The fall of Mobile VAS and what I learnt

Today there are few to no apps that are making money from charging the users in low and middle income countries. But don’t make the mistake of doubting potential for digital services in these markets. Actually many emerging markets have already gone through a phase of prosperous mobile services. And there is big potential to revive it once more!

I have spent the last 10 years working in the telco space, and it’s a well known secret that VAS services can reach significant scale and revenue. At it’s peak in the early 00’s Mobile VAS brought in millions and contributed to over 15% of mobile operators’ revenue.

VAS stands for Value Added Services and is often SMS subscription that gives news or information on a given topic. This can range from updates on your favourite football team to weekly updates on your pregnancy. A user subscribe to a service and then airtime is automatically deducted on a daily/monthly basis.

You might think that Mobile VAS quickly disappeared with the rise of free flowing information on the Internet. Yes, they have become less popular but not due to Internet, instead if was because of greed among mobile operators. At one point the marketing for Mobile VAS was so aggressive that people didn’t know what services they had subscribed to, and even if you knew it was almost impossible to unsubscribe from them.

Two things followed from this:

  • Users lost trust in mobile operators and VAS services, and stopped using them and became sceptical to new services and promotions.
  • The regulators stepped in and put up rules for VAS services. This covered double opt it confirmation when you subscribe to a service, mandatory customer support, transparency on what services you are subscribed to, and easy way to unsubscribe.

This had long lasting consequences where even today 10 years many are sceptical towards Mobile VAS and even if you do want to subscribe it requires quite a bit of technical skills to complete the double opt-in.

Lessons Learned

There are some key lessons from Mobile VAS that I have taken with me and that has influenced the approach we’ve taken with Lily Health.

The is huge demand for information

People want information in various situations for instance to improve your health or improve yield on your farm. But it’s not only about having information available, it needs to be accessible and be relevant.

All information is available and free on the Internet but it can be challenging to access the information that is relevant for your situation.

This is why Lily Health is keeping a conversation to get to know each user to ensure that the information and advice that is given is relevant for that user’s objective and situation.

People are willing to pay for digital services

From what I experienced with Mobile VAS and Mobile Money I’m convinced that people are willing to pay for product that delivers value.

I have previously elaborated on other upsides to charging customers. With Lily Health we have a clear and simple business model where the customer pays for personal, relevant and timely information.

Service providers can but should not take advantage of users

When the MNOs started to use more aggressive marketing it worked. Aggressive marketing will work, for a while. Users will eventually notice their money disappearing without getting value back. The trust will be broken And the trust can take decades to repair and destroy the whole industry.

In Lily Health we are transparent with the pricing and makes it easy for users to unsubscribe for the service. The user notice and appreciate these things. What is less noticeable is how we handle their data with care. We don’t collect personal identifiable data and do not sell the data that we collect.

The opportunity

During the 00’s the mobile operators had monopoly of the digital mobile services. All mobile services were launched by the mobile operators and they controlled the access to the only digital marketing channel which was SMS broadcasts.Since then a lot has changed and created a big opportunity for a new era of prospering mobile services.

Easier to setup

In the past it took months to setup a Mobile VAS service. You needed multiple visits to the Mobile Operator to pitch and agree on a deal, and then do the technical integration. Today there are aggregators that is working as the middle man between smaller players and the Mobile Operators. They do take a cut of your revenues but they speed up the process from months to weeks.

Open marketing platforms

The rise in popularity of internet and social media has also created digital marketing channels, such as Facebook and Google Ads. Actually today these marketing channels are both under-utilised and under-valued.

Mobile Payments

The likes of Mpesa in Kenya and Paytm in India is growing in popularity and by 2020 there will be 1 billion people using mobile payments in emerging markets. These services have low transaction fees and most importantly offers a easy payment experience for digital products.

At Lily Health we are convinced that mobile services can bring a lot of value to people in emerging markets, and the timing to launch and grow has never been better!