SMS Marketing Costs & ROI

It’s a question that many marketers have learned to dread: what is the return on investment for dollars spent?

SMS Marketing Costs & ROI (Video)

Why? First, the cost to send a text message for marketing purposes is extremely low–typically between one cent and five cents per message. Second, good SMS marketing campaigns have a very clear and measurable call-to-action; businesses are trying to obtain sign-ups, coupon redemptions, engagement with a website or some other very specific and measurable goal. And, third, subscribers who have opted in to receive text marketing messages are much more engaged and likely to open, read, and act as a result of an SMS campaign. All of these factors make calculating SMS marketing costs and ROI a more pleasant experience for most companies.

How Much Does SMS Marketing Cost?

Although the actual cost of text marketing is very low with industry estimates sitting at just pennies per text, the total campaign cost of SMS messages marketing will include several other factors such as message development and the cost of complementary marketing campaigns to drive SMS list development.

For example, if you’re starting off with no contact information, you’ll need to create a means of gathering phone numbers and obtaining permission to text customers and prospects. A restaurant may need to invest in a tabletop campaign that offers a future discount in exchange for a text number. You may choose to pay to run an email campaign or a social media advertisement to gather subscriber permission and data. All of these factor into answering the question, how much does SMS marketing cost?

SMS Marketing Cost Per Message

In order to calculate your SMS marketing cost per message, you simply need to total all your related campaign costs and divide by the number of text messages you send.

However, this number can be a bit deceiving because your text message marketing cost will be front-loaded. Whenever you begin a new SMS marketing program, there are some upfront costs in creating the campaigns that will help you build your initial contact list. In addition, you may need to invest in some software or tools and train your employees to run SMS marketing campaigns. This type of SMS marketing campaign cost will not be ongoing, which means subsequent campaigns will be technically less expensive.

A good rule of thumb is to calculate your SMS marketing cost per message on a quarterly or annual basis. Once those initial investments are made, you can calculate a more average cost per message on an ongoing basis.

SMS Marketing ROI

Most businesses that embark on an SMS marketing campaign find that the cost of text message marketing is very low when compared with other marketing campaigns and, as a result, will generate a solid ROI. You can either simply estimate your SMS costs and resulting revenue or create a more detailed record of your statistics to determine your SMS marketing ROI.

If you’re running an SMS campaign that has a non-revenue focused goal, at least in the short term, it can be a little more challenging to look at SMS marketing costs and ROI. It can still be valuable to set goals such as increasing the number of subscribers, boosting click-through rates, and reducing opt-outs, and then measure against these key performance indicators.

Calculating SMS Marketing ROI

When calculating SMS marketing ROI, take your total revenue generated from a campaign and subtract the total text marketing cost for that campaign. This assumes that your SMS marketing campaign directly generates a measurable revenue.

Such campaigns might include an exclusive invitation to purchase a new product at a low introductory price or a special discount on a future service. Text campaigns can be easily segregated so you can see how many subscribers you extend the offer to and how many then redeem the offer. This can be an easy way to see your SMS marketing costs and ROI.

Text Message Marketing vs Other Marketing Methods

When you compare text message marketing vs other marketing methods, you will find that SMS campaigns are an excellent way to reach customers and prospects.

Many other campaigns require higher upfront costs such as buying ad space in print, broadcast, online or signage. They also typically involve advertising firms, designers, creative writers, photographers or videographers, which often come with a high price tag.

In addition to the higher costs of other marketing methods, these other channels are usually not very targeted. They attempt to reach a broader number of people; however, more and more individuals are tuning out the bombardment of advertising around them today.

For example, the average conversion rate for Facebook ads is just over 9% while seeing a television advertisement left about 5.7% more likely to purchase than not seeing an ad at all. Compare that engagement level with SMS marketing where 98% of all text messages are opened and 95% are read and acted upon within three minutes.

In addition, recipients of text marketing messages are ten times more likely to redeem an offered coupon than through other channels. One big reason for the increased engagement level is that subscribers have chosen to opt-in to receive marketing messages from certain companies. Those being targeted by advertisements in most other marketing channels have not. Even email marketing, which still requires opting in, has much lower open rates than SMS messages due to spam filters and recipients simply receiving too many messages.

DialMyCalls can help you measure both your SMS marketing costs and ROI by using its dashboard feature and analytics. Sign up for a free account and give our affordable, easy-to-use service a try. We make SMS marketing campaigns easy to implement, allowing you to reach your key audiences in minutes with regular text marketing messages.