first-party data because they are sold through external retailers, so SMS might not be the best strategy for them.

“CPG has been getting disrupted by some of the direct consumer stuff,” Campbell said. “I still think there’s an opportunity there. They have loyalty they could cultivate.”

Azazie’s customer base is largely millennial and Gen Z, and they respond really well to texts that are celebrity- or trend-driven. “They really love when we talk about the Kendall and Kylie Collection,” Hernandez said.

Related: A marketing guide to Gen Z 

Campbell said an easy way to send a personalized text to a customer is via a birthday message. “Our number one performing message type is a birthday message. It’s a special day, it’s your special day,” he said.

​​Banks will also often use SMS to reach older consumers “who may not be so digitally native,” but who are also on their phones, Berry said.

Text messages can be a good way to build hype around something, too, with already engaged audiences.

Laundry Service, the Wasserman-owned creative agency, incorporated a text message game for consumers to partake in and get exclusive content and clues for the promotion of season two of “The Wilds” on Amazon Prime Video, a show about a group of teenagers stranded on a remote island, said Jordan Fox, head of the agency.

“The sheer intimacy of it was interesting to us for this particular project and our client,” Fox said. “[SMS marketing] is a direct line to people when you get them to opt in. It’s hard to get people to opt in because it’s so personal, but showing up in someone’s DMs or text is more intimate and has a much higher chance of being read, consumed or engaged with than buying paid media on Instagram, or whatever the other ways are that you try to reach people digitally.”

Fox said for a show like “The Wilds,” which has a dedicated fanbase to engage with, SMS marketing made sense.

“The use cases for SMS have to be tailored to the right type of communication, transactional [versus] marketing,” said Nathan Kurach, senior VP of business architecture and marketing intelligence for WPP-owned Wunderman Thompson Data, noting it will work, for example, for “service reminders for your vehicle [versus] vehicle launch messages.

Joshi said Kaged avoids using text messaging as a promotional channel, something that will annoy both Gen Z and millennial customers especially.

“We have a killer SMS list,” Joshi said. “We focus on product education because nutrition and supplements are so confusing. The goal is not, ‘buy, buy Kaged, buy whatever products. It’s like, ‘hey, you just bought this pre workout, start with half a scoop and scale up slowly. See how you’re feeling in the gym.’”

Joshi said Gen Z is the most open to receiving text messages because they’re used to being bombarded with constant content but they also are the most likely to unsubscribe if they don’t feel texts are personal or providing value. Millennials, too, will opt out of text messages if they feel they are receiving too many, he said.

Still, some advertisers, including Null, are more skeptical of SMS marketing and its ability to truly convert sales and acquire new customers.

Null said he hasn’t seen the sales conversions yet and doesn’t see open rates, for example, as a good indicator of success.

“The open rate is fine but you can’t even really use that as a metric,” Null said, noting how many people just click to open a text without even reading it or doing anything more once they realize it’s from a brand. “There’s value in it. SMS marketing is a better tool for re-engaging already existing customers because you’re creating an even deeper connection. But as far as cold outreach, I personally don’t think that SMS is the tool.”

Some advertisers are deterred by it being costly and time-consuming, with the capabilities not quite there yet.

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