This morning, Barack Obama announced his VP pick, Delaware Senator Joe Biden, via email and text message. Great stunt. (Even though the news media got the scoop first.) How much did it cost?
Sending out a bulk email didn’t cost Obama much, and it will be free for anyone who gets it in their inbox. But as anyone who’s sent or received a text message knows, the wireless business doesn’t give those away.
Estimating how much Obama spent — and how much the U.S. mobile business will receive — depends on a few factors: How many people have signed up to receive the message; what percentage of those people pay for bulk text-message plans; and how much Obama’s campaign pays to send out its bulk messages. But via a combination of guesswork and homework, we figure that the VP announcement could generate as much as $3 million for the U.S. wireless business, split evenly between Obama’s campaign and his supporters. (Full assumptions and maths below.)
No matter what the cost, Obama’s getting his money’s worth: A mailing list full of devotees he can send more messages to, like “VOTE!” on election day — and lots of buzz.
Update: The consensus among our commenters is that Obama’s campaign could have gotten a better rate for the messages it sent and received than we had assumed. That wouldn’t affect how much his supporters would have to spend to receive his message — at least half of the total amount, we’ve figured — but could mean that Obama’s campaign spent significantly less than we’d calculated. We don’t have specifics yet, but we’ll try to find out more.
Update 2: The Wall Street Journal says that the Obama campaign estimated “over three million” people were signed up to receive the Obama VP text message. We’ve re-run our calculations for 3 million people, and have also added a new potential price structure — $0.03 for Obama’s sent/received messages — to the chart below. Using our initial assumptions (see below), it’s possible the wireless industry made as much as $1.17 million to $1.35 million from the VP texting.
Under that price model, the vast majority of the estimated total spend — $900,000 — would have been from Obama’s supporters. (Based on an average $0.10 charge per message x three messages sent/received x 3 million people.)
It’s still possible the total was significantly less — if more of Obama’s supporters were on bulk text message plans with their wireless carriers, or if Obama’s rate came out lower than $0.03 per message sent/received. Again, we’ll try to get better pricing information, and will update if we do.
We’ve gone ahead and made a variety of assumptions and run them through a handful of scenarios. Some of the data — like the number of people signed up to receive the message — is a flat-out guess, which is why we’ve provided a number of ranges. But industry sources have provided us with decent numbers on text message pricing.
We assume that Obama’s campaign will pay a text message aggregator between 5 cents and 10 cents per person for each message it sends. Aggegators buy text message capacity from carriers in bulk and resell it to organisations like Obama’s. We’re told that 5 cents per message is a ridiculously good deal that the aggregator would basically be providing at no profit — something many companies would probably do just to say they handled Obama’s text message campaign. 10 cents per message, per person would be a decent deal. We’re ignoring any monthly retainer that Obama’s campaign pays the aggregator for their services.
We assume that 50% of Obama’s recipients will have to spend $0.20 to send/receive the text messages, or an average $0.10 per person. comScore M:Metrics estimates that about 34% of U.S. wireless subscribers pay for a monthly bulk text message plan. Those people are essentially getting the message for free. The remainder of wireless subscribers have to pay a “casual” messaging fee, which we think runs around $0.20 per message. But Obama’s audience skews young and tech-savvy, and the ones who sign up for a VP text message are even more so. So we’re assuming that half of his recipients are have a bulk plan and are getting it for free — meaning the average cost is 10 cents per person.
We assume that the entire transaction generates a minimum of 6 charges: 3 for Obama, 3 for the recipient. In order to receive the Obama message, supporters have to send his campaign a message (VP to 62262 or OBAMA). Then he will send a confirmation message back. Then he’ll send out the actual update. Each one of those messages generates a charge for both sides. We’re assuming it costs Obama the same amount to send and receive a message.
We don’t know how many people have signed up for the message. This is the most important variable, but the one we have the least insight into. Presumably at some point in the campaign, perhaps as soon as this weekend, we’ll hear how many message were sent out, and we can revisit our maths again.
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