Volker on Mobile

The term “Freemium” has been coined first a while ago by Union Square Ventures founder Fred Wilson and has been articulated further by Chris Anderson of Wired fame in his book “Free”. It has since attracted significant interest, last but not least because the concept seems to work…

Ngmoco goes Freemium

Yesterday, Ngmoco, one of the new world’s (scil. Apple App Store’s) giants announced it raised another chunk of money ($25m to be exact) and acquired Freeverse, an iPhone developer that recently announced it had sold (sic!) more than 5m games, which are, alas, not always free – in the contrary. Together with this, Ngmoco announced a push into the Freemium model. So there we are…

To recap: the company had released two titles so far under the Freemium model, namely Eliminate Pro and Touchpets. Both are rumoured to having done, well, OK in terms of revenue (although Ngmoco CEO Neil Young said they were clumsily made). They had previously acquired Miraphonic, makers of Epic Pet Wars and other games, and Neil wants to use the the combined forces of development power to push the Freemium model onto the iPhone properly. Good on him!

What is it about this Freemium?

The term describes games (or apps or services or whatever you can think of) that are initially free to use but use micro-transactions from within the game to monetise it. Eliminate Pro did this by selling Power Packs without which players needed to wait X hours before they could continue. Online, we have had other examples, e.g. Zynga’s Farmville where you can buy hard cash in order to immediately acquire items for which you would otherwise have to play hour after hour after hour. You get the gist… If interested, you should read Chris Anderson’s book since the underlying rationale does not only work in the little work of games.

The principle is simple and also compelling – from both the developer’s and the user’s side: the developer gets a shot at grabbing a multiple of eyeballs allowing for a multitude of chances to convince users that it is the real deal. Users get to look into the mystery bag before having to cough up hard cash. Win-win, you think.

And yes, it is: act honestly and transparently and you shall win over the hearts and minds of your users. IF your product is good and useful, the users will appreciate it, become fans (and maybe even fanatics) and will thus serve as your secondary sales force by recommending things to their friends who are much, much more likely to buy on the recommendation of their friends than from anyone else. What a wonderful idea.

Things to get right

There are two issues with this though, and it is important to get these right:

1. Make sure to get the mechanics right. This does not work for any game or app or service. There must be some initial intrinsic and compelling value. Why would users otherwise use it? There must also be a good reason to buy. Why would users otherwise want to buy premium features? If you get it wrong (i.e. if too many users do not feel fairly treated), your users are gone. And what is the price of user acquisition? Yeah, you get it. It is MUCH more economical to treat users well; they will come back AND they will recommend you and your products.
2. Make sure you get the balance right. Don’t be greedy, don’t be too tight. The aforementioned Eliminate Pro didn’t get the weighting right. The result was a) a couple of seriously upset users and b) sales that were not comparable to the top of the class (anecdotally, Eliminate Pro featured in the top-100 top-grossing list of Apple only very shortly). Remember that you need to deliver value; otherwise users – rightly – won’t feel properly treated but ripped off. And then? See above on customer acquisition costs.

The other side of balance is, however, that giving away too much will kill your business. And that is no good either.

Tools

There are tools to make your (the developer’s) life easier on this: create avenues of the players’ passion, make it easy for them to communicate their passion to their friends (which form the only community that truly matters to most of them) at a time when it is relevant to them, and you’re a big, big step closer to getting the principle right, which is to deliver value. Very, very few users will object to paying for value. But they will only do so (and in this fluid, transparent world more than ever) if the value is true and not some cheap glass pearls conceived to deceive.

Challenges, rewards, and incentives etc have shown to be powerful tools to spurn user activity. If you deliver value, there will not be hard feelings. If you want to learn more about available tools, get in touch…

The Power of Fanatics

74% of users buy things based on recommendations of friends. That is an astonishingly high number. If you manage to convert simple players into fanatics, you turn them into ambassadors and then you just need to do the maths: if the average iPhone user has 100 friends, you have a potential 74 sales (or free downloads with subsequent monetisation) per initial user. Woah!

Most importantly though: this approach does not alienate users. Why not? Because you delivered value. Deliver value and users will appreciate that (just ask Tony Hsieh, he just sold his company for $887.9m; he sells happiness, he says!).

Cartoon Credit: http://www.gapingvoid.com/thisbusinessmodel876-thumb.jpg

On 15 February, one of the most exciting showcases of mobile innovation of the year will be on display in Barcelona: the Mobile Premier Awards in Innovation. The awards are the largest start-up competition in the mobile sector and they are a unique grass-roots discovery tool: each chapter of the global community of Mobile Monday chooses one candidate. 49 candidates have been chosen (have a look further down). An international jury (I am flattered and proud to be a member) selects 20 finalists who will pitch in Barcelona at the Palau de la Musica on the afternoon of the first day of the Mobile World Congress.

It is a wonderful display of the innovation and creative power the mobile industry has to offer and I invite you to have a good look at the candidates.

If you are in Barcelona that week (and who isn’t?), you should make sure to book your ticket for the event here.

I hope to see you in Barcelona to celebrate innovation in mobile!

To stay in touch with everything around the awards, follow them on Twitter (@mobilepremier), become a fan on Facbook,

And, once your in Barcelona, you should not miss Mobile Sunday Barcelona 2010, which has fast become an unofficial kick-off event to MWC for mobile bloggers. It is on on Sunday, 14 Feb, from 7pm CET onwards.

Here’s a list of the 49 candidates (with links here):

• MobileMonday Austria – Mobilizy
• MobileMonday Barcelona – fonYou
• MobileMonday Belfast – SpeechStorm
• MobileMonday Bergen – ComCom
• MobileMonday Berlin – spendino
• MobileMonday Bogota – RedSalvavidas
• MobileMonday Brussels – Getyoo
• MobileMonday Buenos Aires – Beepoint
• MobileMonday Caracas – Consorcio Si-SMS
• MobileMonday Chennai – mobiSiteGalore
• MobileMonday Copenhagen – Cepa Mobility
• MobileMonday Dallas – Wave Integrated Marketing Solutions
• MobileMonday Dublin – Locle
• MobileMonday Dusseldorf – Yoose
• MobileMonday Edinburgh – Mobile Acuity
• MobileMonday Estonia – TaxiPal
• MobileMonday Frankfurt – match2blue
• MobileMonday Hamburg – apprupt
• MobileMonday Hungary – InfomatiX
• MobileMonday Jakarta – dotus indonesia
• MobileMonday Kuala Lumpur – CWorks Mobile
• MobileMonday Lithuania – SendFlow
• MobileMonday London – Audioboo
• MobileMonday Madrid – Tooio
• MobileMonday Malmö – Color Monkey
• MobileMonday Medellin – Wanbee
• MobileMonday Melbourne – Callernizer
• MobileMonday Mexico – Binbit
• MobileMonday Mid-Atlantic – Amphetamobile
• MobileMonday Milan – Soundtrckr
• MobileMonday Mumbai – Umundo
• MobileMonday Munich – Aloqa
• MobileMonday New Delhi – Voicetap Technologies
• MobileMonday New York – PercentMobile
• MobileMonday Oslo – Bipper Communication
• MobileMonday Paris – Presselite
• MobileMonday Rest of EMEA – Layar
• MobileMonday Rio de Janeiro – iMusica
• MobileMonday Rome – Mobnotes
• MobileMonday Sao Paulo – Atope
• MobileMonday Shanghai – mInfo
• MobileMonday Silicon Valley – CloudMade
• MobileMonday Singapore – Just Mobile
• MobileMonday Slovenia – Visionect
• MobileMonday Sofia – Bianor
• MobileMonday Stockholm – MoSync
• MobileMonday Tel Aviv – waze
• MobileMonday Toronto – Fonolo
• MobileMonday Vancouver – Sort Shots

A fresh new year with the conference and rumour seasons already in full swing, 2010 promises to becoming an exciting one for all things mobile. So let’s be kicking off another Carnival of the Mobilists (it is carnival season, too, after all). What do we have this week?

Russell Buckley looks at the benefits but also disadvantages of a retail experience online, on mobile and on the high street. He looks at this from the perspective of search vs discovery and, alas, the mobile being, well, mobile, he predicts some impact. Suffice to say, it involves the renaissance of the (much beloved by me) local bookstore! Russell’s post is here.

Mark Jaffe has an almost lyrical contribution musing about “monetizing passion” (and he is quick to point out that, despite the closeness to that other show in Las Vegas last week, he is not talking about adult entertainment). It is an intriguing angle on a well-covered topic: he basically posits that the ability to digitally provide the immediacy of satisfying passion presents one of the greatest marketing opportunities around. I concur! His post is here.

WIP Jam contributes a very insightful guest post by Informa Principal Analyst Malik Saadi who suggests that the fragmented smartphonosphere (great word!) and resultant increasing costs of native development will provide a lever for the mobile web, and he reasons it well! He reckons that the low latency of next-generation networks (LTE et al) will make the web the new ubiquitous platform for app development. If the battery life of the devices holds up, I might add… Malik’s post is here.

The good folks at mobiThinking have a great overview of available mobile metrics reports from the various ad networks, and all of them in one place. A fantastic resource! Their write-up is here.

And, finally, Aviv Revach looks forward to the Mobile World Congress and the second most important thing (after actually finding a place to sit down for your meetings) and is assembling a compilation of networking events (and, well, yes, parties) in Barcelona. Make sure to check in on his post (which he will update) here.

Which concludes this week’s Carnival. Now get back to your work and if you are attending the Mobile Games Forum or the conference that starts the mobile build-up to this summer’s FIFA World Cup, namely M-Football (both in London), make sure to connect; I’ll be at both.

Image credit: http://cbertel.files.wordpress.com/2009/02/carnival-masks-2.jpg

Here’s the presentation I gave at Droidcon in Berlin. It is also available here on Slideshare.

Unfortunately, Slideshare omitted the beautiful font I used (Chalkduster). Sorry…

Update: a version with the original font is now available here (I finally figured out that it would preserve it when saved as a PDF. Doh!)

I do not normally do this but when Mary Meeker, the iconic Morgan Stanley researcher, this is too good to let it slip (and too voluminous to blog in detail), so I am posting her presentation here. Mobile starts in earnest on slide 28 et seq. Enjoy!

If you want to download it, you can do this here.

Ahead of CTIA later this week, this edition of the Carnival of the Mobilists is being hosted by Tsahi Levent-Levi on his VoIP Survivor blog. This week brings an incredible line-up of topics and contributors: A couple of posts on mobile advertising (including mine pleading for engagement as a crucial factor of ad success), the ideal app store, mobile learning and a whole host on the use of mobile apps in the workplace (including one with a Blackberry in a bakery!) and corporate environment in general plus a look on service and feature requirements for mobile phones in the developing world.

All very good indeed! So head over and set aside a good hour to read! You’ll find it here.

A lot is being said about mobile marketing, mobile advertising, capturing “consumer’s” imagination (if not only their eyeballs). And everyone says: “yes, I get that, social, mobile, always-on, always with them, cool!” Online ad spend outstrips TV already (at least in the UK), and mobile is arguably the next big thing; it is so much cooler, too: personal, accessible, always-on!).

So how do you execute? Banner ads? Text ads? Virals? “Ah, yes, virals are cool, I heard about them!”

There’s a busload full of mobile advertising networks out there, blind, premium blind, premium (check here for a great overview). And what do they do? Well, banner ads, text ads, the usual. Does it work? Anecdotally, sort of… Most developers and publishers I know that engage in this sort of activity make their money in two ways: either they are being commissioned by an advertiser to do it (good because you’re being paid!) or they use it as complementary (sic!) revenue; on a stand-alone basis, it would not feed them.

Why is the conversion not soaring? After all, mobile allows for unprecedented targeting (IF you do it. See here how not to do it): users have their phones always with them, it is always on, you can fall back on historical behaviours, etc, etc.

I would posit that it is because most advertisers still think of it in terms of consumers: beings that sit on the other (sic!) end of the message and who consume whatever I, advertiser, want to tell them. It is not, alas, true engagement, and this is where arguably the future lies.

So how do you engage? Many options. A good one is by being sincere (Zappos, the online shoe retailer that was recently acquired by Amazon, is a great example). Another one is by engaging rather than preaching. Not so easily done with banners. Easier done with something more interactive. Such as – an example – games and apps. On Apple’s app store, there are some great successes for this type of thing: German car manufacturers seem to be good at this! Audi did one, German developer Fishlabs did a couple of games for Volkswagen, Artificial Life for BMW, and then there is Waterslide Extreme, which is basically a Barclaycard ad (and badly executed: they could so easily have accommodated the RFID function, which the original cinema and TV ad is meant to promote; alas, they ignored it!) which despite its shortfalls was incredibly successful. But these are exceptions to what I think might well become the rule. On the app side, there are e.g. Pizza Hut and Gap that were recently featured (for free!) in Apple ads. Wow!

It seems obvious when you think about it: games truly engage (users – not consumers! – interact with them actively) and they can do so in a much more subtle manner (less invasive). At the same time, the user (not: consumer) spends a lot more time with the brand than with a banner ad.

It is, alas, a space of unknown dangers and unprecedented adventure: never-before seen creatures (scil. formats) and strange folks (scil. developers) roam weird landscapes (scil. mobile platforms). This is how brands and their agencies often experience mobile. They "get" it, don’t get me wrong but they are still fairly unfamiliar with it. And because the big pots of gold sit with the brands and they don’t want to risk cutting access, they’ll rather (and rather too often) stick with what they perceive as the trusted old paths. It’s not so good then that the freshest fruit grows on the trees in this new land and no longer in the wastelands of banner ads…

Watch this space then. It will only be a question of time (I hope) before we’ll be seeing a new wave of non-intrusive, interactive, fun brand engagement. And games and apps will lead the way!

This week, the Carnival of the Mobilists is hosted by Phil Barrett on his blog “Burning the Beacon” (I like the title). He gives us the heads-up on posts covering things (seemingly) mundane as SIM cards, a look at augmented reality (also check my post on this here), mobile learning and on how to connect with young users in today’s world. Oh, and speaking of today’s world, he also features a post pondering the implication of technology in our lives. Go on then, head over here and read it!

On today’s is a stunningly beautiful Indian summer morning in England’s North-West and I have been indulging in the Guardian’s weekend supplement. One of the features was an interview with Dame Judi Dench, the iconic actress of Shakespearean as well as James Bondian fame. It is well worth a read but the little bit that caught my attention for the sake of this blog was to be found at the very end: Dench’s upcoming movie (Jude Law and a few others star, too), “Rage”, a project with arthouse director Sally Potter, will see its world premiere not in some swish viewing room or cinema in SoHo but on mobile phones. The prosaic announcement read:

Rage premieres on mobile phones on 21 September and in cinemas on 24 September. For details, go to ragemovie.com.

And that was that.

I find it noteworthy not only that it would happen at all but also that it appears to be somewhat normal, so that no one would actually bother to point it out specifically. Sometimes, progress moves in indiscernible little steps that can happen on stunningly beautiful mornings. This is one of them.

Consolidation in the mobile marketing space: German mobile marketing group YOC, a publicly listed company with revenues in Q1/2009 of c. €6m announced it has acquired Bluestar Mobile, the people known to British readers as the guys behind all the wonderful girls of the Sun on mobile (and, no, they also work with others such as the Guardian, Motorola or Bacardi). No price was disclosed. However, since YOC trades in the prime segment of the Frankfurt stock exchange, it will have to provide some details of the transaction in due course…

YOC is a giant in the German mobile marketing market (the vast majority of its revenues comes from its home market) where it runs campaigns for a lot of the marquee brands, including Mercedes, Sixt, Walt Disney, Coca Cola, T-Mobile, Sony, etc. However, its international revenues were rather small: its biggest foreign market was the UK with €400k revenues in Q1. Bluestar, which had built a nice business (according to YOC’s PR “profitable from inception”), will nicely add to YOC’s activities.

It seems the two follow virtually identical business models – full-service mobile marketing firms that run everything from concept, planning and execution of campaigns via inventory management and ad-serving solutions to creation and operation of mobile internet portals.

When you look at YOC’s share price, the strategy appears to work: whilst the German small-cap index dropped more than 40% in the last year, YOC’s stock rose by nearly 20%. All good then!