T-MOBILE CZECH STUDY SAYS SMS/MMS AD RESPONSE RATE 27 TIMES HIGHER THAN INTERNET BANNER CAMPAIGNS.  The project confirmed the high response rates of SMS and MMS ads, based on campaigns from 22 advertisers, including Coca-Cola, Nestle, L’Oreal, Ford, Komercni banka and Eurolines. The most successful campaign had a response rate of almost 12 percent, while even the results of the least successful campaign were three times higher than the average response rate for Czech internet campaigns. Source

The bottom line: These results highlight the potential of compelling, relevant and properly targeted messages. In particular, they illustrate how much more likely are consumers are to respond to SMS and MMS ads than simple Internet banners.  Peggy adds: Mobile Advertising Research U.K. confirms this, but there’s also a lot of mileage left in banners. For more on what makes for a great mobile advertising experience and a balanced value chain check back tomorrow for my take on a new-launch Hardees campaign.

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TOP APPLICATIONS ON THE APPLE APP STORE HAVE MORE THAN 1 MILLION USERS, according to AdMob’s latest Mobile Metrics Report for May 2009. The report found that the most popular free applications in AdMob’s iPhone network generated the majority of usage, with the top 5 percent of applications garnering more than 100,000 users in May, and some apps showing more than 1 million active users.

A further 14 percent of applications had between 10,000 and 100,000 active users, while 54 percent of applications had less than 1,000. AdMob reached 15.1 million unique users through iPhone and iPod touch devices across 2,309 applications in May, with the average user accessing four applications.  44 percent of iPhone ad requests came from devices running the new version 3.0 of the iPhone OS, compared to just 1 percent of iPod touch requests.  Source

The bottom line: These numbers from AdMob underline the ongoing popularity of apps on the iPhone. But they also offer some insight into the potential value of in-app advertising for developers and content providers, since the apps in AdMob’s iPhone network are all free to download, and earn money solely from advertising.

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SUBSCRIPTION VIDEO AND MUSIC ACCOUNT FOR 40 PERCENT OF MOBILE DOWNLOADS IN THE UK, according to a study from GfK, as the model grows in popularity against pay-per-download sales. The research also states that casual and classic trivia and word games lead the mobile gaming market with 27 per cent of sales, while the budget sector (£3 or less) is also enjoying success through basic and retro games.  It also adds that nine per cent of the mobile tariffs signed up in the UK in Q1 have bundled-in flat-rate data.
Source

The bottom line: This study illustrates the growing popularity of the flat-rate model, both in mobile data access, but also in content subscriptions. Still, the content-subscription model contrasts with the booming pay-per-download app store model.  Will one triumph over the other?

***

AD-FUNDED MMS REVENUES TO HIT $8.7 BILLION by 2014, says Juniper Research in a new Mobile Messaging report.  The report says that annual growth rates are reaching 94%, with SMS and mobile email continuing to dominate the person-to-person (p2p) mobile messaging market.

The report, entitled “Mobile Messaging & IP Evolution”, found that the Far East & China would lead the global ad-funded MMS market by a considerable margin, followed by North America and Western Europe.  The adoption of push MMS and SMS in mature and emerging markets has enabled network operators to support ad-funded voice and SMS tariffs, and combat falling ARPU, while providing brands with new advertising channels. Source

The bottom line: These are bold projections from Juniper.  P2P MMS messaging still has a way to go before it reaches the usage level of SMS, but these projections suggest that MMS advertising could prove to be a lucrative revenue stream in its own right.

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MORE THAN 60 PERCENT OF MOBILE USERS STILL ONLY USE THEIR HANDSET FOR VOICE AND TEXT, according to a KPMG survey. The survey of 4,190 consumers in 19 countries also says that consumer satisfaction rates with mobile services have increased. Music satisfaction is up to 66 percent, video 52 percent (from just 14 percent), IM 44 percent and live TV 38 percent.

The factors influencing users’ next mobile content purchase, according to the survey are, in order: clarity of pricing, cost, ability to save content, download speed and the ability to try content before purchasing it.  36 percent of respondents said they would accept mobile advertising, while 49 percent said they would accept it in music and 28 percent in games.  Source

The bottom line: The level of acceptance of mobile advertising is encouraging.  However, the headline is arguably the most pertinent point: for over 60 percent of consumers, the mobile internet doesn’t exist and text messaging is the only data application of a mobile device.

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MOBILE ENTERTAINMENT REVENUES ARE EXPECTED TO GROW 28 PERCENT ON AVERAGE over the next year, according to the Mobile Entertainment Forum’s quarterly Business Confidence Index, up one percent from its last survey.

Content owners are much more optimistic about their revenues, with the anticipated average income up from $6.1 million to $17.1 million.Revenue in Western Europe is expected to be down 10 percent, North American revenues are predicted to be up 8

percent. 81 percent of respondents said they were as confident as last year about the future of their business. Source

The bottom line: This MEF study illustrates a bullish mobile entertainment market, unbowed by the economic climate.  It could be that, aside from the natural obligation towards market confidence, stakeholders believe the purchasing of relatively low cost content through microbilling will remain popular as consumers delay the big ticket items and seek alternative forms of entertainment.

***

APATHY AND PRICE RULE IN NOT SELECTING THE iPHONE, say the latest findings from The NPD Group.  The study showed that the primary reasons consumers do not want to purchase an iPhone are “lack of interest” (55 percent) and “high price” (42 percent).

One in five mobile phone owners say they want to purchase an iPhone, but have not yet done so, and NPD’s report indicates data plan pricing and exclusivity remain key obstacles.  18 percent of consumers who have not purchased an iPhone cited the expense of the data plan, while 21 percent said they didn’t want to switch carriers.  Source

The bottom line: Reasons why Apple’s iPhone isn’t persuading everyone to leave their current carrier and device seem quite simple: they aren’t actually that bothered.  Given the previous data point, which revealed that 60 percent of people only use voice and text, this shouldn’t come as much of a surprise.

***

iPHONE USERS TOP SMARTPHONE LOYALTY ratings, according to a new survey by Crowd Science.  It also says four out of ten BlackBerry and other smartphone users would switch to Apple’s iPhone as their next smartphone purchase.

On the other hand, only 14 percent of non-BlackBerry smartphone users would switch to a BlackBerry for their next purchase. Meanwhile, a huge 82 percent of iPhone users are loyal to the brand. Source

The bottom line: In contrast to the previous report, this one highlights the attitudes of smartphone users who, almost by definition of being smartphone users, care a little more.  The study is as much a study of consumer brand perception, and the iPhone steals the show as expected, but BlackBerry may take note of the small minority who would switch for their next purchase.

***

MORE THAN HALF HAVE MOBILE SECURITY FEARS, according to mobile security specialists, Cloudmark Inc.  The report says mobile spam now affects two in three consumers, more than 50 percent worry about mobile security, and only 7 percent believe the information they send over the phone is secure.

Cloudmark also says the concern about mobile security is detrimentally affecting the adoption of mobile services such as banking and e-commerce, with more than two thirds (69.3%) of consumers stating that they wouldn’t use value-added services such as mobile banking.

Two thirds of consumers (65.9%) have received unwanted or unsolicited messages (spam) on their mobile phone. While a majority of spam messages could simply be seen as a nuisance, 29% of respondents had received malicious spam such as phishing messages, fraud messages or messages containing inappropriate content.  Source

The bottom line: This report highlights the ongoing fears around the security of mobile devices, which will likely become more prevalent as smartphones become more pervasive, and spammers and malware authors pay more attention to mobile. However, we should also remember that the mobile security specialists who produced the report might have a small agenda of their own.

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.

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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.

Editor’s note: I am proud to announce that Jim Levey, formerly Director of Product Marketing for Search and Digital Advertising at Amdocs, officially joins the roster of authors and influencers contributing news, analysis and thought leadership to MSG. In this post, Jim, who attended last week’s Mobile Marketing Forum in New York City, the flagship event of the Mobile Marketing Forum series organized by the Mobile Marketing Association (MMA) and Informa, summarizes key points, important statistics and asks the question: What’s next?

***

Is the global downturn for real? It may have impacted the mobile industry at all levels at the start of the year, but the message at the Mobile Marketing Forum was that mobile is bucking the trend.

Between panels and during networking breaks I learned that more brands are taking mobile more seriously. Specifically, those brands that have successfully experimented with mobile in the past are now including mobile as a key component within their marketing mix. The top-notch spot of mobile in the advertising mix - and the mix of brand success stories we heard during the sessions - are sure signs that brands are coming on board. But don’t just take my word for it. Mike Wehrs, MMA President/CEO, reported that marketers are becoming more comfortable integrating mobile within traditional campaigns. As he put it: “Mobile is moving from experimental to essential.”

Indeed, mobile advertising in North America, Europe and APAC has experienced sustained growth. While you can argue that actual growth is still marginal, the development is nonetheless a positive if we consider that budgets earmarked for traditional media have been slashed.  What do the numbers tell us? Peter Johnson, VP Market Intelligence and Strategy at MMA, reckons mobile advertising revenues will increase from $1.36 billion in 2008 to $1.7 billion by end-2009, and rise again to $2.16 billion in 2010.  Peter concluded that, based on his recent research, more consumers are accepting mobile marketing as a relevant and valuable part of their digital lifestyles.

Brands and agencies are understanding the value of mobile advertising, and becoming more adept at using mobile in innovative ways. Highlights included exciting new campaigns from Coca Cola Zero, Sunglass Hut, Kodak and Johnson & Johnson’s Baby Center, and MGM Hotel. Whether the format was text, MMS, display, rich media inside gaming, or couponing - or a combination - the point is: Mobile delivers results and a positive ROI.

A cross-media approach that stood out in my book was Coke’s campaign. The company teamed up with Nokia to emblazon Coke’s distinctive red on Nokia handsets and rounded out the offer with an assortment of Coke ringtones and wallpaper for free download.

Other campaigns illustrated how mobile can connect real world experiences with real results. Using mobile to trigger interactivity and brand interest at the point of purchase (POP) Sunglass Hut encouraged its young customers to be glamorous fashion models and capture their image with their cameraphones and upload it to the Sunglass Hut website to enter a contest to win a free trip valued at $10,000. But the real appeal of the campaign was how the brand connected with young people, thus demonstrating how mobile can be an emotional branding mechanism. Put simply, it’s an innovative and emotive way to convey the essence of the brand. It’s also a magical moment when a brand can inspire this excitement at the all-important point of purchase.

The example of a campaign run by MGM Hotel in Las Vegas showed how mobile marketing can be harnessed for effective direct marketing and sales promotion. In this scenario, the brand used a mix of mobile messaging and highway billboards to connect with consumers and allow them to book a room from the road by sending the request to a shortcode.

In addition to streamlining the reservation process and delivering a confirmation directly to the consumer’s mobile phone, the campaign also continued the one-to-one conversation with consumers when they arrived at the hotel. The result: A continuous conversation that drives continued sales. Consumers stay on the hotel premises and are invited to enjoy perks such as discounted snacks and treats, free dinners and a range of incentives around the casino. The brand’s objective was to reward customers and keep them on the premises, and the ongoing conversation via mobile text achieved this.

What do these varied success stories have in common? All these campaigns were simple, innovative and effective. A clear message to brands that they don’t need whiz-bang technology or high-cost production to drive positive results. Peggy adds: Another confirmation of the key message of my recent mobile advertising white paper: The innovation is not in advertising formats, but how we use them.

But it’s not just brands that are waking up to the pivotal role of mobile in the advertising mix. As Charles Johnson, General Manager, Microsoft Mobile, put it:  “There is growing realization that mobile is the only medium that can complete the entire marketing cycle from awareness and activation to engagement and sales.” Microsoft is walking the talk, taking the wraps off  Bing, an online search portal designed from the ground up to give consumers more relevant search results. Microsoft intends to elevate the mobile search and advertising experience in a similar fashion. In fact, the company’s search and advertising platform, which is media agnostic, is geared to serve adverts that are highly targeted and contextually relevant.

Another factor that contributes to the sustained growth of mobile advertising, and the increased interest of big-name brands, is the proliferation of smartphones. The phenomenal popularity of these devices - specifically the Apple iPhone - has triggered an astounding shift in user behavior. In fact, Paul Palmieri, CEO, Millennial Media, counts 59 million uniques (that means 59 million advertising opportunities).

The MMF showcased the progress made by brands, but it also reminded us of the work ahead to define and refine the metrics that will help marketers measure success as well as failure. Fortunately, Markus Munkler, Senior Manager, Industry Initiatives, Vodafone, could update us on some significant progress. He pointed out that there are cross-industry efforts underway in the U.S., bringing together the MMA, the Interactive Advertising Bureau (IAB) and the U.S. Media Rating Council, to standardize ad measurement and reporting.  The initiative - which is similar to the one spearheaded by the GSMA aimed at generating cross-operator mobile advertising metrics based on usage data submitted by all five U.K. operators - is a vital step in creating a framework for global media planning.

Connect the dots, and there is a groundswell of interest and enthusiasm around mobile advertising across the ecosystem. As Paul from Millennial Media, pointed out: Following the post 9/11 downturn, online advertising enjoyed “hockey stick” growth between 2002 and 2005. Mobile advertising is likewise close to a tipping point, an impressive growth trajectory we will likely see as the global recession recedes and markets recover.

My takeaway: Kudos to the MMA for once again assembling industry leaders from all corners of the ecosystem. Communication, education, and understanding how companies up and down the value chain view the opportunities and obstacles are imperative to get the industry on track. Signs of progress are abundant and inspiring: These folks are serious about success and determined to develop standards and metrics to create a level playing field and foster global trade. Where are the brands? For the most part, brands are content to stick their toes in the water. What will move them to take the plunge? The industry must provide brands reach, standard formats across channels, standard metrics and reporting, and the ability to tap into mobile operator’s vast stockpile of subscriber intelligence for better targeting and relevancy. That’s the brief, and we shouldn’t believe that a single entity can fulfill the vision of mobile. Cooperation and collaboration are essential, and there is no market to fight over until we create it - together. Only then will the mobile advertising industry realize its full potential, and deliver an effective and engaging brand message that will revolutionize they way we communicate, respond to marketing and consume content.

MSG mobile search research (the profiles and analysis I share on MSG, and the new-release white paper assessing search, which I co-created with my esteemed colleague Peggy Albright) has attracted the attention of a growing community of readers and influencers across a variety of online destinations and industry organizations.

I am pleased to report this work has also sparked interest at Eyefor Travel Research, a business intelligence firm known as the “leading voice of online travel.” Andrew Merrie, research analyst and Headmaster of the School for Mobile (the firm’s initiative for educating the travel and tourism industries on opportunities in mobile), reached out to me earlier today to collaborate on the firm’s series of free reports (which are essential reads chock-full of case studies, key statistics, and best practice) focused on mobile technology and solutions.

There is a special emphasis on mobile search (which we agree is the linchpin of a range of effective strategies to deliver mobile advertising, commerce, and CRM). By way of background, the Eyefor Travel report series consists of Vol.1 Mobile Technology in  Travel: The Introduction, and  Vol 2,  Mobile Technology in Travel Report: The Detail. Vol 3  Mobile Technology in Travel Report: Consumer Insight is work in progress, but you can sign up here for an alert when it is released later in June.

A trend that stands out is the new popularity of SMS search schemes as a sure-fire way to reach a mass market. As Andrew puts it: “SMS search is a tool that 99 percent of customers know how to use. In a consumer-focused industry such as ours, it [SMS search] represents a good first step in how companies need to move forward.” Another advantage beyond intuitive usability: Proven monetization models around the delivery of related text links and advertising.

This point came through loud and clear in this week’s AdAge article, which outlines the advantages of SMS search, and takes a look at the companies (notably 4INFO, which MSG profiled here, and ChaCha) cashing in on its newfound popularity among users and advertisers.

Rita Chang, who wrote the piece, contacted me for the article, and has since arranged a follow-up call to discuss the mobile search competitive landscape. The intention is to write a comprehensive feature on the models and companies I think set the bar. I gladly support her in this work, and welcome other journalists to reach out to me for comments or just a few company contacts.

The increasing excitement around SMS search isn’t limited to the U.S. (the focus of Rita’s AdAge article). It’s also going full-steam in Asia, where Mobile Content Networks (MCN) - a provider of mobile search and revenue solutions that deliver people connections to content, not links to content, on their mobile phones - has chalked up an impressive list of operator customers for its SMS search, which emphasizes content discovery instead of answers to specific search queries.

Today marks the company’s official launch of Smart Search (aptly named) in partnership with Smart Communications, the Philippines’ leading mobile operator with 36.9 million subscribers. The MCN-powered search service (an SMS triggered search service that lets people use a shortcode to text queries for their favorite downloadable music) complements MCN’s WAP search solution for the SMART Music Store, which launched in 2008 and offers subscribers real-time access to a growing catalog of ringtones and music tracks from local content providers.

Stephen Burke, MCN SVP Sales and Marketing, who pre-briefed me on the news announcement yesterday, also kindly agreed to a spontaneous Skype chat interview to connect the dots in MCN’s evolving search strategy. I produce an excerpt of it below, and will circle back for a more in-depth discussion once MCN formally announces a key customer win later in the summer.

Q: The news is Smart Search. What else is in the pipeline?

A: We will also be adding new WAP and SMS content channels with Smart this month and next, and are seeing steady and healthy traffic growth.

Q: What can you share about traffic and usage?

A: For the Smart WAP Music search, we have seen page views and queries double in the second quarter calendar. We add [the content categories] Games in mid-June and Video in late June, which is projected to increase traffic about 3x.

Q: SMS activity?

A: SMS Search [is] reaching all the non-WAP users in the world’s most active SMS market.We will be ramping advertising in Q3. In emerging markets, the first step is to help build the Mobile Ad ecosystem, which is happening now.

Q: Do they [Smart mobile operator] use allwords [MCN's own PPC mobile content promotion program]?

A: No, not yet. The Philippines’ carrier revshare/ecosystem issues aren’t quite in place yet.

Q: And what can you report elsewhere across your partners/customers?

A: AIS in Thailand, FYI has also tripled traffic as they’ve added our Search to almost every page on the portal in their preparations to launch 3G services. These “emerging markets” are catching fire. Basically, we are seeing growth in all markets (Scandinavia, Turkey, Thailand, Philippines, Japan, etc).

Q: SMS search is certainly on the upswing.

A: In markets where WAP penetration/3G penetration is still lower (than Europe or U.S. or Japan), a transaction oriented, content and personalization oriented SMS service is an important addition. And it’s [SMS search] being specced into RFPs we are seeing elsewhere in S. Asia and Latin America.

My take: SMS search is a case of been-there-done-that? No way! It may be a rather un-sexy category of mobile search, but there is nothing unexciting about the demand for it across markets (and the increasing interest among advertisers). Indeed, comScore reports that SMS ads average a 16 percent response rate, outperforming typical 1-3 percent click-through rates for mobile display ads. While we may be enamored of the iPhone and the pivotal role this device has played in shifting mobile models (and the complete mobile business ecosystem) in the direction of mobile computing (as opposed to mobile communications), we should remember that the mobile device is about connecting us to the people and stuff (information, answers, content, and advertising - because it is content) that matters to us most. What works is what works. As Alex Meisl - Chairman of Sponge, a mobile marketing agency, and Co-Chair of the Mobile Marketing Association - pointed out in a phone interview yesterday, he is not bullish about bells and whistles in mobile. Most of his company’s campaigns harness text and messaging mechanisms people understand. Another advantage of text is the dialog it encourages between people and brands. This level of interaction can also bring a new dimension to mobile search, turning a search query into much more of a search conversation we can all understand.

Disclaimer: ChaCha has sponsored an MSG white paper; MCN has been an MSG supporter.

Today marks the end of a long week of mobile advertising webinars (including this one organized by Mobixell  - password adit123) and interviews, activities which for me drove home the pivotal importance of relevancy in all we do. Like a pop song you keep hearing in your head, my ears are ringing with how many times I have heard executives at brands, agencies, and operators echo the increasing importance of relevancy. In fact, Andy Bovingdon, Bango, VP Marketing, in yesterday’s interview for the Mobile Advertising Research U.K. project, was by far the most adamant to date.

In his view, mobile advertising is a form of mobile marketing that has many forms - all of which must be relevant to us. “The key across all platforms and forms of advertising - search, SMS, banners, and barcodes - is the relevance and the ability to target. Is mobile another screen, or the fourth screen, as some say? I would say it is the first screen. It’s always-on and always with us, and that means we can learn a lot more about the visitors [but not individual visitor] to a site or an ad campaign. We can know more about the people who interact with advertising, and we must use this to give them advertising to interact with.”

Put simply, relevancy rules (!) The message isn’t lost on MSG. Almost five years ago, I wrote the first report on mobile search and content discovery, where I preached the importance of delivering the right content to the right person - better yet in the right context. And that has been my message ever since. (Also reflected in the MSG strapline: At the intersection of content and context.) It’s where the action is!

And if you think it only applied to mobile content portals, then I have one word for you: App stores. This well-written and thoughtful column from Mark Lowenstein speaks volumes. He makes a plea for more personalization in application storefronts, and companies would do well to listen.

“I think the most important way to differentiate in this growing but increasingly crowded market is to deliver a more personalized, contextual applications experience. In most cases, all users launching an app store are presented with the same menu. There have been some early stage attempts to enable users to do some content configuration on operator or third party portals, sort of a wireless version of My Yahoo. But if we’re dealing with tens of thousands of apps and a small screen device with limited input capability, we have to get a lot smarter about what is presented to the user, with the magic being done in the background rather than relying on the user to self-configure.”

Where’s the connection with Blyk? The answer is evident when we consider (in my view) a  milestone quote/observation (below)from Antti Öhling, Blyk co-founder and CEO U.K.

Relevancy, as I illustrated above, plays a major role in content/app promotion and sales, and it will play an even larger role in mobile advertising.

I made this point in my advertising webinars (in fact, I used Blyk examples and slides in each). And I also addressed this issue in my Q&A with Antti, working it in between the questions that had to be asked following the controversial announcement last week that Blyk, the world’s first ad-funded MVNO, was moving to an operator partnership model. Why is Blyk making the switch? How can operators become media companies? And Why should they be wary of Internet players? These are just a few of the questions we explored in the following Q&A.

Q. First - let’s go back to the NewMediaAge article that started it all. I read your statement. My question is why?

A: We announced already in November 2008 that Blyk will change from MVNO to operator partnering model.  So this is not a new business strategy, just the next step in Blyk’s evolution.  I was surprised by the New Media Article.   The problem is that talking about media as we do is confusing for a lot of people, the NMA included. People fail to understand that being an MVNO is not important; it’s merely a means to an end.

When Blyk started out, the aim was to make mobile advertising work. And if you look in the traditional media, there isn’t a media in the world that wouldn’t somehow include the consumer of that media into the value chain. So you look at mobile and ask where is the consumer in the value chain? Because mobile companies come from a telco world, they were thrilled about the idea of inventory.  They think: Wow, we have inventory, let’s use it.  Well, there is plenty of inventory in the world. But inventory doesn’t make it a media. We looked around and said OK, we’re moving from an MVNO business model into a partnership model in order to roll our consumer offering out to a much larger audience and much quicker.

People have asked what is going to happen to our member [subscriber]  base. We spent a lot of energy and time creating a community of 200,000, so we are definitely going to take good care of our core assets. Everybody who works in the media industry understands how valuable an audience is.

Q: I would like to know what happened to the MVNO model and the ambitions behind it. You are not going to be an MVNO in the other markets in Europe…

A: Blyk’s goal is to become the biggest youth engagement media in the world.  The U.K. is a proof-of-concept. It works, and now it’s time to shift up a gear in expansion. We are switching from the MVNO model to operator partnerships in the U.K., Europe, and Asia. Blyk is currently validating the different options, and active negotiations are underway.

Why the switch? An MVNO means that you have to make up-front heavy investments. We needed to do it in the U.K. in order to get the whole machinery working. We needed to have access to all the tools that the operators have in their server rooms. Now that we understand how to use it [technology] we know how to help them. We know exactly how they can combine operator infrastructure with our ad engine and campaign management. We can make every campaign pixel perfect but what’s more important is that they [campaigns] are extremely relevant to the receiver. We saw the MVNO model as too slow for growth. If we partner with operators, we can triple or quadruple the speed, and reach the scalability that many advertisers are looking for.

Q: A question via Twitter from mobile advertising maven Helen Keegan. Let me confront you with what’s being said out there in the market place. For one, people are leaving Blyk. What do you have to say?

A: I’m not dismissing it.  We have never denied that we have streamlined the organization. That’s the modification we’ve done, so we are now steering this with a similar volume, but with a much lighter ship, which makes sense, especially in the current financial situation. We are seeing month on month growth in our advertising revenue, which in this environment is very promising.

Q: Tell me more about the partnership model.  How does the model function in practice and how many operators are you looking at in each market?

A: Blyk is a simple end-to-end proposition that covers everything from ad platform, campaign management, user experience, and audience management to technology.  Sometimes when I discuss this with operators, I say think of Blyk as a Coke as this example makes our role easier to understand. We have the recipe and we have the brand. People understand Blyk; young people understand what it means when we come to a country.  The recipe is how you make it work.  The operators have the factories for making all the refreshments they need, and they have their existing distribution channels. Basically, they have the works. But if they bring Coke in there, they can get so much more volume and so much more value. It’s a lot more interesting - and lucrative - to have Blyk as part of the operator offer. In other words, they can expand their reach to offering another well-known product.

Blyk is a brand focused on young consumers and our goal is to become the biggest youth engagement media in the world. We have deliberately chosen to target this audience, but it doesn’t mean that operators couldn’t work with us to make a similar offer to a different segment or to their entire customer base.  But then it wouldn’t be called Blyk at that point. As part of this partnership model, we’ll most likely choose to partner with one operator per market. Using what we bring is the fastest way for operators to get ahead of the game before their competition.

Q: Speaking of competition and competitive edge, who are Blyk’s competitors now that you are making the move from MVNO to mobile ad enabler?

A: The competitive landscape is actually the online Internet giants. It’s the companies we know from the Internet who are now wanting to make the operators dumb pipes, just selling data tariffs, so that they [the Internet giants] can deliver [their services/content/advertising] on top of that. If you think about the user experience, it’s not really a great model and it doesn’t create any value for the operators.  They [the operators] have no reason to be there and no role to play. But, if we add the engagement media, as we call Blyk Media, then the operators will have all the tools, all the bells and whistles under their control. They have it all.  We just show them how it needs to function in a way that no online player can replicate, a way that works more efficiently and creates a much better user experience. The Internet giants are treating mobile as part of their online offering - this will not work.  In Asia, for example, ‘online’ hardly exists, whereas mobile is widely used. Mobile really is the 7^th mass media.

Q: What does Blyk concretely bring to the table?

A: We have a full sales force, full understanding of how the media works, how it should be sold, how the campaign should be managed, and how you drive traffic to app sites.Based on 18 months’ research before launching in the U.K. in Sept 2007, and because we were a full MVNO with many specific custom-built functions, we have gained unprecedented expertise on how  [mobile advertising] works end to end. We call that magic dust, because it’s not enough to have just the hardware. You need to have a special understanding of the marketplace. Some people in the industry say Oh, we’ve bought this ad platform so now we are a media company.  No, you’re not. You might have a platform that can send stuff to people, but that doesn’t make you into a media company.

Q: What else do you need?

A: You have to start with an opted-in audience; you have to start with your full capabilities of profiling these people.  You then have to create a media environment where the people are happy interacting with the message that you are sending or the messages that they get in order to get the responses, and there you can use the profiling methods, there you can use the whole enrolment method.

You also have to bring something good to these people; a concept that they feel it is valuable to be part of. This personal value can be a free offer or it can be something else, but it has to be there to make communications relevant.  You have to get something out of that equation.  Getting a banner to your phone which you have not ordered gives you nothing.  If it’s not even profiled, that becomes spam and that leads to churn

Today, the way most of the mobile advertising works is not media.  We’ve been able to show that if you make it work, it becomes unprecedentedly efficient, with an average 25 percent response rate. This is what mobile can deliver, provided that - and again I repeat - you have an opted in audience, you have made them understand why it’s beneficial for them by profiling, by providing them relevant advertising which starts to feel like a service. By enhancing the user experience and making it richer than anything else, you achieve high response rates and you can call yourself a media company. That’s been completely missing from the telco industry because operators don’t think of themselves as a media, they think of themselves as a utility company providing a service.

Q. Just curious here. Why the focus on advertising campaigns when I have it from other agencies that search is red-hot?

A: Mobile search. Yes, that’s one revenue stream, obviously. But it’s not going to be the whole equation. It’s all based on a mobile Internet concept which, though it can provide information and all sorts of other things, hasn’t proven to be a great revenue generator per capita, and that’s important because click through rates are low and they will get even lower the more you have similar types of offerings.

In Japan, for example, a country that has had mobile Internet for four years, the lack of relevancy means the market is still under $1 billion and it’s a 120-million people market.  It’s dismally small because the click-through rates are so low, the value is low.  In the Blyk model, you get high response rates, and the value of any single customer is multiplied. A telco may think it needs to have 100 percent penetration. But we are a media company. A media company with say 3 or 6 percent of the entire U.K. population following it is still considered to be a big media player.

Q: I want to talk about your move to mobile portals. I’ll cover this further in my podcast with Leif [Fagelstedt] next week. But why don’t you just walk me through what you are doing and why…

A: We wanted to apply our methods to the traditional content business, which is suffering from the fact that service discovery and content discovery is so poor. Even in the iPhone App Store, the content is great but the problem becomes how do you find it? We know the importance of personalization and engagement from mobile advertising, and we felt the impact would be positive [on discovery] if we could push [suggest] content to people based on this [what we know about them]. And the numbers bear this out; they are very good.

We tested different types of offers and when we changed our consumer offer from the original one to the GBP15 a month allocation, the requests to join the network went up by 30 percent. That was a surprise because it normally doesn’t happen.  You make a lower offer, not a higher one, and people get more interested. With this new member offer, we gave people the flexibility to use Blyk as they prefer - voice, text, or data - and this gives us the opportunity to start testing data usage and finding how that correlates if we then begin to use our engagement media and start to push people to content. So, right now it’s about understanding all of the mechanics of this. We’re still building it, we’re still learning it, but we want to bring some new rules into that game as well.

Disclaimer: Bango is an MSG supporter.

A NEW REPORT SUGGESTS MOBILE ADVERTISING WILL INCREASE BY 30+ PERCENT, despite the overall marketing slowdown, because of critical development anticipated by the end of the year.  According to a report by Magna, the U.S. mobile advertising market will grow by 36 percent. That’s a rise from $169 million in 2008 to $229 million during 2009. Although this doesn’t reflect a significant growth on previous years, Magna explains that we will witness a resurgence in the industry in 2010 thanks to the proliferation of mobile-based subscriptions and ad-supported mobile applications. Source

The bottom line: Another reason to be optimistic about the development of the mobile advertising market in the U.S.  Forecasts that growth will be stunted in 2009 are now tempered by bullish predictions for 2010. Advances in handset penetration, the spread of ad-funded content/services schemes, and a wealth of app store offerings should result in an even greater take-up of mobile advertising.

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THE MOBILE INTERNET, MOBILE EMAIL AND MOBILE SOCIAL NETWORKING ARE USED BY MORE THAN HALF of mobile phone users. A mobile Internet poll carried out by user experience consultancy Webcredible showed that of the respondents who used the mobile Internet (52 percent), over half (55 percent) used it primarily for emailing and social networking. Source

The bottom line: We know that the growth of mobile Internet usage is linked to the youth demographic and their particular usage pattern (transferring their fixed-line Internet/PC behavior to mobile). This study provides us with some numbers to back this up.

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SMARTPHONES REPRESENT A MINORITY of U.S. mobile device purchases, accounting for 23 percent of handset sales volume in Q1, says recent data from market research firm NPD Group. Yet as a percentage of overall handset sales to consumers in the U.S. from January through July 2008, smartphones represented 19 percent of all handset purchases compared to just 9 percent for the same period in the previous year. This rise was put down to declining prices, streamlined form factors, and Internet connectivity bringing devices into the mainstream. Source

The bottom line: It’s easy (particularly if you are focused on the mobile content industry) to lose sight of the fact that smartphones, despite the hype and their urban cool factor, remain a minority in the marketplace. The percentage is rising, but there is no doubt a large and untapped market opportunity in catering to plain-old, low-end devices.

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51 PERCENT OF U.S. SUBSCRIBERS ACCESS ENTERTAINMENT, games, news, and social information via their mobile phones every week, according to a new study published by research and consultation firm Frank N. Magid Associates. Based on a January 2009 survey of 4,000 U.S. consumers between the ages of 12 and 64, Magid says mobile content users now spend about the same amount of time with content (39 minutes) as the average user does sending text messages (38 minutes) or talking on their handset (44 minutes).

The study also suggests that mobile entertainment content like games, music, and social network services are used for longer periods of time than ‘utilitarian’ content such as news, weather and sports scores. Behaviors are split along demographic lines (as you would expect). For a whopping 80 percent of 12-34 year olds, mobile social networking is the thing to do; news consumption is dominated (79 percent) by 18-54 year olds. Source

The bottom line: Encouraging stats that outline how we use the mobile Internet and underline the role of the youth demographic. The one to watch is the richer, data-heavier mobile content consumption habits of the 12-34s.  So called ‘utilitarian’ content often leads towards instant hits - quickly check the headlines, scores, and weather - but means reduced browsing time.

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AUDIENCE TARGETING MOBILE ADVERTISING CAMPAIGNS OUTPACED demographic targeting campaigns by nearly four times in April, according to Millennial Media, which has released its April brand advertiser-focused Scorecard for Mobile Advertising Reach and Targeting (SMART). It says that this translated to major increases in purchase intent for key age groups, while the complexity of mobile ad campaigns demonstrated a lift in the number of users being driven to an established destination. Source

The bottom line: These figures underline the importance of delivering relevant mobile advertising content to a known audience with known interests, as opposed to bracketing by demographics.  While it’s a given that social networking and entertainment are consumed by a generally younger demographic, the ability to tailor advertising directly for people with specific interests - whatever their age - is critical to the success of mobile advertising.

Peggy adds: Indeed, as my close friend and colleague Tomi Ahonen - a late-40-ish, Scandinavian who is totally (!) into rap music and Formula 1 racing - has reminded me many times. No one fits the mould - and no one should. Plug that in your age demographics! An approach based on demographics is fundamentally flawed, with the difference that we will perhaps tolerate the mismatch between who we are and how brands sell to us on TV (commercials for pension schemes during the network news and ads for annoying ringtones on music television), but on mobile it’s spam. I’ll have more on the Millennial Media stats in a briefing with Paul Palmieri, president and CEO of Millennial Media.

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BLACKBERRY APP WORLD’S LOCATION APPLICATIONS are four times more expensive than iPhone and Android location apps, according to a Skyhook Wireless Report. The study found a marked disparity in application cost between the three stores, with the average price of a location-aware application in the Blackberry App World store being $13.60, compared with $3.60 in the iTunes App Store, and $0.84 in the Android Marketplace.

The Apple App Store has the greatest number of location-based applications (over 2,300), and the highest percentage of paid LBS apps (over 75 percent). 67 percent of Blackberry apps are paid, and 80 percent of Android Marketplace apps are free.

The report found that the most popular location aware apps were for Travel, Navigation, and Social Networking, but new apps like Music, Finance, and Games were also beginning to gain traction. Source

The bottom line: These mobile application storefronts cater to slightly different markets, so they will price their products accordingly.  However, such an obvious inequality in pricing for similar applications using identical location technologies will surely persuade many prospective customers to think twice before joining the BlackBerry camp, especially when Microsoft and Palm application storefronts come online giving consumers more choice and increasing overall competition between storefronts.

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APPLE SOLD 3.9 MILLION HANDSETS DURING the first quarter of 2009 to more than double its market share, says Gartner. Smartphone sales hit 36.4 million, representing a 12.7 percent increase from 12 months earlier. The report also says that smartphone sales represented 13.5 percent of all mobile device sales in 1Q09, compared with 11 percent in 1Q08.  It also reflects a doubling of Apple’s market share from 5.3 percent to 10.8 percent. Source

The bottom line: These statistics make Apple the third-ranked smartphone manufacturer by volume.  Although it remains in Nokia’s shadow - Nokia still commands a 41.2 percent share - it will be interesting to see how the imminent arrival of Nokia’s application storefront, the Ovi Store, and its success or otherwise, impacts on Apple’s apparently relentless growth.
Mark Hawkins is a Director of the Mobile Data Association and a freelance communications practitioner of mobile technologies.  He previously managed global communications for MX Telecom, the mobile data aggregation group.  His personal blog can be found at http://amarkhawkins.wordpress.com