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Mobilenet Promises to Be the Next Big Medium

Posted by Mort Greenberg on May 7, 2008

Article Source: http://adage.com

But Don’t Get Sidetracked Into Third-Screen Thinking

Published: May 06, 2008

We are on the verge of witnessing the birth of a new mass-communications medium. It’s the second new mass medium to appear in the last two decades.

The internet arrived in the 1990s, joining the other four mass media: 1) The book 2) The periodical 3) Radio 4) TV. Each new mass medium has created enormous upheavals in society.

  • The book ignited the knowledge explosion.
  • The periodical furthered the growth of democracy.
  • Radio created a celebrity-oriented society.
  • TV homogenized the culture.

The internet, the latest and newest mass medium, continues to make waves. “We are not witnessing the beginning of the end of old media,” Advertising Age’s Bob Garfield wrote recently. “We are witnessing the middle of the end of old media.”

“Both print and broadcast — burdened with unwieldy, archaic and crushingly expensive means of distribution — are experiencing the disintegration of the audience critical mass they require to operate profitably,” Mr. Garfield continued. “Moreover, they are losing that audience to the infinitely fragmented digital media, which have near-zero distribution costs and are overwhelmingly free to the user.”

Fasten your seat belts. On the horizon, there’s another profound shift in media, consumer behavior and technology coming. In the near future we are likely to welcome the arrival of a sixth mass-communications medium.

And what is this earth-shaking new medium? It’s the Mobilenet.

The what? Surely you are joking, Al. The Mobilenet is just a subset of the internet. Just another way of going online. Just another way of surfing the net without using a computer. That’s why mobile devices are commonly called the “third screen.”

Third-screen thinking is going to cause you and your company to miss the boat. Which big brands were created by moving content from one medium to another? Very, very few.

  • Moving The Wall Street Journal online didn’t save Dow Jones from the clutches of Rupert Murdoch for just $5 billion.
  • Moving ESPN onto cellphones didn’t take it to the big leagues.
  • So far, moving TV shows to the internet hasn’t created as much value as one internet site, YouTube.com. Less than 20 months after its launch, YouTube was bought by Google for $1.65 billion.

Google can afford to splurge. In the first quarter of this year, Google had net income of $1.3 billion. In the same quarter, The New York Times Co. lost $350,000. Moving the Times to the internet didn’t solve the company’s financial problems. Last year, NYTimes.com had estimated revenue of $27.6 million, pretty small potatoes for a site that was launched more than 11 years ago.

In spite of its dubious record, the content movement continues to gain momentum. The telecoms plus the TV industry are making massive efforts to move TV to cellphones, in spite of surveys that show, according to Yankee Group analyst Linda Barrabee, only 5% of U.S. consumers are willing to pay for mobile TV.

The software industry is also spending a fortune developing programs to permit these inter-medium transfers. Two weeks ago, Microsoft unveiled “Live Mesh,” a software program to link all internet-enabled devices. “Not just PCs and phones,” reported Ray Ozzie, the company’s chief software architect, “but TVs, game consoles, digital picture frames, DVRs, media players, cameras and camcorders, home servers … our car’s entertainment and navigation systems and more.”

That’s the wrong approach. A new medium calls for new brands, not for extensions of existing brands. The internet didn’t reward traditional brands like The Wall Street Journal, The New York Times, ABC, NBC, CBS, Barnes & Noble and Hallmark. It rewarded new brands created especially for the net. Dot-com brands like Amazon, eBay, Yahoo, Expedia, Netflix, MySpace, Facebook and AOL.

The Mobilenet will also reward new brands created especially for the medium. Like Loopt, a service that lets people with GPS-equipped phones share their real-time locations with friends.

A slimmed-down, warmed-over dot-com brand isn’t going to make it on the Mobilenet.

Laying the foundation
The Mobilenet, of course, isn’t going to become an overnight success. (The internet didn’t either.) A number of developments need to come first.

On the sending side, the missing ingredients are the dot-mobis that will make the receiving device a universal, carry-everywhere product much like the cellphone.

On the receiving side, the missing ingredient is a gadget that integrates telecom service with three technologies in an attractive and convenient package: 1) GPS, global-positioning-system receiver; 2) scanner; and 3) voice-recognition software.

Oddly enough, the most heavily hyped new product of the 21st century (Apple’s iPhone) doesn’t include any of those three technologies. Too bad. With all of Apple’s brilliant design and technology skills, the company could have pioneered and dominated the Mobilenet for decades to come.

Instead, Apple perfected the smartphone, a convergence device destined to remain a niche product. The first smartphone (the Nokia 9000) was introduced 12 years ago. Yet today the smartphone accounts for only 10% of the global cellphone market.

In the last quarter, Apple sold 1,703,000 iPhones, about 6% of the global smartphone market. Not exactly earth-shaking results. In the same quarter, Apple sold 10,644,000 iPods, about 70% of the MP3-player market.

Besides market share, there’s another striking difference between the two products. The iPod, a divergence device, pioneered a new category. The iPhone, a convergence device, was not designed to create a new category, but to improve on an existing category, always a risky strategy for a would-be market leader.

Dawn of a new device
If the Mobilenet is a new mass medium, what would you call the receiving device? The logical name is “MobiPhone,” to reflect the millions of dot-mobi websites sure to come.

Names don’t always describe what a device is really used for. Most people do little “computing” on a computer. (I do my computing on a printing calculator.) A MobiPhone may not necessarily include a cellphone. Many people might like a separate device to make telephone calls.

Obviously some people are thinking along similar lines. To me, the most interesting news item of the month was Nokia’s purchase of Navteq, a firm that collects map data from around the world, for $8.1 billion.

Eight-point-one billion? That’s one and a half Wall Street Journals for a company with revenue of just $853 million last year. That mind-boggling number tells you what the folks in Finland are thinking about. It ties in with the thought that the GPS receiver will be the key function of future telecom devices.

The global positioning system, like every technological change, creates the conditions for a product or a medium to diverge in the same way that environmental changes create the conditions for a species to diverge.

Mobile marketing would snowball
First the internet; now the Mobilenet. That’s how divergence works. Furthermore, the Mobilenet promises to make the dream of mobile marketing a reality.

Up till now, mobile marketing has captured a trivial slice of the advertising market ($708 million last year) even though the cellphone predates the worldwide web.

The potential Mobilenet marketplace dwarfs the internet. Last year more than 1.15 billion mobile phones were sold worldwide, compared to only 271.2 million personal computers. In other words, more than four times as many mobile phones were bought than PCs. And, in my opinion, most consumers will find a GPS-equipped MobiPhone to be a device they can’t live without.

The MobiPhone is not just another device, of course. It’s the receiving end of another medium, one that is unique and different from the internet. And one likely to be larger and more universal than the internet. Companies that want to take advantage of this new medium will quickly register their company and brand names as dot-mobi domain names.

Furthermore, each dot-mobi website should be considered separately from the company or the brand’s dot-com website. Two different media demand two different approaches. (You wouldn’t run a radio advertisement on TV, so why would you run a dot-com program for a dot-mobi audience?)

Long-term, “mobile” is going to become a very important part of the overall marketing environment in America. What kinds of advertising approaches are best suited to the new mobile medium?

Consumers empowered
In my opinion, there are two types of advertising: one that might be described as “passive” advertising, the other as “active.”

Passive advertising is conventional advertising found in newspapers, magazines, radio and TV. It interrupts the reader, listener or viewer in order to present “a message from the sponsor” of the medium.

Active advertising, on the other hand, is initiated by the consumer. Search advertising on the internet is a typical example. But there’s active advertising in conventional media, too. In particular, classified advertising in newspapers and telephone directories. Roughly 40% of all advertising on the internet is “active.” This is what has made Google such a big success.

The Mobilenet is going to be an even bigger medium for active advertising than the internet. That’s why there is a golden opportunity for a Google-like brand specially designed to search dot-mobi websites and coordinate with the user’s exact location.

But that’s only the beginning.

A MobiPhone with a 2D barcode scanner will enable consumers to get a wealth of information by scanning products in supermarkets, drugstores, clothing stores.

MobiPhone users might be able to arrange to be notified when certain things occur; for example, when a celebrity shows up at a restaurant or nightclub.

It’s easy to visualize what a useful device a MobiPhone could be if it is served by appropriate dot-mobi websites.

  • What’s the speed limit? (Maybe we can avoid those huge pileups that sometimes occur in heavy fog by automatically lowering speed limits when visibility is impaired.)
  • How far is the next exit and what facilities can be found there?
  • Without stopping to read them, what do those historic markers actually say?
  • Location of the nearest hotel/motel and the price of a room?
  • Location of the nearest gas station and the price of gasoline?
  • Location of the nearest restaurant by type and price level?
  • What’s the Parker number on that bottle of wine? (One of the many facts that might be available by simply scanning a label.)

What consumers can do with the receiving device is not the most significant aspect of the Mobilenet. More significant are the changes in structure the new medium will facilitate.

For example, taxicab dispatch systems are likely to disappear, since a consumer will be able to see the location of the nearest available cab and call one directly. Similar changes are likely in all types of dispatching systems.

Consumers will find many other ways to use a MobiPhone. Every August for the last eight years, my wife and I have driven around the scenic areas of the Southwest. Every afternoon on those trips, we would keep an eagle eye out for a Dairy Queen in order to snare a couple of their chocolate-dipped cones.

Hopefully, next year we’ll check DQ.Mobi instead.

~ ~ ~
Al Ries is the author or co-author of 11 books on marketing including his latest, “The Origin of Brands,” which discusses how the Darwinian concept of “divergence” applies to the world of business. He and his daughter Laura Ries are partners in the marketing strategy firm Ries & Ries. Their website: http://www.ries.com.

Posted in Brand Advertising, Consumer Behavior, Content, eCommerce, Local, Marketplace Trends, Mobile, Multi-Channel | Leave a Comment »

Viewing Your Sites on Handsets in a Flash

Posted by Mort Greenberg on May 3, 2008

Article Source: http://wsj.com

By AMOL SHARMA
May 2, 2008; Page B8

Surfing the Web on cellphones is a major headache. Despite advances in recent years, many sites don’t load properly, and multimedia content often doesn’t play. Now, the wireless industry is trying to radically improve mobile Web browsing by making it as much like the PC experience as possible.

In a step in that direction, several major handset makers said Thursday they have struck an agreement with Adobe Systems Inc. to bring its Flash multimedia player to more cellphones. Flash powers online video on sites like YouTube and is used to develop Web pages with animation and other advanced features.

Adobe says Flash is available on 98% of Web-enabled desktop computers but only 30% of cellphones. One prominent holdout is Apple Inc., which doesn’t offer Flash on its iPhone device. Apple Chief Executive Steve Jobs has resisted Adobe’s efforts to include the software, saying he wasn’t satisfied with how it worked on the iPhone.

“Flash video is the most-popular form of video on the Internet today; it’s really important to be able to bring that to mobile,” said Gary Kovacs, vice president of product management and marketing for Adobe’s mobile-devices unit.

About 14% of U.S. cellphone users accessed the Web at least once in February, according to M:Metrics Inc., which tracks wireless-industry trends. Slow wireless networks and confusing rate plans are part of the problem. One of the biggest remaining roadblocks is the clumsy presentation of Web content on a phone. While some sites, such as the Weather Channel and MTV, have mobile-only versions, most don’t.

Adobe’s agreement with cellphone makers Sony Ericsson, Nokia Corp., LG Electronics Inc., and Motorola Inc. is part of a broader move by industry players to improve the mobile Web browsing experience. Sony Ericsson is a joint venture of Telefon AB L.M. Ericsson and Sony Corp.

Wireless carriers such as Sprint Nextel Corp. and Deutsche Telekom AG’s T-Mobile USA Inc. are preloading advanced Web browsers from companies such as Opera Software ASA of Norway, Teleca AB of Sweden and Google Inc. into handsets. Among other features, the browsers are good at reformatting Web pages designed for PCs to make them viewable on phones with 2.5-inch screens. Carriers are also integrating technologies from companies such as Openwave Systems Inc. that decipher content from PC Web pages for multiple browsers and cellphones.

Wireless carriers have a huge stake in jump-starting mobile Web browsing. As their revenues from basic voice service decline, they are relying increasingly on advanced Web and multimedia services to power their growth. T-Mobile USA’s chief technology officer, Cole Brodman, says industry plans to sell mobile advertising and digital content depend on getting more users to browse the Web.

“Carriers and their partners need to solve the problem of mobile Web adoption before any of these business models make any sense at all,” Mr. Brodman says.

Browsers are one major focus. While some mobile devices, such as Apple’s iPhone, come with advanced PC-like browsers, most don’t. Consumers can download high-end browsers onto some handsets, but carriers believe they can increase usage dramatically by preloading the software.

Sprint recently began loading Teleca’s browser in Samsung Electronics Inc.’s Instinct, a sleek iPhone look-alike the carrier announced last month. The phone, which will be available in June, is able to display regular HTML pages. T-Mobile is planning to come out this year with the first phone using Google’s Android cellphone operating platform, which includes a Web browser intended for the mass market. T-Mobile already includes the Opera browser and the NetFront browser made by Access Co. Ltd. of Japan in some of its high-end phones, and it plans to extend such browsers further into its lineup.

Making video from Web sites work on cellphones is widely seen as a crucial component of the new shift. Adobe’s wider distribution of Flash is one significant step. As part of Thursday’s deal, Adobe is dropping its traditional licensing fees and making changes to its technology that simplify its integration into mobile phones.

Other partners in the initiative include content providers such as General Electric Co.’s NBC Universal and carriers such as Verizon Wireless, a joint venture between Verizon Communications Inc. and Vodafone Group PLC. Adobe says it is pursuing other efforts to enable Flash on the iPhone.

Other video formats for the Web are likely to turn up in U.S. cellphones. Montreal-based start-up Vantrix, for instance, offers a technology that carriers can plug into their networks to make popular Web-based video formats viewable on phones. The company says it has signed up carriers such as NTT DoCoMo and France Telecom‘s Orange SA and is pursuing U.S. carriers.

Silicon Valley start-up Skyfire Labs Inc. is rolling out a browser that essentially accomplishes the same task, making videos on ESPN.com and other sites viewable, while rendering Web sites as much like the PC versions as possible.

The new technologies have some limitations. Many basic cellphones don’t have enough memory or processing power to support them. And some of the tools can unintentionally load a PC Web page even when a better mobile-only version exists.

Mark Collins, vice president of consumer data at AT&T Inc., the largest U.S. wireless carrier by subscribers, says the company is evaluating several technologies to bring better Web access to its mass-market handset lineup beyond the iPhone. “We’re in an in-between phase right now, given the current limitations on devices and technology and the software solutions that are available,” Mr. Collins says.

Some in the industry say cellphones won’t ever truly be able to duplicate the PC Web, regardless of how fancy browsers and other technologies get. T-Mobile’s Mr. Brodman says some Web services that are packed with content and features, like MySpace and Facebook, are best offered as specialized software applications that consumers can download. Both social networking sites offer mobile software that is available on select devices.

Write to Amol Sharma at amol.sharma@wsj.com

Posted in Ad Products, Data & Metrics, Marketplace Trends, Mobile, Multi-Channel, Online Video News, Research, Social Media, Television & Video | Tagged: , , | Leave a Comment »

Mobile Analytics Firms Seek In-Roads

Posted by Mort Greenberg on May 3, 2008

Article Source:L http://clickz.com

Mobile handheld devices may render the same Web pages as those found on personal computers, but measurement is another story. Traditional Web analytics vendors have limited ability to track mobile, opening the door for mobile-specific vendors to offer services.

In mobile, analytics providers have emerged in niche categories. The landscape is comprised of vendors including Amethon, Bango, Mobilytics, and TigTags. Mobile ad network AdMob is the latest to come to market with AdMob Mobile Analytics, a free service for mobile site owners to track: unique users, duration of visits, page performance, and insight into geography, carrier, and device specifics.

“The world after the click has been pretty opaque and there have been no tools to champion ROI,” said Jason Spero, VP of marketing at AdMob. The ad network doesn’t require publishers and advertisers to be clients to use the analytics. “We’re offering analytics for free as a catalyst for the mobile Web. If advertisers can better measure and manage their campaigns, they will be even more comfortable with the mobile medium,” he said.

AdMob most closely competes with Bango Analytics, which was released earlier this year. The service is offered for free in a light version, while clients can pay for a version with more features. Bango works on publisher sites and transactional mobile entities such as ringtone and wallpaper providers.

Mobilytics provides analytics for smaller publishers, and supports an ad network for a bulk of its users. TigTags’ competency is in location-based usage. The company is also doing work with 2D barcodes (define), which could become more important as adoption grows in the future.

Another competitor in the mobile analytics space is Amethon, which serves larger-scale publishers primarily because it requires a dedicated server.

Differences between the Web and mobile demand special requirements for the wireless Internet. “You can tag individual visitors by using cookies or identifiable information,” said Dean Collins, USA business development at Amethon. He said there is a dispute over how many handsets are cookie-compliant versus storing data at the carrier level. It’s possible to build a unique ID with handset information.

Information, however, gets recycled on a regular basis, typically every 30 days. “It’s not accurate to keep that information beyond a 30-day period,” Collins said.

Beyond building unique identification numbers for users, there are several issues for vendors to work through. Web analytics vendors have used several methods over the years, including page tagging and JavaScript, to track metrics such as unique visitors and time spent on a page. On mobile handsets, mobile browsers aren’t capable of the same functionality. A small portion are able to run JavaScript, and those that are, aren’t able to handle a heavy enough load.

AdMob and Mobilytics use code or tags on the site to apply analytics. Amethon insists on a dedicated server because it uses packet sniffing, a method for tracking behaviors without adding extra code to a site. The advantage is that it doesn’t add weight to the site. “Fifty percent of what you’re downloading to the browser was page tagging. For us there’s no page tagging, we don’t add anything to the Web site,” said Collins.

While waiting for separate solutions to come out, many ad networks have built their own. Bango and AdMob are examples, as their analytics offerings are products of measurement tools built to support their businesses. Mobile ad network Ringleader Digital also created a reporting system for its publishers and advertisers to measure usage and results on its network.

Posted in Mobile, Research | Tagged: , | Leave a Comment »

Mobile Display Ads Have Branding Impact – Increase Awareness, Interest

Posted by Mort Greenberg on May 1, 2008

Article Source: http://mediabuyerplanner.com

Awareness of and interest in “The Golden Compass” among those exposed to full-screen mobile ads for the film increased significantly, according to the results of a mobile advertising campaign by Greystripe and New Line Cinema, MarketingCharts reports.

Greystripe commissioned Dynamic Logic to conduct research to measure the success of the ad campaign in raising awareness, interest and intent-to-see the movie. Survey respondents were separated into “control” and “exposed” groups based on who saw the mobile ads.

Mobile web users exposed to “The Golden Compass” ads on the Greystripe network exhibited the following, according to the study (see chart):

  • Significant increases in awareness of and interest in film – a 19.3 percentage-point increase in awareness of the film’s title.
  • Increased interest – exposure resulted in a 9.5 percentage-point increase in interest in seeing the film among respondents overall.
  • Intent to see the movie in theaters increased by 14.5 percentage points among respondents age 18-24 (see tables).

Additional findings:

  • Respondents who identified themselves as “frequent” movie-goers use the mobile internet more often than those identified as “non-frequent” movie-goers (79 percent vs. 58 percent).
  • Among all respondents, 35 percent use their mobile phones for “finding theater and movie times” and 29 percent “watch movie trailers.”
  • Mobile ads were most effective among those described as “avid” movie-goers (those who have seen three or more movies in the theater in the past two months).

About the case study: The campaign ran on Greystripe’s mobile ad network, which delivers full-screen advertisements that are wrapped around mobile games and applications. The mobile web survey was fielded November 8 to December 6, 2007, among 786 mobile Web users age 18-55.

Posted in Mobile | Leave a Comment »

Mobile Search on Cusp of Explosion?

Posted by Mort Greenberg on May 1, 2008

Article Source: http://internetnews.com

By Judy Mottl
April 29, 2008

Five years from now search will be a key application for one third of the globe’s mobile device users, according to a new report from Juniper Research.

Of the expected 4.2 billion owners of mobile devices expected by 2013, roughly 1.3 billion will depend on mobile device searches to find and locate “local” digital information. Most searches will happen in North America and Western Europe as the countries boast good local digital information suppliers (think yellow and white pages) as well as mapping data with good coverage of points of interest, according to the report.

The trend bodes well for Web search firms. For advertising boutiques and marketers looking for signs of the mobile search market’s growth, the report could be manna. Of course, all these growth expectations are built on a good user experience, the firm noted.

Search engine companies and online service providers are already making serious moves in anticipation. Yahoo and AOL are just two that recently announced initiatives tied to mobile device applications and development programs.

Total mobile search revenues are predicted to reach $4.8 billion by 2013 though Juniper warns of potential “advertising overload” that could act as a disincentive and ultimately limit adoption. That, in addition to continuing public concern about the use of online personal data, could impact mobile search adoption as well.

One trend propelling mobile search is the growth of the handheld marketplace. Research firm Strategy Analytics predicts 290 million mobile handsets will be sold this quarter, an increase of 12 percent compared to the second quarter of 2007.

“Mobile broadband development and the gradual reduction in data costs has encouraged a greater proportion of mobile users to surf the mobile Internet, as has the breakdown of operator “walled gardens,” John Levett, Juniper’s marketing and business development executive, told InternetNews.com. In addition, an increasing operator and vendor focus on ease of service usage has stimulated growth.

“The increased interest in mobile advertising, combined with a greater degree of Mobile Web 2.0 activity, are also factors encouraging adoption,” Levett added.

While adoption will be mostly in Western Europe and North America, Juniper said the demographics could change as network connectivity expands.

“We will see a marked increase in adoption in many developing markets where the fixed broadband infrastructure is limited and mobile becomes the de facto means of accessing the Internet.”

 

Posted in Mobile, Search Marketing | Tagged: , | Leave a Comment »

Take a Picture of an Ad, Earn a Reward

Posted by Mort Greenberg on April 28, 2008

Article Source: http://nytimes.com

April 28, 2008

 

 

Two men’s magazines are trying to engage their readers more — by increasing their cellphone bills.

Rolling Stone and Men’s Health are both testing programs in which readers can take cameraphone pictures of icons on ads, then send them to a certain number. In exchange, they’ll receive more information or an offer from the advertiser.

In Rolling Stone’s current issue, five advertisers are running these offers. They include a motorcycle ring tone for Allstate’s motorcycle-insurance program and a video preview of The Discovery Channel’s new season of “Man vs. Wild.” Men’s Health is going even further, saying each full-page advertisement in its July-August issue will have the added feature.

An image-recognition company called SnapTell is behind both magazines’ efforts. Technology from the company, based in Palo Alto, Calif., can differentiate the icon on one advertisement from that on another and text back the appropriate offer.

For the magazines, it’s a way to make print products interactive.

“We’ve got a product made of paper and ink sent out every two weeks,” said Ray Chelstowski, the publisher of Rolling Stone. “We’re always in the market to find other ways that we can work with our advertisers in providing empirical data in showing how readers engage and interact with our ads.”

Although advertisers could use the readers’ cellphone information to do further marketing, some said that was not the plan. “We will have some cellphone data, and if they opt in to receive something from Discovery, we can obviously send something back to them,” said Brad Feinberg, director of media planning for Discovery Communications, but “the purpose of this really isn’t to collect data per se as it is to give the readers some value.”

For the advertisers, the effort is low-risk. Neither Rolling Stone, published by Wenner Media, or Men’s Health, published by Rodale, is charging advertisers extra for the feature. SnapTell, too, is charging the publishers only a promotional price, “but the end business model here is we hope the magazines convince their advertisers to pay a little more for this extra feature, and we would then participate in the upside of the revenues,” said SnapTell’s chief executive, Gautam Bhargava.

Advertisers said they were happy to give it a whirl, especially given the cheap price tag, even if they did not see an overwhelming response.

“There really aren’t any benchmarks yet, and we are a test-and-learn company,” said Lisa Cochrane, vice president of marketing for Allstate. “It’s cool, it’s innovative and it’s not a really big risk to us because there’s no additional cost.” STEPHANIE CLIFFORD

 

Posted in Ad Products, Ad Spending, Ad/Behaviroral Targeting, Demos & Audiences, Digital Out of Home, Local, Marketplace Trends, Mobile | Tagged: , , , , | Leave a Comment »

The Real Threat to Google

Posted by Mort Greenberg on April 28, 2008

Article Source: http://businessweek.com

 

As more consumers browse the Web on their cell phones, the No. 1 search engine must cope with less space to place ads

Google’s biggest threat may not be Microsoft (MSFT) or Yahoo! (YHOO).

No, one of the most formidable challenges facing Google (GOOG) is likely sitting in your pocket or purse. It’s your cell phone, and it will put added pressure on Google and other Internet companies to revamp the way they handle online marketing.

As more people use cell phones and their tiny glass screens to gain access to the Internet, Google and its fellow online advertisers will have less space, or what’s called ad inventory, to place marketing messages for customers. Google makes money selling ad inventory. And its ad inventory is diminished on a cell phone.

iPhone as Tipping Point

Google can now fit about 10 ads on a standard computer screen. (If you look at Google search results on a PC monitor, paid ads are the listings at the very top and along the right.) But on your cell phone, if you type in a search query at google.com you get only one or two paid ads in response.

Imagine the horror that would befall your business if a large slice of what you sell suddenly disappeared. A similar fate could befall companies that depend on online advertising, as small screens become the gateway to the Internet.

Of course, no one’s suggesting that consumers will abandon standard computer screens overnight. And early research shows that mobile advertising may be more effective than standard online advertising, suggesting that it will be more lucrative for the companies that rely on it. Still, the shift is coming fast enough that Google must get prepared.

It was Apple (AAPL), a frequent Google collaborator, that tipped the trend. Consumer use of mobile Internet in the U.S. has longed trailed Asia and Europe, where standardized cell networks made it easier for handset makers to produce gadgets that tap the Web at blazingly fast speeds. But in the summer of 2007, Apple rocked America by launching the iPhone. The computer maker wasn’t the first to put the Web on phones, but for many consumers, the iPhone made the experience more robust.

Almost two-thirds of Americans have had some experience with mobile Internet use, and the adoption trend is most pronounced among teens and young adults, according to Pew Research Center. About 60% of adults 18 to 29 use text messaging every day, compared with only 14% of their parents. Nearly one-third of young adults use mobile Internet. This is the future, because people take their media habits with them as they age.

Why Google Wants In on Cell Phones

So, as Apple and demographic trends thrust the mobile Internet upon us, how will advertisers and we consumers of electronics respond?

Google will try to expand ad “shelf space,” especially by redesigning cell-phone software. In November, Google announced it was launching an Open Handset Alliance to design a new operating system, code-named Android, which would provide a “truly open and comprehensive platform” for cell-phone users. A few scratched their heads as to why Google would get into the cell-phone interface business. But now it’s clear; Web screens will soon be two inches wide, and Google wants a say in what fits on that tiny screen.

Our bet is that the new Android interface will encourage mobile device users to flick through multiple layers or pages, similar to the iPhone album-art menu. This will create more room for ads. Expanding the visual ad inventory will be crucial for Google, as evidenced by the recent announcement that it will begin selling small display ads on cell-phone screens.

 

Another implication is that consumers may have to start paying for “free” stuff. Sure, there’s a lot that’s free on the Web now, as many, including Chris Anderson of Wired, have noted. Yet, even Anderson notes that most “free” content models really just transfer the hidden cost from you to third-party advertisers, who subsidize your content in hopes of getting attention. If online social media such as Twitter, Facebook, or Digg can’t figure out ways to entice money from advertisers, they’ll have to grab it from you.

More Personal Ads on the Way

Our hunch is that free content systems may stick to the big Web pages, where more ads can fit. For tiny screens, systems such as Twitter that work well in small detail will eventually have to charge, make money some other way, or go away. Consumers push back on paying for something that is already free, so the only solution we see is to keep ads very minimal—and very personal.

Which brings us to one of the biggest implications of wider use of the mobile Web. Advertisers will increasingly rely on personalization. Today, collections of Web sites known as ad networks track consumer behavior across multiple sites, and then shoot targeted ads to users. This behavioral targeting approach, found via WPP Group’s (WPPGY) 24/7 Real Media, Blue Lithium, Tremor Media, and other Web networks, often results in ad response rates 5 to 10 times higher than standard banner ads.

Personalization works, and several companies are working on ways to make it work better. Microsoft recently filed a patent application that would use offline data such as credit-card transactions, estimated physical location (from cell-phone towers), and TV viewing habits to serve you a customized ad the next time you go online. The fact that you bought cleats for your kids this morning, went to a high school football game in the afternoon, and turned on ESPN when you got home would conceivably trigger a personalized sports ad on your cell phone.

Better Marketing Through Profiling

ComScore (SCOR), the Web site ranking service, is taking a different approach, using “biometric signature” profiling to match the keystrokes and mouse-click patterns of different users on a single computer. The idea here is to get beyond the gadget to the individual user who touches it. The system can identify whether Dad or Mom or Sis is sitting at the keyboard, and then match the individual user with a rich profile of demographic data to improve ad targeting.

Pondering all this, we called Marc Rotenberg, executive director of the Electronic Privacy Information Center, to see what concerns privacy groups might have about a future where marketers track your every move. “Personalization is actually a great idea,” Rotenberg said, “but it should be done in a way that doesn’t require detailed data collection” about an individual.

It’s a nice hope, Rotenberg’s, that advertising and Google can survive in a world where the ways to reach consumers via glass screens grow smaller and smaller. But we suspect hyperintrusive data profiling is coming fast.

After all, Internet screens will soon be a lot smaller. And no one as rich or as smart as Google gives up so crucial a slice of sales without fighting back.

Kunz is director of strategic planning for Mediassociates, a media planning firm.

Posted in Ad Spending, Ad/Behaviroral Targeting, Consumer Behavior, Mobile | Tagged: , , | Leave a Comment »

BlackBerry’s Quest: Fend Off the iPhone

Posted by Mort Greenberg on April 27, 2008

Article Source: http://nytimes.com

 

 By BRAD STONE

Published: April 27, 2008

STEVE JOBS, Apple’s chief executive and field general, has Napoleonic dreams of global conquest for his 10-month-old wonder gadget, the iPhone. So it may be fitting that he’s encountering his most serious resistance in a city called Waterloo.
J. P. Moczulski/Reuter

Jim Balsillieleft, and Mike Lazaridis are co-chief executives of Research In Motion, the maker of the BlackBerry.

Tony Cenicola/The New York Times

The company had focused on e-mail-craving executives, but with Apple’s iPhone breathing down its neck, it is trying to lure more consumers with phones like the Pearl, left, and the Curve.

That is where, 70 miles west of Toronto in Ontario, 19 nondescript, low-rise office buildings comprise the headquarters of Research In Motion, maker of the BlackBerry.

R.I.M. is the North American leader in building smartphones, those versatile handsets that operate more like computers than phones. But R.I.M. may have trouble dominating the market’s next phase. Once the exclusive domain of e-mail-obsessed professionals, smartphones are now prized by consumers who want easy access to the Web, digital music and video even more than an omnipresent connection to their in-boxes.

Since the iPhone went on sale last summer, amid long lines of shoppers and media adulation, the contours of the smartphone market have begun to shift rapidly toward consumers. An industry once characterized by brain-numbing acronyms and droning discussions about enterprise security is now defined by buzz around handset design, video games and mobile social networks.

That means R.I.M., which has historically viewed big corporations and wireless carriers as its bedrock customers, needs to alter its DNA in a hurry. While business is booming in Waterloo, analysts are raising an important question about R.I.M.’s future: Can a company that defined mobile e-mail for a generation of thumb-jockeys with bad posture also dominate the new consumer market for smartphones?

“The vultures are circling,” says Roger L. Kay, president of Endpoint Technologies Associates, a research firm in Wayland, Mass. “There is this sense that the R.I.M. franchise is under assault.”

In the short term, Apple’s noisy entrance into the smartphone market has elevated the visibility of smartphones and enhanced the prospects of most of its rivals. Worldwide, smartphone shipments jumped 60 percent in the last three months of 2007 over the same period the previous year, according to IDC, the tracking firm. Of the two billion cellphones sold last year, nearly 125 million were smartphones — a share that analysts expect to inexorably grow.

R.I.M. added 6.5 million subscribers in its last fiscal year, twice the previous year’s amount, and its stock hit the stratosphere, more than doubling in value as investors anticipated the coming Age of the Smartphone. And R.I.M. has already introduced catchy mainstream gadgetry. The BlackBerry Pearl and Curve, two phones aimed explicitly at the consumer market, have sold well, particularly during the holiday season, and now account for a majority of R.I.M.’s device sales.

But there are also signs that R.I.M. faces steeper challenges. At the end of last year, BlackBerry had a 40 percent share of the United States smartphone market, down from 45 percent at the end of 2006, thanks largely to the 17.4 percent share the iPhone grabbed in its first six months.

In March, Mr. Jobs announced that Apple would take the rare step of licensing Microsoft’s corporate e-mail technology, to allow iPhones to connect directly to business computers — a dagger aimed at the heart of R.I.M.’s strength in the corporate market. In Apple’s quarterly conference call last week, Apple executives said that one-third of Fortune 500 companies were interested in giving iPhones to their employees.

Apple, meanwhile, in an effort to further increase its appeal to consumers, is also expected to introduce a new 3G version of the iPhone in June, which will work on speedier wireless networks and may further attract a new segment of customers to the iPhone in the United States and abroad.

In describing the threat that Apple poses to R.I.M., Charlie Wolf, an analyst at Needham & Company, describes his wife’s entirely common use of the iPhone, which she takes to bed with her each night to browse the Web.

“Some consumers who might have considered the BlackBerry, who don’t have the e-mail urgency of a mobile professional, are going to start selecting the iPhone,” Mr. Wolf says. “This isn’t going to stop R.I.M., but it is going to slow them down.”

Up in Waterloo, where the towering winter snowpacks finally melted this month, R.I.M. executives appear nonplused. Though they would not reveal details, R.I.M. itself is expected to unveil a new 3G phone sometime in May and deliver it to wireless carriers throughout the year.

R.I.M. employees and outside developers who are writing programs for the new phone, which has the internal code name “Meteor,” say that it will have faster processors, a larger screen and a better browser that more closely resembles the Web experience on a computer.

Photographs of the device, leaked to gadget news sites, also indicate that the new BlackBerry will have elegant curves suggestive of the iPhone. It will also have a physical keyboard like previous R.I.M. devices, as opposed to the glass touch screen found on the iPhone.

THERE’S a reason that R.I.M. is averse to the iPhone’s glass pad. “I couldn’t type on it and I still can’t type on it, and a lot of my friends can’t type on it,” says Mike Lazaridis, R.I.M.’s co-chief executive and technological visionary. “It’s hard to type on a piece of glass.”

Mr. Lazaridis thinks that e-mail-dependent BlackBerry owners demand the reliability and tactile feedback of a keyboard. But, despite his critique of the iPhone, he does not dismiss the possibility that R.I.M. may itself one day sell a touch-screen phone, aimed specifically at consumers without the e-mail demands of BlackBerry’s core users.

Indeed, two independent developers writing software for coming R.I.M. devices say that a touch-screen BlackBerry is in the works, and that R.I.M. engineers privately refer to it as the A.K. — for “Apple Killer.”

R.I.M. would not comment on future devices or media reports last week that at least one carrier, AT&T, was delaying its introduction of the newest R.I.M. phone because of problems with call quality. Those reports sent R.I.M.’s stock down nearly 3 percent in trading on Friday.

Mr. Lazaridis says only that “I wouldn’t underestimate the amount of research we’ve done on user interfaces and technologies. We are not afraid to reinvent ourselves.”

Keypads and touch screens aside, R.I.M. is facing a lot of competitors in addition to Apple in the booming smartphone market.

For years, Microsoft has tried to have manufacturers use its operating system for smartphones, Windows Mobile, which analysts generally think is overly complex and too difficult for consumers. The companies that license it, including Motorola, Palm and HTC, a Taiwanese manufacturer, have carved out only small fractions of the overall smartphone market.

Then there is Google. Later this year, phone manufacturers have promised to start selling smartphones running Android, Google software based on the open-source operating system Linux and backed by a coalition of 34 wireless-industry companies. Google’s idea is that Android can be a more open and a less expensive alternative to the proprietary mobile technologies of Apple, Microsoft, R.I.M. and Nokia in Europe.

Executives in Waterloo acknowledge these assaults but argue that R.I.M. is the only company that isn’t trying to leverage strengths in ancillary markets, and can therefore focus exclusively on mobile-phone innovation. They also seem to relish the prospect of savvy high-technology companies jockeying for position on their home turf.

“There’s no question the level of focus and intensity on wireless platforms has gone up an order of magnitude,” says Jim Balsillie, R.I.M.’s wiry, jargon-slinging co-chief executive and strategic brain. “The stakes are so very high, not only in the size of the market and market share, but in who has the important position in the ecosystem.”

Mr. Balsillie thinks that R.I.M. is in the best tactical position for the coming fight. He points to its close relationships with 350 carriers around the world — like Verizon and AT&T — that sell, often at steep discounts, BlackBerry phones and the accompanying monthly e-mail service.

Apple and Google, on the other hand, are vocally trying to dislodge the carriers from the nexus of the North American wireless market. Unlike other phone makers in the United States, Apple sells iPhones from its own stores and has negotiated relatively stingy contracts with the carriers, in exchange for limited periods of exclusivity. Google, for its part, unsuccessfully bid for wireless spectrum this year in an effort to force carriers to be more open to allowing various handsets and Internet services on their networks.

R.I.M. makes its alliances clear. “We are sort of polite and amiable and we gently interrelate with the carriers and try to find compatibility,” Mr. Balsillie said. “It may be a better strategy to fight the carrier. We may be wrong. The carrier may get disintermediated, in which case we fade with them.”

R.I.M. is also betting on security, which hinges on the fact that its handsets and e-mail systems are relatively impervious to hackers. Mr. Lazaridis predicts that corporations will not give iPhones to their workers because they have already proved vulnerable to hackers eager to pry iPhones off AT&T’s system and make them work on other wireless networks.

“It’s not that simple for an I.T. manager to give up security,” he said.

INDEED, R.I.M.’s allure to carriers and corporations may be irresistible and impossible for Apple to weaken, even if Apple improves iPhone security. But some analysts still wonder what will happen to the BlackBerry’s dominance when everyday consumers start driving growth in the smartphone market.

R.I.M. has always moved deliberately in embracing new handset technologies, in order to reassure corporations anxious about possible security breaches. For example, it added digital cameras and slots for removable memory cards to its phones only at the end of 2006, years after they became popular in other devices. Companies feared that these features would leave confidential corporate data vulnerable, but consumers demanded them and R.I.M. ended up providing them.

Consumers also want to choose from a growing pool of entertaining software programs to buy and load onto their devices. On this front, R.I.M. may be falling behind. Apple released a set of programming tools for outside developers in March, and recently said that 200,000 programmers had downloaded the tools.

The BlackBerry has been open to developers since R.I.M. started using the Java programming language in 2001. But for now, those programs are simpler and more primitive than what’s coming on the iPhone. For example, some of the new software available for the iPhone will take advantage of its support for 3-D graphics and innovative features like its motion sensor, which allows users to rotate their screens. The BlackBerry does not support 3-D graphics; it also doesn’t have a motion sensor. If motion-sensitive gaming — like that found on Nintendo’s popular Wii console — finds a home on smartphones, R.I.M. may be at a disadvantage.

Analysts say that R.I.M.’s greatest challenge in a consumer-driven smartphone industry may simply be creating devices that people admire and covet as much as the iPhone. Despite the faithfulness of its flock, R.I.M. is not there yet.

In a survey this year of 3,600 professionals by ChangeWave, a research company, 54 percent of BlackBerry users said they were very satisfied with their devices.

Even so, the BlackBerry was a distant second in the survey: the comparable figure for the iPhone was 79 percent.

Posted in Marketplace Trends, Media Company Stocks, Mobile | Leave a Comment »

MoComment: The Money in Mobile Advertising CPMs

Posted by Mort Greenberg on April 22, 2008

Article Source: http://www.moconews.net

 

By Rafat Ali – Thu 14 Feb 2008 07:36 PM PST

[by Chetan Sharma] At least half a dozen press releases popped up during the writing of this book claiming a $50 or $60 and higher CPM rate for mobile ads. A brief look back at Internet advertising from 1998 to 2002 shows that a $50 CPM, or anything near it, is not defensible for very long. For the CPM model to work at any price point, even in the short term, these networks need a critical mass of advertisers willing to spend branding (versus direct marketing) dollars on a new, untested medium that will appear in a wide range of content. That is going to be difficult, if not impossible, to find. Since the agency ecosystem is rooted in print and TV, it is also anchored in CPMs and GRPs (gross rating points). For the near-term future, CPMs probably will determine the ratio of dollars spent in mobile. But the ecosystem is being yanked into the digital world with more transparent ROIs that gauge new levels of consumer interaction and impact. Outcomes need to be tied to more than just the theory of eyeballs in the living room. Lots more in extended entry….

Assuming for a moment that the mobile ad networks can find enough advertisers, it will increase the attraction for publishers to run ads on their networks, adding more inventory and depressing prices. In addition, web-based interactive agencies were already burned once by ad networks with prices above a $30 CPM. It is likely that the entire mobile CPM model will shrink, as it did on the Web. In both the PPC (pay per click) and CPA (cost per acquisition) models, more responsibility is put on the content providers, insulating advertisers from some risk until the consumer clicks toward a transaction or sale. However, the implementation and success of CPC and CPA models rely on huge impression volumes, an ad sales system more scalable than is required for CPM models, and a mobile infrastructure capable of monetizing consumer clicks or actions. All these are a long way off for mobile advertising. As noted by Larry Shapiro, VP of Disney; “We might have 10 percent to 20 percent of click-through rates (CTRs), but 90 percent of unsold inventory and CPMs are high indicating the early stages of the market and all of this will trend down like the way you had on Internet when we had $30 CPMs, 10 percent CTRs, and 95 percent unsold and all those numbers changed in the mature market.”

Two major groups are using mobile for advertising today. First are the companies that want to advertise on mobile to get consumers to click to their point of sale to buy a game, mobile music, ring tones, or video. For these advertisers, mobile advertising is about accelerating the process of acquiring a new customer. Their ad spending will be measured and driven by the lifetime value of that new customer. Mobile CPM rates above that are not sustainable for this group. For lifetime economics in these scenarios to make sense, CPM rates must drop to between $5 and $10. As mobile search-based keyword auctions appear, these advertisers may well move their budgets over. But is this type of advertiser really going to scale mobile advertising revenues? No. It will basically be capped by the marketing budgets of these smaller companies. Beyond the CPM and economic issues, aren’t all mobile application providers essentially competing with each other for the same time and service spends from the same consumers? How do mobile portal managers feel about semicompetitive mobile media advertising on their prime real estate with the goal of stealing a customer’s attention? Will every ad have to be preapproved? Will this really be the market force that drops CPM rates? No, it will not.

The second group of mobile advertisers consists of companies outside the mobile industry looking to increase the awareness of their products and services in a high value, personal scenario. These companies are just beginning to understand the unique value of mobile advertising for relevant, targeted, effective presentations to their audience. Selling these companies on the concept of mobile advertising and getting them to spend more than just their trial budgets is a long, arduous cycle. And the high CPM rates are often confusing to this group. Compared with $10 for a run on an untargeted network to $20 for a targeted web site group, there is still a question of cost and value of the $50 CPMs in mobile. Part of this high mobile CPM rate is driven by lack of mobile inventory today. Once the inventory arrives, that pressure will force the CPMs down in mobile.

Similar to the Web, the mobile CPMs will bifurcate into a lower cost, less targeted run-of-network (off deck) with CPMs between $2 and $9. The higher tier will be targeted mobile sites with specific audiences, where CPM rates will be around $12 up to $20 on the high side. The CPM rates simply follow the degree of targeting value. Better targeting equals higher CPM rates. In mobile, these will be mostly on-deck with high degrees of targeting based on proprietary mobile data being exposed anonymously for the ad campaign. Today’s mobile press releases touting costly, untargeted inventory is absurd and won’t last. Off-deck mobile ad networks, with less well-defined targeting approaches, will turn into the equivalent of the Web’s run-of-network buys, where inventory should always be inexpensive. CPMs will be tied to a certain size of advertising buy, but it won’t be an unreasonable premium for smaller buys.

But with the potentially higher value of mobile targeting into niche audiences in a fractured mediascape, is there another level of ad targeting rates, metrics, and value beyond the tried-and-true CPM of yesteryear? Yes, there is!

Posted in Mobile | Leave a Comment »

Nonprofits find profits in mobile

Posted by Mort Greenberg on April 14, 2008

Source:

Source: http://rcrnews.com

By Colin Gibbs
Story posted: April 12, 2008 – 5:59 am EDT

Attendees heard plenty at the recent CTIA Wireless 2008 event about all the sexy things in the mobile space including music, video and, of course, mobile advertising. But the quiet world of wireless donations may be about to make some noise.

Nonprofit agencies have long rejected text-to-donate campaigns as too expensive. Traditional revenue-share models forced them to sacrifice 50% or more of contributions, and nickel-and-dime fees for short codes and other mobile must-haves left them with precious little to show for their efforts.

That’s changing, though, as a handful of wireless players are working to help charities and other nonprofits target potential donors or constituents through their mobile phones —and network operators are helping.

Carrier efforts

U.S. carriers supported a recent television campaign for the United Way that asked viewers to send a message to a short code to donate $5 to the agency’s youth fitness program. The animated spot was broadcast during the Super Bowl and featured the voice of New England Patriots quarterback Tom Brady, and the network operators allowed a 100% pass-through rate on the proceeds — foregoing a taste of the cash.

The effort marked the first time U.S. carriers had waived their fees for a text-donation campaign aside from specific disaster relief efforts.

“I think what you’re starting to see is that the carriers are looking for ways to give back,” said James Eberhard, co-founder and chairman of Denver’s Mobile Accord Inc. “It’s something that’s going to drive usage across networks; it’s going to be exposing mobile services to a big base of people out there.”

Eberhard became a 26-year-old multimillionaire in 2004 after selling 9 Squared Inc., a ringtone provider, to the U.K.’s Monstermob Group for $40 million. (Monstermob has since been swallowed by Zed Group, a Spanish content behemoth.)

“Coming out of the ringtone space, I was looking at, ‘How can I give something back? How can I help out in terms other than the competitive landscape?’” Eberhard said. “It’s something I feel great about every day: working with nonprofits, being able to help them continue the effort to grab and connect to donors in a new way.”

Ad a success

The Mobile Giving Foundation, a Seattle-area nonprofit, brokered the deal that allowed the United Way to keep the lion’s share of revenues from the Super Bowl campaign. The clip was easy to overlook amid the ocean of big-budget Super Bowl ads: it was only 10 seconds long and, unlike many of the other commercials, eschewed special effects in favor of a simple voice-over. But the ad generated enough interest for its backers to call it an unqualified success.

“This wasn’t designed to drive volume, but rather prove the medium,” said Jim Manis, chairman and CEO of the foundation. “It worked splendidly, and the United Way viewed this as phenomenally successful.”

The United Way effort was only the most visible of a growing number of mobile campaigns by nonprofit groups. Mobile Accord has deployed mobile campaigns with partners such as the International Fund for Animal Welfare and ONE: The Campaign to Make Poverty History, and the Nonprofit Federation of the Direct Marketing Association recently partnered with MobileCause to launch a mobile marketing pilot program for several charitable agencies including Food for the Hungry and Big Brothers/Big Sisters of Greater Kansas City.

Power of mobile

Like some other verticals — the music industry, for instance, and traditional news media — nonprofit agencies were slow to leverage the opportunities of the Internet. But charitable groups, which are typically smaller and more nimble than for-profit companies, have been relatively quick to realize the power of mobile, said Mobile Accord co-founder and COO Dan Weaver. And as the United Way agreement shows, carriers are showing some flexibility in adjusting their traditional businesses to accommodate cause-oriented groups — even if it means forgoing some potential revenues.

Nonprofits have been eager to use this,” Weaver said. “They’re actually, despite a finite pool of resources, very savvy marketers, they know how to reach donors and constituents. The only barrier that was in place is that the business models were set up for for-profit types of businesses. Once the framework was put into place to treat nonprofits as a different activity and to understand what it is, it’s really opened up. These groups understand the power of that.”



U.S. carriers supported a recent United Way TV campaign that asked viewers to send a message to a short code to donate $5 to the agency’s youth fitness program. The animated spot featured the voice of New England Patriots quarterback Tom Brady.

Photo credit: SPCHROMEPIX

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