Mobile Groove

In brief: A review of buzz at the recent Mobile Marketing Forum (MMF) event in Berlin and a closer look at clever campaigns (Coke, P&G, BMW, Lufthansa) suggest pent-up demand for advertising approaches (services) that make our lives more livable.

Mobile advertising must deliver value.

It’s the key takeaway that has run through each of the 20+ industry events I have attended/chaired over the past year like a leitmotiv. However, the value of mobile advertising is changing.

At first, many brands/agencies were convinced that their value proposition was inextricably linked to their level of cool. In line with this mindset, they focused on fun campaigns around free content such as branded games, ringtones and images, as well as some viral elements people could pass around to their friends.

The strategy has paid dividends for brands such as Coca-Cola.

A textbook example is the Fanta Stealth Sound System, which harnessed high-pitched frequencies that are audible only to youth thus providing young people a new way to communicate with each other without adults listening in. Another campaign that generated buzz (and impressive results) was Fanta Virtual Tennis. The world’s first 3D augmented reality tennis game let players use their mobile devices as tennis racquets to hit a virtual ball.

COKE MOBILE MILESTONES

At Mobile Marketing Forum (MMF) Europe, Hinde Pagani, Coca-Cola Senior Mobile Marketing Manager, Global Interactive Marketing, treated attendees to a string of case studies that included these gems. But the real excitement was about simple SMS campaigns that employed a mechanism known as UTC, or under the cap (unique codes inserted under each soft drink bottle cap) to engage people and increase brand trust.

Coke still offers its demographic fun, free content. (It boasts three iPhone apps, including a runaway success that has been downloaded 500,000 times in two months – without promotion!) But it’s campaigns that combine free content with free airtime that are the real crowd-pleasers. In fact, this winning combination has allowed Coke in India to count a whopping 5 million responses in just four months. Coke in Germany has also run a similar campaign, offering customers three minutes or three SMS free of charge.

Read between the lines, and value has new meaning. It’s still about delivering cool content, but it’s also about delivering a service that teens (and their parents) appreciate. As Hinde put it: “(With these campaigns) we gain teens’ trust and please their moms.”

The popularity of location-based services applications – particularly their top-notch position in a variety of app stores – indicates that location apps are crowd-pleasers, but are they really game-changing? Nate Janewit – an MSG columnist and a computer scientist at Stanford University sharply focused on the larger issues around LBS – suggests companies need to think differently about location in order to wring more value out of their vast stores of data.

The recent report on trends in location-aware apps from Apple’s App Store, Google’s Android Marketplace, and Blackberry’s App World released by Skyhook Wireless, itself a provider of a patented hybrid system of location awareness, reveals a buoyant market for LBS apps. Indeed, the Apple App Store was found to have the greatest number of location-based applications, at over 2,300, and the highest percentage of paid for location apps, at over 75 percent. 67 percent of Blackberry apps are paid, and 80 percent of Android Marketplace apps are free.

Clearly, location apps are popular, as their increasing ubiquity and popularity across a variety of app stores demonstrates. But move past the hype and the excitement generated by the flurry of activity in the space, and it becomes clear that location services – by themselves – are not game-changing.

Location-aware data is not enough

Indeed, mobile location-based services and social networking companies such as Loopt, Pelago, and Sense Networks have invested a great deal to achieve their vision, which revolves around the provision of an array of consumer and community services supported by socially-tagged, location-aware data stores. The data they have is impressive and the expansion plans they pursue are ambitious. However, they also face formidable competition from Internet giants (Google, MySpace, Facebook, and Yelp) that have already aggregated their own large sets of useful social content, and are anxious to extend their reach to mobile.

Can companies compete on location data? Many players are positioning themselves to do just this. However, I submit that location services – and the structures and systems in place to deliver them – represent little more than an incremental innovation on top of the immense stockpiles of location data and content that are largely under the control of established Web companies and heavyweights. As a result, these Web giants are well-positioned to leverage location data to mobilize their offers and ultimately dominate the marketplace. There are, however, options and strategies mobile location services companies can employ to win the game – even though, as I argue in this is column, location services on their own are far from game-changing.

Admittedly, not everyone shares my view. Sam Altman, founder of Loopt, told me in a recent interview that he strongly believes in the value of innovation in location-based services and their central position in personal mobility experiences. A prime example is the company’s iPhone app. Loopt’s Mix feature enables users -without compromising their personal privacy – to connect with other users nearby. What’s more, users can find places nearby on Yelp and find what their friends on Loopt are saying about those places.

Beyond this interesting user experience, Loopt’s location-related content is thin, and therefore isn’t terribly useful – yet. However, it’s not so much the company’s progress with their service offering that interests me as much as its business priorities.

A NEW REPORT SUGGESTS MOBILE ADVERTISING WILL INCREASE BY 30+ PERCENT, despite the overall marketing slowdown, because of critical development anticipated by the end of the year. According to a report by Magna, the U.S. mobile advertising market will grow by 36%. That’s a rise from $169 million in 2008 to $229 million during 2009. Although this doesn’t reflect a significant growth on previous years, Magna explains that we will witness a resurgence in the industry in 2010 thanks to the proliferation of mobile-based subscriptions and ad-supported mobile applications. Source

The bottom line: Another reason to be optimistic about the development of the mobile advertising market in the U.S. Forecasts that growth will be stunted in 2009 are now tempered by bullish predictions for 2010. Advances in handset penetration, the spread of ad-funded content/services schemes, and a wealth of app store offerings should result in an even greater take-up of mobile advertising.

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THE MOBILE INTERNET, MOBILE EMAIL AND MOBILE SOCIAL NETWORKING ARE USED BY MORE THAN HALF of mobile phone users. A mobile Internet poll carried out by user experience consultancy Webcredible showed that of the respondents who used the mobile Internet (52 percent), over half (55 percent) used it primarily for emailing and social networking. Source

The bottom line: We know that the growth of the mobile Internet usage is linked to the youth demographic and their particular usage pattern (transferring their fixed-line Internet/PC behavior to mobile). This study provides us with some numbers to back this up.

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SMARTPHONES REPRESENT A MINORITY of U.S. mobile device purchases, accounting for 23 percent of handset sales volume in Q1, says recent data from market research firm NPD Group. Yet as a percentage of overall handset sales to consumers in the U.S. from January through July 2008, smartphones represented 19 percent of all handset purchases compared to just 9 percent for the same period last year. This rise was put down to declining prices, streamlined form factors, and Internet connectivity bringing devices into the mainstream. Source

The bottom line: It’s easy (particularly if you are focused on the mobile content industry) to lose sight of the fact that smartphones, despite the hype and their urban cool factor, remain a minority in the marketplace. The percentage is rising, but there is no doubt a large and untapped market opportunity in catering to plain-old, low-end devices.

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It’s a busy next couple of days as I put the final finishing touches to my mobile advertising webinars. First is my contribution (together with Dusan Hamlin, Managing Director of the agency Inside Mobile) to Multi-Channel Advertising, a webinar taking place this Wednesday at 10:00 am CET (GMT +1:00), organized by Mobixell, a provider of a comprehensive range of mobile media solutions enabling service providers to deliver mobile messaging, mobile advertising, and mobile TV. (You can register here.)

The webinar dovetails well with my mobile advertising projects, including Mobile Advertising Research U.K., a research project MSG has undertaken to expertly document the state of the mobile advertising industry in the U.K., identify growth opportunities in the emerging mobile advertising marketplace, and benefit stakeholders, shareholders, and consumers worldwide. It draws upon primary research, including in-depth interviews with 15+ mobile executives, agencies, and mobile networks, including an interview this week with Freddy Friedman, Mobixell Head of Advertising. With my MSG hat on I will also request a later briefing with Mobixell (for MSG) to discuss recent news, new customers, and the role of mobile in a multi-channel advertising strategy.

I’ve also wrapped up my contribution to a series on audio-visual presentations on mobile advertising produced by Henry Stewart Talks (HST), which will likely go live in early June. HST, a company with a 35-year tradition, provides access to world class seminars by leading thinkers and authorities from around the globe in one online resource.

The company commissioned me to summarize the findings of both volumes of my extremely popular mobile advertising white paper series (sponsored by Bango): Mobile Advertising for Newbies, which provides a how-to guide to mobile advertising and analytics; and Mobile Advertising For The Masses, which examines the market opportunity for running campaigns in a mobile social networks.

I am pleased to have the opportunity (as part of HST’s Marketing & Management series) to educate the marketplace about mobile advertising and the pivotal role of mobile analytics.

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

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

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

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

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

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

In-Brief: Consider this (the last in this week’s trilogy of iPhone posts) a place-setter for the news we’re likely to see later this month from Taptu, a provider of socially-assisted search I have had high on my radar since it broke on the scene just over three years ago. Look for a new service focused squarely on enabling mobile search across touch devices, and a short private beta before it launches in the Apple App Store next month.

Taptu’s approach, which takes universal search to the next level, crawling and indexing the social networking sites and destinations such as MySpace, YouTube, and Wikipedia, to expose an eclectic mix of results and content we might not have found otherwise, has been at the core of Taptu’s differentiation. But it’s the company’s latest release white paper (Touch Search: A New Vision For Mobile Search, which you can download by clicking the button in the sidebar) that signals an exciting shift in the mobile search paradigm.

The advance of touch devices changes how we browse the mobile Web and, naturally, it impacts what we expect from mobile search. What’s more, the touch Web represents the fast-growing subset of the Web, consisting of websites and Web pages that are optimized for access by touch devices like the iPhone.

However, as I point out in this earlier post, Taptu does more than acknowledge this trend; it has responded with a roadmap to encourage the innovation that content providers and brands agencies will require to deliver an optimized search and advertising experience for touch devices. I met up with Andreas Bernstrom, Taptu COO, a few weeks back to see Taptu’s prototype search service in action. Now I have the green light to post (I respect Andreas’ request not to give too much away here), so here’s a brief summary of my private demo and the details I can share.