Following its acquisition of Quattro Wireless for $275,000,000, Apple has just announced the launch of iAd, its mobile advertising platform (see my colleague’s take here). Adding the $750,000,000 that Google is ready to invest in AdMob (the deal is still under FCC scrutiny), the two most disruptive new mobile entrants have invested more than $1 billion — a clear signal that mobile advertising has long-term potential. The main difference between Google and Apple is that Apple is only just entering the advertising business, while Google’s entire business model simply IS advertising. However, that potential has yet to be realized. Does that mean stakeholders can generate significant revenues in the short term and that operators will be bypassed once again? I have read in various places some strange comments suggesting that Google’s mobile ad revenue share with mobile operators would be a way to finance network evolution. Just compare the cost of a base station and the significant investment required to finance 4G with absolute mobile advertising revenues and you’ll quickly figure out for yourself that this is unlikely to happen anytime soon. This is more of an online advertising discussion around the Net neutrality debate (remember France Telecom’s CEO warning that he was not “building freeways for Californian cars”!) but it will crop up later for mobile.
Apple announced iAd today as part of their OS 4 program today. I speculated in this post on why they purchased Quattro Wireless a few months ago, but now we have more details. This post is on iAd only - my colleague Charles Golvin has a more complete analysis in his post.
First, looks like Apple will leverage Quattro's business model and use their sales force to sell ads. This should work early on for large buys.
They are continuing to be very supportive of their developer community with 60% of the ad revenue going to the developers. Not a lot of details now, but this could be generous. Part of the revenue needs to go to the sales team as well. There will be less leftover for Apple. Models such as Admob's have more of a self-serve model that have the potential to be more cost-effective especially with smaller buys. The types of companies that will have the budgets to develop interactive ads that take full advantage of the platform - accelerometer and location plus rich media - will have the budget to spend on media as well - not just on the creative.
Beyond developers, Apple is continuing their focus on the consumer experience. They are looking to protect the quality of the user experience by controlling the ad experience. Steve has raised the bar on quality of mobile ads by keeping consumers within their existing application or experience. He anticipates that the ads will be engaging enough to be considered entertainment.
It has the potential to be more valuable than inventory on many phones.
People who own smartphone devices are more active on their cell phones than your typical cell phone owner. For simpler tasks like SMS, they are moderately more active. For more complex tasks such as shopping, using maps, banking or doing product research they are significantly more active. iPhone users are some of the most active smartphone users when it comes to commerce-related activities.
Advertisers have held back on spending more on mobile marketing for many reasons. One of the primary reasons has been their inability to demonstrate the effectiveness of the medium or calculate an ROI. It gets a lot easier to calculate the ROI when consumers are buying items or using services such has mobile banking to deposit checks. Consumers are spending real money. My colleague Sucharita Mulpuru will be working on a mobile commerce forecast later this year. Anecdotally, we saw consumers spend in the hundreds of thousands of dollars with individual merchants/hotels/restaurants in 2009. We're likely to see run rates in the low millions for a few companies within a few industries by the end of this year.
The more consumers spend, the more advertisers will be motivated to spend. Consumer product and service companies will invest in mobile services such as "find the nearest," consumer reviews, available inventory, etc. to support commerce-related activities. The greater the supply of services (of great services), the more adoption and usage we'll see among consumers. Then consumers will spend more because the experiences will be convenient - it'll be easy to buy books or toothpaste.
This is probably one of the top 10 inquiries I get from clients. Should I have a mobile coupon offering? If so, what form of mobile technology should I use? Our new report, "Mobile Coupons: Gold Rush or Fool's Gold?" addresses this question in more detail. This question was especially important in 2009 with the poor economy as consumers sought savings and deals.
Do consumers use mobile coupons today? A few do. Our surveys show that a few percent have at least trialed mobile coupons. There have been some usability issues - how to opt in to programs, download a coupon application, breadth of offers available - as well as demand. Heavy users of mobile coupons are not necessarily heavy users of mobile data services. My grandmother cuts more coupons than anyone else I know. She has a prepaid 100 minute per month voice plan. Will she ever use mobile coupons? Probably not. She turns 90 this summer. A lot could change in 10 years, but until her arthritis is so bad that she can use scissors, I think she'll still be clipping coupons from the newspaper. I see more opportunities in luring young mobile-savvy cell phone users into opting in for programs.
That said, I'm optimistic. The main reason ... every grocery store and many retailers that I know are using mobile coupons. Target launched a few weeks ago. Target takes providing an amazing guest experience very seriously. When you ask, "are mobile coupons ready for primetime?" Target adopting and rolling them out is a clear "yes" for a leading US brand. Safeway. Best Buy. Krogers. JC Penney. These are just a handful of the companies rolling out mobile coupons. With their marketing power and ability to drive awareness and motivate adoption, I expect we'll see a significant jump in adoption and usage this year.
**Correction: Actually, we forecast that direct mail will be at about $67 billion by 2012. So to my comment below, the astronomical forecast of mobile at $20 billion would be closer to a third, not a half of dm spend by 2012. >Both Josh James and Shantanu Narayen, the CEO of Adobe mentioned mobile in their keynote presentations and now I'm listening to RIM also talk about the power of the mobile browser.
The mobile industry is in full swing. Its center of gravity is shifting from hardware to software, from voice to data and services, and from traditional telecom stakeholders to new entrants.
Google’s “mobile first” approach and the shadow that Apple cast over the show are forcing mobile operators in particular to redefine their position in the value chain. The traditional focus on infrastructure (LTE..) and this year’s debate on operators’ congested networks need to be put in the context of nontelecom players’ willingness to monetize mobile. Mobile World Congress is a unique opportunity to witness how mobile is reinventing itself and to see how it will become even more disruptive in consumers' daily lives in the future.
Target is now allowing gift cards to be loaded onto an online account that can be accessed from your cell phone. You can actually pay for stuff with your cell phone. Yay! See Target's press release.
I know they aren't the first. Many versions I've seen before, however, have been small scale pilots or in foreign countries. Many scenarios I've seen also are "closed" pilots among the 3-4 parties in an ecosystem that it took to string a trial together. Target has 1740 stores ... there's a bit of scale in this solution.
So, how does it work?
First, you buy a gift card. I bought the one with the cute Target dog.
Then you pull the sticker off of the back so you can see the codes. I purchased a $20 gift card.
Instructions for using mobile gift cards as well as promotions are on Target.com. Using their available media - Web site - to promote the new offer? Well done.
Interestingly though, this site ONLY had instructions for the mobile gift cards. I couldn't find a link on this site to regisiter my mobile gift card. This confusion for me is probably the only thing I could find to "ding" them on, so to speak. I'd expect that one of their next rounds of Web site updates would add this link.
Marketers - pay attention. This is an example that seems great in theory, but the "devil is in the details" of the implementation so to speak. This is among the top inquiries I hear from clients, "what do you think about 2D barcodes or QR codes as a means of connecting with customers?" I took this inquiry from a CPG client just a couple of weeks ago. I laid out the challenges. Their response was, "well, we're doing it anyway." Piloting is good - just go into it with your eyes wide open.
I've just returned from Apple's launch of the new iPad. Am exhausted from the anticipation and the intensity of the event. For a full analysis of the iPad, please check out the blog posts from my colleagues James McQuivey and Charles Golvin. See yesterday's blog. They were really dead on with their comments. I'm sure they'll post more today.
I was there so I got to touch the big iPod Touch-esque iPad. Curved edges. Not too heavy. Great video resolution - if there is HD video. (Watching full screen low resolution YouTube clips posted by European soccer fans - average). Baseball isn't my thing, but the MLB app with integrated video - looked sweet.
- Browsing - good.
- Photos - I like taking photos and I like slide shows so this was one of my favorite features - the iLife-esque photo slidesshows with music. For me as a photographer, this would be more about showing photos than creating the slide shows on the device - fun way to share with friends. Apple - if you're listening - next on my wishlist is iLife photo editing on one of these devices. I want to travel with this device, transfer photos from my fat Nikon to this, delete, edit and then sync back to my computer at home so I can then sync to my Apple TV ... could you see a mini-iLife for $9.99 for this device please?
I've been fielding quite a few requests about why donations via text messaging have done so well and why donations to Haiti via SMS have set new all time high's. I am in Cambridge, MA this week. I was walking around Central Square yesterday evening, and I noticed how many promotions there are for donating via SMS. I was surprised.