Mobile advertising is the fuel of arguments between mobile trend makers across the globe. An emerging traction point is the use of short codes for simple print and media extension into the mobile web.

In the states, ShopText, HipCricket and SnapTel are successfully developing the short code segment as mobile advertising enablers. They’ve captured a beach head through the use of short codes as a bridge between old and new advertising media. By including mobile short codes on fixed and print advertising they’ve carved out a solid position in a confused and crowded space by offering a low friction means for advertisers and agencies to capture the increasing power of context, immediacy and personalization offered via the mobile platform.

ShopText especially has been very successful leveraging their experience in advertising by enabling high profile campaigns by the likes of Hearst–Cosmopolitan and Esquire–Burger King, and P&G products such as Tampax to capture a solid “access advantage” with brands and agencies, making ShopText the clear leader in the developing short code enabling space.

Paradoxically these simple short code solutions may be both too early and too late. Regardless of how connected their client portfolio is today, unless short code enablers show they have the means to migrate up the technology value chain, short code simplicity will be quickly leapfrogged by the on-coming rush of technology which is quietly prevalent in Asia especially Japan, and is being swiftly adopted in Europe. The US will be next. The ripple effect through the short code ecosystem will be considerable jostling even larger public companies such as Neustar, which administers the short code distribution in N. America.

Most of these enabling companies have been started by advertising executives who have leveraged their understanding and experience with agencies and brands. They have provided a means to do things people couldn’t readily do before. However, their offerings are more point type solutions, “better, faster, cheaper,” than breath taking mobile innovation which will help define the mobile advertising space. Short code enablers have architected an easy means to extend media through a secure, off the shelf solution using accepted standard short code functionality. All good in jump starting traditional print and media into the mobile web world.

But, my biggest concern is there no identifiable defensibility against similar advertising or mobile savvy teams building short code solutions from entering the market. Anyone, anyone, can secure a short code contract, vary key words or text combinations, start selling to brands and advertisers and compete in the space. There’s no entry defensibility. With easy entry, scalable growth becomes an issue. You can see a glimpse of that already happening in the short code enabling business with the rush of providers using short codes for rental and real estate applications at the local market level.

Yea, yea, the simplicity of the short code solution has captured value in initially developing this space. But to gain “venture value,” up-starts need as much to manage complexity, and if the market remains the same, the short code enablers will be forced to compete on price alone as more enter the space. Low margin, low prices means highly efficient volume becoming the key driver. But with such intense competition, where are scale efficiencies achieved? Something else needs to be in the value mix. Knowing “mobility” within advertising won’t cut it. Access or relationships with brand and agency decision makers will not carry the load alone, and beyond speed to market what “efficiencies” can be captured with simple short codes? Additional reporting metrics might be only creative point to cash in on but what else is there with such limited functionality?

Unless short code enablers adapt to more powerful technology now just coming on line, these fledgling start ups plus the entire short code engagement business will find itself dying in the sun while the tide changes.

Check out Part 2 of “Short Code advertising: too early & too late?” to find out what this technology is. . . .