99% of all text messages are read by the recipient.
90% of all text messages are read within three minutes of their delivery.
In over ten years of operations, our recent investment in Blyk is probably the one that we scrutinized the closest – and we scrutinize every investment very closely, indeed – and one that raised the most buzz after the announcement earlier in 2010.
While we are excited to be the lead investor in Blyk, the decision was not a fast one. We talked with the management team intensively for well over six months; we looked at the numbers, plans, and prospects inside and out; we analyzed the market; well, you get the picture...
It should not come as a surprise that Nexit is bullish on mobile advertising – we firmly believe in the importance and growth of the segment. However, Blyk had its MVNO history – building a Blyk branded Mobile Virtual Network Operator. During the credit crisis this path got too capital intensive and the company decided to take a new approach: strategic partnering with mobile operators. This strategic move created buzz and concern about Blyk’s future (especially by casual observers).
But the more we looked at Blyk, the more certain we were there was much more to the company than met the casual eye. Sure, some mistakes had been made, but after a very careful, in-depth investigation, we concluded that Blyk was better positioned than ever with the proven effectiveness of its engagement media and its cost-effective partnering business model.
So what is Blyk anyway?
Blyk creates engaging mobile messages (SMS and MMS) that include info, entertainment, and exclusive offers. Members opt in and have high participation rates when responding to messages. That’s what helps make Blyk a targeted, effective, and proven way to reach young people on the best medium for them: their mobile phones.
Blyk is currently active in three markets, in cooperation with leading operators in each one of them: in the UK with Orange, in the Netherlands with Vodafone, and in India with Aircel. With the leverage from the partners, Blyk reaches of over 60 Million people in these three markets, with further partners and markets in the pipeline.
While other advertising media might be sexier, messaging is clearly the most effective. The research firm mobileSQUARED concludes in their recent report: “About 90% of all text messages are read within 3 minutes of their delivery – and over 99% of all text messages are read by the recipient.” The recent success of Groupon underlines the trend towards targeted messaging based advertising.
A study by Direct Marketing Association further illustrates the effectiveness of messaging-based mobile advertising: click-through rates (CTRs) and conversion rates for text messaging are much higher than rates for e-mail and Internet display, two channels that win larger percentages of marketing budgets than mobile. The average CTR for text messaging is 14.06%, while the average conversion rate is 8.22%. E-mail brings in an average CTR of 6.64% and an average conversion rate of about 1.73%, and Internet display doesn’t even hit the radar with an average CTR of 0.76% and average conversion rate of 4.43%.
And if you not are impressed by now, the story gets even better. While the average CTR for SMS advertising is 14%, Blyk has demonstrated a consistent CTR in excess of 25%.
The Bottom Line
Our bottom line is that Blyk has all the attributes that make a good investment: a large and growing market, a strong foothold in key markets, bona fide Tier 1 customers and partners, and a demonstrable edge over competitors. It has a world-class management team that we have gotten to know very well during our long courtship and that we will keep working closely with to make Blyk more than just a good investment – a good exit.
