Tag: mobile web

US Mobile Advertising Snapshot August 2009

I had covered the monthly Scorecard for Mobile Advertising Reach and Targeting (what a mouthful) from Millenial Media before (see here for the May figures), so here’s an update on this (and note that these are all US-only figures). The firm covers just under 50m users, which seemingly represents 79% of the mobile web (but only 11 of the top 25 sites as per Nielsen). However, it should provide for a very decent overview of the state of advertising on the mobile web. So here it goes:

The first really noteworthy piece has not actually anything to do with advertising but with user satisfaction: would you actually have thought that users enjoy most things more when done on their smartphone than on their computer, including playing games and watching video? The computer only leads (and by a meager 2% higher rates) for web browsing (70% vs 68% on smartphones). Wow! Here’s the graph:

This is very encouraging and probably also owed to the market leader when it comes to ad impressions received on a mobile device, which is – moan – the iPhone of course. The last snapshot I covered had the Samsung Instinct in front but this has slipped back to a still respectable #3 now. Blackberry’s Curve takes 2nd place. Here’s the top 20 list:

Compared to their old format, Millenial Media is no longer spitting out a comprehensive chart showing the CPEU (cost per engaged user) per demographic/targeting method. They have adopted their proprietary “Mydas” tool, which appears to enable them to mix things together in an optimal way. It is understandable since this is their business but the look under the bonnet was great. Alas, no more. So here’s what we still learn:

  • iPhone and iPod Touch impressions are still growing with double-digit numbers (month on month they grew 68% in June, 29% in July and 15% in August).
  • Average monthly page views is 111 (up 5 views).
  • The top 20 phones (see above) make for 50.63% of all device traffic, which is drop by nearly 4% compared to the previous month.
  • A whopping 26.15% of all ad impressions were achieved on devices on a WiFi connection (bandwidth is king!).
  • Cost per Engaged User for audience targeting increased very significantly from ยข52 to $1.35, which is owing to Millenial’s aforementioned Mydas thing (or so they say). Most CPEU rates decreased however. Here’s the chart:

So what does it teach us? Well, due to the new format unfortunately less than previously… but then: I’d love to have that Mydas touch… ๐Ÿ˜‰

EA Mobile, Namco Bandai and the State of Carrier Decks

After many rumours and ominous statements that it was “reviewing its activities” Namco Bandai confirmed today that EA Mobile will thenceforth act as its distributor for mobile games outside the US and outside any app store.

After Taito and Eidos, EA Mobile just gobbled up another major distribution deal and the exodus from J2ME games distributed via carriers continues. It also means that EA’s dominance over the operator decks has just increased a little more yet again. It had estimated (back in June) that its 2009 mobile revenues would reach $185m (although this arguably includes Apple’s and other people’s app stores as well as embeds).

What is worrying is that this cements the oligopoly of games distribution in all major markets. EA Mobile, Gameloft occupy the top 2 slots very comfortably with Glu an equally comfortable but distant third. I-Play, Digital Chocolate, Real and Connect 2 Media are fighting for place and Xendex, Handy Games and a few others seek (and sometimes find) niches to prosper. THQ Wireless, Vivendi Games Mobile have departed. Player X found a new home under the mighty wings of Zed. And then? If the above companies all manage to maintain a healthy business, this might be enough; there are silverback gorillas in every market segment. If not though, this might become a doomed sub-sector; the limelight would then be on the (failed) ecosystem operators tried to build: overly fragmented with everyone of them wanting it just so and just their way rather than agreeing on a largely unified structure and processes pressed margins from a system that has been tough from the outset (handset fragmentation and international spread mean fairly high cost per capita anyway).

The accumulation of external properties arguably also mean that EA will need to run a business that is almost a combination of a publisher and an aggregator (with its very own challenges). The issue of shelf position (will they give Tetris and the Sims undue preference over Space Invaders, Pac-Man and Cooking Mama?), the commercials of their own deals (they anecdotally paid Hasbro a handsome sum), and the generally dominant position will all come into play and it is inconceivable (well, is it really?) that their partners will continue to play ball.

It might of course only be a brief interregnum on the way to an app store world. Smartphones are very much on the rise and, in that world, such stores seem to rule. Apple has taken the lead, Android followed suit and new stores are springing up almost by the day, which also includes operator-led ones: Orange already has one, Verizon Wireless has announced one (mobile web-based) and so has Vodafone (which might actually be bigger than Apples) as well as many others. The OEM all do the same (even though some carriers want to disallow them): Nokia Ovi, Blackberry App World, Sony Ericsson, LG, Samsung, you name them, they have it. The question of course is if that might mean the same thing all over again: will they again want it all just so? Will they again have it just their way so that a user would have the unique flavour of operator X on handset Y in this unique way, meaning that – again – thousands of SKUs would be required to service them? Groundhog Day? I hope not!

Image credit: http://www.antitrustreview.com/files/2007/07/files51lsaydhrsl.-ss500-.jpg

Mobile to Rescue Music Business?!

It seems to be music week this week: Apple running its somewhat anticlimactic “It’s only Rock’n’Roll” event today, lots of folks pondering Spotify Mobile and now this: the good folks at Forrester Research have released an interesting report entitled “Music Release Windows: The Product Innovation That The Music Business Can’t Do Without”. This is some statement.

The Old Model is Broken

Forrester was kind enough to let me have a glance at the report, so let me dive into its revelations and the underlying rationales, which starts off with looking at the broken model of the industry: in (latter part of) the 20th century, the music industry was mainly fueled by record sales (first vinyl, then CD). With the introduction of digital media and, in particular, ubiquitous broadband connectivity in many parts of the world, it shifted to digital downloads. Unfortunately, it mainly shifted for downloads that people did not pay for. iTunes has only taken a piece of the action. And iTunes’ ยข99 per song model has then contributed to people no longer buying whole albums but only the songs they like most, which somewhat squashes profitability.

Live events, etc used to be a support for record sales. They have recently become the biggest revenue generator for some recording artists (as well as for some labels, at least if they managed to conclude so-called 360-deals with artists) but they cannot alone make up for the shortfall. On top of all that, people like my 14-year-old son use a plethora of services (Spotify, Last.FM, YouTube and probably dozens more of which I do not know) to quench their thirst for music.

Change the Product, not the Business Model

The researchers suggest to re-think the product offering in order to engage the fan more holistically: leverage diverse assets through those maligned 360 deals: they might “feel” a bit tight around the hips but the opportunities are immense: labels and (capable) artist management can create a very rich offering of diverse content. This then ties in into step #2, which sees the industry moving away from (or rather beyond) the classic album model where an artists would release one album per year (or so) and sustain the buzz in promotion thereof (and in between) with concerts, interviews, singles and EPs. With digital distribution, there is no need for that (an album on CD might be maintained as one part of the mix however): one can produce a continual stream of creative products from the artist. This will help build sustainable and longer-term relationships with fans.

The final piece is – put simplistically – the introduction of release windows similar to what the film industry is doing for decades: releases are structured successively with higher product (read: better monetizable) tiers coming first. It is re-vamping a trusty old model though: you want it first and exclusive, you pay more.

The bottom line is – oh, the bliss of buzzwords – the 4 C’s, which are content, convenience, cost and community: The higher the cost, the greater the convenience and the better the choice of content. The authors basically plead a re-introduction of scarcity in order to re-build the perceived value. Convenience ranks above content in terms of the creation of value: and this is where mobile plays a role: it is always with the user, it is always on, it is readily accessible (at least the new generation of phones is). It is arguably why services like Spotify are believed to be a valid revenue stream for labels, at least on mobile…

Community is the Glue

Is community just thrown in for good measure? No, of course not. According to Forrester, “Community enhances social value.” It is the glue that will be the key differentiator from piracy (or so they hope): the thinking is that a sense of community will build some sort of moral cohesion (another C). Here though, Forrester tails off a little. It says:

“Social functionality should be deployed right across the hierarchy.”

Nothing wrong, you say? No, it is not. However, “deploying functionality” is way short of what is needed to build social value. What makes a community? Emphatic engagement with fans, not a set of tools that sits somewhere on the various sites and offerings being operated by some far-away call center. Whilst the principle is right, the suggested execution remains a little shallow. Forums & networks is all they have to offer. Hm. Everyone has them already, so will this work?

The principle does work, I believe, However, the execution is much, much more complex than the analysts reveal. Here, one can make or break this.

Release Windows

The analysts suggest that a release should be tiered by windows: start with a preview, then go into the mainstream for-pay channels (2-3 weeks delayed) and finally release to “free-to-air” (6 weeks delay). The premier window is suggested to being the one where incremental value can be unlocked: first releases, premium value-added content (and no DRM!), etc; users only get this if they pay. Elegant packaging and programming is crucial to convince people of the richness of this. Then they will not defect to P2P sites. CD releases remain in the mainstream window and then, finally after six long weeks, the Spotifys of this world will be able to get it through their ad-supported model, TDC Play, the Danish flat-rate all-you-can-eat model that generated more than 100m downloads in 15 months would be able to add it to their package, etc.

Mobile is in the premium tier (with very few others): Forrester believes that carriers’ and OEM’s efforts, investment and – last but certainly not least – billing relationships merit this. I would suggest that the eye-opener ringtone where one could charge huge premiums for monophonic (!) 20-second-loops would contribute to this conviction, too.

In the “modern world” with smartphones and flat rate data plans, a lot of it of course hinges on how such services tie in with a) the handset (app vs. mobile web), b) the provider(s), namely labels, artists, operators, handset manufacturers, other (mobile) distributors as well as iTunes, and c) the users, i.e. will they adopt it or will they defect to the (free) web side of things after all. The crackdown on piracy in many countries will have something of a disciplinary effect but the jury on this is probably still out.

Is that It?

There must be more in order to create compelling services and products. Otherwise, I cannot see people doing it in sufficient numbers. It could be seen online with Spotify where, anecdotally, only 17,000 in the UK have signed up to the premium service; I cannot believe that the premium music market should be limited to that. The analysts suggest the creation of

“truly 21st century products […] blend[ing] interactivity, multimedia, multi-platform, convenience and social to create something totally new.”

That sounds awesome but how do you create it? The starting point needs to be the relationship between artist and fan. I have long held that this bond is more than actual musical tastes; it is a lifestyle decision, which is why fans crave to belong to “their” artists’ circles. As early as 2002, a “Britney Spears Mobile Fanclub” was successfully running, and that did not even involve her label! What it did involve though was access (or at least the promise thereof) to Britney (who was, at that time, arguably one of the biggest recording artists in the world). The service combined text (real-time backstage reports from Britney herself!), live concerts, editorial, merchandise, and special promotions to create a rich and comprehensive experience around the artist. And this at a time when a ringtones were just on the rise and premium SMS not widely available! The principle works! It does take however (and that’s a big IF) active involvement of a complex ecosystem of artists, management, labels, merchandise firms, media, etc.

The new generation of artists is of course significantly more tech-savvy (see e.g. upcoming singer Remi Nichole‘s video blogs and tweets): one sees a much higher willingness to participate actively and – even more importantly – authenticly in engaging the fans (“audience” is probably an overcome term in this respect). This can work, and on mobile it can work as a revenue generator, too! But the core is the revised approach to the people (and this is not limited to the music industry): they are not sheep that want to be exploited; if you treat them that way, they bolt. Treat them honestly, fairly, transparently, and you have at least a fighting chance!

So, Google: App Store or Web? Or Both?

Last week, there was the Mobilebeat conference on, and – amongst many other things – a lot of guys felt they had to air their opinions on the future of mobile apps or, errh, no apps. They spoke so elaborately about it that even the revered FT (albeit in its blog section) and the BBC felt compelled to run stories. Amongst others, the CEO of “indie” app store Get Jar and Google’s wonderful Vic Gundotra, VP Engineering and also equipped with this most valleyed of all Silicon Valley job titles, i.e. “Evangelist” (I would really like one like this, too!), in his case for developers spoke about where they saw information and entertainment on mobile phones going in the future and how the ecosystem would look like.

Now, let’s get serious.

What was Said?

First, GetJar‘s CEO sees the market for mobile applications becoming – get this – as big as the Internet (woah!). He then said also that it would peak at about 10m apps (in total?) by 2020. Hmm. GetJar then went on to warn that the number of developers would drop “drastically” and that only about 10% would be able to survive. The others would take their skills elsewhere. So where then? To the web? (This is of course interesting also because GetJar will deliver Sony Ericsson’s App Store…).

It is here where Google comes in. Gundotra said that, according to Google (and who would question them), the web had won. Even (!) Google was struggling with the device fragmentation in mobile and many, many applications could be delivered through “incredibly powerful” browsers as well. He even borrowed Steve Jobs for his argument, pointing out that the Apple CEO had announced that the iPhone was “Built for the Web” upon its launch.

There were others who contributed: Nokia’s Head of Services reminded everyone that Nokia was there to help with its Qt (Cutie, geddit?) cross-platform application network . The Symbian Foundation’s Executive Director, Lee Williams queried the need for more app stores and called, instead, for more than “just a bucket of apps”, which should look like an aisle with the very stuff that specific consumer is interested in and which (s)he could wander down at leisure.

They all however concluded that it [scil. the mobile web] was not there yet. Hm again… Let’s try to disentangle this all:

The Needle in the Haystack

Upon the launch of the app store and the wondrous stories of the iShoot developer Ethan Nicholas who coded in his bedroom after work only to resign from his day job weeks later because he made more money than he had ever thought. A lot of developers read that and, since it is the wet dream of every games developer (earn cash with an honest game without the “suits” fiddling with your game in between; anyone remember Copeland’s skateboarding turtle?), embarked on the journey themselves. And then they found, oops, it does not work that way? Why not? Well, because there are more than 400 applications going live every day. And with the sheer number of them, it could well be that the best app ever written is already out there but buried deep a couple of categories down in the app store.

This is no big surprise. It is how it works in any sector: one smart kid is not enough, you also need the environment and a lot of other building blocks to have a winner (as reigning F1 World Champion Lewis Hamilton is painfully realizing this year).

In the app store’s (and a gazillion other) case, this means that you have to make sure that you gain some attention. From Apple (or any other app store operator), from the press, from the users out there. And this is not news. There have been very well written pieces about this galore (see here for just one of them).

So will this mean the fall of a lot of the developers that went about their business thinking the app store magic would do away with centuries of business logic (there is a reason why companies have sales & marketing departments, you know…)? Yes, very probably. But does that mean the app model is flawed? No.

The Hit Dilemma

One of the Mobilebeat participants, namely Playfish, creators of some of the most successful Facebook games who released on the iPhone, too, complained about the hit-driven nature of games on the App Store. Whilst I am painfully aware of this dilemma, one has – again – to point out that this is pretty much how most of the economy works, too, unless, that is, one builds a superior and dominant brand (Tetris would be the example for the games world).

Other industries know this, too. Everyone knows IBM is a leading computer maker. Hardly anyone remembers that the Dutch electronics giant Philips used to be one of the biggest players in that market (not even Wikipedia mentions this); their CeBIT booth was bigger than IBM’s throughout the 70’s and early 80’s (my dad worked for Philips then; I need to dig out some pictures). What happened? Hey, they missed some crucial disruptive innovations and they were history…

What I want to say is that no one is immune to the demand for constant innovation and improvement (otherwise some Firefox will sneak around the corner and steal market share). The reason why this hit dilemma is more painful in mobile games than elsewhere is the relatively small size of the market to date: it is more difficult to build reserves than in other, more established sectors.

How Many App Stores? Mee too, me three, me four, …

With Apple’s roaring success with the app store, the whole industry stampeded to put out their own, and they have been moderately successful or failed. But it is early days! Why did they fail? Because they equally had hoped that one thing and one thing only (just name your bucket of apps an “app store”) would heal the painful failure of the sector in converting otherwise gladly paying users to also using, consuming, contributing to entertainment and information on their mobiles. Now, this overlooked that Apple’s model did not only consist of a storefront. It also consisted of a fairly simple developer programme (with a click-through agreement), a fair(er) revenue share to the developers and unprecedented ease of use in getting to the app of one’s choice. Try and apply this to, say, the launch of Nokia’s Ovi Store

So do users need more than one store? No, not in general. If you can get all you ever need, want or desire from one destination, you don’t need another one. This however becomes a little precarious with a view to monopolizing channels. You would never know if there are not some that are a little more equal than you… So, having Firefox, Chrome, Opera, etc. next to Internet Explorer did the world a ton of good. And having Nokia, Sony Ericsson, the carriers working on alternatives to Apple’s app store is arguably of equal value. Will the user care? It depends on the execution: Google’s superior search algorithms made the old-style catalogue model previously found in search engines superfluous; why do I need to sort something if I have a little fairy that races to get me what I want in no time? So: if I have a bucket that comes with a little fairy, I don’t need long, long supermarket aisles. I’d rather get it home-delivered by the search fairies.

It’s the Usability, stupid!

Now to the key question: separate apps or web? Now in Google’s case, their pleading is somewhat obvious: well, they would, wouldn’t they?

Google, on the other hand, has apps out on most platforms for most of their web services: Be it Gmail (great Blackberry app!), Maps, or – all in one – their iPhone Google app, it comes as an app. And why?

Because it would otherwise be unusable! OK, let me rephrase that: the delivery of browser-based applications through mobile phones suffers some very severe setbacks today, amongst which usability on a small screen, constant connectivity and bandwidth. Whilst the latter two are arguably solvable some time soon, the former is a little trickier: when delivering to a mobile device, you not only have to download all underlying data (graphical assets, etc) but also an interface that works on that device. And because of the small form factor of mobile phones (even in the case of large-screen touchscreen phones like the iPhone), this is likely that your user experience will be significantly worse than on a large screen equipped with mouse, touchpad, etc. Apps can bridge this usability gap, and I would argue that this is precisely why Google is producing them. The underlying content can often (not always) well be delivered from the cloud but the UI of small devices is crucial to their sensibility.

With both (mobile) browser technology and handsets improving, the space available for services that can sensibly (and with superior costs) be delivered from the cloud (i.e. through the web) will increase, and steeply. However, there will always be applications that will either be impossible to deliver via the web (name a high-end 3D racing game on the web) or where a specific mobile UI would greatly improve the usability of any service.

It is another question if these will be delivered via flexible widgets or larger, more comprehensive apps (functionally, a lot of apps effectively are covert widgets); this will simply be (and remain) a question on the complexity of any given task and the ease and superior (or not) delivery an app would provide over a browser-based service. There will be an equilibrium between the two but I posit that there will remain large areas where browser-based delivery will not be able to compete with specific applications (that will draw on data from the cloud as well). Incidentally, 58% of Wired readers agree with me (and another 17% don’t care; check the bottom of the article) ๐Ÿ˜‰

This can be seen on the (“normal”) web, too: Google Docs (Google’s online suite of office applications) is, despite a lot of effort and being free to use, an utter underdog to MS Office or Open Office (the only numbers I could find give Google Docs a market share of between 1% and 5%). It is, I think, because downloadable office “apps” are so much more usable (and react instantaneously irrespective of my ISP’s moods) than online services. The complexity of the computing (and – more importantly – the bandwidth necessary to deliver it) is just too overwhelming (see here for a previous post on this).

More evolved mobile apps often are (and/or will be) a hybrid: they offer a front-end that optimizes the data drawn from an online environment for use on a specific mobile device. It will not be an “either/or” but an “and”. Anything else would anyway be so last century!

In Conclusio:

Whenever possible, services will move online because it is cheaper to produce. Whenever necessary, they will be delivered through dedicated apps because it is required to use them!

AdMob on iPhone ad impressions and why Andrew Bud is wrong

Mobile advertising firm AdMob has released some numbers on ad impressions on iPhone vs other smart phones and the result is, well, that Apple is basically a 50kg flyweight boxer competing against Sumo wrestlers 5 times it weight (8% smartphone footprint but more than 40% ad impression share).

Now, very (!) crudely put, this does not mean that it is 8 times as successful on mobile advertising. It does mean however that users are 8 times more likely to use applications where ads are being displayed. Here’s some of their stats:

iPhone Apps (in AdMob’s network):

  • The top iPhone apps had more than one million users in the UK in May 2009
  • 5% of iPhone apps had more than 100,000 active users in May 2009
  • 14% of iPhone apps had between 10,000 – 100,000 active users in May 2009
  • 27% of iPhone apps had between 1,000 – 10,000 active users in May 2009

Mobile web browsing market in May 2009:

UK:

  • 48.7% of ad requests came from Apple handsets (iPhone and iPod Touch)
  • 28.4% of ad requests came from the iPhone
  • 282,493,761 ad requests from users in the UK

US:

  • 45.1% of ad requests came from Apple handsets
  • 25.7% of ad requests came from the iPhone
  • 3,804,373,544 ad requests from users in the US

Global:

  • 31.4% of ad requests came from Apple handsets
  • 18.6% of ad requests came from the iPhone
  • 7,997,946,483 ad requests from users around the world

Interestingly, MEF and MBlox Chairman Andrew Bud (who is being quoted at the end of the article) said that Apple’s app store compared to Nokia’s Ovi Store like a niche boutique to Tesco (or, if you are in the US, Walmart). Is that so? No it is not. And here’s why:

Apple is a boutique with more items on sale than a Tesco megastore. And its (less) customers buy trolleys full of wares. Moreover, their high-spending customers leave the store with a spring in their step and committed to come back the next day.

Nokia is a super-store with gazillion potential (!) customers where 1 in 20 stroll through aisles stocked with not so cool things and most of them walk out without buying anything and, on top of that, feeling fairly downtrodden and frustrated about what was on offer.

So, for the time being, I’d choose the Apple boutique. If that choice changes will depend on whether Nokia will manage to stock their shelves with more compelling wares and improve on their tills (less queuing, more bang for your buck, etc). Oh, and get those cold strip-lights replaced, please!

Page 10 of 10

Powered by WordPress & Theme by Anders Norén