Who is making the money (and how) with barcodes? No easy answers there.

But the raft of recent announcements makes it clear that barcodes, like online/mobile search, cover the bases to become the interface to information everywhere. They allow us to access information (about products, places, people – the works!). Like search, barcodes also trigger the delivery of advertising in tune with the information we request.

With so much in common between these platforms (barcodes and search) it’s not surprising that search/OS giants Apple, Google and Microsoft have all unveiled ambitious barcode strategies. (Even Facebook has joined the party.) But even these giants will need to develop the IP and business ecosystems to make this work.

Will they “make” or “buy” the pieces they need (perhaps snapping up a provider of end-to-end barcode services that include the handset app and the overarching platform)? It’s a tough one to call. But one thing for certain: barcodes are in the bowling alley and making a solution from scratch (down to the clearing house or other barcode management scheme to help advertisers and brands achieve reach and interoperability among operators, agencies and enablers) may cost time even these giants don’t have.

MORE THAN MARKETING

While we wait to see how this could play out over the next months, barcode providers are signing deals that lay the groundwork for a myriad of applications beyond mobile marketing and couponing, bring the day closer when barcode scanning could well replace search as a means to access information about everything everywhere. (And without making us scroll through reams of results on our mobile devices, I might add.)

This exciting scenario is at the core of the recent tie-up between Renu Mobile – a company that provides marketing and advertising services including mobile Web (WAP), SMS, social media and now barcodes – and NeoMedia, a provider of barcode scanning, management and publishing solutions whose platform includes barcode reading software (NeoReader) and a barcode management system (NeoSphere).

Earlier this week the companies announced an agreement to include NeoMedia’s products as part of Renu Mobile’s end-to-end mobile campaign management services. This paves the way for Renu Mobile to build out its cross-media mobile marketing mix and deliver barcode capabilities to agencies and brands. I caught up with Carol Glennon, Renu Mobile CEO, to ask her about the tie-up with NeoMedia and her strategy to target a wide range of industry sectors including pharmaceuticals, enterprise and homeland security.

INTERVIEW HIGHLIGHTS

First, what does the tie-up mean?

According to Carol, it’s the only fit that allows her company to get reach without allying itself with a potential competitor. Put simply, NeoMedia NeoReader barcode reader software comes pre-installed on key devices and platforms. (NeoMedia recently announced its reader software was released for the iPhone 3G and 3GS. Its reader software also comes pre-installed on Sony Ericsson devices – and more handset deals are imminent, I’m told.)

More importantly, NeoMedia doesn’t compete with Renu in managing/executing mobile marketing campaigns. If anything, NeoMedia, through its involvement with Neustar, a company spearheading the creation of a barcode clearing house to drive adoption and enable interoperability, is doing its part to ensure mobile marketing delivers. To date barcode companies NeoMedia, 3GVision, Mobile Data Systems and Mobile Discovery are using the Neustar clearing house (more in this press release from Mobile World congress).

Connect the dots, and it’s about delivering barcode campaigns that are open, interoperable and global.

However, it’s also about powering enterprise apps everywhere.

Carol aims to be on top of the game with a slew of clients and services that focus sharply on public sector, security and pharmaceuticals. It’s easy to imagine how scanning a barcode on a bottle of medicine could allow people to access valuable information such as the proper dose, potential side-effects and/or a mobile website with advice or the location of nearby pharmacies and physicians.

Likewise barcodes could ensure that authorities (such as police and fire) resolve an emergency situation with fewer casualties. Among the scenarios high on Carol’s radar: barcodes built into the firefighter’s badge that allow doctors access to details about the individual (profile, health record, allergies etc) when that person is unconscious or injured. “It’s about enabling services – and rapid deployment – without authorities having to invest in new equipment or learn a new skillset.” Little wonder the next stop for Carol is MILCOM 2010, a military trade conference focused on the “Next Decade of Military Communications.”

Keeping with the security scenario, barcodes could also allow authorities to define and oversee a security area. Barcodes on vehicles, equipment, even people would potentially streamline security checks and wring more value out of limited manpower and resources.

WHAT’S NEXT?

Carol tells me Renu will expand its mobile marketing activities through the partnership with NeoMedia. But Renu will also move full-steam ahead on its first test of a pharmaceutical application later in the summer.

After I interviewed Carol I saw a tweet from my esteemed colleague and Forrester anaylst Thomas Husson about his latest blog post, a must-read treatise aptly titled Liberty, equality and mobility. Having studied barcode reports and white papers in preparation for the posts I was writing, I struck by some interesting possibilities and parallels.

Thomas’ post is an excellent examination of the societal impact of mobile phones and the pivotal role of governments in moving effective communications and media tools a giant step forward. He argued that governments should balance investments and “make the most of mature mobile ecosystems” such as NFC (near-field communications). Thomas provides some examples and reminds us that “innovative research and development clusters that focus on mobile innovation, optimized transport systems, and a tech-savvy image are key to appearing innovative and attractive to firms looking for new locations. This is why the French government and the city of Nice are heavily backing the large-scale live Near Field Communication (NFC) trials that will take place in Q2 2010 in the South of France.”

While NFC is quite different from barcodes – there is some exciting overlap because they are both interfaces to the digital world of information, content and utilities.

In fact, Neustar joined with Visa at Mobile World Congress to showcase the potential of barcodes. In this pilot it was about scanning the barcode on the back of the Visa card to check your balance. But it’s easy to imagine more applications involving financial institutions.

Likewise, it would also be possible to scan a barcode (as it is to swipe an NFC-enabled device over an NFC tag) to manage workflow. (I am reminded here of a white paper I wrote for Nokia years back that argued workers – in this case technicians – could swipe their phones over an NFC tag on a particular piece of equipment to access repair records and streamline trouble-shooting.)

Hmm – sounds like an application that would fit with barcodes – particularly since these technicians could do this now with ordinary mobile phones. (NFC success is somewhat stalled until we have a critical mass of NFC-enabled devices.)

And, if we need any help figuring out additional scenarios, I’m sure Carol could think of a few…

The takeaway: Barcode business models and use cases are falling into place – and companies that miss this wave (and the opportunity to add a barcode component to their service offer) risk falling behind.

UPDATE: Carol just informed me via Skype that Renu Mobile has signed its first hospital customer. Looks like barcodes with be everywhere this year. Look for more analysis of this exciting space on MSG.

Mobile advertising continues to be a good news/bad news story. And your view seems to depend on the news you want to hear.

November was a stellar month for mobile advertising. Google paid an eye- watering $750 million to acquire 3-year old AdMob, a Silicon Valley-based leader in display and iPhone ad formats. Google is not one to waste money, so you can imagine what a huge opportunity mobile advertising really is (even if the rest of the industry is blinded to it) if a Web giant is willing to pay almost $1 billion for a company with mobile expertise. I wonder if we won’t look back in two years and say it was steal…

At the end spectrum, there are always industry pessimists who ask when mobile advertising will finally be big business. However, I must also note (with a grin) that many of these nay-sayers are large publishers (can’t name names) who are 1) amazed by the tremendous traffic to their mobile Web destinations and 2) clueless about how they might harness mobile advertising and monetise these eyeballs.

And let’s not forget the mood among traditional media players. Doom and gloom everywhere you look: newspapers, direct mail, TV, radio, yellow pages, outdoor, magazines and PC Internet.

In fact, the BIA Financial Network (BIA), parent of the Kelsey Group, forecast spend on these media to decline to $144.4 billion by 2013 from $155 billion last year.  But there are winners among the losers. With budgets under pressure and advertisers beginning to demand far more tangible results, traditional media – such as print – is likely to be hit far harder.

Marketers have long realised this trend and increasingly turn their attention to online and new media channels. Against this backdrop, online commands an ever-increasing share of spend. BIA has forecast the new media share globally to grow from around 9 percent today to over 22 percent by 2013. Moreover, a recent study from Pricewaterhouse Coopers (PwC) predicts by 2013 the new media share of advertising in the U.K. will be around 34 percent.

Clearly, the advertising market is going to shrink and see a substitution of spend. It’s a trend that squeezes traditional media and spells opportunity for companies that either play in new media or migrate value to their online assets. Thus, your chances of survival are a measure of your willingness to rethink your media business models and refocus your operating principles.

MOBILE MATTERS

The media futurist Jeffrey Cole points out that the biggest challenge companies face is their own reliance on traditional advertising models. “The problem [is] people often believe there is enough life left in the ‘old advertising model.’” While many companies are still waiting for traditional advertising techniques to deliver, Jeffrey is convinced that the “big breakthroughs will be digital advertising developed by those who grew up their entire life with digital media.”

If Jeffrey is correct, and I believe he is, then mobile – a personal medium digital natives regard as an extension of themselves – is where we will see the meaningful innovation and positive business results.

Indeed, mobile continues to be the bright spot in a raft of recent industry reports. Then market outlook is even more buoyant when it comes to advertising approaches that successfully combine location and promotion.

The Kelsey Group, a research firm specialised in location-based services, expects mobile local advertising revenue alone to reach more than $3.1 billion by 2013, up from just $160 million in 2008. Meanwhile, Gartner forecasts total spending on mobile advertising to grow to $7.5 billion in 2012, up from $530.2 million in 2008.

Connect the dots in these reports, and mobile advertising revenues could outstrip anything that has gone before, making mobile one of the fastest growing advertising channels of all time. A remarkable feat when you consider that the overall advertising industry (traditional and online) will continue its decline. No wonder Google was so keen to snap up AdMob and stake its turf.

WHY WILL MOBILE GROW

In a word, mobile is different. While other media may be limited to a time or context in our daily routines (print in the morning when we read the newspaper on the train and TV when we get home in the evening), mobile is a 24/7 channel directly to us.

Look at it this way and mobile ticks so many marketing boxes that you ignore it at your peril.

• Mobile is a life-line for the 18 to 30- year old demographic, a very attractive demographic to marketers and notoriously difficult to reach.
• Mobile is a personal device and rarely shared, making one-to-one marketing a real possibility.
• Mobile is present at the point of purchase, providing marketers a channel to influence people’s brand choice and encourage the all-important impulse buy.
• Mobile is measurable, allowing marketers insights into campaign performance and their ROI.

However, for most brands and media owners, mobile remains one of the great untapped channels.

WHO WILL “GET” IT?

Not everyone is blind to the tremendous opportunities at the intersection of local information and advertising approaches. In fact, there is a staggering number of players across the ecosystem jockeying for a lead position. At one end of the spectrum you have the search engines and platforms: Taptu, MCN, Google, Yahoo, and Microsoft, just to name a few. At the other end, you have dozens of directory publishers (Yell, Pagine Gialle, Pages Jaunes, etc.). And let’s not forget the social networks, media owners, verticals, handset manufacturers and mobile operators all lining up for a slice of the action.

The market is crowded. But, if companies continue with their current approaches, then a shake-out is imminent.

To be clear, only a handful of mobile players have what it takes to be highly successful. The barriers to entry, the complexities of the mobile channel and challenges of distribution and discovery make this a game for deep-pocketed players. But other companies have an equal chance (even if they don’t have equal budgets) if they use mobile in a smart and meaningful way to deliver real value to the consumer.

WHAT WILL MAKE A WINNER?

The winners will be the companies that have much more than content (such as local listings, for example). It will be those players that have the capabilities mix to deliver mobile consumers a contextual, relevant and tailored offering. This presupposes the know-how to deliver to the device capabilities, provide consumers the features they expect, enhance location information, support social and viral distribution and add value through marketing and advertising.

It may sound simple, but why are so many companies still getting it wrong?

In my view, they lack focus and an understanding of the mobile channel.

In contrast, companies succeeding in mobile are those players that have recognised the gaps in their knowledge of new media and brought in professionals that do. (Even better if these professionals are themselves digital natives with an instinctive grasp of mobile and its impact on every aspect of our daily lives.)

Leading digital agencies such as AKQA and Ogilvy, and progressive media owners including the BBC and Sky have long had dedicated mobile teams in place. Now other companies are following their lead, dedicating more resources to mobile or buying in skills as they need them (either because they believe in the true potential of mobile or because they have been pushed into mobile by brands who understand how important it is to engage with consumers on their personal device).

If you doubt that mobile demands experts with a different skills set, then consider the real reason Google acquired AdMob: it’s easier (and cheaper) to buy skilled people than make the investments and risk missing the mobile advertising opportunity altogether.

While many agencies and media companies have a long way to go (and a lot to lose), it is encouraging to see so many brands moving full-steam into mobile and reaping real benefits. The list of successful campaigns is impressive: Guinness with its ‘Passport to greatness’ campaign, British Airways with its ‘Mobile check-in’, HSBC with its ‘Business banking’, Sky with its ‘Remote record’, the BBC with ‘BBC mobile’ and the New York Times with their NY Times iPhone app. It is interesting to note that all these companies have dedicated teams or experienced agencies that understand usability and what makes mobile different. Even if these brands appear to experiment or treat mobile as a separate business, they are serious about mobile’s position as part of the digital marketing mix.

WHERE ARE THE LOCAL CONTENT OWNERS?

Brands are leading (not all – but we have more solid case studies than last year), agencies are learning and everyone else is at least talking.
So, where are the director publishers? They are the only players with content and vast experience in traditional advertising who have yet to make the most out of their digital assets. They should have a natural edge over their competitors, but, as I pointed out in my last column for MSG, they are leaving money on the table.

Indeed, directory publishers are best placed to deliver compelling local mobile services and – importantly – commercialise them through advertising. After all, they have existing customers and a powerful sales force to sell advertising products.

It appears that directory publishers are so focused on the business challenge that they can’t see the opportunity mobile represents. This, unfortunately, leave the  door wide open to Google & Co, companies that “get” mobile and understand the value of listings.

WHAT DO THEY NEED?

To close this gap directory publishers must stop thinking of mobile as a technology and understand it is a utility. The mobile device has evolved into a multifunctional tool. It is our social organiser, our information resource, our boredom filler. Basically, it supports our lives. Directory publishers have content that is a perfect fit provided they also plug it into the equation to simply or enhance our daily routine.

Directory publishers must also acknowledge that mobile comes with a whole set of new rules. Granted, the industry has yet to figure out these rules, but borrowing ideas and approaches from traditional media will not work. A good starting point is to answer three core questions: how are you going to approach mobile?; why is your offer relevant?; and what do you expect a consumer to do?

My takeaway: As a marketing medium mobile is only set to grow in value. Providers that get the basics right and forge partnerships that allow them to unlock the potential of mobile, monetise their digital assets and deliver features that add value to our lives will be well-equipped to compete against rivals and win.

Editor’s note: Martin’s next column will focus on what companies (specifically, local media and directory publishers) should to deliver contextually relevant mobile advertising based on location.

Martin Wilson has been involved in digital media for over 14 years, during which time he gained a wealth of experience in the fixed line and mobile Internet. In January 2008, Martin established Indigo 102, an independent consultancy, to assist organisations (including leading advertising agencies, directory publishers, media owners and online service providers) take their brands – and value propositions – mobile. In this role Martin has supported the development and launch of six mass market mobile services across three continents. You can contact Martin directly (martin@indigo102.com) and follow on Twitter (@indigo102).

Naturally, the news that Web giant Google was getting in on the action in mobile by acquiring AdMob created an atmosphere of excitement and optimism at the Global Mobile Marketing Forum last week in L.A. But it was more than a mood; it was a quantifiable trend. Mike Wehrs, President & Chief Executive Officer, Mobile Marketing Association (MMA), reported that mobile marketing shows an increase of 40 percent over last year.

What’s more, mobile is a line item in more budgets. Mike gave us the example of German carmaker Volkswagen, which is “doing things exclusively with iPhone Apps independent of other media channels”.

Another sure sign that mobile marketing has arrived full-force was the announcement by Microsoft (just prior to the event) that it had decided to join the MMA. In fact, Microsoft became the organization’s inaugural Premier Member, reflecting Microsoft’s commitment to both the association and the mobile marketing industry. As Charles Johnson, General Manager, Microsoft Mobile Advertising, put it in a press statement: “As mobile advertising has grown in significance, the time is now for carriers, OEMs, publishers and advertisers to join forces to capitalize on that growth.”

REAL RESEARCH

Peter Johnson, VP Research, Mobile Marketing Association, provided us the latest findings from the Research and Metrics Committee.  A highlight: leveraging coupons and loyalty programs are winning customers. It is found to be the most successful of all the mobile marketing approaches (!).

Another surprise is spending. To date the average media spend by agencies on mobile is still only 1.8 percent of the total spend.  However, those agencies that have experienced successful mobile marketing have already moved mobile up to account for 2~3 percent of their overall spend.

In 2009 spending on mobile marketing was $1.7 billion in total. But there was a potential for $2.5 billion, if we think back to the boost in spending shown by companies successful in mobile marketing.

Success breeds success – and encourages more spending. To get there from here the industry needs more education and a sharing of best practices. To this end the MMA is working to encourage knowledge sharing worldwide and making sure best practices are better evangelized.

BRAND SUCCESS

But the real proof that mobile is at the top of the agenda comes from the major players pushing the envelope.

COCA-COLA COMPANY: Tom Daly, Group Manager, Strategy and Planning, Coca-Cola Company, revealed what it looks for in mobile agencies. It may not be easy to get into Coca-Cola, but it’s worth it. According to Tom, Coca-Cola is “working with over 400 brands in 200 countries with a minimum of $8K per brand per country, and it is growing and we are looking for new partners.” His checklist for agencies: The company looks for three things.

1) Talent and environment
2) Thought leadership
3) Account management process.

As he summed it up: “We look for best in class to take Coca-Cola to the world leaders in creative mobile marketing and transparency is key.”

AT&T INTERACTIVE: Matt Crowley, CMO, AT&T Interactive, argued local and search are the real drivers for mobile advertising. As he put it: Today the total of mobile ad spend is about 70 percent (display and SMS) compared to 30 percent search. But he expects this will change to 25 percent (display and SMS) and 70 percent search in 2013. In fact, local search is the driver.  “We have seen over 250% YOY mobile search network growth and our goal is to pre-load the YP mobile app with local search on every device.” Matt added that AT&T counts 79 million subs and 22 million on Medianet, AT&T’s mobile portal. “There is over 22 percent access of Medianet daily.”

CNN: Louis Gump, VP of Mobile, CNN, talked about the future of news on mobile. He asked the audience how many look at news on their mobile before they get out of bed in the morning and about 30 percent answered they did. No wonder mobile is at the center of their strategy. CNN has a freemium model (offering the mobile website free and a paid CNN app).

The company debated the pricing for this, but decided on the $1.99 price as a way to keep mobile moving forward as a profit center to propel initiatives across all the mobile strategies of CNN. As Louis put it: “We wanted a dual revenue stream, and at $1.99, yes, there was debate over prices from $0.99~9.99. But we chose that price as we doing this for marketing. We want mobile as a sustainable business platform.  He continued: “We need not only the one-way free route, but a way to sustainability 3.5 and 10 years down the road.” To date 34 percent of users access CNN news only on their mobile phones. This means over one-third of users are only getting their news from CNN and only via mobile. Connect the dots, and “mobile is now the channel for CNN to reach a different demographic of people.”

Interesting to note: CNN doesn’t limit its focus to the iPhone. Instead the mobile strategy is holistic and covers four platforms:

1)    Mobile website (with 11~12 million users  per month – free and ad-supported)
2)    Text messaging (breaking news alerts)
3)    Video- on-demand and streaming (to distribute clips much more widely)
4)    Apps (and here the news is the September 27th  release that has changed the way news is consumed on the iPhone)

FUTURE OF MOBILE

Charles Johnson, Head of Mobile Advertising for Microsoft led an engaging panel on the future of mobile advertising. Ken Wilner, CEO,  Zumobi, stated that that key to mobile is “engagement”. Yes, acquisition is important, but once you obtain a consumer, the on-going engagement is second to none as mobile is with the consumer all the time, everywhere. Frank Babieri, CEO,  Transpera, was particularly bullish about the outlook for video. In his view, of the users that access online video that also access mobile video, “more then 62 percent of the time they will access it from mobile.” Another data point to keep in mind (from Charles): We replace our phones every 12~18months and we’re due to make those purchases soon. Smartphones will likely be the ones we chose, attracted by all their cool features and the great mobile Internet experience. Thus, 2010 will be the year of mass-device transition, and that will accelerate our industry even further.

BANKING: Bruce Withers, Head of Mobile, Wells Fargo, shared his mobile banking vision. He should know. Wells Fargo has been nominated as one of the top mobile banking solutions in North America and part of that success is linked to their sharp focus on youth (Gen Y and Millennials) that are part of the larger group of mobile professionals that need banking services on the go. Some key stats illustrate the success of a multi-approach mobile strategy.

•    Text messaging alerts: the user averages about 19 requests per month
•    Mobile website and iPhone application: users engage in about six sessions per month.
•    Location: Wells Fargo has added unique features in their iPhone App, including an ATM finder and direct links to wellsfargo.com.

CROSS-MEDIA: Mike Carter, CEO, MyThum and Tiffany Gerhard, Sr. Manager, Marketing- Emerging Capabilities, BestBuy, had a great session on the success of cross-media marketing for a retail brand.  For me it was one of the highlights of the day – particularly if we consider that BestBuy was doing NOTHING in mobile two years ago. Now, they have holistic strategy and results that speak volumes (literally). The strategy includes mobile as part of the marketing mix, but it is also core strategy to the company’s CRM strategy. Tiffany pointed out that mobile is a key link in clinching the sale – and everything that follows. “The use case quite good for us is when many of our customers come into the store that find when a product is out of stock. They can just go to their BestBuy application and click-to-buy in one action and then have the product delivered right to their home” But it doesn’t stop there. Mobile allows the company to support the buying process with information and interaction with customers. “Everyday now is a learning process for us to get better with mobile.”

FOOD FOR THOUGHT

Throughout the event execs and speakers raised a variety of interesting points and challenges.

•    Zaw Thet, CEO, 4Info, brought our attention to the need for an industry-wide initiative to establish a mobile cookie.  Today the next best thing is the user’s telephone number or UID on the iPhone.  By using this we can recognize and build cross-media campaigns for targeting users from platform to platform.
•     Chetan Sharma, Chetan Sharma Consulting, stated we are finally seeing the growth of the networks. Now, mobile has surpassed the data card (!).
•    Michael Shim, Head of Mobile Sales, Yahoo, reported that Yahoo’s growth of 54.8 percent is greater then the average for the industry of 45.4 percent with the mobile Internet.  Yahoo is doing unique ad solutions for apps and working on a slew of cross-media campaigns (with clients such as Subway) that link the Web to mobile.

INSIDE INNOVATION

The MMF event also recognized companies and campaigns pushing the envelope and spearheading mobile adoption. The MMA received hundreds of submissions in 12 categories from companies across the globe and winners for the Fifth Annual Global Mobile Marketing Awards were selected by the MMA Awards Selection Committee, a body comprised of global industry leaders from wireless carriers, technology and content providers, agencies and industry publications.

I had the honor of sitting on the panel of judges, a privilege that gave me a first-hand look at the campaigns. The campaigns that were real eye-openers for me in terms of real ROI and creative excellence came from agencies such as: Mobile Dreams Factory (Mini Mobile Dealer), AKQA (Gap Style Mixer), F.biz (Trident Fresh) MyThum (Rogers/Live Nation live ticketing solution) and the Pizza Hut iPhone App from Pizza Hut.

My takeaway: We kicked off the MMF event asking ourselves if 2009 was the “year of mobile” – again. Maybe not. But 2010 is going to be an adventure.  With budgets coming back, mobile showing up on marketing budgets and the advance of smartphones, the stars are aligned for 2010 to (finally) be the year of mobile is 2010. With the stars aligned it’s up to the industry to deliver – with solutions that scale and turnkey cross-media strategies with mobile at their core.

Editor’s note: Matthew Snyder is CEO and Founder of ADObjects-Inc, a cross-media strategic consultancy focused on revenue-generating, customer acquisition, brand building and business development solutions for clients determined to make the most out of mobile. Clients/Partners include: Bing, CBS Radio, Canadian Music Week, Nokia and Mobility Ventures, as well as a variety of media companies and major brands. During his career at Nokia, where he held a number of positions including Device Program Manager and Global Director of Strategy in the Multimedia Group, he architected Nokia location-based services strategy and mobile search application. MSearchGroove is proud to be an associate of ADObjects, joining a vibrant team of professionals including Chetan Sharma, Founder and President of Chetan Sharma Consulting, a management consulting and strategic advisory firm, and Roman Kikta, a renowned venture capitalist, wireless pioneer, seasoned entrepreneur and author. Feel free to contact Matthew directly (matt@adostrategies.com) or follow him on Twitter (matsnyder2001).

Imagine a living room where a large flat screen wirelessly attached to a set top box hangs from the wall. You enter a personal code into the set top box that recognizes your profile; the screen welcomes you to a portal where there are no channels only menus with links to personalized content and apps that range from social networking to commerce to premium content and entertainment.  A blinking icon reminds to you to record Wimbledon while an ad from Wilson invites you to view their latest rackets.  As you click the record button, you slide out the keypad on your remote and navigate to the Wilson site where you purchase a new tennis racket.  Payment for the racket is included in your monthly cable invoice.

Sounds like science fiction?  Hardly.  We are on the cusp of next generation iTV (interactive television), services that will elevate our viewing experience. Advertising will also be transformed,  paving the way for two-way communications that enable brands to target households according to key demographics and other information collected by the set top box (STBs). Mobile devices, widely regarded to be the remote control of our digital lives, will surely play an important role in this scenario. (Mobile already has a central spot if we consider how people reach to their phones to cast their vote for talent shows, follow sports and read the gossip during soap operas.)

The promise of being able to access the wide open Internet and everything in between on your TV may be a while away, but the battle for the living room, the one that will decide who monetizes our content consumption and who cashes in on the commercial messages we consume, is being fought now.

Best positioned in my view are the cable companies, who have the trump because they own the signal into the home and have a trusted relationship with subscribers. They also benefit from established business partnerships with broadcast and cable network programmers, that receive billion-dollar fees for entertainment content.

But there are other players lining up to stake their turf. For example, Tier 1 service providers in North America and Europe are rolling out high-speed connections into the home as part of their multi-play strategies to deliver premium content and advertising services via IPTV (TV via the Internet). While the viewing experience for consumers might not be radically different, the opportunities for brands to deliver targeted and relevant advertising could get a boost since multiplay is about creating a holistic view of the customer by monitoring behavior across channels including mobile.

Little wonder that Internet giants are also lining up to own the living room experience. Navic (acquired by Microsoft), gives broadcast and network programmers a unified platform to distribute premium content and advanced advertising services across disparate cable systems.  And let’s not forget Google. Through its relationship with Dish Networks and Visible World, Google is  geared to provide brand advertisers with expanded reach and more precise demographic targeting aimed at satellite and cable subscribers.

These companies have their eye on the prize: knowing the customer first and best. But it’s not an easy goal to reach. Operators concerned about privacy issues are predictably reluctant to release STB data to marketers and industry partners. What’s more, cable’s legacy architecture presents a host of interoperability and scalability problems that must be overcome in order to provide brands national reach across regional cable companies.

So what is cable doing to overcome these challenges?

Although the space is crowding and the privacy/technology obstacles are significant, cable companies are nonetheless next positioned to win the battle for the living room. But how well prepared are they for the struggle ahead?

The cable industry along with CableLabs, the industry’s research and development arm, has developed several key initiatives to usher in the age of iTV. These efforts, already well underway, provide the standards and interfaces that will allow brands and publishers to conduct business via cable and better target their audience demographic.

To get the inside track on work in progress I recently spoke with Paul Delzio, Director of Business Development and Product Management at ARRIS, a provider of infrastructure and advanced advertising solutions to cable. As Paul put it: ARRIS and other solution providers are “helping operators build a superhighway to the home and throughout the home using modern architecture that will ensure an interactive future with robust subscriber services.”  As he sees it, operators will monetize this highway through differentiated data plans, digital TV fees and new revenue streams from t-commerce (tv commerce), advertising and billing.”

CableLabs’ development of tru2way, java-based middleware that will be integrated directly into next-generation TV sets, is a critical step in this process.  With it, subscribers will be able to interact with a wide range of applications such as program guides, commerce, games, Video on Demand (VOD) and web browsing, without the need for a set top box.  Naturally, the world’s largest TV manufacturers are on board to bring us this technology.  Panasonic, Toshiba, Sony, Sharp and Samsung are just a few of the players lining up to cash in on this opportunity. Look for a big push at retail this holiday season.

But not everyone is going to rush out and buy tru2way TVs. So, CableLabs has introduced EBIF (enhanced binary interchange format), a technology which is being integrated into STBs as we speak. In fact, 15 million units are projected to be installed throughout the U.S. by 2010.  EBIF will enable true interactivity through multimedia pages that resemble html, so the consumer experience will have a similar look-and-feel to what we get on the Web. The advantage for brands is lead generation because cable viewers can click on a marketing message, in the form of a static banner, and receive information or goodies in the mail.

According to Paul, this “Cable Advertising 1.0 (which makes use of snail mail to fulfill a consumer request for information) will open the doors for brands eager to justify TV spend.”  Marketers see the opportunity and have stepped up spend on advanced advertising solutions from ARRIS and its partners, which supports them with the same tools they know from online and mobile, such as campaign management, media planning, analytics and response measurement.

These Cable Advertising 1.0 ad products and fulfillment services have been wisely engineered to meet the needs of this emerging ecosystem and to provide user experiences we can appreciate via this medium. Graphic overlays on top of full motion TV commercials will allow viewers to click through to micro sites where they can request information or coupons which will be delivered in the mail, allowing advertisers to target demographic segments by selecting zip codes.

Interactivity will also play a role, but mobile won’t be a shoe-in here. Subscribers can also participate in voting and polling using their TV remote control. Will we really want to use the cable remote control for text messaging? The jury is out is out on this one, but it’s clear there is a laundry-list of usability issues that will have to be solved before the cable remote is our keypad of choice in the living room–particularly when you consider the sophisticated touch and tactile keypads next generation smartphones will provide.

Personalization and relevancy on the big screen

Where are brands in the equation? The good news is significant progress is being made on the new standards and interfaces that will allow brands and marketers to buy interactive and addressable advertising locally or across multiple cable operators. Spearheading this effort is a consortium of ecosystem partners including SCTE (Society of Cable Technical Engineers), systems manufacturers including ARRIS, Biap, BlackArrow and Sigma and Canoe Ventures, a joint venture funded by the cable operators.

For brands seeking national reach, Canoe Ventures is developing a platform for advertising stewardship and fulfillment across the top six cable operators in the U.S.  The platform will aggregate inventory and subscriber intelligence to provide brands with rich data services, localized messages, lead generation and fulfillment on a national basis.

The platform will also no doubt attract the attention of Web giants who want to get in on the action. In fact, Paul tells me it’s “inevitable that major retail portals like Amazon and Expedia will want to collaborate with operators to provide subscribers with a personalized shopping experience.” What will make this experience more enjoyable for consumers and more targeted for advertisers? The key to the equation is unlocking the rich assets — our transactions, interactions, browsing behavior and viewing history all captured in the STB.

And why wouldn’t they be there? After all, it’s much more enjoyable to view a HD large screen to select your next vacation rather than squint and scroll on a 15” laptop. Moreover, cable operators are in great position to expand their billing systems to accommodate billing partnerships with the leading online retailers. Now consumers can buy what they see on TV and add it their monthly bill (Does this sound familiar? Mobile operators are determined to leverage their billing relationship in a similar way.) Shoppers benefit from a consolidated bill from a trusted provider.  Brands will love this — a virtuous cycle of shopping, analysis, advertising and more shopping.

In fact, astute brand managers will see the synergies between cable and mobile. Leads collected from the TV can be fed into mobile advertising systems enabling brands to continue the conversation on an individual basis.  Additionally, mobile SMS will grow as sports and reality TV continue to prompt voting and polling.

What else is cable doing to hedge their bets?

While excitement around Cable Advertising 1.0 continues to grow, some cable operators are exploring their options. In July Time Warner Cable and Comcast joined up to launch “TV Everywhere”, an over the top service (that is, where content is going over the Internet and not through the STB) designed to give cable subscribers access to premium content online.  Content from  cable network programmers such as TBS, TNT and Starz, along with movies from HBO and Cinemax, will be made available to Comcast and Time Warner subscribers.  It is rumored that AT&T will jump on the band wagon, as well.

But, as Paul pointed out, over the top is both “an opportunity and a threat.” On the opportunity side, TV Everywhere will accomplish several important tasks; it will extend audience reach, allowing operators to further monetize ad revenue, while at the same time reinforcing brand loyalty.

As a threat, TV Everywhere will enable subscribers with tru2way TVs to access the Web and enjoy premium content at no cost.  Case in point is premium content provider Hulu. The company’s audience , which has doubled since launch to approximately 1.3 million daily visitors as of July (Quantcast), underlines the validity of the ad-supported business model.   Hulu advertisers include some of the world’s leading brands : Johnson & Johnson, McDonald’s, Visa, American Express, Best Buy, Chili’s, DirectTV, GM, Intel, Nissan, State Farm, Unilever, Wal-Mart, Cisco, and Procter & Gamble.

Plus, it doesn’t take much imagination to envision extending the concept of TV Everywhere to the mobile Internet. Combined with mobile’s portal personalization and recommendation engines (already delivering good user experiences to millions of subscribers in Europe and Asia), premium content streamed over the mobile Internet would provide the broad reach brands have been waiting for. Major Tier 1 service providers planned CAPEX investments in LTE can be subsidized in, no small way, by interactive video advertising dynamically inserted into premium content on the handset.  

Bottom line: who will dominate the living room?

At the end of the day, the battle for the living room will be determined by sophisticated personalization and recommendation engines that understand our preferences and profiles and serve us relevant content and marketing messages.

When operators append third-party retail data to subscriber demographics and STB viewing patterns, then the vision of personalization begins to get interesting.  Comcast Spotlight, in fact, is leading the way by appending third-party data from Experian to improve household targeting.  It’s easy to imagine households that frequently purchase from Toys R Us are a good bet for family products or mini vans.  And personalization technologies will connect the dots for sure.

While the wide spread adoption of tru2way is good news for cable operators it is also good news for telcos and premium publishers.  Sure, subscribers will be free to browse off-portal.  But why bother?  A rich and personalized portal with premium content, entertainment, shopping, social networking, video on demand and other services, will make browsing the Internet irrelevant.

So, who will dominate the living room?  Cable is in the driver’s seat – for now.  In view of somewhat difficult (but not insurmountable) environmental challenges, time will tell if they will be able to deliver the vision of a personalized portal with robust services supported by advertising,  If they don’t, the leading telcos that follow a multiplay strategy and Internet players will be just a few clicks away.

Jim Levey, formerly Director of Product Marketing for Search and Digital Advertising at Amdocs, joins the roster of authors and influencers contributing news, analysis and thought leadership to MSearchGroove. He comments on developments in personalization, recommendation and mobile advertising.

In brief: MSearchGroove proudly steps up to the plate and hosts the Carnival of the Mobilists for the first time.

The last weekend in August and I spent much of it at a two-day summer festival in Siegburg, Germany, where I’m based. I’ve been on a natural high with good friends, great food and a wonderful line-up of home-grown entertainment. But not all the excitement was at the local fairgrounds. The Mobilists have also come up with a mix of thought leadership and must-read posts that give us new perspectives on mobile and start our adrenalin flowing.

Andy Favell and the team at mobiThinking.com do us all a great service and compile a comprehensive list of mobile industry facts and figures. The first in this series focuses on the size of the mobile Web and the implications for marketers. What do the numbers tell us? Should investors/companies take advantage of the economic slowdown and move ahead while others are standing still? Read on, find out and tell us what you think.

Another round of important mobile stats comes from Jose Colucci at Mobile Strategy, who continues the countdown of the 12 Reasons Why Canadian Banks Should Really Offer Mobile Services. Jose expertly brings together figures that show significant growth and penetration (despite strict government regulation, a lack of competition and a sky-high mobile data plans and pricing).  The bottom line: over 70 percent of Canadians have wireless access. Is Canada an untapped market for banking services? Is there a first-mover advantage for financial institutions that get involved? Read on, find out and tell us what you think.

With all the buzz around app stores and the proliferation of mobile devices (beyond just phones), the timing couldn’t be better for this post from Antoine RJ Wright. In it he recounts Nokia’s size, scope and industry influence, and wonders if the Finnish giant has the resources and marketing muscle to sustain three brands/strategies: Ovi, Symbian and Maemo. Could Maemo be the “wild card” in Nokia’s hand? Read on, find out and tell us what you think.

Tsahi Levent-Levi at VoIP Survivor, a blog in RADVISION’s blogs network providing insights into the VoIP industry, connects the dots in recent analysis/commentary and examines the outlook for mobile VoIP. Will current interest among carriers create the conditions for a viable market? Or will it simply advance the shift to IMS (IP Multimedia Subsystem) – a technology that defines how to set up advanced services for 3G cellular networks – and put operators back in the driver’s seat? Hmmm…should Fring and Truphone watch their backs? Read on, find out and tell us what you think.

A refreshing new idea comes from Judy Breck at Golden Swamp. She uses the debut of  Half the Sky, a new book documenting the plight and progress of the world’s women, to start a long overdue discussion about the impact of mobile on women in the emerging markets. Must women such as Saima Muhammad, a Pakistani woman who routinely beaten by her husband until she started a successful embroidery business, continue to endure their terrible fates in silence? Or does personal mobility offer the promise of liberation and freedom from oppression? What is the outcome when the world’s women have access to the Internet in their pockets? Read on, find out and join in the conversation at Golden Swamp.

Meanwhile, Dennis Bournique at WAP Review uncovers disturbing inequities in the price of mobile data in the developed world. He successfully argues the case for a rethink based on his shocking observation that (currently) all prepaid data is “wildly overpriced.” So, what is fair price for mobile data on prepaid plans? Dennis does the math and provides us a reasonable model that makes money and sense for everyone. Read on, find out and give us your take.

Some eight operating systems are battling for market supremacy. Will there be only one? Digital evangelist Ian Wood (thankfully) moves us past the academic discussion and back to basics in a post that draws from his vast personal experience and road tests. His conclusion: look for consolidation that will see three OS providers emerge. Who will make the winner’s circle? Read on, find out and let us know what you think.

Kudos to C. Enrique Ortiz at About Mobility for asking the question: is Apple a control freak? He connects the dots in recent developments – such as the decision by Apple to reject both Google Voice and Riverturn’s VoiceCentral application – to communicate an uncomfortable truth. But it’s not about whether Apple is morphing into a monopolist; it’s about the larger impact on the ecosystem and the third-party developers that have made iPhone the success it is. What are the arguments (pro and com)? What’s at stake? Read on, find out and speak out!

Finally, MSearchGroove uses COM #189 to showcase Mobile Groove, its new, no-holds-barred podcast series. I join with series co-host Inma Martinez, a leading digital media strategist and advisor to venture capitalists who has been referred to as a “free radical” by Red Herring and Fast Company. Together we raise our goblet of rock and speak out on the rise and demise of Blyk, what went wrong at Spinvox and what we can expect from Microsoft moving forward. Read on, have fun and contact us with your ideas/input! (mobilegroove AT msearchgroove DOTcom)

Post of the week goes to Judy Breck at Golden Swamp for prompting us to see mobile as a tool (for change) rather than a technology. Access to the mobile Internet gives everyone – particularly women suffering in isolation – a voice, allowing them to connect with people and peers who can amplify their message and fight their cause. Thanks, Judy, for reminding us why mobile is amazing and why we must strive to bridge the digital divide.

***

If you’re like me, then use the last days of August to catch up on your reading and check out the Carnival posts we unfortunately missed on MSearchGroove.

COM #186 at allaboutiphone.net (Topics include: what brands want from targeting; U.S. wireless data stats from Chetan Sharma; and a look at whether Europe risks losing its competitive edge in mobile. A highlight: an answer to the question – does Steve Jobs hate the App Store?)

COM #187 hosted by Jamie Wells at mobilestance.com (Topics include: five iPhone apps that could make publishers money; a discussion around the future of paid content; an in-depth look at what a mobile Web OS experience could offer; and an exclusive interview with Blyk.)

COM #188 at Golden Swamp (Topics include: how location adds context to content; a look at the cool new Layar Reality Browser2.0; an analysis of Nokia; and a new take on mobile education.)

Thanks to COM contributors and readers.

Look for the Carnival next week at WIPJam - and be sure to catch up with Caroline Lewko and the great WIPJam team at the next Jam Session on the World Tour: WIPJam@OSiM (Open Source in Mobile), September 16, in Amsterdam.

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) – specifically 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.

We joined forces to provide industry commentary and insights on the top market news in the mobile industry. But it doesn’t mean you can’t get involved. We welcome your ideas, suggestions and elevator pitches. DM us on Twitter(@mobilegroove)or email us at mobilegroove@msearchgroove.com.

Listen to the podcast here. [22:25]

A ROUND OF THANKS

And finally, thanks (again!) to Inma, for the energy and excellent ideas. Thanks to Annette Kramer, a Stradbroke Partner and presentation coach, for her kind offer to do the intro and outro to our podcast series; and to Alfred DeRose, Brian Avery and the team of professionals at Tego Interactive, a company helping to build businesses – including mine – through converged Web and mobile solutions. The company has been instrumental in creating some new features and functionality (including a mobile site) for MSearchGroove, with more soon to come, so please check back regularly.

And a special thanks to RealWire, an MSG partner and supporter whose global news release distribution service (specializing in the online media and mobile) consistently delivers reach, audience and exceptional analytics. MSG uses RealWire for all press releases, and I recommend you do the same.

For now our podcast will be accessible via the MSearchGroove web site home page. In September Mobile Groove will also be available for download via a dedicated iTunes channel.

In brief: An analysis of what Blyk’s partnership with Vodafone Netherlands really means, an exclusive Q&A with

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.

As Antti put it: “An MVNO means that you have to make up-front heavy investments. We needed to do it in the U.K. in order to get the whole machinery working. We needed to have access to all the tools that the operators have in their server rooms. Now that we understand how to use it [technology] we know how to help them. We know exactly how they can combine operator infrastructure with our ad engine and campaign management. We can make every campaign pixel perfect but what’s more important is that they [campaigns] are extremely relevant to the receiver. We saw the MVNO model as too slow for growth. If we partner with operators, we can triple or quadruple the speed, and reach the scalability that many advertisers are looking for.”

And while we’re reviewing the milestone statements from this Q&A (opinions that have new and significant meaning in view of the Vodafone Netherlands partnership), allow me to bring your attention to the one from Antti that speaks volumes (literally) about why operators would/should tie up with Blyk for a Blyk-branded service in the first place. In a word, brand.

As he put it: “Blyk is a simple end-to-end proposition that covers everything from ad platform, campaign management, user experience and audience management to technology.  Sometimes when I discuss this with operators, I say, ‘Think of Blyk as a Coke.’ as this example makes our role easier to understand. We have the recipe and we have the brand. People understand Blyk; young people understand what it means when we come to a country.  The recipe is how you make it work.  The operators have the factories for making all the refreshments they need, and they have their existing distribution channels. Basically, they have the works. But if they bring Coke in there, they can get so much more volume and so much more value. It’s a lot more interesting – and lucrative – to have Blyk as part of the operator offer. In other words, they can expand their reach to offering another well-known product.”

EXPERIENCE EXPERTS

Jonathan MacDonald – friend, esteemed colleague and, importantly, an architect of Blyk strategy – highlights another ace that plays in Blyk’s favor as it enters into this and other partnerships with mobile operators: breadth of offer.

Based on a background briefing with Antti Öhling, Blyk co-founder and CEO U.K., Jonathan pieces together what he calls the “Blyk partnership Blueprint” (which he shares in this post).

The model:

1)    Position yourself as an MVNO (as Blyk did) to perfect the process of linking brands with people. As Jonathan, an eyewitness to this stage of the company build-out observes: “Over time there was constant improvement of processes and tools which all connected to creating a true experience for Blyk members and creating the world’s first network as a media.”

2)    Productize this offer. Create a comprehensive capabilities mix whose components (in the case of Blyk) include: “Blyk brand, Blyk user experience, Blyk approach, Blyk audience management and of course, Blyk advertising sales.”)

3)    Partner with mobile operators. Use the existing infrastructure and capabilities of the mobile operator, experts at customer acquisition, billing and delivering great service.

Intrigued by this model, I caught up with Pekka Ala-Pietilä, Blyk co-founder and CEO, earlier this morning to deep-dive into Blyk’s real business objectives and the real value of brand in the scheme of mobile advertising. (My personal thanks to Irene Nyberg, Blyk Head of Analyst Relations and International Press, for arranging this briefing on short notice.)

AN EXCERPT OF THE Q&A WITH PEKKA ALA-PIETILÄ

Q: What have you achieved in the U.K. and how will you bring this to bear in your partnership with Vodafone Netherlands and others in the pipeline?

A: There are three elements. We have developed the capability to make ads relevant, that has allowed us to create an opt-in audience that want to receive this advertising. Beyond this, we have changed the whole context of advertising. Advertising ceases to exist because it is perceived as content. And that is one of the great aspirations of advertisers: to get to a level of relevance where what they send is perceived as valuable information, valuable content and important social currency. The fact that the audience responds positively to this response is reflected in the third element of this: our net advocacy scores. [By way of background, Net Advocacy is a measure of the volume of positive and negative word-of-mouth.] With over 40 percent, we’re at the same level as YouTube and Facebook. That is important for advertisers. Net advocacy is high and so are response rates. They have stayed at 25 percent for over 20 months now. [NOTE: Some 200 advertisers, including major brands such as Coca-Cola, L'Oreal and Sky, have run some 2,500 campaigns to date, reporting an average response rate of 25 percent.]

Q: You have achieved brand awareness without yourself spending on advertising and promotion. It worked in the U.K., but what will be the strategy for other countries? And how do you quantify your brand strength?

A: We believe the Blyk brand has several facets. The consumer-facing brand has the capability to spill over. Consumers are connected and can find out about our brand on the Internet or from other sources, so we believe that is how awareness will continue to grow. Our brand also has a great crossover effect when it comes to advertisers. We work with all six major advertising agencies and a large number of international and global brands. Finally, our brand is known to mobile operators who know what we achieved in the U.K. and what we plan to do in The Netherlands. Many forget that we have successfully recruited youth, the most difficult audience segment to reach because you have to get to them through the clutter of other media. We did this because youth is an extremely important segment for advertisers.

Q: The news is the partnership. But why not just go it alone?

A: Mobile advertising is not a technology game. Technologies can be bought. Of course, you need to have a good technology, and we have it. But it comes to the ability to deliver a seamless end-to-end media experience, which is why we are a media company. Operators are telecom companies and all the corporate DNA and KPIs [key performance indicators] are telco-driven. In the model [Vodafone Netherlands partnership] the operator brings the telco capability, the infrastructure, the billing and the ability to acquire customers and on a mass scale and feed that into an opt-in database that you need to make advertising work. We bring the audience management – the member experience – and we manage it for them. We bring the processes, how the media works between the members and the advertisers; and we bring the technology and the ad sales force. All this means we can get off to a flying start, and that’s a great benefit for operators.

Q: You have a kind of turnkey solution here; one that you say gets you off to a “flying start” when you move into a new country. What countries are on the roadmap?

A: We have a model that doesn’t only allow us to grow fast in a country. We can roll it out in number of countries in parallel.

Q: Such as?

A: We are moving in Europe and Asia. One of the guidelines we follow is the interest shown by advertisers, the markets they think are important. Asia is where broadband has not and never will take off to the same level that it has in Europe. There mobile will be THE digital media. There is no other digital advertising channel available.

Q: We hear that a lot – but why is advertising the major revenue source for every mass media except mobile? And where are the mobile operators? My own mobile advertising research (Mobile Advertising Research U.K.) revealed value chain confusion is to blame, along with a lack of awareness and education. What’s your take?

A: For one, the industry has tried to take the online experience – such as search and banner – and apply it to mobile. We have not yet come up with an adaptation that is right for the mobile context. It’s the same as in the 1990s, when we learned that you cannot force mobile on the Internet and saw that WAP didn’t work.

Second, operators have taken a purely technology approach. They have brought in multiple platforms, in some cases two, three, even four technology platforms, and none is generating revenues. So they have gone for piecemeal and not complete solutions and it’s only a recent revelation [among operators] that this isn’t going to work.

But awareness is changing and that will sharpen the focus on mobile advertising. Another development that has raised the stakes is the intention of the Internet companies – Google, Apple, Microsoft, Nokia and others – to make money and a business out of mobile advertising. So, there will be an interesting increase of efforts and tensions, and this will create an increased sense of urgency on the part of the operators to put more effort into mobile advertising. There will be a battle between players to decide who will be first to create the foundation and grow to become the game-changer in mobile advertising.

Q: My own research also revealed a growing concern that the number of mouths to feed in the value chain exceeds the revenues to share. How many mouths are in your value chain?

A: We have only three mouths to be fed: agencies, operator and us. So, there is more than enough to be shared and go around. If the value chain is a puzzle then, you are right, there are too many players that need to be taken care of, and you have more companies than revenues to go around. On the topic of costs, we can partner in way that the incremental cost for an operator to actually build this capability from the technical side is low. The production cost and what’s need to achieve economies of scale for producing [advertising] messages is also low. On top of that the incremental cost for us to connect [our media offering] with different operators is again low. So, when you look at the cost competitiveness of different alternative value chains or solutions – the one we have built is almost unbeatable. There are revenues to share and the partners involved [Blyk and the operator] already have an optimized cost structure.

Q: Lastly, a look back to your off-portal play. You have a partnership with Velti and a sharp focus on content portals and providers. What does this tell us about Blyk objectives? Some could argue this conflicts or that you could be spreading yourself too thin…

A: This is not a zero-sum game. That model only applies when the market is stagnant – but on the mobile side – content and consumption the market is on a growth curve. What happens off-portal – and promoting it – is a way of helping acquaint people with mobile and encouraging them to use services and content, and that is a benefit for everyone. A parallel is i-mode. There are open and closed spaces – and helping both to grow is a win-win for everyone.

Q: It’s about content and services. But what about apps? Companies tell me they are excited about apps and getting in now with advertising schemes and strategies. Is Blyk going to jump aboard the app bandwagon?

A: We will have an aspect in our business which will definitely, and in due course, be aligned with the elements you mentioned. Having said that, we don’t see the need to rush to the app stores – especially when our core business has so much potential. We have more then enough work and opportunities just focusing on what we do.

WHAT DOES THIS ALL MEAN?

My take: Connect the dots, and Blyk has its eye on the prize: developing the capabilities – in partnership with mobile operators – to be a game-changing engagement media in reach and response.

It’s also about leveling the playing field and helping mobile operators understand the terrible truth: mobile operators are no longer in the access business and focusing on growing subscriber numbers obliges them to overlook the very opportunities (such as mobile advertising) and value creation opportunities that Internet brands are rushing to embrace.

Indeed, let’s not forget how bullish Google CEO Eric Schmidt is on mobile advertising. In August 2008 during a guest spot on CNBC’s “Mad Money with Jim Cramer” he stated: “Over time, we will make more money from mobile advertising. The reason is because the mobile computer is more targeted. Think about it–you carry your phone everywhere; it knows all about you.”

But it’s more than a play to make sure the Internet – where network operators (who owned the networks) and media companies (that owned the content) lost out to Internet giants such as Google – doesn’t repeat itself.

Mobile has to be different, which is why the partners (Blyk and Vodafone Netherlands) have also agreed to maintain the Blyk brand to their mutual benefit. (Makes sense… Why start with a new brand when Blyk already has a high net advocacy rate and high profile with agencies and advertisers?) Against this backdrop, a Blyk brand in the arsenal is a great way to jumpstart a youth-focused mobile offer wrapped in a proven media model brands and agencies understand. Now it’s up to the partners to turn it on and turn up the volume (literally) to build the opt-in database of members that will attract the brands.

But does it have to stop with a youth brand? I doubt it. A look under the hood a the breadth of the Blyk offer tells us this is a turnkey solution that clever operators could brand and turn on for other customer segments that advertisers want to reach (other age groups or illusive prosumers, for example).

And why not?

After all, the solution is the same (Blyk built it); the value chain is manageable (always and only three mouths to feed); and a raft of recent research reports tell us people everywhere respond positively to mobile advertising that is relevant to their interests and respectful of their right to co-create their advertising experiences. (Or at least they have to have that option. No doubt the 90/10 rule that holds for the Internet – that 90 percent are lurkers and 10 percent are contributors who get involved – goes for the mobile Web, but it’s best to ask permission all the same, and it’s a great way to gather the demographic data that so far only the social networks can.)

And if this sounds far-fetched then consider a surprise finding that emerged from the interviews that fed into Mobile Advertising Research U.K.: a growth opportunity lies in building the capabilities mix to improve audience segmentation and deliver demographics brands and agencies know from other media.

From the report: “However, this opportunity also represents one of the greatest challenges to mobile operators. While they wield powerful data about their customers, many operators have not yet structured their organizations to deliver this in a form that brands and agencies appreciate. As one executive at an application provider put it: ‘Operators must be able to segment the audience into media segments that make sense. Till now they haven’t done a good job at that.’”

Maybe the Blyk Blueprint shows the way…

***

RELATED READING

·       Blyk: Inventory Doesn’t Make Mobile Operators Media Companies; Why Mobile Advertising Must Be Relevant

·       Ad-funded MVNO Blyk: Alive & Kicking – AND Coming Exclusively To MSG

·       Mobile Advertising Success: Orchestrate Don’t Dominate

·       PODCAST: Blyk COO Leif Fågelstedt On Stats, Response & Competitive Landscape; Mobile; Does Blyk Break The Mould?

·       Podcast: Blyk COO Leif Fågelstedt On Mobile Advertising,

IS THE APP INDUSTRY WORTH NEARLY $7 BILLION? Will Apple do nearly a billion dollars in revenue in its first year of the App Store? While the exact numbers are debatable, you can’t ignore the monster success Apple has had with its store (which also drives device sales, by the way). How much money has Apple made? This post, titled Apple has made no more than $20 – 45m in revenue from the app store, gives us a figure. One I might add is not too shabby for a product yet to see its first birthday. What makes this more remarkable is that Apple has captured between 1-2 percent total market share worldwide (including feature phones), and only 10.8 percent share worldwide in the smartphone segment. Few (save Juniper) have taken a stab at valuing the total app industry.

StatCounter’s recent announcement that Opera Mini surpasses the iPhone’s Safari as the most popular web browser for mobile phones is testament to the potential of the greater industry. Opera Mini is the most downloaded Java application of all time. So, while I am excited about the enthusiasm for the iPhone, I find the conversation is missing a big-picture perspective. The question we should be asking is: What is the total app market worldwide really worth? After all, Opera Mini’s success story underlines the potential of the app market beyond just the iPhone.

So, allow me to take a shot at valuing the total app industry, worldwide, for pay-apps (apps you pay to own on your phone).  This is the total value excluding Of course, we have to exclude free apps like Opera Mini.

In a nutshell: If Apple can do nearly $1 billion in sales its first year and has 10.8 percent smartphone market share worldwide, how much is the total smartphone app market worth?

This post from AppleInsider tells us that Apple could do $777 million in App Store downloads in 2009.

A 10.8 percent worldwide smartphone market share implies that the total mobile app market is $7.2 billion, if all smartphone users spend as much on apps as iPhone users do. We know that this won’t be the case. A much more likely scenario is one in which smartphone users will spend far less.

So, let’s assume users with these handsets (other than the iPhone) spend half (50 percent) of what iPhone users on App downloads. Now let’s do the math.

$7.2 billion is the extrapolated industry valuation of direct revenue from apps if consumers spent as much on apps for other platforms as they do the iPhone. Let’s take $7.2 billion minus $777 million (iPhone app share), and multiply that by 50 percent. That gives us a valuation of $3.2 billion for the non-iPhone app market, or $4 billion total, including the iPhone.

($7.2 billion – $777 million) * 0.5 = $3.2 billion non-iPhone app market.)

Given these assumptions, the total addressable market for non-iPhone smartphone users is approximately $3.2 billion in 2009 alone. This, of course is direct app revenue, and does not include advertising, in-app sales, carrier data revenues, feature phone app sales, and other yet-to-be-developed revenue models.

What does this figure represent? Is this pent-up demand in search of a marketplace? It sure looks like it. In any case, the number is staggering, and why this fact hasn’t gotten more attention is surprising.

But I can tell you from my experience at Opera, the success of the iPhone app store is great for the industry. Apple’s app store (although benefiting from massive multimedia marketing campaigns) is the proof-point our industry needed to see its own much greater potential. Apple gets high ranks for making the job of marketing or selling an app that much easier. Mainstream consumers now realize it’s not rocket science to load an app on their phone. Now it’s part of an every-day routine for many mobile users.

Apple has created a market, but does it dominate it?

AdMob’s Mobile Metrics Report recently released compares mobile Web usage to market share of mobile devices. As this chart from AdMob shows, the iPhone literally tops the charts for mobile Web usage – and that despite the fact the device only accounts for 10.8 percent market share of devices (according to Gartner’s latest estimate).

Symbian is next, followed by RIM and Windows. With the launch of the Palm Pre, greater penetration of Android devices soon to come, and Microsoft opening its Windows Skymarket app marketplace, it’s a safe bet that consumer spending on apps on other platforms might total half of what iPhone users spend on apps (If you disagree, please make your case for lower estimates in the comments below, or email me – ben@mobspot.com .)

Let’s put a growth-figure in here. If we accept the figures from Ovum, which predict 15 percent per year growth for smartphones, then you end up with an app industry worth nearly $7 billion.

Not bad. We are excited about the App Store concept, which has taken much of the pain out of discovering and buying apps. Now is the time to get equally excited about the opportunity for apps on all platforms.

And why shouldn’t we be excited? Apple’s App store has caused a shift in consumer behavior. It has captured our interest (even passion), encouraged us to explore the mobile Web, and put downloading and purchasing apps central to our daily mobile routine.

Where does this leave Apple?

It may be riding the cool factor now, but where is it written that cool apps will only be created for the iPhone? I’m confident developers are already working on more great apps for other platforms.

Apple also doesn’t have a monopoly on delivering a great consumer experience. I’m sure developers are hard at work coming up with new approaches that likewise set the bar.

My take: Apple has created a market. But it has also paved the way for some fast followers to follow suit – and even go one better. I’m excited about the avalanche of apps we’re sure to see available across all platforms, and the impact on mobile industry and consumer behavior at all levels. What do YOU expect?

About the author:

Prior to founding Mobspot, Ben was Director of Global Marketing at Opera Software, where he led multiple record-setting product launches of Opera Mini. Opera Mini is the most downloaded mobile application in the world. He has a BA from the University of Washington and an MBA from Copenhagen Business School.

Since teaming up with Rudy De Waele, blogger at mTrends and  dotopen founder, to develop mobile search case studies in preparation for a workshop on Mobile Search Future Prospects organized by JRC IPTS (Institute for Prospective Technological Studies of the European Commission), and seeing the positive response to our work to date, I’m convinced mobile search is back again at the top of the industry agenda. And with good reason: Search is the de facto interface to all things digital in the online space, and there is every indication that it will be the same in mobile.

From mobile advertising, where our queries trigger the delivery of related advertising (in the best case scenario, we’re not there yet), to social media, where the content we appreciate and discuss across destinations ranging from MySpace to Twitter allows us to restore balance in an otherwise purely algorithmic approach that tends to promote search engine optimized websites over what we find genuinely relevant and useful, mobile search is where the action is.

But as Rudy and I have both pointed out in our recent presentations, mobile search is not about the usual suspects (Google, Yahoo, and Microsoft). Rudy spoke at Next09, and you can find his slides  further on in this post; I spoke at the European Mobile Media Conference, and my deck can likewise be found after the jump.

Indeed, context and personalization change all the rules (!)

A highlight of our recent presentations: A comprehensive overview of the market and (thanks to Rudy) a SWOT analysis of the players that stand out in their category such as Google (universal search with a poor mobile offer and an even weaker grasp of social search), and Twitter (a case of mobile search + social media = real-time results that really reflect what we discuss/share).

In my own mobile search research – an on-going project that began back in 2004/2005 when I wrote the first report on mobile search and content discovery, a 220+ page report published by Informa Telecoms & Media – I have recently identified some 60+ companies and 10+ categories of mobile search I would like to share with you (below) for your feedback.

INTERACE

• Text: ChaCha, 4INFO,MINFO, textperts (acquired by 118118), Answers.com, AnyQuestionAnswered, Ask, AskMeNow
• Voice: Google, Yahoo, Vlingo, Microsoft, ChaCha (Watch this space for an expert assessment of the voice-enabled services offered by Google, Vlingo, and ChaCha. ( I am proud to have had the opportunity to collaborate with Peggy Albright, MSG Associate and founder of Albright Communications, and even prouder of the results.)
• Visual: IQ Engines, Kooaba, Mobile Acuity, Searchme, SnapNow, SnapTell, Tin Eye Mobile, Nokia
• Navigational: Boopsie, kannuu, Nuance (through Tegic acquisition)

ACTIONABLE

• Universal: Google, Yahoo, Microsoft, AOL (based on Google), Medio Systems, JumpTap (although a much stronger focus on mobile advertising)
• Federated: MCN, Motricity (managed mobile search platform providers)
• Operator-centric search: Amdocs, Qualcomm, IBM and this company coming out of stealth mode
• Alternative search: Defined as every service except for Google, and includes a long tail of 1500+ search engines (tracked by AltSearchEngines) with ambitions to go mobile – some sooner than later
• Vertical/content-specific search: abphone, vtap, Truveo
• Local search: Hundreds of players that offer local search via SMS services, on their own WAP sites, and/or as part of a nearby shopping scheme. (Fortunately, the local mobile search landscape is the topic of an upcoming column on MSG from Martin Wilson, founder of Indigo 102, an independent consultancy with a focus on mobile local search and services, so watch this space!)

SOCIAL

• abphone, ChaCha, Hiogi, Taptu
• Twitter in a class by itself!

It’s work in progress, but it’s all the more exciting if we remember that – in mobile search – the players that matter and the business models that deliver are wide open to discussion.

Indeed, the central role of mobile search in a wide variety of mobile services around sharing, advertising, location, and context-aware activities turns up the pressure on an even broader range of businesses (operators, brands, agencies, enablers – everyone!) to understand what mobile search delivers (and doesn’t) and the companies/models that do it best.

To help mobile professionals and practitioners navigate this tough terrain, Rudy and I have joined together on a project to produce the definitive mobile search market overview, a work that will draw from primary research, case studies, and exclusive forecasts to document this exciting space and present our recommendations for strategies to harness growth opportunities on the horizon.

I still have the opportunity to take your views and perspectives into account, and I would welcome your input. The project, widely distributed via our sites and via our network of sites, supporters, and influencers, will also offer a commercial opportunity to companies interested in conveying their value proposition to a growing community of senior executives and decision-makers in the mobile space.

If you are a mobile search company with an interest in being considered for an interview, please contact me directly or send an email to my assistant Andrea Henninge (andrea@msearchgroove.com).

Overall, the report is a good read. It covers all the bases, from mobile ad revenue predictions to estimates for mobile search revenues, and it recounts the results of a road test (Google vs. Yahoo) to determine (literally) which provider is getting more bang for the buck when it comes to paid search.

Indeed, mobile search performance is at the top of my radar as Peggy Albright (founder of Albright Research, and MSG associate) and I have just wrapped up a white paper comparing mobile voice services available on the iPhone. More importantly, we have moved into the final phase of our Mobile Search Performance Report (MSPR), an industry-first quarterly report documenting the mobile search experience across a range of geographies, operators, and search engine providers, providing insight into the key performance metrics, such as click-distance and mobile advertising relevancy.

While I may have my issues with some of the Bernstein report findings, there’s no arguing the fact that Google controls a sizeable share of the U.S. mobile search market,  despite the fact the search giant consistently delivers a poorer user experience (an observation based on MSPR findings as well as those reported by Mobile Commerce during a recent Mobile Search Master Class).

Based on brand reach research (number of visitors to a search property divided by the estimated total of visitors ever to access the search category  in a month) and comScore estimates (as reported in September 2008), Bernstein Research reckons Google had 62 percent of the U.S. market in January 2009. Yahoo came in second with 30 percent, and Microsoft’s Windows Live finished third with 11 percent.

Listen to the podcast here. [19:21]

Against this backdrop, Bernstein estimates that mobile search revenues in the U.S. will grow from $20 million in 2008 to $910 million by end-2012. (Much lower than the numbers I’ve seen, so the truth must lie somewhere in the middle.) In contrast, mobile advertising revenues are set to skyrocket. Bernstein figures revenues will grow from $160 million in 2008 to $2.3 billion by end-2012. It further projects that global revenues will grow from $700 million in 2008 to $7.2 billion by end-2012.

But the real news is Google’s algorithm for success. Google’s strategy of “pulling through” users from its PC platform to mobile appears to be paying off big-time. Google is not only benefiting from user habit (users tend to visit the same brands and destinations they know from the PC Internet, with Google leading the pack); it’s able to keep all the cash from paid search advertising. As the report points out: “Google has not made to our knowledge any agreement to split revenues with the carriers. Google is possibly also gambling upon intensifying carrier competition and a favorable political climate to drive through de facto ‘wireless net neutrality’ and avoid splitting its revenues with the carriers altogether.” (Think it through. It’s an outspoken observation – and possible outcome – that should have alarm bells ringing in carrier boardrooms…)

At the other end of the spectrum, Yahoo and Microsoft focus on paid default placement (a strategy of negotiating to have their search engine app pre-loaded on the mobile deck so it is available as the default). Unlike Google, the search engines split their paid search advertising revenues with their mobile operator partners. (Yahoo with AT&T and T-Mobile and Microsoft with Verizon.) It’s a strategy to which I give high marks because it potentially encourages a more robust and healthier business ecosystem. However, Bernstein doesn’t seem to share my long-term view. It focuses on the here and now, concluding that Google’s strategy of winner-takes-all “will result in significantly higher margins” than Yahoo and Microsoft.

But a closer look (and an excellent podcast with Jeffrey) reveals good reasons to watch Yahoo over the next months. Vast improvements to mobile search and an exciting set of mobile apps are a boost to Yahoo’s popularity and potential for growth. (More on my take after I hear back on my request for an in-depth briefing to connect the dots in the raft of recent announcements, so watch this space.) Bernstein thinks Yahoo has “already overtaken Google.” The challenge now is to “translate this gain into superior financial performance with advertisers.”

As Jeffrey put it in the podcast:  “To Yahoo’s credit; Yahoo has improved enormously in mobile search recently. And clearly, its applications are resonating more with users. Now that may ultimately translate down the line into a more favorable share, so possibly, going with Yahoo might end up being a good strategy provided Yahoo can keep its momentum going and keep improving. Probably at this minute, it seems that the worst choice for the carriers would be to go with Microsoft, which is where Verizon has gone.”

Among the highlights:

GOOGLE WINS?: Sure seems that way. As Jeffrey puts it: “Even though competitors have preferential placement through deals, and even though competitors may have apps that consumers say they prefer, Google’s still winning.” Why? Brand reach is a big part of it. “What we’re seeing with Google is: That without compelling people in any way – you don’t have to sign up a contract to use Google, you don’t have to pay Google anything, you just use it if you prefer it -  people, in 60 percent of the cases, will just elect to use Google.”

VODAFONE & YAHOO: “After analysis and results, and we’re doing some more user surveys at the minute which we think will probably confirm [our view]: Vodafone might actually be wasting their money.” Drilling down a bit more Jeffrey says “Vodafone might not be wasting money in the sense that they’re doing a deal with Yahoo, it just that they probably could have done better with Google had they selected Google under very similar terms.” (A tall order indeed if we consider Google doesn’t split paid search revenue. (I later asked Jeffrey to look at it from the operator perspective. Does it pay to give it all to Google? Listen in and let me know what you think.)

ANDROID: It’s a fail as far as Jeffrey is concerned. The bad news: The apparent collapse of the Android Alliance and the surprisingly low brand reach of Google among G-1 users have dealt a tough blow to Android. The good news: It doesn’t seem to matter. “Android strategy doesn’t seem to have been a success, but it hasn’t hampered Google’s outcome.” The pull-though strategy – picking up users who repeat their PC behavior on their mobile phones – has paid off.  We should keep in mind Jeffrey is talking about the trend in the U.S.  No doubt users in emerging markets that have leapfrogged the PC altogether are likely to be a little harder for Google to simply “pull through.” What’s more, MCN tells me user preference in Japan and much of Asia favors content and commerce over search results.

OPENNESS & OPERATORS: “I think it boils down to the control mindset with the operators. The operators need to feel control, and it depends whether you would accept a lesser degree of control and a lot more money, or you want a higher degree of control and get nothing.”

My take: It depends on where you are in the value chain. For investors, it’s enough to know Google’s paid search pays dividends. But the mobile search road test Bernstein uses to determine the effectiveness of paid search strategies employed by Google and Yahoo also highlights an important factor that could play in Yahoo’s favor as more people do more with their mobile phones.

By way of background, Bernstein road tests Google’s approach (giving prominent placement to ads) and – based on the Google Ad Traffic Estimator – estimates what the advertiser had to pay Google for the top-notch spot. Yahoo, on the other hand, has organized its apps into a carousel that gets high marks on user experience, but makes it tougher to show ads.

Read between the lines, and this criticism may actually hold the essence of Yahoo’s longer term competitive advantage. Its paid search strategy correctly tends to emphasize the quality of the user experience over the quantity of paid search ads that could be delivered. As the report points out: Yahoo favors delivering a good user experience over “overt monetization via display ads.”

But is that really a shortcoming? Doesn’t delivering a better user experience ultimately solve the monetization issue? A better user experience means more users, more searches and more opportunities for brands and mobile advertisers.

And let’s examine the premise that the end-game is about displaying ads at the top of the results list. Many companies – including those that support Every Single One Of Us – are beginning to question the fit between PC advertising methods and our intensely personal mobile devices (and the metrics we use to measure their success/failure).

User experience or prominent placement? Which makes for a more sustainable business model over time? The jury is out on this one – so please share your ideas and insights.

Disclaimer: MSG has been chosen to undertake the Mobile Advertising U.K. research project on behalf of Every Single One Of Us; MSG is an Every Single One Of Us Collaborator. MCN has been an MSG supporter.

Notice anyone missing? Service providers and mobile operators.

In fact, their absence in this line-up tells us these players are either content to leave it to the handset makers and Internet giants (a first step on a slippery slope to being a dumb pipe perhaps?), or are simply oblivious to the vast arsenal of capabilities at their disposal, capabilities such as customer relationship data, personalization technologies, and location information that allow them to fight back. In my view, if these players could open up to make all the above available to developers (in a standardized, no-brainer way), then they would cover the bases to be much more than just another application store. With their reach and resources, operators and service providers could be the super shopping malls of the mobile Internet.

Last week I explored this in a post that outlined how Qualcomm and its Plaza Mobile Internet platform potentially change all the rules, levelling the playing field and allowing operators and brands to play a central role in this brave new Open Web. This week I’m back with an exclusive look at Amdocs, a company preparing to take the wraps off an application store platform that ups the ante. Thanks to Jessica Francisco, Amdocs account manager at Weber Shandwick for reaching out, and thanks to Idan Carmeli, Business Development Manager, Amdocs Interactive, for giving MSG the inside track on the company’s app store strategy.

Idan’s controversial yet correct observation: Service providers must learn how to leverage third-party developers. “The biggest question that should be on operators’ minds is: How do I convince developers to use me and not any other of the app store channels that are available in the market?”

The answer: Operators must open up and offer their assets – their customer billing relationship, their customer information, their ability to deliver content personalized to customer segments, and their network capabilities – to developers. “Operators know how to sell content and bill for it. Now they have to be open to third-parties and give them the tools they need to sell to their customers.”

An excerpt of our Q&A:

Q: Some call the app store model the killer model. Google et al have app stores in place, what is the impact on off-portal?

A: It accelerates the move to off-portal, which isn’t good news for service providers. But there is another side to this. The increased interest of consumers in finding cool content and apps means it’s a good place for operators to be [in the middle of this exchange] if they can find ways to better monetize this marketplace.  We’re helping service providers create an environment – an ecosystem similar to what we’ve seen from Google and Apple – that leverages their [service provider's] unique assets to bring developers and application providers on board.

A: There is nothing written about your app store platform and offer at this time. What can you tell us about it?

Q: We will be formally launching this new solution [at WC 2009] next week in Barcelona, along with other Amdocs Interactive offerings. The app store is a platform that allows service providers to, on the one hand, provide tools for developer communities to create applications, and, on the other hand, gives them [developers] a channel to present these apps on the content store. So there are two sides: One, a commerce platform and all the enablers on top of the commerce platform that are derived from our acquisition of Qpass that allow developers to create, upload an application to an existing content store, define how much they want to sell it for, sign the contract with the service provider for the revenue share – the works. Two, the tools for developers to actually build applications that aren’t just generic applications because they can access service providers’ services, such as SMS, WAP access and location as well as other available customer information . The aim is to connect all this – in a convenient way — into developer toolkits that are provided by the service providers to the developers to help them build applications they can later sell through the [service provider's] app store channel.

Q: Does the application store come with apps to start? Or do you help service providers populate it with apps so they have something to sell from the get-go?

A; As part of Amdocs, we have our own framework in place for working with third parties in the mobile start-up arena and we have a framework for building relationships and creating a channel between the start-up community and the innovator community on behalf of our customers.  So, we can leverage these relationships and all these start-ups that are part of our program in order to populate an app store. It’s not the focus of our solution, but we can facilitate this.

Q: So you offer the nuts and bolts for an app store. But I also know that you have mobile search and personalization capabilities – through ChangingWorlds, for example – that could potentially make this a self-learning storefront…

A: Definitely. Our ultimate vision for everything we do in Amdocs Interactive is to bring to market solutions that leverage all our assets. So eventually we will want to embed relevant capabilities in our app store solution. For example, we recognize that personalizing the app store experience for the consumer is an important value-add for both the developer and the consumer as it solves the relevancy issue that’s causing real pains for third-party developers on other mobile platforms.

Q: In other words, developers might pay a premium to content providers for the ability to target individual consumers? What would the deal look like?

A: It would be the service provider saying to the developer ‘you have this app that certain consumers are more likely to appreciate than others, so let’s make a deal and I’ll make sure the apps consumers see are the ones most relevant. Something like that could be reflected as a premium in the revenue share model between the service provider and the application provider. But first service providers should get where they want to go, and that is being able to launch an app store as quickly as possible because nobody is waiting for them.

Q: A devil’s advocate question here: What is the USP of an app store run by a service provider? Apple and Google have a lot of mindshare already…

A: When opening up to third-parties, service providers  actually create an edge for themselves by creating an edge for their partners. Our app store is not just a content store, but  an end-to-end process and a set of tools for developers that allows them to offer apps to users in a way that they find compelling because they are personalized, or location-aware, or indicate presence, or simply build on the history of the consumer relationship because the developer has access to this data. That’s an edge Google can’t provide its developers.

Of course, the sharing of customer data would take place in a secure and controlled fashion because these are big issues. And let’s not forget reach. If I’m making a choice to develop something, say, for the Palm Pre platform, , I had to take into account it’s not that big a platform yet in terms of how many users are using that. But if I go to AT&T, I have a subscriber base of upwards of 70 million customers. This is scale the service provider needs to learn how to leverage and offer to third-party developers.

Q: Let’s talk about some business basics. What is the monetization model and where does mobile advertising fit in?

A: The basic monetization scheme is the revenue share from the download of the application.  On top of that the mobile operator can charge for the value-ads we identified, such as placement on the store, perhaps boosted by mobile advertising across the network, as well as access to personalization information. It’s easy to imagine a number of models. In one scenario, it’s an 80/20 split in favour of the developer for the basic upload and distribution through the store. But the operator could take 25 percent for better placement, or 30 percent for better personalization. Lots of business models are possible.

It all comes back to the core assets. Once service providers can make it easy for developers to do business with them, then there’s basically no one better placed than a mobile operator to monetize these apps. They know their customer base better than anyone, and that includes Facebook, Google and even Apple.

Q: What about the developer? What capabilities do you offer them to help monetize their apps? I could imagine top of the list would be mobile analytics and some visibility into sales and mobile advertising campaigns…

A: Definitely. In fact, in the very first concept mock-up that we developed for our product, the most prominent feature on the developer profile page – the page where the developer manages himself — is a dashboard of revenue and usage performance for his applications.  For us, this is an important piece of what the service provider needs to offer developers so they’ll come to their [service providers'] platform.

Q: What about mobile search? A gripe I hear is that people can’t find the apps they want. You have mobile search within Amdocs, are you going to use it to make shipping in your app store less of a chore?

A: Yes, search is absolutely part of our roadmap – that and our personalization capabilities will be part of the app store.  But there is more than that: Amdocs is also an established BSS player and systems integrator,  and we’re priming our solution to best leverage the differentiation potential of the customer data, the customer billing and the business intelligence that’s coming from the BSS.

Q: What about the marketing and the branding? Is it powered by Amdocs? And who gets the developers on board? Amdocs or the operators?

A: Good questions. I think we’re going to collaborate with our customers on this. In the case of making sure that everyone hears about their (service providers’] app platform, it’s ultimately going to be the responsibility of our customers to communicate the app store and why it’s a good proposition.

Q: A big picture question: Is it too late for mobile operators to join that app party? I mean we already have Apple, Google, all the big names…

A: We’re seeing increased interest from our customers because they realize they have to be in on this. They have to be on that train before it leaves the station.

Q: It hasn’t left already?

A: Everybody else is announcing app stores.  Any service provider that goes to the market now, it’s not going to be the first; it’s not going to be the second. But any service provider that enters the market now will need to offer an app store. It’s table stakes.

It’s all about the future of the mobile industry. It’s time [for service providers] to seriously bring partners into their business. That’s that bigger issue at play here. If you look at other examples, such as Amazon in the retail industry, it gets this. It’s a retailer with an online store. But with its Amazon Web Services offering, it’s suddenly become more than that. Now you can ask yourself: What does a retailer have to do with providing computing services to developers and application providers?  It’s only when you dig a little bit into that that you realize that if you want to make sure that your business keeps growing and expanding and capitalizing on 100 percent of the opportunities that you have, then you have to learn how to work with partners in the best way possible.

My take: I am reminded here of The Keystone Advantage: What the New Dynamics of Business Ecosystems Mean for Strategy, Innovation, and Sustainability, a must-read business book by Marco Iansiti, the David Sarnoff Professor of Business Administration at Harvard Business School. In it he points out that scale, once an expression of internal operational and innovative capabilities, is fast becoming a measure of external resources and reach. Put simply, size is about “exerting influence over vast networks of companies and managing assets you don’t own.” All the big names – Microsoft, Google, Nokia, eBay and Amazon – are giants because they pursue a kind of keystone strategy that not only aggressively furthers their own interests but also promotes their ecosystems’ overall health. They have become undisputed market leaders because they appreciated the positive impact their platforms could have on their business ecosystems – and took steps to help other businesses in their ecosystem achieve high performance. This in turn has paved the way for sustainable results over decades.

Mobile operators should borrow a page from this winning strategy and leverage the broad range of content and capabilities available in their business ecosystems to improve the end user experience. Concretely, mobile operators should create platforms in the form of services, tools, or technologies and allow other members of the mobile content and services ecosystem free access.

With companies such as Amdocs and Qualcomm lining up to do just this -in the case of Qualcomm, it’s initially more about widgets -  it’s clear that Google, Apple, Nokia, Samsung, Microsoft and Handango (RIM) could get some serious company. We don’t have implementations yet – but we do have platforms that cover the bases to help operators gain a competitive position in the center of this value Web (NOT chain – that’s old school thinking)…