It has been a crazy-busy, exciting week at MSG! The Mobile Advertising Research U.K. report, which combines desk research with extensive primary research and surveys to offer invaluable insight into the attitudes of people and companies across the emerging mobile advertising business ecosystem, is ready for release after receiving the final polish.

Regular readers will recall that MSG was commissioned to conduct Mobile Advertising Research UK, a project research endorsed by the Interactive Advertising Bureau (IAB) and the Mobile Marketing Association (MMA), to expertly document the state of the mobile advertising industry in the U.K. and identify growth opportunities in the emerging mobile advertising marketplace.

The report — which combines valuable consumer insights gathered by ÆNEAS Strategy Consulting and Management (coordinated by my esteemed colleagues Tarik Fawzi and Atva van Zanten) and qualitative research based on more than 20 interviews with operators, enablers, agencies and brands contributed by MSG — marks the first in a series of region-specific reports that will include Germany (2009) and North America (2010).

During the inaugural event (Mobile Advertising Research U.K.) last week in London, Tarik and I presented an overview of key findings (documented by MSearchGroove here) and revealed the results of an online survey of over 1,000 British. consumers. Pricing is GBP 2,999 ($4,866) for the report, and a 500 GBP discount is available for MMA/IAB members, and people who attended the event. For more information, email James Cameron (james@camerjam.com) or call +44 7940 749874.

And speaking of reports, I am pleased to announce that I will provide a sneak-peak at the results of a performance analysis of voice-enabled mobile search services from search giants Google, Yahoo! & ChaCha during a special Mobile Search Masterclass in London on June 30.

By way of background, this course is part of The City University London’s Masterclass series, a collaboration between the giCentre and the Centre for Interactive Systems Research at the University. It will be run for the second year following from feedback last year and is endorsed by the Mobile Data Association (MDA). Registration is GBP295 and the organizers tell me there are still a few seats available, so email Mark Firman (mfirman@soi.city.ac.uk) to reserve your place.

Regular readers (and Twitter followers — @peggyanne & @msearchgroove) may recall that I teamed up with Peggy Albright, owner of Albright Communications and veteran writer in the wireless industry,  to research and write Pump Up The Volume: An Assessment of Voice-Enabled Web Search on the iPhone.

The complete findings will be released in July, but I can say that ChaCha, a fast-growing SMS mobile search service available in the U.S., “proved superior” to two other voice-enabled search options for the iPhone: the Google Mobile App with Voice and Vlingo for iPhone, a voice-enabled application that allows users to direct their spoken queries to Google or Yahoo! For the purposes of this study, Vlingo provided a spoken interface to the Yahoo! search engine.

To evaluate the overall performance of voice-enabled mobile services offered by ChaCha, Google and Vlingo for iPhone with Yahoo!, Peggy asked a series of 18 queries representative of six typical mobile search categories (Navigational, Directions, Information Local, Information General, Social, and Long-Tail). For each query, we evaluated nine performance characteristics including response time, results accuracy, voice recognition accuracy, number of results received, keytaps required, relevancy of the result, location awareness, use of advertising and presence of other value-added features. The study further took into account that a service could deliver its search results in the form of answers (as ChaCha offers) or as links to Web pages (which Google and Vlingo deliver); for each query tested, an accurate result could be achieved in either form.

In addition to going over some high-level results, I will also present an overview of the mobile search landscape, focusing particular attention on the 10+ categories of mobile search gaining significant traction, including multimodal (voice/visual), mobile vertical search (music/games) and social search, a people-powered search approach that effectively infuses human preferences and human judgments into computer algorithms to pinpoint relevant information and better answers.

This presentation is based on the work I did with Rudy De Waele, blogger at mTrends and dotopen founder, in preparation for a workshop on Mobile Search Future Prospects organized by JRC IPTS (Institute for Prospective Technological Studies of the European Commission).

Other masterclass speakers and sessions will examine a range of topics and developments, including: mobile search statistics and surveys, key trends and developments, location services and search user interfaces and usability, and the range of content and advertising monetization models involving mobile search. I’m honored to join an impressive roster of industry authorities from companies including AmbieSense Ltd., a provider of ambient search services; Microsoft Research (Cambridge); g8wave Ltd., a mobile marketing company; and Mobile Commerce Ltd., a provider of location-based services that also possesses what the founders call a “piece of enablement” that gives them deep insight into the search queries passed through the operator portals in the U.K., and the results set returned to the user. This central position, combined with the company’s prowess in search advertising, makes MC a top address for the inside track on the quality of the mobile search experience offered by Google and Yahoo!, as well as their ability to deliver relevant results to users’ queries.

Last year, the case studies and analytics provided by Colin Bates, Mobile Commerce CTO, data also reported on MSearchGroove, provided invaluable insight into the most popular categories of mobile search queries and what users really want from their mobile search experience. The eye-opening observation: “Users are grazing, not researching. They are looking for time-fillers rather than facts, and they are using search boxes for site-finding rather than data-finding.”

It will be exciting to explore how mobile search has moved on and discuss where it is going. If you plan to attend and would like to meet up or catch up, please contact me directly (peggy@msearchgroove.com) or arrange an appointment with Andrea Henninge (andrea@msearchgroove.com). I hope to see you soon and will circle back with analysis after the event.

Back from Mobile Advertising UK (Twitter feed: #maduk) in London with new and practical insights into mobile advertising and extremely positive feedback on my report findings.

Regular readers will recall that MSG was commissioned to conduct Mobile Advertising UK, a research project research endorsed by the Interactive Advertising Bureau (IAB) and the Mobile Marketing Association (MMA), to expertly document the state of the mobile advertising industry in the U.K. and identify growth opportunities in the emerging mobile advertising marketplace. The report - which combines valuable consumer insights gathered by ÆNEAS Strategy Consulting and Management (coordinated by my esteemed colleagues Tarik Fawzi and Atva van Zanten) and qualitative research based on 20+ interviews with operators, enablers, agencies, and brands contributed by MSG - will be formally released in July.

Pricing is GBP 2,999 ($4,866) for the report. 500 GBP discount for MMA and IAB members, and people who attended the event. For more information, email James Cameron (james@camerjam.com) or call +44 7940 749874. And while we’re at it: A huge around of applause for James, long-time MSG friend and supporter, whose Camerjam Events company successfully brought together 130+ professionals and pundits at this inaugural event sure to spread to other countries soon!

In the meantime, allow me to share some of the key findings and data points based on an online survey of 1,000+ UK mobile users. (And please follow along in the complete presentation below via SlideShare, and listen in to this audio interview (supported by the iPhone blogging app Audio Boo) via The Really Mobile Project, where I put some of the stats into perspective.)

At a glance:

• Today the mobile advertising market in the U.K. totals nearly GBP 30 million ($48 million).
• Mobile advertising accounts for only 0.16 percent of the total advertising market - which is where Internet advertising was in 1998.
• ÆNEAS Strategy forecasts that mobile advertising will see accelerated growth in four years and so account for a significant portion of advertising spending. Drivers include: A calculated growth rate of 99 percent in 2008 vs. 2007; the overall shift towards digital advertising; and increased demand for targeting, reach, and a medium that -like no other - allows advertisers to identify and track unique visitors. (For more on this unique capability and the benefits I encourage you to read my own road test of mobile analytics solutions.)
• Only 32 percent of those surveyed have a positive attitude about receiving advertising on their mobile phone. However, 64 percent said they would accept advertising is they are properly incentivized, and 70 percent said they would accept mobile advertising if they are incentivized AND in control.
• The majority of those surveyed felt 5 advertising messages per day was the limit of what they would accept.

Unsurprisingly, youth are most familiar with mobile advertising channels (specifically rich media such as MMS and in-game advertising (approaches we know from the likes of Unkasoft). What’s more a whopping 84 percent of youth surveyed has a positive attitude toward mobile advertising if incentivized. The bottom line: Acceptance of mobile advertising is right up there with TV and other more traditional media IF we can get our head around what incentives to offer and develop the mechanisms that put people in control.

No clue on the right incentives, but it’s not a given that companies need to offer cash to capture people’s attention. In the fireside chat I recorded with Rory Sutherland, Ogilvy UK Vice Chairman, we discuss the value of branded utilities and life-simplifying services. Will people accept advertising if the pay-off is less stress/more convenience? It sure looks that way!

Expert interviews:

So we know mobile advertising will be big. But what do we do in the interim, and where should we channel our investments/efforts so we can move fast when the market picks up?

No easy answers, but my interviews with companies up and down the emerging mobile advertising value chain speak volumes. Companies - in no special order - included: Orange, Vodafone, 3UK, Alcatel Lucent, Ogilvy, 4th Screen, InsideMobile, Adfortel, MMA, AdMob, IAB UK, RGA, Mobixell, Comverse, T-Mobile, 3, Sponge, Bango, and a slew of brands that wish to remain anonymous.

The bottom line: Text rules! There’s plenty of mileage left in simple SMS, and it represents a hassle-free way to start an ongoing conversation with people on their terms (remember from the findings above, people want to be in control of their advertising experiences).

There are also opportunities in location-based marketing (but not the Starbucks example, please!), mobile coupons, cross-media advertising plays with mobile at their core, and the avalanche of app stores coming online.

I can’t divulge all the results here, but I can share some thought-provoking quotes that highlight where the growth is (and isn’t), and identify the obstacles that stand in the way.

BRANDS

“If measurement was aligned with what we know from the Web or TV, it would help a lot to build confidence.”

Road ahead:

“Just between the two of us, our spend for search is by far not in the digits yet, so therefore it would be not realistic to say we would spend more on mobile advertising than for search.  That’s where we are with digital advertising, so it would totally unrealistic to say that in 2009 or 2010 we make it into the single digit share.  But it’s growing, clearly growing.”

OPERATORS

“I think there’s other opportunities such as advertising actually embedded within a widget. You could have some sort of utility widget, such as one providing weather forecasts, and there’s no reason why certain companies may not wish to have some advertising embedded within that.”

Road ahead:

“As a general principle, operators are in a particularly good position in that we can offer a variety of ways to reach the audience.  If brands want to reach a customer base, we can offer banners and messaging. We also have a fixed line web presence so we can offer traditional web advertising, in addition to magazines and billings (mailings) that we can offer. We are in a position to use mobile not only as a media property, but also as an enabler.”

AGENCIES

“I don’t think there are any real obstacles. I think it’s laziness on behalf of anyone that would suggest it’s difficult to buy. You have 5 buying points and you can hit 80 percent of the market. Call us, Yahoo, Microsoft, Orange, and AdMob. That’s it - and you’ve got the market covered. 80 percent of the inventory covered in five phone calls.”

Road ahead:

“There are a number of studies out there that show exposure to multi-channel advertising gives you exponential impact in terms of response rate and brands awareness. So the opportunity is in mobile, but also in the other channels that evolve with it.”

APPLICATIONS PROVIDERS

“The big opportunity in every country to make mobile advertising really work is to have media sales bureaus or agencies who sit in between the owners of the inventory and the advertisers. It’s in an early stage of development, and it’s also something we are going to focus on as we set up a dedicated mobile sales agency to connect the inventory to the advertising agencies.”

Road ahead:

“There are some great examples of interaction with your phone and a poster, or with your phone and TV, but that will always be a small piece of a bigger advertising picture. Core to mobile advertising is mobile messaging. Mobile is capable of delivering a message and allowing us to interact with the message. There is an interesting opportunity for advertisers to interact via messaging linked to a certain location or time, and that will develop.”

INFRASTRUCTURE COMPANIES

“Currently, we’ve got a plethora of people offering mobile advertising in the market. But when it starts to become mass-market and reaches volume, then many of those players [ad serving companies] now will not be able to translate into that volume. So, you’re going to start seeing those players just sort of die away because when mobile advertising is serious business, then you’re talking about millions of adverts and not just a few hundred thousand.”

Road ahead

“It only starts to become interesting for a carrier when the revenue they can envisage starts off at 2 percent over their overall revenue with an opportunity to grow to 10 percent. That’s the revenue that will make them sit up and listen and we’re not there yet.”

Rory Sutherland audio interview

A highlight for both me and the audience was the entertaining and educational fireside chat with Rory, whose interest in -well - us and the finer points of behavioral psychology brought much-needed balance and big-picture vision to the discussion. As he points out in this recent opinion column in New Media Age: The job at hand is to use ideas to turn human understanding into business advantage. During our interview he made it clear that mobile is a medium perfectly suited to achieve just this goal. (Listen to the audio interview here. It’s 28:40 - but time flies when you’re having fun - and this sheer genius! Unfortunately, my site isn’t up to scratch, so I had to host it on a site that belongs to Stuart Willett, MSG Biz Dev Director - so don’t let that confuse you!)

A few excerpts that made us think:

YES WE CAN!: Mobile can change people’s behavior - primarily because it takes the heavy-lifting out of doing things we might not do otherwise. Case in point: Charity. A moment of “epiphany” for Rory was the huge response to SMS campaigns asking for donations, although we have assumed that youth is not a demographic to give so generously. As he put it: “If this technology can change behavior that significantly, then who cares how good it is at advertising. Advertising is about changing opinions as a half-way house to changing their behavior.” The bottom line: If you can change people’s behavior from the get-go with mobile, then it deserves a top-notch spot in our campaigns.

LIFE-SIMPLYING: Rory’s message: Don’t dismiss branded utility because it’s unglamorous. Being brandedly useful is key. (And here is an example from Rory’s Twitter feed that illustrates this approach. The IBM Scout is a branded app that helps people get the most out of the Wimbledon 2009 Championships, providing live coverage of just about everything.

COUCH POTATOES: Let’s face it - many of us are. Rory figured this out when he was watching a line of cars at a drive-in ordering fast-food. Not one got out of the car to order at the counter - even though it was empty. Connect the dots, and it’s clear we are all a bit lazy. Apply this observation on basic human behavior to mobile and you have a powerful combination indeed! We will likely reach to the medium at hand (the personal device we have with us at all times) because it’s more convenient. “Channel preference almost trumps brand preference.” Some people may prefer Pizza Hut, but if they can order from Dominos by text, then they will likely switch for this reason. The bottom line: “Modality and modal preferences seem in a weird way to trump other things.”

WHAT’S THE POINT?: We have lost sight of what mobile can do. (A point that also came out in the research I conducted.) We’re hung up on old models and enamored of new technology, and we are missing some big opportunities. Imagine using text campaigns to encourage impulse savings instead of impulse buying. Or how about a brand that simply harnesses mobile to improve listening? As Rory pointed out: “Advertising is talking and listening. That’s a perfectly reasonable form of marketing, and mobile brilliant and you can do it in real-time.”

METRICS: We have become prisoners of our own metrics. To show us how ridiculous our obsession has become, Rory compares media buyers to alcoholics. “Alcoholics buy booze on a single metric: How much alcohol do I get per pound (GBP), and this is how media buyers buy media.”

MOBILE MATTERS:  “Mobile has been the medium of first resort and dangerous to neglect it which is probably why Google has been scared. Search has been the first place you go on the Web and mobile preempts this in some respects.”

I’ll explore mobile search in a post tomorrow, which will recount some highlights of the event, let you in on the results of a new MSG white paper,  and detail my own Mobile Search Masterclass on June 30^th in London.

By way of background, Rory’s bio:

Born in Usk, Monmouthshire in 1965, Rory read Classics at Christ’s College, Cambridge, before joining Ogilvy as a Graduate Trainee in 1988. After 18 months spent as the world’s worst account handler (as a desperate remedial measure he was once booked onto a time management course, but got the date wrong) Rory became a copywriter in June 1990. He has worked on Amex, BT, Compaq, Microsoft, IBM, BUPA, easyJet, Unilever, winning a few awards along the way. He was appointed Creative Director of OgilvyOne in 1997 and ECD in 1998. In 2005 he was appointed Vice Chairman on the Ogilvy Group in the UK in recognition of his improved timekeeping.

By an amazing stroke of luck (his brother is an academic) Rory first used the Internet in 1987. Hence he had the advantage in 1994 of knowing what it was and what it might do a few years ahead of many colleagues. Most people would have combined this knowledge of marketing and technology to make a fortune; not Rory. Instead he became the first Briton to have his credit card details stolen online, thereby losing £22.45.

In his spare time, Rory collects self-aggrandizing job titles. He was President of the Direct Jury at Cannes in 2007, and was elected President of the Institute of Practitioners in Advertising in 2009. He is also the Technology Correspondent of the Spectator, the world’s oldest English language magazine. At quiet moments in the proceedings over the next few days you may like to pay a furtive visit to his blog at http://snipr.com/da9bq

Rory is married with twin daughters of 7 (Hetty and Millie) and lives in the former home of Napoleon III in Brasted in Kent. Unfortunately in the attic.

41 PERCENT  OF CONSUMERS WILL MAKE SMARTPHONES their next device, according to Yankee Group research. The report also reveals that trends within the smartphone ecosystem are shifting the balance of power between equipment manufacturers (OEMs) and operators.

Yankee further suggests smartphones are the most competitive battleground in wireless today, and predicts U.S. penetration will reach 38 percent by 2013.  More competitive device entrants, tighter budgets, and increased consumer expectations are factors that will force OEMs and operators to collaborate in order to grow. Source

The bottom line: The proliferation of full-featured handsets and the advance of payment mechanisms (other than the ones operators offer) have created some tension, making this an interesting space to watch.   It’s also worth pointing out that, while 41 percent will choose smartphones, the majority (59 percent) of consumers are not going for smartphones as their next device, nor may they even care to upgrade.

***
IDLE SCREEN TECHNOLOGY ENGAGES 82 PERCENT IN TRIAL by Celltick’s LiveScreen Media platform. The Telefonica mobile operators group announced the launch of an innovative idle screen marketing solution, Livescreen Media, which broadcasts news, sports, business, entertainment and lifestyle teasers - as well as advertising messages directly to the mobile idle-screens.

Movistar, the Mobile Phone Company from the Telefonica Group, tested the service as part of a six-month trial in Mar del Plata, Argentina, involving around 5,000 customers, and results showed 82 percent of users engaged with the new communication channel on the idle screen.  The platform is also able to segment users based on location, handset type and areas of interest which are generated from tracking user response to idle screen messages. Revenue is generated from content downloads, subscription services and advertising fees.  Source

The bottom line: As I posted on my own blog, the Idle Screen presents an enormous opportunity to drive increased data traffic and service engagement, if issues of bandwidth and battery life can be overcome.  82 percent engagement is a massive proportion of users, albeit in a local and rather limited trial. In my book it begs the question: Is further proof of concept really required?

***

PURCHASES ON MOBILE CONSIDERED SAFE BY 71 PERCENT consumers, says an eMarketer summary of recent mobile commerce statistics. The round up reveals the kind of products people want to buy from their phones, which include pizza, movie tickets, hotel rooms, and fast food the most popular.  Internet Retailer, a ranking of America’s 500 largest e-retailers, provides us more proof that mobile commerce is gaining some traction in the U.S. It reports that 5 percent of the top 500 online retailers offer m-commerce sites or iPhone apps. It estimates the U.S. m-commerce market will total $1.6 billion in 2009. Source

The bottom line: This report suggests that the U.S. is ahead of the game in m-commerce. Peggy adds: It also lends credence to the view that mobile advertising (communicating the brand message via mobile) could be just a side-show. The real excitement is building around selling stuff via mobile, a scenario that could put mobile operators (with their trusted payment mechanisms) back on center stage.

***

EUROPE TO HAVE 130 MILLION MOBILE LBS USERS BY 2014. A Berg Insight report predicts that the number of European users of mobile location-based services will grow significantly from 20 million users in 2008, propelled by local search, navigation, and social networking services.

Among the drivers: On-device application stores will provide greater access to mobile services for a broader audience, flat-rate data plans will make pricing transparent and more operators are opening their location platforms up to third parties.  More than 20 percent of mobile handsets shipped in 2009 will feature GPS, and the installed base in Europe will surpass 50 percent of total handsets in 2013.  Source

The bottom line: Berg adds more fuel to the location fire with this report. Technological penetration, consumer education, and basic marketing remain key to the success of location services. And we shouldn’t forget that there’s a big difference between having the technology and using it on a regular basis.

***

NOKIA ANNOUNCES OVI STORE VISITS FROM CONSUMERS IN 152 COUNTRIES.  Two weeks after the initial Ovi launch, Nokia has revealed a range of statistics about the service. It says that the Ovi Store is accessible from over 75 Nokia devices in five languages and taps into mobile billing from 27 operators. When it comes to free downloads, the Applications category tops the list. Games is the top catgory in premium content.  Many of the most popular applications involve messaging, such as Twitter, Facebook and SMS applications. Source

The bottom line: All-systems go for Ovi. After what I described as a difficult launch, these statistics illustrate that the Ovi Store is now bedding in and beginning to enjoy use with a broad reach.  With improved user experience (which will come when the store becomes pre-installed on devices) will come increased, carrier independent use with a significant global footprint.

***
MOBILE REVENUE GROWTH SLOWS TO 3 PERCENT in Q1 2009, according to a Strategy Analytics report. Down from 8 percent a year earlier, the report, “Wireless Operator Performance Benchmarking, Q1 2009,” says nearly 40 percent of all mobile operators saw revenues fall in Q1 2009, compared to just 16 percent in the same forecast period in Q1 2008. The research, which tracks the operational and financial performance of over 175 mobile operators who account for 80 percent of global subscribers, found that a quarter of the operators in emerging markets also saw service revenues fall in Q1 2009. Source

The bottom line: Bleak reading from Strategy Analytics illustrates that the economic downturn has made a global impact on operators, and very few are immune.

****

U.S. FLIRTING ADDICTION SEES AN AVERAGE OF FIVE DAILY LOG-INS AND 26 SENT MESSAGES.  Statistics from Flirtomatic, a U.K.-based mobile and online flirting service that recently launched in America, reveals mobile flirting behavior using their service is remarkably similar on both sides of the Atlantic.  This has allowed Flirtomatic to reach critical mass in the U.S. - much earlier than expected.

By way of background, Flirtomatic, with 1.3 million U.K. users and a frequent listing in the top 5 mobile websites, stands out as one of the mobile Internet’s social networking success stories. It also offers an effective platform for advertisers, and reports an impressive 10 percent CTR.  A witty and effective campaign for Storngbow cider in the U.K. resulted in users sending (gifting) their buddies a whopping 340,000 drinks (delivered as drink tokens to their mobile phones) in just two weeks. Source

The bottom line: Given the previous gloomy story, I thought it reasonable to conclude Data Points on a lighter note this week.  Flirtomatic’s story illustrates what can be achieved if the platform, offering and audience are all in synch and the effort is made to benefit consumers, carriers, advertisers, and partner brands.

Continuing with Part 2 of my audio interview with Dan Harple, CEO of GeoSentric, the company behind GyPSii, a digital mobile lifestyle application. But look beneath the hood (and listen in to Part 1 of the series) and GyPSii isn’t just another company jockeying for position in the location-aware mobile social networking space. It’s got its eye on the prize: Using our location, our social graph (because we are members of the GyPSii community), and our judgment to index the world around us. Google may be about organizing the world’s information; GyPSii is about organizing the real world.

What to do with a people-powered, user-generated index of the world out there? Follow in Google’s footsteps and sell advertising on top of it.

As I wrote in my last post, GyPSii has cleverly harnessed PlaceMe, a primary function of GyPSii that allows you to create a point of interest (POI), add your content (image, video, audio, text), add your current or last geo-location, categorize/tag/describe the POI, and submit to the server in real time to a personal or publicly designated folder in your MyPlaces (your record of points of interest).

To get this to Google scale, GyPSii needs a lot of people out there indexing the world with their mobile phones. It’s an ambitious strategy, but not far-fetched. Dan’s forecast models tell him that a company with 7 million users, each doing 2 PlaceMes a month would produce an index in the first year that would be “significantly larger than the Google file system in its first year.” (Dan expects GyPSii to be on “between 80 and 100 million devices in the coming 12 months.”)

There are no stats on active users as a percentage of that total. But GyPSii members tend to be hyperactive when it comes to PlaceMe, creating and tagging “15-20 PlaceMes per month.” Every time GyPSii members do that, they are adding a new indexed item to what the company calls the Osmotic File System (OFS).

Where does mobile advertising come in? It’s already work in progress in China. In fact, GyPSii has a lot of progress to report in China - period. As Dan sees it: “To have an ad-based model, you have to have an audience.” To reach more members (and encourage them to index the world around them) GyPSii’s has this week launched the Java version of its application, with both Chinese and English language support.

The expectation, according to the press release, is that the new app will “appeal to the 70 percent of the 650 million phone owners in China who own Java-based phones.” By way of background, GyPSii is already locally available in China for the major operators China Mobile and China Unicom, for download on compatible Java phones.   GyPSii is also available globally across a wide range of devices, including Samsung, Nokia, LG, Apple iPhone, and BlackBerry smartphones.

How does GyPSii plan to make the jump from critical mass to relevant advertising? What is the rev share model for partners (handset makers and carriers) who get on board? And what is the experience for members that use the ExploreMe function to search the world around them (and so trigger the delivery of an ad on their mobile device)? These are just a few of the questions I explored with Dan in this final segment of our podcast interview. (It’s a little longer than my usual interviews, but I felt detail was necessary to fully understand the interplay between search and advertising GyPSii-style.

Listen to the podcast here. [20:27]

Excerpts from the interview:

PEOPLE-POWERED SEARCH: Dan is a great believer (as I am) in social search on mobile. As he pus it: “This is the ultimate user generated content business model ever.” With patented technology in place (as part of the PlaceMe function), the next step is scale. “It’s got to be at scale because if our goal is to build that index, we’ve got to get lots of people to use the app.” Downloading is only part of it. Bundling is the business model that drives results.

WATERFALL MODEL: This model sits at the core of how GyPSii does deals and shares the money. “It starts with OEM manufacturers, and then to ODM manufacturers. So we go and get bundle relationships with them to get on-deck.” After GyPSii seals the deals to be on the phones, “the water falls, [and] the next layer is the carrier layer.”  Then, as you begin to get scale, you use something like Open Experience, the API, to further connect all of the social networks.” And what do handset makers get? Future revenue. As Dan puts it: “If you’re a phone manufacturer, for example, once you sell your phone, it’s a done deal. You have to make a new one and sell it.  We’ve got a business model that enables a phone to be an annuity generating device for a manufacturer, and that’s all the downstream advertising that results out of any given phone. So, that way, every device they make is an investment in a future revenue stream.”

MOBILITY AD DELIVERY: “In selecting GyPSii, they’ve not just selected this app to be bundled; they’ve selected the whole GyPSii back- end system, which also is a contextual search and add delivery system.  So, strategically we’ve been selected for mobility based advertising delivery by some of the world’s largest manufacturers and I think that’s kind of a strategic place to be because they believe in this vision….They understand mobility, [and] they don’t appreciate a top-down play from other companies coming in trying to do a land grab on their customer base.”

ADVERTISING EXPERIENCE: It’s a lot like the mobile search we know, except the index is created by people and the ads - well - don’t look like ads. It all starts with a function called ExploreMe. From the website: “ExploreMe allows you to find places by keyword, category, proximity based across the general public, by your friends in your social network, or limited to your own personal points of interest. The resultant places allow you to see full context of photos, video, audio, text and ratings by the owners, contact the owner of the place (dependent on user settings), allow you to map the place, and with navigation allow you to get to the place.” Essentially, ExploreMe is what Dan calls the first step in “planet search or experience search.” You get search results and ads that are sold into that index in the same way that ads are sold into the Google index.  How do the ads look? A lot like content. But you could also get a coupon. No matter what you get, when you make a selection it triggers an advertising-based transaction - and a pay-off to the handset manufacturer.

MORE THAN MOBILES: Who said mobile advertising has to be delivered to mobile phones? GyPSii’s goal is to be on every device out there. “That’s not just phones, it’s also netbooks. We’ve got a relationship with Intel; we’ve been selected as part of their reference platform for all mobile Internet devices and netbooks.  There are other ways to be mobile besides just your phone, so every mobile device that has an ability to be connected to the Internet, we want to be on.”

MOBILE ANALYTICS: Advertising on a social network (as I have pointed out in my recent release white paper Mobile Advertising For the Masses, sponsored by Bango, which you can download here) provides brands access to key data, such as gender, preference, and whatever else members are willing to share. “For privacy reasons, [GyPSii analytics] will never say who a person is or anything else, but it will report things like gender, age, what other social networks that person is in. Think of a 3-D cluster map of the kind of people that are interested in that product, it helps them [advertisers] in real-time know where they should place their ads.” The feedback loop is simple: “We’ll help them know more about who’s interested in their products.”

WHAT’S NEXT?: “We’ve been in hunting mode and now we go into gathering mode.  So, where are we going? We’re going to continue to hunt relentlessly.  We will not yield until we sign every major OEM and ODM and carrier in the world - that’s hunting.” Execution goes hand-in-hand with innovation. We spoke shortly before the iPhone app launch, which Dan explains in the interview. Beyond that, we can look for a “release schedule that enhances that new user experience on all the other devices we’ve got.” Finally, GyPSii will expand what it calls the GyPSiiPlex, “all the data centers around the world adding capacity and fine tuning our algorithms.” (Dan calls the company’s core algorithm PlaceRank, a word play on PageRank.)

My take: My own mobile advertising research for a variety of projects including Mobile Advertising Research U.K., and MSG’s own publication/online resource MobiAD World Focus, brings me in contact with C-Level executives from a mix of mobile operators, agencies, brands, ad networks, and enablers. The questions on the top of the list: What is the value chain and who are the mouths we have to feed? The advance of companies like GyPSii tells us two things: We have to re-think how we define mobile advertising (Is it about brand message? Or is the end-game for advertisers simply the chance to communicate with social networks like GyPSii?), and the value chain we assume is coming together to deliver it.

Clearly, mobile social networks are making the shift from meeting place to market place, and having search and advertising baked in (in addition to all its other features/functionality) has earned GyPSii a prime position in the emerging mobile search and advertising business ecosystem.

Special thanks (again) to GyPSii for hosting my podcast until I can upload my content to the cloud and make it available to MSG readers via iTunes. It’s work in progress and coming soon!

In the next podcast, I look at a new app store approach from Bytemobile. For background I will also feature the video in the video player in the MSG sidebar.

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If you have an interest in being considered for an interview for MobiAD World Focus, please contact me directly or send an email to my assistant Andrea Henninge (andrea@msearchgroove.com).If you are interested in taking advantage of this platform to contribute a sponsored column, case study, or company profile, then please contact Stuart Willett, MSG Director, Business Development, at sw@morianamediagroup.com or by phone on +44  7734 315 506.

Disclaimer: Bango is an MSG supporter.

The popularity of location-based services applications - particularly their top-notch position in a variety of app stores - indicates that location apps are crowd-pleasers, but are they really game-changing? Nate Janewit - an MSG columnist and a computer scientist at Stanford University sharply focused on the larger issues around LBS - suggests companies need to think differently about location in order to wring more value out of their vast stores of data.

The recent report on trends in location-aware apps from Apple’s App Store, Google’s Android Marketplace, and Blackberry’s App World released by Skyhook Wireless, itself a provider of a patented hybrid system of location awareness, reveals a buoyant market for LBS apps. Indeed, the Apple App Store was found to have the greatest number of location-based applications, at over 2,300, and the highest percentage of paid for location apps, at over 75 percent. 67 percent of Blackberry apps are paid, and 80 percent of Android Marketplace apps are free.

Clearly, location apps are popular, as their increasing ubiquity and popularity across a variety of app stores demonstrates. But move past the hype and the excitement generated by the flurry of activity in the space, and it becomes clear that location services - by themselves - are not game-changing.

Location-aware data is not enough

Indeed, mobile location-based services and social networking companies such as Loopt, Pelago, and Sense Networks have invested a great deal to achieve their vision, which revolves around the provision of an array of consumer and community services supported by socially-tagged, location-aware data stores. The data they have is impressive and the expansion plans they pursue are ambitious. However, they also face formidable competition from Internet giants (Google, MySpace, Facebook, and Yelp) that have already aggregated their own large sets of useful social content, and are anxious to extend their reach to mobile.

Can companies compete on location data? Many players are positioning themselves to do just this. However, I submit that location services - and the structures and systems in place to deliver them - represent little more than an incremental innovation on top of the immense stockpiles of location data and content that are largely under the control of established Web companies and heavyweights. As a result, these Web giants are well-positioned to leverage location data to mobilize their offers and ultimately dominate the marketplace. There are, however, options and strategies mobile location services companies can employ to win the game - even though, as I argue in this is column, location services on their own are far from game-changing.

Admittedly, not everyone shares my view. Sam Altman, founder of Loopt, told me in a recent interview that he strongly believes in the value of innovation in location-based services and their central position in personal mobility experiences. A prime example is the company’s iPhone app. Loopt’s Mix feature enables users -without compromising their personal privacy - to connect with other users nearby. What’s more, users can find places nearby on Yelp and find what their friends on Loopt are saying about those places.

Beyond this interesting user experience, Loopt’s location-related content is thin, and therefore isn’t terribly useful - yet. However, it’s not so much the company’s progress with their service offering that interests me as much as its business priorities.

Specifically, Loopt has correctly honed in on two features/functionalities which are fundamental to all location-based services moving forward.

1. Connecting users to each other (using location in addition to other social filtering parameters).
2. Connecting users to information (using location as an additional input to search).

The intersection between location and search on a mobile is particularly promising, and has caught the attention of location services providers including Loopt, Sense Networks (CitySense), and Pelago (Where service), as well as mobile search services providers including ChaCha, a company that connects users to a human agents trained to provide answers to their SMS text search queries and, more recently, voice-activated queries.

However, these players are all pursuing business models built around a broad but rather general vision of what location-based services are - and can be.

In their view, location can be to mobile search and social networking what PageRank currently is to Internet search. Put in this perspective, location is potentially disruptive. What’s more, the companies that control the data stores (thus the capabilities to connect users to information they require, and to each other) are positioned to rock the industry.

Location information is power, both to the companies that deliver it and the consumers, who benefit from the tremendous amount of utility it provides.

Love the restaurant where you just ate? Review it, post it online, and alert everyone (or just your friends) nearby to try the place, all while you’re waiting for the check. Want to find a good barber shop in Mountain View, California? Ask a question, direct it only to users in downtown Mountain View, and be alerted when you receive an answer from someone there. The immediacy, intimacy, relevance, and quality of such services make them very exciting for consumers.

And let’s not forget the potential for the delivery of more relevant, location-aware mobile advertising, which is the main attraction for local stores, clubs, restaurants, businesses, and organizations hoping to attract consumers to their premises.

The location tools and technologies used here to record what we do and where we are (all the while paying careful attention to personal privacy concerns) as part of our day-to-day routine provide advertisers, agencies, and mobile operators a potentially much deeper understanding of consumer habits, insights that can greatly increase the value of mobile advertising linked to location-based services. Mobile contextual advertising is already de rigueur, but location has the potential to make mobile advertising more relevant, more personalized, and thus much more effective.

But it doesn’t stop there. Adding location on top of traditional information sources we know from the Internet provides online companies with further opportunity to personalize content for their users on the move. Location can also boost the quality and value of online recommendations (where the system delivers suggestions based on an implicit understanding of user content preferences and requirements) and search (where an explicit query triggers the delivery of additional related results).

Why location-based services are an incremental innovation

Clearly, location services which connect users to each other, or information, or both have the best chances for success. However, there are several major obstacles that make this a difficult space for companies - particularly startups - to gain traction.

1. Users can resist change: Connecting users to each other and introducing them to new social networking communities could be tough, particularly if they are loyal to the communities where they are already members. The social networking space is already nearing saturation point, at least in the U.S. and the U.K.
2. User-generated content matters: Without a large data store of geotagged content, there is little value to a location-based service. Yelp and CitySearch, companies that have large data stores of reviews, listings, phone numbers, and shop information indexed by location, have the advantage here.
3. Search needs location: Developing effective mobile search will likely require heavy-duty algorithms and design (that factor location and context into the equation), and a large infrastructure to deliver.
4. Google is on an expansion course: Companies - particularly startups - face strong competition from Google. Latitude, a service that allows users to share their location with their friends on GTalk, can be read as Google’s bid for market supremacy. Is Google over-reaching? Not if we consider the company’s ability, through Latitude, to leverage legions of clusters for search to deliver more relevant information culled from a wider data set than any startup could ever stockpile. Furthermore, Google’s dominance in contextual advertising, which it is trying to extend to the mobile space, allows it to reach out to a wide network of advertisers and businesses eager to attract traffic to their sites and tap in to the potentially lucrative Long Tail of search queries. While even Google will have difficulties as it sharpens its focus on selling paid search advertising to the hyperlocal market, its brand recognition and reach may allow it to make considerable inroads and thus pose a significant threat to a broad mix of location services providers and mobile ad networks.
5. Brands need trust: Users are generally not accustomed to sharing their location data with brands and merchants. To convince consumers they trust brands with their personal information, all communications (particularly brand messages delivered via mobile marketing campaigns) will need to be permission-based and comply with the Global Code of Conduct, guidelines introduced by the Mobile Marketing Association (MMA), a global non-profit trade organization established to lead the growth of mobile marketing and its associated technologies. Put another way, brands best positioned to achieve their business objectives, and reach mainstream users instead of just early adopters, are ones that respect our privacy and have our respect. That narrows the candidates down to established big-name brands, companies that we know and trust.
6. Content without consent is spam: The avalanche of new content linked to contextual data (what we do and where) opens the door wide open to the delivery of spam and the spread of fraud. All companies have to do their utmost to attack this problem at the root. However, many startups will likely find they lack the infrastructure to keep this issue in check.

Put another way, making a mark in the location services space requires more than the ability to pick up on a user’s location. Location services require the professional and reliable interplay of systems and services enabling search, content delivery and discovery, social networking and communication, and mobile marketing and advertising. What’s more, players in this space must connect and collaborate with a complex value chain that includes advertisers, enablers, operators, consumers, and companies we have yet to identify.

Given these factors, the players that emerge dominant in this market are likely to be the names we know from the Internet: Facebook, MySpace, Google, and Yelp. Why? Because, as I have pointed out: It’s not about location; it’s about the data and the networks that power location services. Internet giants have experience, communities, content, and search. Location is just another ingredient they can add to their already successful recipe for success. Put simply, location serves as an additional input, paving the way for these companies to provide interesting new applications - applications that fundamentally leverage the assets already out there on the Web.

Smart strategies for clever newcomers

It may be a bleak picture that I paint for mobile location companies and startups; I would like to point out that I am a believer in the vision behind location based services. However, given my experience and common sense, I cannot ignore the barriers that prevent newcomers from changing the game.

But there are actions startups can take to ensure they nonetheless secure a central spot in the merging location services value chain. It may require a rethink, but the potential rewards make it well worth the effort.

I would therefore suggest startups refocus their strategy to bring more value to users, boost their competitiveness in the process. I would advise executing one of the following options:

1. Mashup: tackle the “cold start” problem and build up your data store (and follow the lead of services such as Loopt and Where) by providing content from larger Web services such as Yelp, Evite, Eventbrite, and CitySearch. It’s a great way to connect your users to valuable information immediately. What’s more, there’s an opportunity for one or two location-based “data aggregators” - companies that use information from other services and present it via a unified interface on the mobile device. (However, there is only room for a few companies in this space since the barriers to entry are low and little prevents Internet giants from entering the mobile space (on their own) themselves. Yelp and Google lead the group of Internet companies staking out their mobile territory by releasing location-aware apps for the iPhone and Android devices. A successful play in this niche would therefore require companies to outmaneuver both the mashups offered by other competitors aiming to be data aggregators and the individual siloed applications offered by the Internet companies that have the data and determination to play in mobile.
2. Killer search: It may seem unlikely, but search can be decisive and disruptive, particularly as the integration of location information will likely cause a seismic shift in how users interact with the results they receive on their mobile phone. Keep in mind that, when Google began promoting their brand of search engine, observers joked that the race had already been run and won by the likes of Lycos, HotBot, Yahoo, and AltaVista. My message: If a company makes a fundamental improvement in search by using location data, it would represent a sea-change in contextual search and shift the balance of power away from the current market leaders.
3. Big money: Location can enhance the value and effectiveness of advertising and marketing, adding a new dimension to how companies communicate their brand message to consumers. It may even be possible to use location information to provide better advertising that will appeal to users. As this recent post on MSearchGroove points out: Advertising is indeed content. Location can enable the delivery of truly compelling content. At the other end of the spectrum, we might ask ourselves if it is not possible that location could even pave the way for a whole new paradigm around the effective monetization of content and services that does not involve ad-funding. The value of receiving the right information at the right time and in the right context may be so valuable that people will pay for it.

In conclusion, a bright future awaits location services startups that think outside the box. Granted, it’s a tough market with ever tougher competition, but a strategy built on one (or all) of the options I present will help startups stand up to the Internet giants. I strongly believe location and location-based services are the future. I enjoy hearing about scrappy, ambitious startups, and their success should encourage all companies in this space to execute on the strategies I have outlined. The strategies may vary but the pay-off is clear: Companies that position themselves now to leverage the power of location will lead the way in delivering contextual relevance across mobile search, mobile advertising, and a potentially lucrative range of mobile services we cannot even imagine.

About the author:

Web: http://www.linkedin.com/in/njanewit
Nate Janewit is a search and mobile technologist and a Silicon Valley resident. His career thus far has spanned Microsoft, Google, Kosmix, Efficient Frontier, and research in Japan and at Stanford. He is an analyst of emerging technology and media and actively contributes to developments in the search and search advertising space.

Yahoo finally and officially joins the group of search companies getting on the voice search bandwagon, and announces that it has launched voice-enabled oneSearch for the Yahoo! Mobile iPhone app.

While Yahoo comes to the party more or less six months later than rivals such as Google, there is some indication that the wait was worth it if we consider that this service extends beyond allowing people to conduct keyword searches (for flight numbers, locations, Web site names, local restaurants - the works). People using the app can also use voice to customize the ‘My Interests’ tab. The procedure (according to the press release): “Simply click on ‘add anything’, speak the topic you’re interested in, then select the relevant content and add it to your page.” The Yahoo! oneSearch with voice application is currently available on more than 80 different devices and across platforms including Blackberry, Nokia, Windows Mobile, and now the iPhone - with support in eight languages.

Various bloggers have tried out the voice app, which harnesses speech recognition technology from Vlingo, and reported mixed results. But it’s difficult to judge the user experience based on random road tests. (This is why MSG has pooled its resources to produce mobile search research that, like my own mobile advertising white papers, offers readers a balanced assessment based on first-hand experience and solid methodology.)

The Yahoo app, however, comes in too late to be included in Pump Up The Volume, MSG’s own assessment of Web search on the iPhone. But that won’t keep us from conducting our own road test of the Yahoo app soon. Regular readers and Twitter followers (@peggyanne) may recall I announced the project a while back (a teaser before we had further refined our methodology to account for fundamental differences between natural language and keyword search, an important improvement that makes the results all the more compelling).

The white paper, researched and written in collaboration with Peggy Albright, MSG Associate and founder of Albright Communications, will be released next week. By way of background, our work assesses the overall performance of the voice-enabled search services offered by ChaCha, Google, and Vlingo in a typical range of use cases and scenarios. (Vlingo for iPhone converts queries into text and submits them to one of two search engines, Google and Yahoo. We chose Yahoo.)

A special highlight: A foreword by Bill Meisel, Editor of the specialist publication and voice technology knowledge destination Speech Strategy News. I’m honored to have him on board for the voice search white paper, and look forward to showcasing his analysis/columns on MSG soon.

I won’t divulge all the white paper results and stats here. However, I can say that ChaCha’s  results proved superior to both the Google Mobile App’s voice feature and Vlingo for iPhone.

ChaCha uses human agents to transcribe and interpret/answer search queries (spoken as questions). However, we found the performance of voice recognition alone does not determine nor predict the accuracy of a search result. Indeed, one search provider exhibited high voice recognition accuracy but still had difficulty delivering the intended search results regardless of query format.

Some background on the methodology of this defining work, which will be available for free download.  We created 18 queries representative of mobile search usage and trends. The queries covered search categories considered common in the mobile environment, such as navigation (to a specific Web site), directions, local information, general information on timely topics, and specialized or unusual long-tail topics (sometimes referred to as “dinner table” questions). We also included specific queries that represent the most popular mobile search terms in 2008, based on mobile search data publicly reported by AOL and Yahoo. Recognizing that the search engines used in the Google Mobile App and Vlingo for iPhone services are built from the ground up to handle keyword search - matching documents/information on the basis that they contain one or more terms (keywords) - we conducted a second set of tests using keyword queries.

Peggy and I are proud of the research and look forward to collaborating together on future mobile search assessment reports and work contracted by our various clients. I will keep you posted of our progress on MSG.

A key takeaway I want to leave you with: This white paper provides evidence that mobile social search - which harnesses human judgment, thus restoring balance in a model that tends to promote search engine optimized websites over destinations the user may find genuinely relevant and useful - has significant advantages over algorithmic computer-centric search approaches. As I have pointed out in this earlier analysis, in the case of the mobile phone, an intensely personal device we have with us at all times, a more people-centered approach represents a perfect fit with our search behavior and our expectations for a more personalized service. Indeed, the rise of mobile social networks further underlines our increasing requirement for search services that effectively inject human preferences into the equation. This, itsmy.com CEO Vince Staybl, recently told me was the primary motivation for the tie-up between his mobile social networking service with socially-assisted search engine Taptu, and I fully expect many more such partnerships to follow.

Disclaimer: ChaCha is an MSG supporter and white paper sponsor. The opinions expressed in the white paper are those of Peggy Albright and Peggy Anne Salz, and do not reflect the opinions of organizations referenced in the paper.