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In-Brief: The first in a series of quarterly Thought Leadership articles focused on personalization and content discovery for the mobile Internet from Prof. Barry Smyth, ChangingWorlds‘ Chief Scientist, examines the hidden interaction costs associated with surfing and exploring the Mobile Internet. Prof. Smyth concludes that these costs - a sum of the time and effort required by subscribers to access the relevant content they demand - are prohibitive, frustrating, and threaten the future of mobile data usage worldwide. (More in this press release.)

The Mobile Internet is a case of good news and bad news. The good news is that it’s chock-full of compelling content and data services that could more than make up for the worldwide decline in mobile voice revenues. The bad news is mobile data revenues are relatively low - and will remain so - until mobile operators demonstrate the value of the Mobile Internet to subscribers. This is tougher than it looks, since accessing the Mobile Internet is neither enjoyable nor affordable, and no amount of marketing to the contrary is going to encourage usage until mobile operators understand and address the hidden costs.

Put simply, there are two costs that drain both users’ wallets and their patience.

There are the obvious monetary costs associated with Mobile Internet access. These are the direct costs that the subscriber bears, in the form of charges levied by the operator, each time they access the Mobile Internet from their phones. This is a clear direct cost to the user they are faced with each billing period - and it’s the one charge that causes “bill shock.” Common sense tells us high data tariffs will never encourage high data usage. The fact that mobile operators such as Vodafone have recently introduced flat-rate data packages is evidence that monetary costs are indeed a barrier to usage that operators can no longer ignore.

The second type of cost, what I call interaction cost, is perhaps less obvious than a line item on a monthly mobile bill, but it is far more central to the health and continued growth of the Mobile Internet and must be addressed.

These interaction costs reflect the time and effort required by the average subscriber to access the content they consider relevant and genuinely useful. While these costs are less visible to subscribers, they are manifest in the frustration that subscribers routinely experience when they try - and often fail - to find and access the content they want.

Recognizing the role that both monetary and interaction costs have to play in the Mobile Internet is critical for mobile operators and other companies in the mobile ecosystem, to better understand what defines a positive user experience and how they might deliver it.

One route to better value is to reduce these costs, and it is no surprise that many mobile operators have introduced “all you can eat” fixed-price rate plans. I mentioned Vodafone, but there are many more. In the U.S., Verizon Wireless, AT&T, and T-Mobile USA have championed flat-rate data packages. In the U.K., O2 has likewise introduced a flat-rate plan to drive Mobile Internet usage.

While the majority of such plans are not yet attractively priced for the majority of subscribers, they do show an important and welcome shift in the mobile operator mindset. The collective wisdom is that reducing the monetary cost of the Mobile Internet will drive usage and lead to many other significant revenue opportunities, with premium content and mobile advertising leading the pack.

But cutting tariffs - and hence addressing only the monetary costs of accessing the Mobile Internet - does not get to the root of the problem. Granted, customers spend less money to access the Mobile Internet, but they still lose time and patience when they try to access the content they want.

To be clear, these interaction costs effectively negate the savings in monetary costs and seriously damage the customer’s perceived view of the value of their Mobile Internet experience. It may be cheap to access, but this doesn’t take the pain out of getting to the content they want.

Over the last years, subscribers have said they are increasingly frustrated by the challenges they face when they attempt to access relevant mobile content. Their main complaint: It takes too long. And, keep in mind, this is not a bandwidth issue; it is an interaction issue.

Put simply, it takes too many clicks - or interaction steps - for users to locate the content they want. This has been documented in a recent analysis of mobile portals conducted by Mobile Metrix & ChangingWorlds. It revealed that the average mobile operator portal requires an average of 20+ interaction steps (menu scrolls and option selections) for the subscriber to navigate from the portal home page to content of interest.

To put this in context, other studies have argued that the average user expects to get to content within 30 seconds, which corresponds to no more than 10-12 interaction steps. Taken together, these studies highlight a huge gap between user expectations and the reality of the Mobile Internet. And let’s not forget, more interaction steps mean more time is spent navigating the portal. The upshot: Up to 75 percent of mobile content is all but invisible to the average subscriber.

When we look at mobile search, we find similar interaction problems. ChangingWorlds’ own research (based on an analysis of 10 million mobile search sessions) reveals that only 10 percent of mobile search queries result in actual result selections. This means that 90 percent of mobile searches fail to deliver results that the searcher finds useful and relevant enough to select.

Conventional Web search delivers a much more satisfactory end-user experience, with approximately 50 percent of user search queries leading to result selections. Put another way, the Web search results set offers users results they consider relevant in one out of two cases, against one out of 10 cases in mobile search. Consequently, Mobile Internet search currently lags far behind its Web cousin in terms of this basic click-thru measure of effectiveness.

Given the pivotal role of mobile search in off-portal discovery (mobile search is effectively the only means to find mobile content since there are no mobile operator menus to point the way), these results suggest that off-portal interaction costs are prohibitive and problematic.

As this illustration shows, personalizing the Mobile Internet can significantly reduce the interaction costs for users. By automatically learning about individual user preferences, it is possible to provide users with a more proactive and relevant Mobile Internet experience, whether browsing or searching for content, on or off portal.

Clearly, the interaction costs of accessing the Mobile Internet must be reduced. But how can the industry achieve this?

The answer lies in personalization technology that can effectively learn about the requirements and preferences of individual users, and communities of users, as they interact with a wide range of Mobile Internet services. Many mobile operators are beginning to understand the critical role personalization plays in their content-selling strategies.

What’s more, an increasing number of mobile operators are harnessing personalization technology to improve their portal offers and the quality of the overall user experience. This is possible because personalization technology enables mobile portals to be fully and intelligently personalized to the user’s individual needs and preferences. Even better, personalization technology - if it is dynamic - can learn through clicks, patterns, and interaction with the user over time to adjust their structure - that is, the content on offer and the order in which it is presented on portal - to answer, even anticipate, the individual user’s mobile content requirements.

Indeed, our own research and mobile operator implementations have shown that personalizing the Mobile Internet can significantly reduce the interaction costs for users. As the figure above shows, by automatically learning about individual user preferences, it is possible to provide users with a more proactive and relevant Mobile Internet experience, whether browsing or searching for content, on or off portal.

Allow me to provide an example.

If Ashley regularly accesses movie listings on a Saturday evening, then the personalization technology will pick on this to gradually promote what’s on at her local cinema, as well as relevant movie reviews that are likely to interest her, to a higher position within the portal. This obviously reduces the number of clicks to content as well as the number of interactions to book a movie, for instance. Critically, reducing the interaction costs associated with accessing the Mobile Internet also increases the quality of the user experience and the value-add delivered by the mobile operator. In short, the Mobile Internet experience is vastly simplified, interaction costs are dramatically reduced, and the chance that Ashley will make accessing the Mobile Internet part of her regular routine skyrocketed.

Our own internal research, based on the experiences of more than 50 mobile operators around the world who have implemented our personalization technology, clearly demonstrates that interaction costs can be reduced by half. This leads to significant incremental improvements to Mobile Internet usage; our customers have seen this usage increase by approximately 30 percent per year.

The user behavior and content preferences collected and learned by personalization technology also have a fortunate and formidable effect on other Mobile Internet applications and services. An example of this is mobile search.

Indeed, applying learned user preferences to the ranking of search results ensures that individual users are presented relevant and genuinely useful results. The fact that users find what they are looking for naturally encourages them to use mobile search more often, thus creating a virtuous cycle of use and utility.

Personalization also improves the relevance of mobile advertising and ensures that users are not “spammed” by messages they consider irrelevant of or just plain annoying. This is critical if we consider that operators count on mobile advertising to provide them a new and significant source of revenue. Here again, harnessing the learned preferences of mobile users enables mobile operators to offer highly targeted advertising messages and offers.

The result is an advertising experience that is far superior to traditional “one-size-fits-all” approaches. Indeed, our own research shows that personalization yields real and positive results. Highly targeted, personalized advertising can increase click-thru rates by up to 150 percent.

I began this series with a discussion of how the value proposition of the Mobile Internet can and must be improved. As I have demonstrated, there are two costs the industry must address: the real monetary cost of accessing the Mobile Internet, and the interaction costs that place the burden of finding and accessing relevant and useful content entirely on the shoulders of the user.

Flat-rate tariffs are welcome, but they are more of a quick-fix than a long-term solution. The success and survival of mobile operators is a measure of how well they manage to reduce their interaction costs. Personalization technology is a proven and practical approach that cuts interaction costs while stimulating Mobile Internet usage across the subscriber base. As in all industry sectors, giving the customer what they want and how they want it is the superior strategy.

The next in this series will examine the success factors imperative for effective mobile data personalization. It will deliver answers around what we really mean by personalization for the Mobile Internet and provide examples of best practice for the implementation of personalization strategies to deliver measurable results.

• Posted in
• Recommendation, Mobile Research, Personalization, Mobile Search, Mobile Advertising, Content Discovery

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