Mobile Groove

In brief: Inma Martinez, a leading digital media strategist and advisor to venture capitalists, joins with MSearchGroove to co-host Mobile Groove, a no-holds-barred commentary on the companies and trends that matter most. Inma, who has been referred to as a “free radical� by Red Herring and Fast Company, speaks out on the rise and demise of Blyk, what went wrong at Spinvox, what we can expect from Microsoft. High on her investment radar: a new fund that could give startups in Europe the financial muscle they need.

When I first met Inma Martinez at Mobile 2.0 Europe I was struck by the depth of her knowledge and the strength of her determination to speak her mind. I made the decision to work with her at some level. A few in-person meetings in London (where she is based) and many Skype chats later we are proud to take the wraps off Mobile Groove, a monthly podcast series here at MSearchGroove that will provide short, digestible and insightful commentary on what’s hot in news, investments and developments impacting the mobile space at all levels.

Mobile Groove will air on the last Friday of every month and consist of three thought-provoking segments: The Big Picture, a wrap of the month’s news and views; Street Groove, an informed discussion of the companies and technologies sure to rock the mobile space; and The Radar, a roundup of talk on the street and what is highest on investors’ radars.

OUTRAGEOUS & INSIGHTFUL

The first in the series kicks of with a look at the the rise and fall of ad-funded MVNO Blyk, the controversy surrounding voice-to-text provider Spinvox and an in-depth look at the key platform players (Apple, Google and Microsoft) – particularly the news via Taiwan handset makers that Microsoft plans to adopt a dual platform strategy to promote its Windows Mobile OS (operating system) and, thus, take aim at both Android- and iPhone-based platforms.

Inma, who stands out as an über-connected advisor to venture capital firms, also gives us the inside track a new fund by entrepreneurs for entrepreneurs that may spell relief for European startups and smart people with brilliant ideas.

In brief: This summary – which includes excerpts from an exclusive interview Marc Overton, Orange VP of Wholesale, Business Development & Partnerships – examines the mobile operator’s mobile advertising strategy; outlines Monkey, the first of a slew of services specifically based on the Blyk model; and wraps up with insights from Alan Moore – an authority on social media marketing and founder of the Engagement Communication Consultancy SMLXL – who points out that content/services subsidized by advertising may have to be more than free to fly.

On the heels of the extremely popular posts on Blyk and MSG’s exclusive interview with Pekka Ala-Pietila, CEO and Co-founder of Blyk, the timing is perfect to deep-dive into Orange UK’s mobile advertising aspirations now that it has formally folded Blyk’s MVNO activities into its wider strategy.

The first service that draws from Blyk’s mobile advertising model – an approach built from the ground up to encourage a dialogue between brands and people that want to her their message by delivering people relevant advertising in tune with their preferences and profiles – is Orange Monkey.

The first Pay As You Go (PAYG) package for the U.K. market offers free music to customers when they top up their mobile. (Although PaidContent suggests the service is not about free music since the tunes you get to listen to (not own) when you top up add up to about 600 minutes each month. This translates into GBP2.14 ($3.53) for customers regularly paying GBP30 ($49.23) in phone credits. But that may just be picking nits since people are getting music at no extra cost.)

More about Monkey: it provides exclusive music, pre-release tracks and other content from Universal Music’s catalogue and relies on British broadcaster Channel 4 to get the word out to the target demographic (16-34 year-olds with mass market phones) via the Channel 4 portfolio including 4Music, billed the most watched music channel in the U.K. A clever twist and nod to the power of multi-channel promotion: The 4Music team will be the editorial voice of the official Monkey website which will carry news, artist features, playlists, exclusive content and competitions. (Check out the Orange site for more details and a video demo of the service.)

The promotion is about building buzz, loyalty and community. So, where does/will Blyk’s mobile advertising approach come in?

The focus on engagement and social networks is baked into the offer. As well as free music, Monkey offers customers free texts, allows for playlists to be shared on social networks, and it “delivers great offers from relevant brands direct to their mobile.”

Prior to the Monkey launch I was pre-briefed by Marc Overton, Orange VP of Wholesale, Business Development & Partnerships, who walked me through the concept and – more importantly – where brands and Blyk fit in the scheme of things.

THE PERCEPTION OF HIGH COSTS CONTINUES TO HOLD BACK MOBILE DATA USAGE, says a new survey from 3ple-Media. Last year, just 32 percent of mobile subscribers surveyed said that the believed receiving multimedia content on their mobile would be “too expensive”, but that figure jumped to 58 percent this year. Meanwhile, 65 percent of operators surveyed agreed that cost was the biggest obstacle to users getting multimedia content. Source

The bottom line: While flat-rate data plans have become more pervasive, and mobile data use has increased, cost still remains a very sticky subject, particularly for content not covered under unlimited data plans. This is a huge issue for operators and content providers looking to increase uptake of mobile content, but the implication is pretty clear: consumers don’t have good pricing information, and they’re hesitant to shell out without it.

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THERE’S A MIDDLE CLASS OF IPHONE APP DEVELOPERS, says mobile apps analytics company Flurry, with them bigger than independent developers, but much smaller than the traditional mobile powerhouses. The company studied the distribution of the most popular games on US carrier decks and in the Apple App Store, and found that the iPhone environment wasn’t dominated by the same big names (EA, Gameloft, Namco, etc.), but rather by smaller, newer developers.

Flurry says the cost of content is a big issue: it notes that in the App Store, EA’s games mostly run from $5 to $10, compared to the $1 to $2 of other more popular games. It also notes that just before it conducted its analysis, Gameloft sliced the cost of its iPhone games to 99 cents; consequently 3 of its games leapt into the top 25 list. Source

The bottom line: Once again, these figures show how price-sensitive consumers are when it comes to mobile content. The question for the likes of EA, though, falls back to that wonderful economic concept of price elasticity: by cutting the price of a $5 game to $1, will they get 5 times as many buyers? It’s hard to get a read on that from Flurry’s data, but anecdotally, it seems that users have a much easier time paying the mental transaction cost of a 99-cent app, and the lower price tempts a lot more curious buyers.

In brief: An analysis of what Blyk’s partnership with Vodafone Netherlands really means, an exclusive Q&A with Blyk co-founder and CEO, Pekka Ala-Pietilä, and some big questions mobile operators can’t ignore: Why is advertising the major revenue source for every mass media except mobile? And how do operators plan to compete with media and Internet companies to capture the most value in mobile media?

It’s been a bit quiet at MSG as I finalize the plans and partnerships that will transform MSG into a media company and lay the groundwork for an ambitious mobile marketing publishing project that has already earned the endorsement of several major industry organizations. (More in a press release soon via RealWire, a global news release distribution service and MSG partner that, like the online media industry that is its focus, is always-on, always-connected and always professional, which is why I can recommend them so highly.)

But I couldn’t end the week without posting an analysis of the exciting (but not unexpected) news from Blyk, combination mobile engagement media company, mobile advertising startup and MVNO, that it had signed an deal with to roll out its branded service in partnership with Vodafone Netherlands and to share revenues with the operator.

Connect the dots, and Blyk has executed on the game-changing strategy that Antti Öhling, Blyk co-founder and CEO U.K., outlined in May in this exclusive Q&A. In it he provides solid logic for “making the switch” from MVNO (a model he called a “proof of concept”) to youth engagement media. The reasons range from scale and speed (both accelerated through partnership with operators) to the ones that matter most to advertisers: reach and engagement.

Today marks the end of a long week of mobile advertising webinars (including this one organized by Mobixell – password adit123) and interviews, activities which for me drove home the pivotal importance of relevancy in all we do. Like a pop song you keep hearing in your head, my ears are ringing with how many times I have heard executives at brands, agencies, and operators echo the increasing importance of relevancy. In fact, Andy Bovingdon, Bango, VP Marketing, in yesterday’s interview for the Mobile Advertising Research U.K. project, was by far the most adamant to date.

In his view, mobile advertising is a form of mobile marketing that has many forms – all of which must be relevant to us. “The key across all platforms and forms of advertising – search, SMS, banners, and barcodes – is the relevance and the ability to target. Is mobile another screen, or the fourth screen, as some say? I would say it is the first screen. It’s always-on and always with us, and that means we can learn a lot more about the visitors [but not individual visitor] to a site or an ad campaign. We can know more about the people who interact with advertising, and we must use this to give them advertising to interact with.”

Put simply, relevancy rules (!) The message isn’t lost on MSG. Almost five years ago, I wrote the first report on mobile search and content discovery, where I preached the importance of delivering the right content to the right person – better yet in the right context. And that has been my message ever since. (Also reflected in the MSG strapline: At the intersection of content and context.) It’s where the action is!

And if you think it only applied to mobile content portals, then I have one word for you: App stores. This well-written and thoughtful column from Mark Lowenstein speaks volumes. He makes a plea for more personalization in application storefronts, and companies would do well to listen.

“I think the most important way to differentiate in this growing but increasingly crowded market is to deliver a more personalized, contextual applications experience. In most cases, all users launching an app store are presented with the same menu. There have been some early stage attempts to enable users to do some content configuration on operator or third party portals, sort of a wireless version of My Yahoo. But if we’re dealing with tens of thousands of apps and a small screen device with limited input capability, we have to get a lot smarter about what is presented to the user, with the magic being done in the background rather than relying on the user to self-configure.”

Where’s the connection with Blyk? The answer is evident when we consider (in my view) a milestone quote/observation (below)from Antti Öhling, Blyk co-founder and CEO U.K.

If you think you read wrong when you understood from today’s report in NewMediaAge (NMA) that Blyk had indeed pulled the plug on it’s U.K. operations, you are absolutely right. My first reaction was disbelief (you can’t believe everything you read, of course), and I immediately called Blyk to get the story from the source. The story is: There is no story.

Jonathan MacDonald – a brave voice in the mobile advertising space, who, during his time at Blyk, was instrumental in developing the company’s strategy – has summarized the facts in this post. (And I see that NMA, just minutes ago, had retracted the headline that started it all.)

Judging from the level of excitement today the timing couldn’t be better for a serious analysis of Blyk’s partnership strategy (and an update on negotiations with mobile operators). Another important development that needs some clarification: The announcement during Mobile World Congress that Velti and Blyk have sealed a deal to launch a content portal.

The intriguing part of the release (that no doubt got lost in the trade show shuffle): “The new portal acts as a conduit for Blyk members interested in content from relevant brands or lifestyle choices; which moves away from the traditional mobile portal business model.” (Hmmm – An interesting approach that potentially addresses the frequent complaints I hear from cool content providers and app developers frustrated by the red tape and – in some cases re-education – necessary to sell mobile operators on their offers.)

Blyk has a mobile savvy audience of 16-24 year olds (early-adopters), and has built its business on a deep understanding of social media marketing (the models and means to play matchmaker between customers and content/apps). Against this backdrop, the Blyk’s strategy opens up some interesting opportunities and raises some even more interesting questions: To what extent is it possible to encourage discovery based on insights into customer demographics (gathered through opt-in and other means)? In what way can personalization determine the content (and advertising, as Blyk does treat advertising as another form of content) Blyk users will accept and appreciate? Does this model displace carriers, or potentially help them in the inevitable transition from mobile operator to media company?

These are just a few of the questions I will discuss this week with Antti Öhrling, Blyk co-founder and U.K. CEO. We are