Sunday, August 24, 2008

Obama's VP Text Message - How Much Money Was Made?

The Silicon Alley Insider posted an interesting piece yesterday titled Barack Obama's Million-Dollar Text Message?*. The author, Dan Frommer, attempts to calculate how much Obama spent and how much the U.S. mobile business received when Obama announced Joe Biden as his Vice Presidential running mate using a combination of email and text messaging.

The cost of sending bulk email was probably minimal but texting is different and it looks like some pretty big money was made by the wireless companies. Here's some assumptions used by Frommer to calculate the money made:

The Wall Street Journal estimates "over three million" people were signed up to receive the Obama VP text message. Frommer used $0.03 for Obama's sent/received messages.

Frommer assumes that Obama's campaign will pay a text message aggregator between 5 cents and 10 cents per person for each message it sends.

Frommer assumes 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.

Frommer assumes that the entire transaction generates a minimum of 6 charges: 3 for Obama, 3 for the recipient.

The six charges was a little confusing at first to me but Frommer makes it pretty clear. 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.

Here's a YouTube video of the text message posted by Watch Free TV.

Frommer estimates about $900,000 was spent by Obama's supporters and the wireless industry made as much as $1.17 million to $1.35 million from the VP text message. He's has been updating his post as new information becomes available - you can watch it here.

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