Mobile advertising in Peru: The impact of SMS advertising on sales and customer experience

Abstract

Mobile advertising through SMS is widely used by Peruvian companies to provide customers relevant offers. Telecommunication companies’ sales depend considerably on getting into consumers’ minds, so they refill their prepaid phone, upgrade their subscription, or purchase a new phone. Therefore most mobile operators might not hesitate to raise the number of SMS ads sent to customers to obtain higher profitability at the expense of customer satisfaction. A case is then presented to determine the impact SMS advertising has on business sales and consumer experience. First, we analyzed 5-month data of SMS advertisement sent by a telecommunication company that included the number of impressions, clicks-throughs and conversions made for a mobile campaign. Throughout the campaign, we observed that the rise of SMS sent produced the click to rate (CTR) to decrease from 5% in October to 1% in February. In contrast, the CR kept around 3% while sales remained stable in the first four months. Moreover, the customer touchpoints of the three major mobile campaigns indicated that Peruvian customers received, on average, 1 SMS every day. Nevertheless, most customers ignored the fact that they allowed receiving such ads after accepting the terms of service on the phone subscription. It is expected that this work helps understand mobile advertising in Peru and serves as a guide to telecommunication regulatory bodies to promote better customer experience.