As I said in the post below, today’s tie-up between MCN and Nokia also provides me a perfect opportunity to summarize the highlights from the mobile search and advertising session (Overcoming The Barriers To Delivering A Successful Mobile Search Advertising Ecosystem) moderated by Oguz Oktay from ARGELA-USA Inc., which brought me together with MCN CEO Marc Bookman and Juhani Kivikangas, TeliaSonera VP Content, New Businesses, Business Area Mobility Services. The panel was part of Mobile Advertising 2008, organized by IIR Ltd. and our own James Cameron.

The discussion centered on the mobile advertising ecosystem and the role of branded search providers in the scheme of things. We started off with the operator perspective from Juhani, who walked us through his strategy and the company’s clever move to encourage mobile search and surfing by offering users improved navigation and streamlined access to Internet sites via a mobile search toolbar. The approach, which takes its inspiration from the PC browser experience, offers users a long list of features and functionality including bookmarks, zooming capability, browsing history and a dedicated search box.

By way of background TeliaSonera booted out Microsoft (MotionBridge) to relaunch its portal with white-label search and advertising provider JumpTap. JumpTap is the exclusive partner for all advertising and paid search ads served on the portal.

In Juhani’s view, mobile operators must create business ecosystems that allow them to deliver users results and content from the Internet as well as content from their own portals and partners.

Since the end-game in mobile search is about delighting the customer with a great search experience, mobile operators should choose their options wisely. “Branded search players are not only [operator] competitors; they can also be partners.” The trick is to negotiate these relationships from a position of strength and maintain control over the search results and the traffic.

The mobile search functionality offered by TeliaSonera’s SurfOpen service - provided and hosted by JumpTap - presents search results organized in a range of categories and gives the operator the final say.

The operator-branded search results page combines results from TeliaSonera mobile content partners (divided into individual content categories such as ringtones, video, etc..); results from the mobile Web index (provided through crawling); global Internet index results (provided through crawling and a third-party API to Ask.com); local results (from the Web and provided through a third-party API, where available); and white pages/yellow pages results (provided through integration with third-parties, where possible).

TeliaSonera’s SurfOpen service also includes content adaptation via a transcoding engine that ensures Internet content can be displayed on mobile devices. “If the mobile search experience offered by the mobile operators is a good one [and so presents Internet results that can be displayed on a mobile device], then it can attract users and compete with branded mobile search services.”

Admittedly, early transcoding glitches and the move by the mobile operator to replace Internet site owner’s ads with its own banners did upset publishers and advertisers, but Juhani pointed out that was all just part of the learning process. Today these problems have been solved and publishers well understand the value of having their sites adapted for mobile. In fact, Juhani reports more users surf the mobile Web (thanks to the high quality of the user experience), a trend that has resulted in double-digit growth for some publisher sites.

As for advertising, mobile operators should create “an advertising framework” that gives them - not branded search providers - control over the search advertising and the traffic. In the case of TeliaSonera, sponsored links take a top-notch spot and are sold to the highest bidder. But the prime real estate belongs to TeliaSonera. It can promote its own services, and SurfPort portal offers, above the search results.

But this is not to say the mobile operator can dominate mobile search and advertising, or the mobile Web experience, in the long term.

“Beginning in 2009, the big market will be off-portal and the big shift will be away from mobile operator portals,” Juhani stated. If you want to see how this will likely play out, then Juhani suggests we look at Japan today.

It’s the leading market for mobile search and advertising because the operator doesn’t try to own the customer. Instead, the mobile operator has created the perfect conditions for optimal interplay between the players in the business ecosystem (content providers, advertisers, developers). The result is a virtuous cycle where good user experience inspires more searches, which result in more monetization and, ultimately, drive more usage of the services among consumers.

Marc from MCN sees another mega-trend making its way from Japan to other markets: The shift from clicks to content sales. With all the excitement (or shall I say hype?) around mobile advertising, it’s easy for mobile operators to believe the real prize is ad revenue.

But MCN’s first-hand experience with customers such as NTT DoCoMo tells a different story. “Content sales and commerce [off-portal] - not ad revenue - are the big money-makers for mobile now and in the future.”

(In the latest issue of Mobile Media, a subscription-only publication I am proud to contribute to on a regular basis, MCN reports that off-portal is the main attraction in Japan with “about 75 percent of content discovery and advertising” happening there. Traffic on operator portals, on the other hand, is flattening out rather than declining.)

Quoting figures from Japan’s Center for Information Research, Marc pointed out that the Japanese market is a “clear indicator” that mobile commerce transactions are the real pay-off.

In 2008,content and commerce will both generate about $6 billion (total of $12 billion) in revenues, while mobile advertising will generate a mere $1 billion. In 2010, commerce transactions will lead the pack, generating a whopping $15 billion in revenues; advertising will generate only around $2 billion.

To seize this opportunity mobile operators will need to change their approach to content management and discovery. “The walls that were constructed to limit user access to content must give way to malls, where on-portal and off-portal content is readily available.” The shift poses new challenges both for operators, who must quickly connect users to the content they seek while maximizing profitability, and for content providers competing in a more open, competitive environment.

Against this backdrop, MCN has sharpened its focus on what it calls “search merchandising.”

Search advertising combines MCN’s federated search (delivered via MobileSearch.net, MCN’s white-label search platform) and vertical paid search (delivered through allwords, MCN’s own PPC mobile content promotion program) to “make it easy for users to find content from any source by providing new vertical paid search programs that connect those users directly with the content item they want.”

Vendor spin aside, Marc reports the allwords program is “generating click-throughs in excess of 45 percent - it’s as high as 90 percent in the comics category - and the highest conversion [sales] rates in the industry.” Moreover, the company has a “100 percent renewal rate from content providers buying allwords categories such as music, games and comics.

By way of background MobileSearch.net is an ASP-based white label solution that connects directly with sources in vertical content categories (including music, images, games, video, and local), as well as horizontal information sources (including web, wiki, weather, and news) to connect users directly to the content they seek in 2-3 clicks.

In line with my brief to profile mobile search companies for AltSearchEngines, I plan to circle back with an in-depth analysis of MCN’s platform and value prop. But I’ll wait until autumn, when we can expect some big news from MCN. Watch this space!

(Disclaimer: JumpTap and MCN are MSG supporters.)

This entry was posted on Monday, July 14th, 2008 at 9:56 pm and is filed under Content Discovery, Mobile Advertising, Mobile Research, Mobile Search. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.