Tatango: Dead Simple, Ad Supported Group Text Messaging

Tatango is a dead simple, free group texting messaging service that grew out of Derek Johnson's basement to a company that now serves over 300,000 users across the nation. The startup helps groups, organizations, sports teams, college cheerleaders, and similar type groups blast messages to their members via SMS or voice message. Although simple, it helps solve a variety of problems such as effectively reminding peers of group meetings last minute or staying in the loop about what's happening on campus by subscribing all of your favorite groups. The model is attractive because it can be applied to any organization or business on or off campus and has a viral component that helps propel user adoption. You can send messages from your browser or conveniently from your phone - perfect for when you're on the go.

How do they make money? That's simple too, just attach a brief 30 character advertisement at the end of each message. This model is not only appealing to investors since it builds on the rapidly expanding mobile marketing industry, but likewise to marketers themselves as it allows them to send highly targeted messages to their target markets right on their cell phones. The isolation of the ads helps to increase brand awareness while their actionable nature bolsters their overall value, thus producing high CPM rates. 4info, a startup that utilizes the same model, has been able to charge marketers $0.05 per impression (a $50 CPM rate).

How fast is the mobile marketing industry growing? According to eMarketer, US mobile ad spending will increase from $878 million last year to a rough $1.7 billion by the end of 2008 and eventually reach $6.5 billion by the year 2012. Although, it is uncertain what percentage makes up SMS marketing and actual banner advertising, they will clearly be able to capitalize on the trend. The trend is good, but as market space exponentially grows, it is likely that those CPM rates could drop. They can't drop too far as the cost to send each messages is roughly $0.02 and would cut into profits.

Tatango recently open their services up to the public and has been featured on MobileCrunch and the Wall Street Journal. The market is competitive with a number of group text messaging services that already exist and a growing number of copy cats. They'll need to continue to carve out their niche market and hold it. This will likely require aggressive marketing. I like that they also provide voice messages. They can easily expand their services by utilizing XML feeds from STATS to supply sports alerts, news updates, and weather. However, I would assume that SMS will no longer become the ideal way for push type messages as smart phones continue to develope and saturate the market.

Tatango has entered our entered our elevator video pitch competition. Check it out on Vator.tv to compete.