The Cellular Path to Consumer Engagement
To our Valued Investors:
In a recent study performed by 99 Firms, a multifaceted business consulting company, fresh statistics reflecting Americans’ relationships with their cell phones came to light. While some of these numbers might elicit a defeated sense of acceptance (“None of this surprises me — have you met my kids?”), many of the statistics should at least raise an eyebrow. To be sure, if a person could have been handed a copy of the report only fifteen years ago, they would have dismissed it as pure fiction. Alas, smartphone usage statistics for 2022 paint quite a picture. About 97% of American adults own a cell phone. Individuals who have been fortunate enough to survive to a very advanced age pull this number down somewhat, but the figure for 18- to 49-year-olds comes quite close to 100%. Among cell phone owners, 89% of us focus on our phones within thirty minutes of waking up. This number has increased significantly over the past couple of years, perhaps due to the pandemic-related urgency to check in with family or to read online news updates. The average American will check the cell phone 47 times a day, unless that average American happens to be between the ages of 18 and 24. For them, it’s nearly twice as often. Again, those with loved ones in their late teens or early twenties might remain unphased by even this nugget of information, but think of it another way. Assuming that the phone stays dormant for seven hours of sleeping time, we’re talking about 5.5 looks an hour, or about once every eleven minutes. That’s not even taking into account class time, work time, or mealtime. I mean, why kid ourselves?
Such examinations of phone usage can be fodder for heated discussion, and it is a cause for grave concern for many. As these increasingly versatile devices evolve, the line between man and machine becomes increasingly blurrier. Excessive cell phone usage has been blamed for weakened cognitive function, sleep disruption, bone spurs in the skull, and a drastic reduction in stickball games on the streets of Brooklyn. Has the tech done more to improve our lives or to diminish its meaning? The debate will likely rage on for many years to come, but for one sector, cellular dependence has had nothing but upside. Consumer marketing has, in recent years, reached new levels courtesy of customer outreach by way of text messaging.
Founded in 2016, New York’s Attentive Mobile, Inc. recognized the benefits of this direct, personalized form of engagement. For decades, physical junk mail and “spam” emails had a well-earned bad reputation. The effectiveness of both of those means of connecting was steadily diminishing, even to the point of eliciting mistrust and outright hostility from the intended consumers. Enter Attentive’s Simple Messaging Service (SMS, also known as “texting”) platforms. The company’s Chief Revenue Officer, Brian Malkerson, noted that “Consumers don’t like how businesses interact with them – between ads, spammy emails and intrusive messaging, brands are talking at their consumers. Attentive is building a platform to change that to focus on delivering personalized, relevant two-way and compliant communications. Messaging is ubiquitous, it is how people talk to each other and it is how businesses should communicate with consumers. When done right, SMS delivers a personalized experience. Consumers shared [that] they want to receive relevant content from brands they have opted into. Our platform enables brands to deliver personalized messages across the customer lifecycle and we help them create personalized, direct campaigns that strengthen customer loyalty and drive traffic.” In other words, the old forms of marketing like paper mailing campaigns and email spam (and, while we’re at it, let’s add billboards, T.V. ads, and print publishing) are impersonal. They’re aimed at wide audiences; they have to be, by nature. When they hit your virtual inbox or the physical mailbox at your home, the detached message has no personal connection, and it is delivered with an aura of intrusion rather than the intended helpfulness. As the studies abundantly demonstrate, though, Malkerson was quite correct in referring to SMS messaging as “ubiquitous”. Inasmuch as our cell phones seem to be slowly morphing into extensions of our very beings, Attentive has discovered a way to leverage Artificial Intelligence (AI) as a means of eliminating the faceless nature of old-school marketing methods and speaking directly to the individual with text messages. The AI comes out of Attentive’s acquisition of Boston-based Tone, which specializes in AI-enhanced human text message conversations, last June. With Tone’s advanced algorithms, consumers truly get the sense that they are chatting with a friend, and that is proven to be much more effective at driving sales follow-throughs.
The same bundle of studies that gave us the scary numbers on how often people check their phones also reveals why SMS marketing is absolutely the way to go in today’s environment. First, there’s the preferred messaging method. In a world of WhatsApp, Facebook Messenger, Signal, Snapchat, and a growing list of many others, a majority of people (more than 55%) feel most comfortable using the “native” messaging service that comes with the phone. This is the one that Attentive uses. 89% of phone users surveyed said that they would read a text message within 30 minutes of receiving it, and 26% said that they will read the message within one minute of hearing the notification chime. After an advertiser sets the friendly and trustworthy tone with a welcome message following a purchase (thereby establishing legitimacy), 91% of those surveyed expressed an interest in signing up for texts, with over half of them saying they had already done so. Most promising for Attentive, perhaps, is the 56% of US retailers that plan to increase mobile SMS marketing investments in the very near future.
The Black Friday / Cyber Monday blast has become the most critical moment for American retailers every year. In 2021, this time period saw an astounding 71% increase in cellular network activity compared to 2020. Most of this is attributable to a 51% increase in SMS messaging from last year. Among this swelling of digital communication, Attentive’s own survey showed that more than 1 billion text messages were sent during Cyber Week by the world’s leading brands, generating sales of over $830 million from SMS alone. These included campaign and customer-specific messages (such as, “Hey, Sally, you still have that size 6 floral print dress in your cart! Are you still interested?”) that drove an average conversion rate of 34.6%. Clearly, subscribers were actively engaging with favorite brands through text messaging. According to Attentive’s Malkerson, SMS drives 10 times more revenue than email per message, with 99% open rates and 30% click-through rates. Spam emails never had a prayer of even approaching such impressive numbers. In 2021, brands using Attentive collectively earned about $12.5 billion in revenue through SMS marketing. Let that sink in — $12.5 billion in revenue that is directly attributable to Attentive’s text message marketing, almost tripling the $4.5 billion in revenue generated in 2020. More than 4,000 brands work with Attentive, engaging over 200 million consumers, and yet the practice is still very much in its infancy. As a Software as a service (SaaS) company, the rates Attentive can charge for their licenses are directly related to how much revenue they generate for their corporate users. This early in its trajectory, it’s easy to conclude that Attentive has great potential for some very rewarding growth momentum.
The massive opportunity has been noticed by the best in the business. Attentive was the beneficiary of the fifth-largest funding round of all of New York’s tech startups in 2021. The investors in that $470 million round included Base10 Partners, Coatue, D1 Capital Partners, IVP, and Tiger Global Management. Sequoia Capital and Bain Capital Ventures had also earlier staked a claim in Attentive. This is not an ordinary list of investors; it is a veritable “who’s who” of the most consistently successful venture capital names on the planet, and Iron Edge VC is extremely proud to join this distinguished group with a recent investment in Attentive. Of course, Attentive Mobile is a privately held company, making it impossible to buy at Merrill Lynch, TD Ameritrade, Robinhood, or any other conduit to the public exchanges. Iron Edge VC can, nonetheless, provide you with access to our Funds that have ownership interests in this company that supercharges commerce through intelligent SMS marketing. If you would like to learn more, or if you know anybody else who would, please don’t hesitate to contact us by clicking “Get in Touch” below.
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All the Best,
Founder & Managing Partner