Singapore’s advertising costs have come under renewed scrutiny after the company behind one of the world’s most popular SMS messages revealed that its advertising costs rose by about $15m a year in 2016.
The revelation comes after the Singapore Government released its latest statistics last week showing the cost of advertising in the city has risen from $4.4m in 2012 to $5.9m in 2017.
The company behind SMS-based SMS ads in Singapore, Singtel, says it has been in discussions with the Government about the impact on its operations of the growth in SMS advertising.
Singtel’s chief executive officer, Michael D’Ambrosio, told a conference on Monday that the company had begun discussions with Singapore Government about how to minimise the impact of increased SMS advertising costs, including to improve customer experience.
But Mr D’Ambrozzo said that in the long term, he thought that the increase in SMS costs was a problem that needed to be addressed.
“There is a long-term perspective here,” he said.
“The issue that we’ve raised is that if we don’t do something now, there’s going to be a cost for the company over the next decade.”
We’re not in the position to pay out on the debt because we haven’t had the growth that we’d like to have in the next five years, but we’ve got to do something to reduce the costs for the future.
“Mr D’Ambrosio said he hoped that Singapore could find some solutions to the issue, including by working with companies to create a “more efficient” advertising system.
But the Singapore Business Chamber of Commerce and Industry also expressed concern that the rise in advertising costs would not be shared evenly between different categories.”
I think the real concern is that you are going to have some areas where advertising costs will go up while other areas won’t go up,” Mr Dang said.”[I]t’s going be a little bit of a struggle to manage that.
You’re going to need to think about that in terms of what we can do to improve the process and ensure that there is a smooth transition.
“The latest statistics show that the cost for SMS advertising rose by nearly $10m in 2016 from $3.5m to $4m.
Singapore has become increasingly reliant on SMS advertising, which costs $2.65 for a 30 second ad, while the costs to make the same ad on mobile have increased by $7m in the past year.
But many companies say that the costs are falling in line with the cost to make an ad in a mobile environment.
In 2016, for instance, SMS advertising cost Singapore $3,600 to make a 30-second ad on its platform.
In 2017, the company said it was now spending $3 for each 30-sec ad it sends to consumers on its mobile platform, and $0.75 for each 40-second spot it sends.
But its CEO told The Straits Times that the rate of growth was “very low”.”
In terms of the real cost, our cost to send a 30 seconds ad is now $1.75 per 30 seconds, and our cost for a 40-sec spot is now almost exactly $0,” he told the newspaper.”
This means that if the cost goes up, the rate at which we can send the ads to the end user will decrease.
“It’s a small amount of change but the overall effect is a small one.”
Mr Hwang said the company was trying to find out more about the issue to find the right balance between the growth of SMS advertising and the costs it was putting on the company.
“As a result, we have a very small amount for each ad we send to consumers and we are not using the money to buy advertising,” he added.