Today we can see businesses using SMS for different purposes - marketing, notification, news, text to win campaigns and so on. In those cases usually SMS is a small part of a big project. However, there are plenty of businesses where SMS is in the middle of the business case and sometimes gives the competitive advantage. I will introduce four innovative SMS-based business cases that have been extremely successful in Nordics during the past years.

1. SMS-auction

An SMS-auction is where user’s text in a bid for an advertised item. The system can be set for “highest bid wins” or “lowest unique bid wins” mode. Either way, the user receives a reply message acknowledging the bid and advising them of its position. There are different variations on that business model, which all have their own advantages. Get a general idea of SMS-auctions.
* Bimbaso is a good sample of lowest unique bid auction
* sms2bid is an Australian version of highest bid auction
* Sendioksjon is an Estonian neat version of SMS-auction, where every SMS increases the price per 0,006 EUR and extends the auction by 2,5 minutes. Last person who sends the message gets the product.

2. SMS-loan

It is probably the most profitable SMS-based business, which has also raised some ethical issues. Many countries have already regulated their market for SMS-loans and some countries are doing it right now. Business case is simple - give out loans for small sums with big interests in a really quick and easy to use way. Before creating your own SMS-loan office, read those two stories as well: SMS-loan sharking and loanshark 2.0.

3. Browser based games

Browser based games are quite popular among youth. Believe me, there are plenty of people who want to do something besides shooting someone or playing flash games. Business case here is this - if you want to get advantage over other players, use paid services. Get cool widgets, more money, fame, train yourself etc. Many Fortumo clients have said that for micro-payments SMS is the best one. Every player has a mobile phone these days and they are using it impulsively.

4. Social Networks

Who isn’t a member of some social network nowadays. Some of them have a strong business case behind the solution; some of them don’t have a business case at all. Smaller local social networks have solved it really easily. There are 5 simple steps:
1. you have a social network where people love to spend their time
2. think what could be the extra feature for what users are willing to pay small sums
3. monetize these features with SMS
4. let people know about new opportunities
5. start earning revenue even while you are sleeping

Some things that have been monetized: sending presents, changing the background theme of your profile, getting fame, giving higher points to users, highlight your account/ad/picture etc.

A few days ago social networking site Facebook announced mobile extension to its popular developer platform. Great move, as mobile is definitely where things are going these days. However, it seems that it’s not very stable yet, and they have rushed a bit to get this news out.

In addition to showing snippets of information on the Facebook mobile page (m.facebook.com), application developers could use the API to add SMS interaction to their applications. SMS is great for allowing instant communication with the users wherever they are. However, it has also proved of being one of the most accessible and convenient ways to collect micropayments from users. There are several success stories of social networking sites in Europe, that have made fortunes using one or two simple premium SMS services neatly tied to the otherwise free website. For example, you can make your photo appear on the front page for some time, by sending premium SMS costing let’s say €1. This amount is then added to your phone bill and mobile operator is sharing the revenue with the website.

Eric Eldon from VentureBeat wrote:

Mobile apps may be a good way to monetize, though, Shen [RockYou co-founder Jia Shen] tells us: “Lots of people are thinking about how to run micropayments through phone bills” as high schoolers don’t have access to credit cards for doing things like buying Facebook’s virtual gifts.

At its current version though, Facebook Mobile API does not seem to support premium priced SMS, nor do they share any revenue with application developers, but I’m sure they’re thinking about it. As contextual advertising does not work, I think that SMS could become one of the easiest ways to monetize Facebook apps.

Good news for Fortumo users from Lithuania, Latvia and Estonia, who would like to cash out their revenues via PayPal. In the end of last month, PayPal announced new international withdrawal functionality for multiple countries including the Baltic states. Users from these countries can now receive payments to their PayPal accounts and withdraw the money to either bank accounts in the U.S. or to Visa debit or credit cards. Unfortunately many Visa debit cards do not have a Card Verification Number on the back of the card, which is required to receive payments. Of course one could also use the accounts to pay for other goods and services via PayPal or just send money to someone else. PayPal charges € 0,35 + 3,4% for receiving the money, and € 2 for withdrawing it to a Visa card.

Users from Sweden, Norway, Denmark and Finland can also withdraw their PayPal accounts to their local bank accounts. And Fortumo also supports direct bank transfers (in Euros) to local bank accounts in all the member states of the European Union or in EEA countries (that also includes Norway).