Understanding Sms Marketing

Understanding SMS Marketing

Introduction

Short Message Service (SMS) is a wireless service available on digital mobile networks. It enables the transmission of text messages between mobile phones and other systems such as electronic mail, paging and voice mail. Up to 160 characters can be sent and received through the network operator's message system to the mobile phone (Gustafsson & Lenman 2007).

SMS is essentially similar to paging. Paging is the process of a message, which consists of a few digits typically a phone number that the user is then expected to call, to be received by a one-way numeric pager. A pager (sometimes called a beeper) is a simple personal telecommunications device for short messages. A one-way numeric pager can only receive a message (paging) consisting of a few digits, typically a phone number that the user is then expected to call. While paging requires the pager to be active and within range, SMS messages do not require the mobile phone to be active within the range as they will be held for a number of days until the phone is active and within range. SMS messages are transmitted within the same cell or to anyone with roaming capability. They can also be sent to digital phones from a web site equipped with a PC Link or from one digital phone to another. In addition to SMS gateway is a web site that lets the user enter an SMS message to someone within the cell served by that gateway or acts as an international gateway for users with roaming capability.

The SMS is a store and forward service. In other words, short messages are not sent directly from sender to recipient, but via an SMS Center. Therefore there is a need for a network operator. Each mobile telephone network that supports SMS has one or more messaging centers to handle and manage the short messages.

The SMS features confirmation of message delivery. This means that, unlike e-mailing users do not simply send a short message and trust and hope that it gets delivered. Instead the sender of the short message can receive a return message back notifying them whether the short message has been delivered or not.

Short messages can be sent and received simultaneously with GSM (Global System for Mobile Communications) voice, data and fax calls. This is possible because whereas voice, data and fax calls take over a dedicated radio channel for the duration of the call, short messages travel over and above the radio channel using the signaling path. As such, users of SMS rarely, if ever, get a busy or engaged signal as they can do during peak network usage times (SPG Media Group PLC 2008).

According to the same study above ways of sending multiple short messages are available. SMS concatenation (stringing several short messages together) and SMS compression have been defined and incorporated in the GSM SMS standards.

The introduction of standardized protocols such as SIM (A small smart card type device that has details of the mobile subscriber including public telephone number and the numbers required by the network to recognise and authenticate the subscriber), Application Toolkit and the Wireless Application Protocol (WAP) contribute to an increase in messaging usage by providing a standard service development and deployment environment for application developers and business partners. These protocols also make it easier for users to reply to and otherwise access messaging services through custom menus on the phone. While these protocols are only a means to an end and not new messaging destinations or services, they are likely to lead to a 10-15% uplift in total SMS volumes (SPG Media Group PLC, 2008). Some companies could reach more successful results if manage the SMS marketing processes successfully.

Today, for example, to use SMS, MMS, e-mail, instant messaging (IM), voice mail, and so on, end users must be aware of the underlying technology and their intended recipients' capabilities. Studies and market trends show that messaging solutions must be easier to use if they are to facilitate communication and increase traffic. This will form the base of a successful mobile marketing campaign constructed on SMS.

SMS Marketing under Marketing Overview

SMS has grown into a mainstream communication tool for consumers, reaching them via SMS marketing has become increasingly important strategy for businesses. Whether between two people planning to meet up or a broadcast message to thousands of users, more and more customers are becoming converts every day, and savvy marketers realize text messaging is a great way to quickly communicate with their audience. For this reason; text messaging is increasing at an enormous rate. One of the primary reasons behind this growth is that text messaging has become increasingly used as a business tool (mobilestorm.com/sms-marketing 2009).

The trend in Jupiter Research shows that SMS Marketing is quickly surpassing e-mail technology as a tool for marketers and also for customer relationship management. Moreover; Jupiter Research says three billion coupons issued to cell phone users will generate sales of almost $87 billion by 2011 (textsmsmarketing 2006).

 Types of SMS Marketing

Types of SMS Marketing can be defined in three different contexts in general; Purchase Context, Technical Context and User Context. These contexts are mostly given preference while enterprises practising the SMS Marketing efforts.

Purchase Context defines SMS as a product based on the way it is purchased. On the other hand, technical context defines the types of SMS Marketing from the mobile operator point of view while user context defines it from the benefit the SMS provides to the target customer. The common point of these types is that the payment type of these SMS can be defined based on the request of the buyer (the sender). The company that wants to send SMS can chooses either to pay the price of the SMS itself or to charge the price to the target customer.

Purchase Context

In SMS marketing campaigns, there are two different SMS methods as a product; a company can either choose to make a deal with the carrier for a promised amount of SMS for a given time (mostly 1 year). This is called bulk SMS. On the other hand, the company can choose to buy SMS packages that are being sold by the carrier in specified amounts like 1.000 or 500.000 or it can be included on the standart price numbers of dispatch etc. This is called piece SMS.

Marketing strategy is obtained by making corporate SMS purchasing agreements either with Mobile operators or with the infrasturcture providers or different SMS reseller companies. The more amounts of SMS purchased, the less money is paid for an SMS. While it is more profitable to buy over million quantities directly from the GMS operator (bulk SMS), it can be a better decision to buy from the providers or resellers since they buy from the operators with over million quantites and resell them in small quantitities with better price (piece SMS). This also creates a new intermediate trade of SMS. In addition to this; wide extensive solution partnership agreements are available among company. At that time; more services are given in a lot of case such as SMS, logo, melody, conversation, entertainment, competition, game, etc.

Technical Context

There are three types of SMS from the technical perspective. These are one way, single shot and two way SMS's (see in Table 2).

One way SMS is an SMS that sent by the sender to the target customers. With this type of SMS an answer from the target customer is not expected and most of the time not allowed. So there is no customer interaction.

One way Fast SMS (Single Shot) is an SMS which is sent by the sender to the target customer and an answer from the target customer is not allowed. The most important feature of this type is that the SMS is valid for a defined time (mostly a short period like 3 minutes). Becuse of this feature, the SMS must be sent immediately after it is triggered. This type is mainly used to send passwords that are valid for the defined time (Like a password that will be used by the target customer to log in into his/her different accounts over the internet). This type of SMS is not blocked by the filters meaning that a customer can filter the SMS that is coming from a certain sender or number by sending that message to a special filter list of the mobile operator. But this filter is not used for single shot SMS.

Two Way SMS is an SMS sent by the sender to the target customer and an answer from the target customer is expected if he/she wants to join or use the services/benefits that are offered. Since there will be a client interaction, the SMS number that is used to sent this type of SMS must be configured to recieve SMS that will be sent by the customers.

User Context

Premium SMS gives clients the option to earn money on certain text messages and content for which consumers will pay to send or receive. Clients can hold voting contests, like those on many reality TV shows, daily horoscopes, a VIP program, or other instances where new information is time-sensitive, making that information valuable to the consumer.

Mobile Coupons will benefit businesses and customers alike-promoting spending while saving money for consumers. In addition, the convenience and "green" factor (no excess paper or ink needed to produce them) of digital coupons, such as mobile coupons, make them especially appealing to consumers today.

Text-To-Screen is a premium service that allows marketers to create polls and quizzes especially for a particular event.

Marketers have a way to ensure event attendees' interest while adding excitement to shows, parties, major sporting events or a regular evening at a movie theater. A marketer can use giant video screens that are traditionally at these places to advertise a poll or quiz, compel the crowd to participate and then post the results on that same screen in real time. (mobilestorm.com/sms-marketing 2009)

The SMS Campaign

The SMS system is a small piece of mobile communication and marketing system. For this purpose, like every marketing campaign, SMS campaign should be carefully planned. There are 3 processes that a campaign manager should plan in order to create a successful SMS campaign.

 Every process has its own individual approaches. In step I, campaign manager should carefully plan the target segment, the message that will be addressed and configuring the body of the SMS based on this message.

In step II, the carrier must be chosen in order to reach the targeted segment based the technical and financial criterias. All the replies must be carefully viewed.

After sending the message, an analysis of the study must be made for performance measurement (mobilestorm.com/sms-marketing, mobilesmsmarketing.com 2009).

 In order to create an SMS marketing campaign, a database must be created that consist of the phone numbers of the clients that are targeted. A member or commitment list is being constituted by the enterprises with the help of clients' needs. However; we cannot observe the same situation at the private sector. The companys, which can constitute their lists, can add new numbers to these lists by using different channels. The channels can be;

• inside the company - the companies own database or affilitaions database
• outside from the company - databases that can be provided from consulting firms, SMS operators, yellow pages etc.

This process is sensitive because of the requirements and outlines defined by the law. Both the individual numbers at the newspapers and the other numbers, which are used by institutional enterprises, help to increase the quantity of the numbers at these lists in the behalf of request or guidance.

SMS Marketing Implications

In the past; the companies, which want to communicate with their customers, were using postcards, celebration cards, fax and telephone. These ways were increasing the costs and were creating problems for transportation. Most of the cards were not arrived to the addresses and the companies were not controlling these limitations. By the use of corporate SMS service, the companies began to trace whether the SMS was received by the user. Furthermore; considerably higher profits were provided at the cost side. One of the most attractive sides of this application for the companies is the high returns of the customers, who are taken these messages.

Corporate SMS Working Process

Client applications have a speciality of working as internet-based environment and desktop execution with local database. The applications, which are served as free for customer usage, can be accumulated in three main titles: Desktop SMS application, web-based Web SMS application and Office SMS application, which can be provide sending SMS from directly Microsoft Excel. After controlling SMS sending offer from these applications out of institutional servers, SMSs are transferred on Internet at the same time to the related mobile operator. Then; these SMSs are transmitted to the mobile phones.  

The corporate SMS system can be classified in 3 categories;

First one is the public enterprises, in which SMS application is an indispensible requirement for each company. For instance; small announcements can be transferred to the people by associations, labor unions, foundations, etc. By the way; it provides an opportunity to get lower costs and make the works rapidly.

The second one is the private sector institutions especially finance (banking), automotive, market, retailers, etc. They announce their campaigns to the related clients at the same time and this provides a returnable and customer fidelity.

The last category is about the education sector, in which corporate SMS was began to see as an essential requirement and called service by the guardians. A private class was began preference by giving the services of lack of continuity, examination results and other reports.

Efficiency of SMS

 What could efficiency of SMS bring to companies? The most important issue is to get the transmission reports of the messagings. We can analyze these reports based on;

• People & Responses
• Total cost of Transmission
• Results

In a recent study by Nielsen Mobile, 23% of U.S. mobile phone users remember seeing mobile advertising in the last month, and over 50% responded to the ad. (mobilestorm.com/sms-marketing 2009) When we compare this result to another marketing media like TV where the response rate is around 0,3%, it can be seen that SMS can be a very successful media for marketing.

Not only for the mobile advertising however it covers a lot of place in mobile marketing but also constitute a good relationship with the customers are very important subjects to the companies.

SMS Marketing System Analyses

The marketing concepts are changing while these new medias & technologies step into ourlives. An important factor to consider when selecting a marketing technique such as SMS marketing is that method's ability to reach a wide audience. This is why famous TV programs attract a lot of sponsors, famous celebrities get a lot of endorsements and popular websites get a lot of posted ads. Businessmen know that these programs, celebrities and websites will be garnering a lot of visitors; thence, more people will get to see their advertisements. The same equation applies to SMS marketing. Nearly every person in the world possesses a mobile phone. It's only natural that companies and businesses will want to compete in this new marketing arena. (sign-up.to 2008)

It is very important to understand the SMS Marketing system and to manage the system after sending messages to the customers even their target is advertising or relationship. Companies have to find out the most valuable customers by detecting the performance with so many analysis and then to decide and apply what are the following actions whether the companies want to succeed their functionality continuously for their success in marketing.

The companies naturally think about their current customers primarily, because they know their identities, personalities, conventions, pleasures, etc. There are two types of customers; the current customers and the potential customers, who are not available for the present and may be the candidates.

To create opportunities for the companies and satisfy the customers, companies should perform some endevours. Hereby these endevours undertake with marketing philosophy and to give some detailed conveyance for the SMS marketing efforts. Like every marketing concept, analyzing the result to measure the performance of system. In general before passing through to the analyses, suppose that a company determined their customers and sent them an advertising text message, in which the company's new products were recognized. Presume that the amount of these customers is 10,000 and just 1,000 of them have demanded the new products after receiving the SMS. However, since this is a cost for the company, cost - benefit ratio must be taken into account all the time. The other 9,000 people can be classified into two groups: the people, who erase the text messages without seeing; and the people, who erase the text messages after seeing. In this direction; these people may not be interested in these text messages for the reason of the improper time, unsuitable content, previous experiences, etc. In that case what should the company analyze to control the activities and the environment for benefitting from SMS Marketing?

From the strategical point of view the companies should be done below analysis for their safety and do the right things for the good marketing relations and satisfaction of the customers;

Basic Statistical Analysis

Statistical analysis is the first step of the success or failure of the system. It includes the response time of the respondents to the text messages, the percentage of the right arrivals, the percentage of the lost messages, etc. In addition to these; these performance results should be traced and understood effectively to take the precautions and determine the SMS strategy primarily. For instance; at Keynote Systems, the average performance for all carriers was 11.8 seconds to receive message and 94.7 percent of all messages arrived at their destination. While these numbers are an improvement over the prior three months, the 94.7 percent availability could represent a significant loss of information and business when the number of lost messages is calculated. (AT&T 2002)

In our example; the company can classify the customers, who have made commercial activities, in 3 groups: high level, mid-level and low level. By the way; the company should also trace these classifications to understand whether there are changes in high levels, mid-levels and low levels. There may be some quantitative changes such as the increase in high levels that also indicates the increase in the expenses or the reduction at all levels that indicates the demand in the market has been declined.

Tendency Analysis

Targeting the audience is one of the most important things that any advertiser should remember. Nowadays, businessmen are considering it more wise and practical to advertise to individuals who will likely become customers. For instance, if a company is selling video games and other hip electronics, then marketers would want to run your SMS marketing campaign on teenagers and other young people who might be interested. (sign-up.to 2002)

Since 80% or more of all cell phone users carry their phone all the time, a text message to their cell phones is the perfect way to alert your subscribers or clients of any urgent information, such as a change of appointment, or product ready for pickup. For this reason; the companies have to understand in which stores and/or products that the customers have paid money by finding out the location of these stores and/or products, what the ranges of these saves are, who these clients are by making data mining, etc. By the way; the company can make identification about the product characteristic and determine new marketing strategy related to the most popular products or services. In addition to this; the products can be served to the people individually.

Capacity Analysis

The main idea of detecting capacity is to answer the question of will the company maintain the investment of sending text messages to the customers. The company has to understand the signals of benefits with the usage of SMSs. Because of the company will produce the products or keep the inventory according to the demands. Whether the demand is low due to the expectations, the company will produce lower parties, keep lower inventories and may reduce or stop the usage of SMS marketing. Moreover; the company may change the marketing strategy. On the other hand; the company may support and increase the usage rate of text messaging by sending them to more people whether the demand is very high. At that time; the company will perform more aggressive role in the market and this will affect the investments of the company.

For this reason; the capacity analysis, which indicates the present situation to meet the present demand and the future situation to meet the following demand, should be investigated and taken into consideration by the companies.

Reviewing Marketing Performance

Mobile marketing can be used for a wide range of occasions like announcing new product, one-day specials, new store openings, special events...etc. Subscribers can be treated as a special group for offers and information that only they have access to, increasing loyalty, purchases, and speed of communications.

While mobile marketing can be used in a lot of areas that helps them customer loyalty, customer satisfaction and incremental sales; the companies should search the performance of their marketing activities to maintain the available situation and then to increase the market share by accessing more satisfied clients. To achieve this; some functions should be generated like market research, market modeling and market consulting.

• Ø Marketing research - world-class qualitative and quantitative research, particularly market segmentation that gives the company growth-oriented insights.
• Ø Marketing modeling - state-of-the-science, profit-focused modeling that offers the company invaluable information about the financial impact of different marketing decisions.
• Ø Marketing consulting - continuously filtering what the statistics say through managerial, statistical, and financial criteria to provide the company with relevant and doable action steps.

In this regard; the company should determine some indicators to trace the performance of the marketing to understand whether the situation is going on the predetermined strategy or not. Some of these indicators are market share, new product, marketing return on investment (ROI), customer, brand, etc.

Furthermore; there are some criteria for selecting the targets of these performance indicators such as sales potential, growth potential, retention potential, common motivations, problem potential, responsiveness, findability, lifetime value, etc. These criteria should be investigated, considered and evaluated before targeting process. (Copernicus Marketing Consulting and Research n.d.)

Sales Analysis

In sales analysis, the goal is to provide accurate management information related to sales activity in order to improve sales profitability and provide facilities for sales forecasting and planning at customer and product class levels.

By sales analysis; we can make the following actions:

• Ø Identify the most profitable customers
• Ø Know which products are selling
• Ø Analyze market trends and geographic market patterns
• Ø Know the profit generated by each product
• Ø Know which divisions of business are selling
• Ø Identify which salespeople are performing
• Ø Improve sales forecasting
• Ø Measure actual performance against quantity or revenue forecasts
• Ø Analyze tax collections
• Ø Set targets against customers and / or products
• Ø Compare against budgets per product group and/or salesperson

By the way; we can decide to maintain and admire the most profitable customers, continue to produce the most selling products, prompt the most valuable salespersons, get precautions according to the trend of the following months' sales, constitute the budget or make re-budgeting, determine the following targets that the marketing department should provide, etc.

In this regard; SMS marketing is perfect for local and national retailers wishing to promote products or services, provide incentives, and increase customer loyalty and retention. Retailers can send SMS messages to their opt-in subscribers with coupons code inserted directly into the message. Customers can come into the stores and present their coupons right on their cell phones for redemption. This application is very useful for consumers to sale any product in any time at any location, where it helps to increase the sales of the company.

Cost-Benefit Analysis

When consumers make purchases at market prices, they reveal that the things they buy are at least as beneficial to them as the money they relinquish. Consumers will increase their consumption of any commodity up to the point, where the benefit of an additional unit (marginal benefit) is equal to the marginal cost to them of that unit, the market price. The same idea can be used for the companies. A company, which directs its marketing strategy on SMS marketing, wants to get the financial benefit of the application including customer satisfaction. However; when the trend of the earned marginal benefit is going on a reducing direction, the company may decide to give up SMS marketing and consider another methods. On the other side; whether the marginal benefit is going on a positive direction, the company will begin to behave more aggressive way to use more text messages to arrive more customers. 

Character Analysis of the Customers

The first step in SMS Marketing campaign is collecting and getting permission to gather cell phone numbers as stated before. Although it is perfectly acceptable to simply have a signup form on the company's website or retail store with the promise to send valuable offers in return for signup; it is much more effective to come up with a creative tactic that offers more like prizes, memberships, bonus and free stuff. As the comapny build its database of cell phone numbers, try to elicit more than just that one piece of information. Ask for the customers about their hobbies, conventions and then create special announcements based on niche interests. Find out demographics and customize the text messages campaign to that particular cell phone recipient.

In the character analysis; clear purpose and goal focusing, communication skills, time management prioritization and planning, conflict handling and mental attitudes' information should be gathered by the companies. For instance; a goal focused person, who understands the direction of the organization, makes plans and organizes resources, both of people and materials and plans ahead in a strategic manner; can be directed to the gifts of special days and the text messages can be sent to these customers like in this way. Because these people are living in perfect planning days and they do not forget the most important days in their lives. For this reason; the gifts, which emphasize the special days, should be chosen as a content of text messages in SMS marketing strategy at these companies. In a different example; there are also SMART people, who can be described as Specific, Measured, Achievable, Realistic, and with a definite Time deadline. That's why these people always calculate the time and the cost opportunity, in which the prices are lower at any location. In this regard; the shopping centers' activities such as discounting days or other kind of promotions may be announced to these kinds of people earlier by the help of text messages.

This needs to be new specialists that improve themselves of psychology and marketing.

Institutional Risk Analysis

"Most of the banks in the US are not broke, not in trouble, but they don't trust each other because they don't know which banks are bad. We've got to get the bad ones out."             
William Seidman / American economist and financial commentator

The same situation can be considered for the commercial companies. The expectations will be seen clearly, whether the companies can determine which products are not sold enough, which salespersons are not successful enough, what are the actual and forecasting values of the market, etc. In the same direction; the main idea is to determine which products may not be sold in the following period and what are the actions that can be taken primarily. The methodology of risk analysis can be written as in the following:

• Ø Identify risk assessment and prioritize risks
• Ø Develop strategies to manage risks
• Ø Develop tactics to mitigate risks
• Ø Assign responsibility and implement
• Ø Test effectiveness and evaluate results

Comparative Analysis

Comparative analysis is a tool that uses item by item comparison of two or more comparable issues like processes, products, qualifications, sets of data, systems, etc. For instance; in accounting, changes in a financial statement's items over several accounting periods may be presented together to detect the emerging trends in the firm's operations and results. The company, which uses text messages to arrive to their customers, sends SMSs to their available clients primarily. After a time of this application, there are some feedbacks that some of the clients have made trades against the others have not. The results in here should be recorded. In this regard of this situation, the company may change the content of the text messages and then wants to see the results. In this time; the company can take a photo of two different situations and make a comparative analysis by using the quantity of sales, the amount of saved money, the number of sold products, etc. to see the differences and the impact of the contents. After that; the company can determine the following marketing strategy due to the feedback of these results.

Environmental Factors Analysis

The last searching area is to reveal the environmental factors like the changes in interest rates; crisis surrounding in economical, social and political areas; the developments in the rivals; the sales in each product; the demands in the market; purchase power of the public, new investment areas, which are rising in recent period, etc. Furthermore; SWOT analysis, which takes the information as a result of these previous activities and separate them into internal issues (strengths and weaknesses) and external issues (opportunities and threats), is one of the best techniques to understand and evaluate all these activities together. In SWOT analysis, the knowledge is designed to help an organization an understanding how it relates to its external environment. In other words to act as a way of seeing whether the organization is aligned with the world going on around it.

As a result of these analyses, the company should evaluate the available situation and get some remarks for the future. Whether the situation is not good enough or the demands are not expected, the company can trace the following instructions:

• a. Constituting an action plan
• b. Differentiating text messages
• c. Timing of the text messages
• d. Differentiating of the product
• e. Timing of the product
• f. Determining new marketing strategies
• g. Finding potential customers
• h. Evaluating the channels for their potentials, capabilities and reliability conditions

CONCLUSION

Mobile marketing tools are offering easier and more convenient ways with evolving marketing strategies. SMS has been the pioneer in wireless data applications and SMS services were the first mobile data services with a serious impact on the operator's revenue. The industry has seen tremendous growth and, clearly, messaging will lead the way to profits in 3G as well. Inevitably, the way that revenues from mobile applications are currently shared out will change and become much more versatile.

We can admit that SMS Marketing is a very useful tool for the marketers and a competitive marketing strategy for the companies. However; the main issue is not just to apply text messages to the clients. The focal point is to send the right value of contents, at the right time, at the right location, to the right customers with the right effect. Also; after sending them to the clients; the enterprises should follow the marketing auditing like marketing statistics by applying some analysis whether the text messages are effective or not. If there are some problems with this type of marketing strategy, the enterprise should review its' all ongoing processes to understand where the problem is.

The reasons of failure/triumph should be investigated. After the determination of these, the cautions should be taken into a contingency plan, the actions should be revised and the new applications should be done. If all these processes such as taking pre-cautions, monitor the applications in an analysis approach, etc. are taken into consideration in a systematical approach, we think that SMS Marketing will become a very powerful and indispensible tool for the applicant enterprises. On the other hand, most of the forecasts show that data-related services are increasing its value especially in the means of revenue of the mobile operators. Moreover, picture messaging and visuality has taken off, and MMS is a natural progression of these facts. The fact that the consumer preferences are moving fast towards visuality especially with services like Youtube, Video Messaging Services can be the new concept for the mobile world and the mobile marketing strategies.

Multimedia Messaging Service (MMS) is a new form of communication that combines rich content, such as audio and video clips, photographs and images, with text messaging. It is an end-to-end application for person-to-person mobile messaging, mobile-to-mobile, mobile-to-Internet and Internet-to-mobile. It is good news for service providers, as they can now improve their existing text-based services by adding rich visual content. MMS will be a key mass-market revenue generator for content providers, mobile operators, application developers and advertisers, while for users it will provide a way to capture a moment of time and share it with others.

From the users' perspective, a successful MMS launch needs the terminal to be set up ready to use from the minute he or she walks out of the store with it. An operator can meet this expectation by offering automatic terminal provisioning over the air through its own network and today, Turkcell, the leading operator in Turkey is offering this service over the air. In addition, operators need to educate end users, not only on how they can send and receive MMS messages but also how they can discover and subscribe to MMS content services. Operators can create service packs, set-up content service demos provide customer training and competitions in retail stores, as well as at relevant events such as festivals and concerts.

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