Blyk scraps it! No, it doesn't!

Blyk, the ad-funded MVNO for 16-24 year-olds has been in the news lately a lot. The trigger was a piece by NMA according to which Blyk had announced it would scrap its consumer offering and concentrate on selling its technology/concept/both to other operators. This was quickly refuted by Blyk. The "final" position appears to being a little unclear.

Now, quite a while ago, I issued concerns about the viability of their business model as a stand-alone ad-funded MVNO (see here), and I stand by it (even if they have varied their model a little recently: from 217 free messages and 43 minutes of free calls per month to a £15 discount voucher). If they now claim that this was "only" a proof of concept, I must say that this smacks more than a bit of hopeful PR although this may just be semantics:

The pitfalls of an MVNO-only model aside, their approach is rather intriguing: if you can segment the market as they do and thus create consumer (or people) clusters that are much more homogenous than most media will be able to assemble (18-49-year-olds anyone?), you have a fairly powerful opportunity to interact with your people more directly, more intensely and - most importantly - more relevant messages than you otherwise could. And this has value, and lots of it!

Combine this now with the headaches of your ordinary operator, of which the biggest one probably (still) is churn. I am lacking current accurate numbers but, historically, an operator's churn rate (the percentage of users it would lose in 12 months) was up to 1/3. And this is painful, very painful! So get a tool that allows to reduce that churn significantly and you're off to the races. Combine this with a (functioning because highly targeted) advertising model and you can even increase your margins on this model. Sounds good? Certainly does to me!

And so it is not a big surprise that other operators are said to have shown a lot of interest in the model. Vodafone, for one, have had their own advertising-related announcement in the last week, and the use of Blyk's model and expertise could be quite compelling to them (as some voices already suggest). From Blyk's point of view, such a model is also easier and more quickly scalable than a stand-alone expansion and it should therefore greatly aid Blyk to build the critical mass it needs to stay (or become) relevant to advertisers.

It might still fly, you know...

Image credit: http://asetcenter.net/images/article/mobile_adv.jpg

Mobile Advertising works!

We seem to be having another successful showcase of mobile advertising: this time, mobile ad firm Greystripe and research firm Dynamic Logic have produced a report that confirms that mobile ads are uber-effective: they report about a case study for a mobile advertising campaign for The Golden Compass (which was broadcast during load times for certain mobile games). The campaign brought about a 19.3% increase in awareness of the film’s title a 9.5% increase in interest in seeing the film among all respondents. The ad apparently also outperformed a typical online advertising campaign by 52% in terms of brand awareness.

The case study also states that results showed that WAP sites were effective in influencing
a highly-engaged audience, particularly when advertising new movies:

• Among overall respondents, 35% say they use their mobile phones for “finding theater and movie times,” and 29% “watch movie trailers.”
• Frequent movie-goers — those who have seen at least two movies in the theatre in the past two months — use the mobile Internet more often than non-frequent moviegoers (79% for frequent movie-goers vs. 58% for non-movie goers).

It would have been interesting to know if the game was actually the mobile game for the Golden Compass (published by Glu, which was surprisingly absent from any mention) or if it was just more or less random games selected. There was also only little to read about the details of the survey, etc, etc. As Greystripe has somewhat of a vested interest in this, one might be querying...

The naked numbers from above are in themselves impressive. However, I am calling for more information here as this is per se not substantial enough to merit a whole big new world... I am inquiring for more details... Fingers crossed.

Blyk now at 100k subs

Now, I will not claim that they ramped up their efforts as a result of my comments a few days ago, but Blyk announced today that they breezed past the 100,000 subscriber mark. So, well done them!

It does not however alleviate my concerns about the general business model, I have to say. They are not revealing ARPU or anything like that. The overall constraints of the ad-funded approach do, I think, remain. I stand to be corrected but would need to see a more robust business parameters to be convinced...

PS: Thanks to BitRabbit for the heads-up!

Nokia pockets Enpocket

Nokia has agreed to buy ad-platform provider Enpocket for an undisclosed sum. The deal is expected to close later this year. This, coupled with Nokia's recent announcements concerning Ovi, shows the Finnish giant's push into other parts of the mobile content value chain.

Nokia's CTO Tero Ojanperä highlighted just that: “Nokia has already announced its intention to be a leading company in consumer Internet services and we believe that mobile advertising will be an important element in monetizing those services for our customers and partners. [...] This acquisition is a [...] move to bring the reach and depth of Nokia to organize the market across the world, and make it easier for an ecosystem to develop.”

Nothing much to add, I guess. It'll be interesting if they will manage to leverage Nokia's might to extend the reach of Enpocket or if the latter will simply be absorbed by the sheer size of the former...

Mobile Coupons gaining traction?

Mobile coupons have long been a story lots of people have tried to get their heads around (the oldest blog entry I found dates back to 2003). There is a large number of players working on and with this and there have been the occasional successes: Austrian firm 3United (acquired by VeriSign) sold mobile tickets for a Britney Spears concert in Vienna as early as 2005 and 10% of all tickets sold were sold via mobile (they upsold additional content to 85% of those users!; see here). Scottish company Mobiqa is rolling out a mobile ticketing solution for MLB through tickets.com (see their showcases here). There are countless more applications in the area (apologies for not mentioning everyone...)

Cellfire now reports "about" a million people who have signed up for their service in the US. The WSJ ran an article about this (read it here; note: this might go to behind their subscription wall soon...). Redemption rates are reported to be good: they say they've been seeing them at 15%, which is a whopping 3x that recorded for old-fashioned paper vouchers.

Besides the usual critical mass and all I suppose it comes down to mainly two points then: more information about the line one must not cross in respect of bombarding consumers with advertising and retail brands picking up on the mobile screen as an advertising and indeed customer retention tool in earnest (so far, most of what we are seeing are trials or fashion-driven PR affairs). Given that there are more mobile phones in the world than toothbrushes, this should be a no-brainer! And with customization and segmentation of the customer base increasing by user, a very targeted approach should be possible. This is something Cellfire clearly realizes: they do not share phone numbers... Well done, them.

Cellcom's ad-funded game trial: the Results

It is probably because they read here my criticism of their somewhat cryptic information policy back in April (well they probably didn't) but - one way or another - Cellcom, the Israeli carrier that entered into a comprehensive ad-funded mobile game trial has provided insight in the results. Kudos!

So what do we learn? Here's some of the highlights:
* 44% click-through rate
* 19% acquisition rate
* 10x higher game downloads per user (compared to downloads prior to the trial)
* 24% of the participants had not downloaded a game in the preceding 6 months, and 54% had not done so in the preceding 3 months.
* Take-up appears to have been particularly high amongst the youngest (9-20 years). No surprise here. The sentence reporting that is a bit mumbled, so not sure if they want to tell us that 65% of the users in this segment downloaded at least one game during the trial...

A little aside I noticed was that they call advertisers - somewhat carefully - sponsors: does that mean they didn't get any return for their money? Anyway, they advertisers/sponsors included quite a few of the biggies, e.g. Nokia, McDonalds, Diadora, Samsung, Adidas and Walt Disney. All the agency powerhouses tinkered with it, too, with McCann, Saatchi & Saatchi and BBDO all involved.

I have praised above Cellcom's information policy but two crucial data points are (somewhat unsurprisingly) left out, namely CPM and pay-out to the game publishers. For a 1-month trial, everyone will be in for the ride, and be only to show that they are in the midst of the flavour of the month, mobile advertising. However, only if advertisers are that (and not sponsors), i.e. if CPM will be at levels comparable to other media (or better), will it work. The above click-through numbers suggest that this might well be the case, and the added value of extreme targeting (the mobile screen is a user's most personal one: it is not shared with others to the extent the TV or computer is) will improve that further.

The question will then remain if big mobile game publishers who regularly spend hundreds of thousands dollars on a game will provide for in-game ads in these games and if licensors for such games will allow advertising that will then factually be endorsed by their brands. Finally, operators must make sure that the consumer is not charged for the data transferred to feed the ads. This can make for an incredibly complex business model, and perhaps one that will not make it worthwhile for one or more of the parties in it to participate. Much easier of course if there is no third-party licensor involved. The result could then likely be a two-fold structure: high-powered branded premium games for a price and unbranded, ad-funded games for free.

Buongiorno buys Flytxt... and it goes on...

Consolidation of the mobile marketing sector seems to happen faster than people can blog: Italian mobile content distributor Buongiorno has acquired UK and US operations of Flytxt for c. $ 5.4m. With Buongiorno's platform and D2C focus and Flytxt's background (they provide a tool that allows marketing types to run their own campaigns), this is a somewhat different twist to the approach Microsoft, Google, Yahoo! and others have been taking. A D2C player should really be better positioned to bridge the gap between advertiser and consumer as they are much closer to the latter.

Here's what they say: "Mobiles allow marketers to reach individuals in new ways, which are not possible with other media and open up dramatic new opportunities for marketers to interact with consumers. Flytxt's work with Orange on its 'Orange Wednesdays' campaign is testament to how powerful the use of mobile can be as a marketing and advertising tool". By way of background: Orange Wednesdays are a BOGOF cinema service that has mobile ticketing components (i.e. you can sign up/participate via mobile), and if we get this right, the mobile component is based on Flytxt's propositions...

No numbers on usage and/or take-up though, and that is a pity... Other than that, this combination could be intriguing. Bring it on, folks!

AOL gets Third Screen Media - The Big Boys & Mobile Advertising

It heats up but remains VERY fragmented: After Microsoft snatched up Massive and bought Screentonic, AOL now acquired Third Screen Media. Google has been invisible on this front but powers ahead with integrating many of its products onto mobile - and they (can) come with ads (see article and interview with their Director of Product Management, Deep Nishar, here). Yahoo! as well is getting its search products onto more and more carriers, a step to keep doors and screens open... Mighty Nokia announced its own service... Various carriers do it on their own (e.g. Sprint as per the report here). And then there's a few first-generation "indies", such as Greystripe and Actionality (indies for how long though?), Exit Games and IDG try the partnering approach - there is certainly a lot going on!

Is this all sensible or is it the silverbacks trying things out and some of the smaller players dressing up for a beauty parade and a big-buck exit by acquisition and/or running after the flavour of the month? AOL seems to think the former: their Chairman & CEO, Randy Falco said that "AOL is one of only four at-scale advertising businesses on the Internet, and the acquisition of Third Screen Media gives us a very strong position in the fast-growing mobile space. It also lets us offer advertisers a more complete set of solutions, from display advertising to search and now a superior set of mobile solutions."

At the moment, the sector is all talk and little money. According to traditionally buoyant analysts Informa, 2006 saw $871m in ad revenue on the mobile platform (and they didn't even tell what was comprised; I assume this includes SMS-based services which we can probably agree are pretty crude), others put it to half that (also see the overview on the fine GigaOM blog here). There is little doubt that the sector will grow exponentially but when, how and through which players is pretty much wide open.

Today, for MSFT, Google, Yahoo! et al, these acquisitions are largely insignificant as regards their impact on the P&L but they may well equip them with a much needed spearhead (and knowhow) in the new ad sector, mobile advertising.

If more and more players try to assert themselves, the question will arise which type of advertising model we will see: will it be syndication-driven as it is on the web or will you need to book your ads with every single media owner (as it is in print and TV). At the moment, even though one would/could argue that the mobile is merely a different iteration of online, it would seem as if they're choosing the latter but then it is very early days.

The big issues are still somewhat unsolved as yet and they will arguably hinder quick implementation: white-listing of data services, so that the end user does not actually have to pay for the delivery of ads to his/her phone, is a big issue that will only be solved once data plans are truly open and not capped at [X] MB (as a few carriers now introduce, e.g. Orange). Many other issues, such as targeting users (relevance) and balancing ads (e.g. in-game; see interesting report here) need more robust solutions, too.

So at present I'd say: congrats to the likes of Massive, Third Screen, Screentonic, etc who have found a deep-pocketed corporate home and good luck and perseverance to all the others.

Quo Vadis, Microsoft Advertising Strategy?

Mobile Marketing seems hot, even in this young blog where I commented upon it here, here and here already. Now though mighty MS moves again: Microsoft acquired Screentonic, a French mobile advertising firm. This follows their acquisition of leading NY-based in-game advertiser Massive a year ago (see here). Coupled with rumours around this ominous joint venture that sent Yahoo! shares soaring one wonders if MSFT is setting itself up for a true fight with Google.

Google of course has recently bulged up again with its DoubleClick acquisition, in particular as it was said to be interested itself (not that Google hadn't done anything before: remember their Sky and MySpace deals). According to reports, Google is set to take 32% of the digital ad market this year, up 7% from 2006 (the report is not clear if that includes DoubleClick or not). Yahoo! came in at 18% in 2006 and Microsoft at a meagre 7%.

It is a very exciting space. However, when it comes to mobile advertising can I note that Google hasn't really moved there yet? Implementing AdSense and AdWord on mobile might be tough as long as screen resolutions aren't sooo great and data-inclusive plans still the exception but isn't the absence of any action noteworthy? I think not, at least not at current (becasuse, let's not forget, they are rather active when it comes to get themselves onto carrier decks as the search engine of choice).

Any move at current is a gamble: data plans can cost you anywhere from nothing to an arm and three legs, users haven't shown to be taken to ads on the mini screens of mobile phones (unless they get immediate reward: see my blog post here). Microsoft's explanations (which their GM of Digital Advertising Solutions gave to AdAge) aren't uber-convincing, more middle-of-the-road talk about CPM, CPC and CPA... These are horrific for mobile at the moment. And mighty MS doesn't reveal terribly deep insights into the space when they utter things like this when it comes to the carriers: "There's definitely an economic relationship. I can't tell you what those [revenue] shares are. Most of the mobile operators today basically look like a web portal on the mobile phone." It is just that those operators today are more what AOL was in its heydays: they control the whole thing, including the access to the end user. And they do not provide the content, so you will need someone else in there, and, and, and. It might just not be just as profitable and rosy as people often say...

The hope always is that mobiles are the devices that make it easiest to target one-to-one. Fantastic! But the above shows that the jury might very well still be out.

So - as unfashionable as it might have become - Google may just have shown some smart thinking again: sit back (and comfy on their search cushion) unless you see a business unfolding that shows significance impact for your own business - and that would arguably have to be even more to merit such a move for Microsoft (that isn't traditionally basing its business model on ad sales) than Google (that is).

Mercedes Markets Mobile

It is another one of these examples where PR speak dilutes the message till no one knows what it actually is but here goes: Mercedes has instructed an agency to increase its use of mobile phones for marketing purposes, and the good folks from the PR agency do not forget to mention that "no other automotive manufacturer in the UK has implemented and maintained such a large mobile presence" So: what does that mean?

They want to "encourage active response from traditional advertising such as poster, print, TV, and DM, via mobile text calls to action, driving users to Mercedes-Benz mobile sites." But how, with what, what for? I don't know and they don't say. Now, mobiles and mobility - there surely is a common theme here somewhere. But will they do more than inform customers via SMS and try this Bluetooth trial? I would really wish they'd be somewhat more aggressive in communicating initiatives.

Cellcom does Mobile Advertising...

Israel's largest mobile operator Cellcom has launched an advertising-funded games service, reports MobileIndustry.biz. The game titles (no word on which ones these are) are free to subscribers and the network has apparently enlisted some of the heavyweights as advertisers: Disney, Nokia, McDonalds, Diadora, Adidas and Samsung are all listed to have "already signed up". Campaigns are apparently being designed by Saatchi & Saatchi, BBDO and McCann, so on that front all ingredients should be there.

Unfortunately, the press release remains a bit foggy on how it is actually done. It talks of "ads appear[ing] as product placement in the game and within different areas of a games environment" and they say that "[t]he digital coupons and product placement methods used in the trial have proven themselves with high conversion rates among [their] clients" but no numbers or more insight is being offered.

With the limited information provided, the question unfortunately remains if this is only a PR coup on the flavour of the month or if it is indeed commercially viable. Next time?

Update: Some results of the trial can now be found here.

Mobile Ads for PrePay Credit works with Teens

Here is some interesting research on mobile advertising. According to a recent survey, a staggering 82% (!) of 11-20 year-olds would be happy to receive advertising in exchange for top-up credit (76% for discounts/special offers). There was more to report on the survey of course, which you can read e.g. here.

The most interesting conclusion is that the kids apparently fully understand the mechanics of advertising: advertising business is paying for eyeballs. If you want my eyeballs, you have to pay me.

They do not really seem to give a hoot WHAT ads they actually receive (although at least 71% would not mind to receive ads on things of interest to them) but more what they get in return for allowing it. This would appear to create a small dilemma because it is somewhat difficult to communicate to the advertiser that one wants it to subsidise the youngsters' top-up credits ("so who was that ad from?" "Can't remember but was worth 2 quid"). At the very least, advertisers would have to take a different approach to the messages (as in brand message, not as in SMS) and the type of campaigns they create in order to take this into account.

Crazy numbers: mobile marketing worth $19bn by 2011?

According to ABI Research, mobile marketing will be worth a staggering $11bn by 2011. Apparently, by the end of this year, it will already be a rather honourable $3bn market.

Now, I don't have the means (or inclination) to buy the underlying report but at least they divulge that the amount is to include proceeds from mobile search and mobile video, and I suppose one could predict that, in 4 years time, there may well be more advanced devices that will actually make it fun and worthwhile to use them for more elaborate surfing and rich media consumption. Not very specific though. Other than some foggy reference to the wealth of data carriers sit on and "due in part to mobile broadcast networks' presence in all major markets" (doh!), all the rest is apparently, well, apparent...

To me, it's a whole lot crystal ball-type assumptions.