Paul M. Banas on Consumer Insights, Marketing Research, and the Digital Media Landscape
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Category — Mobile

A Way Google Can Make Big Money With Mobile

Can this little mobile bar code be worth a significant slice of a $320 billion market opportunity to Google?

It’s not a question that one of the cornerstones of Google’s future earnings growth will be in the mobile market, but what is debatable is whether its paid search revenue template that has worked to date through traditional desktop computers will be the way they get there.

Recently Henry Blodget of the Silicon Alley Insider wrote about why Google shouldn’t be thinking that mobile advertising is the ticket to higher revenue.

Specifically, he took Google CEO Eric Schmidt to task about his statement that Google could make more through mobile advertising than the $20 billion it currently takes in through traditional desktop computers.

He does the math this way:

“Google currently makes about $20 billion a year in desktop. For Google to make “more in mobile than desktop,” the targeted mobile advertising market will have to grow from less than $1 billion today to, say, $50 billion (assuming Google pulls down a mind-boggling half of it).”

While I agree with him that users aren’t going to tolerate intrusive mobile advertising interfering with their communications, if Google can find ways to deliver value to consumers through mobile, maybe those revenue  fantasies can become more of a reality.

And a key way I believe that Google could deliver that value is through mobile couponing.  In fact, as this earlier Silicon Alley Insider article by Dan Frommer covers, Google has tipped its hat in this direction already.

The secret is using the little square bar code above in conjunction with a mobile device’s camera to tap into the large existing market of paper coupons that appear every week in publications across the country.

For a point of reference, in free standing inserts alone (FSI coupons added to daily and weekly newspapers), there were 257 billion coupons dropped in 2007, according to TNS Media Intelligence and Marx promotion, up 1.6% versus prior year.

The average face value of these coupons was $1.26, which represents over $320 billion dollars of value delivered to consumers by major and minor marketers across the country.

This doesn’t even include the value of coupons through direct mail, in store coupon machines, or coupons with your register receipts.

In contrast, the total amount to be spent by marketers on online advertising in 2008, as estimated by eMarketer, is $24.9 billion, which was recently revised downward versus prior estimates.

I agree with Blodget that $50 billion for a mobile advertising market is a big number, even with Google being involved.  And if Google thinks they’ll be able to growth mobile revenues by jamming traditional advertising into a mobile handset, they certainly won’t get there.

However $320 billion in coupon spending is a bigger number, and if by levering mobile to provide true value to consumers versus just ads, Google could maybe do to traditional couponing what they have done already to traditional advertising.

August 26, 2008   No Comments

Social Networking Is Going Mobile

Like peanut butter and chocolate, if ever there were two trends that were meant for each other, Social Networking and the Mobile Internet are them.

Cell phones and smart devices are inherently social devices to begin with, and unlike home and office locked PCs, they can blend virtual and physical social networking in all environments.

While I’ve written previously that cell phone usability and their current data plans have held back full development of the Mobile Internet, the iPhone and the Blackberry (and all its clones) are beginning to turn the tide.

From a recent study, eMarketer is predicting that that mobile social networks will rise from 82 million users in 2007 to 800 million worldwide by 2012.

Mobile Social Networking

Much of this growth will come from existing social networks shifting their coverage to the mobile space.

According to Brandon Lucas at MySpace, who is their senior director of mobile business development, MySpace recorded over 7 million unique visitors to MySpace Mobile in the US in the six months since launch. “It wasn’t until we rolled out m.myspace.com that we got a sense of how powerful demand was for MySpace on cell phones”.

There are also dedicated mobile social networks that are growing as well. For a complete list of 38 different mobile social networks, check out this post by Social Media Trader.

With the ability of mobile devices to operate in many different social spaces, both virtual and real world, the expectation that mobile will be the future of social networking is not as far fetched as it seemed only one year ago.

May 8, 2008   2 Comments

Are Cell Phones Ready For The Mobile Internet Boom? (Part 3)

This is the third and final post in a series on the Mobile Internet, and how the current line up of cell phones and their networks are not delivering on the full potential of this new platform.

As I mentioned in my previous two posts, while the potential of the Mobile Internet is strong, it is being hindered by the current line up of less than optimal phones and data service plans.

I think the problem is that the mobile industry has either been pursuing a one-size-fits-all approach to mobile devices, or limiting their focus to appeal to a single consumer segment (younger users) with all their offerings.

However, by focusing on understanding consumer needs through market research and consumer segmentation, and then tailoring products to match those needs and segments, I think the mobile industry will finally be able to deliver on the enormous potential of the Mobile Internet.

Here are a couple of potential segments that exist, but are currently offered phones whose feature sets either fail to meet their needs, or are clogged with useless features that irrelevant to their lives.

Young Connectors
Typically a primary focus of mobile companies, these are young singles, who are highly social, and live mostly in urban settings. While there are devices out there that can provide the entertainment of a iPod, what’s missing is something that is both an extension of and a catalyst to their intricate social lives, both online and off.

Features Needed:

  • Seamless interactivity with all the big name social media sites (Facebook, Flickr, YouTube) they are active in, so they can connect and share with friends in all social environments.
  • Camera and video: allows them to capture and share social activities and friends with one device.

Useless Features:

  • Data services such as news, stock reports, etc. If they consume this media at all, it is probably during one of those rare times when they are home and can access via their PCs.

Mobile Parents
Parents of school age children with lots of activities. Needs a mobile device to help manage constantly changing work schedules and children events, many times from the front seat of a mini-van.

Features needed:

  • A dynamic and easy to use calendar that reflects schedules of both work and family.
  • GPS map service for directions to activities and services across town.
  • An intuitive, one button contact list to manage both personal addresses and phone numbers, and those for their children.

Useless features:

  • Camera: If they want high quality, photo memories of their kids, that’s what their Nikon D40 is for.

Business Travellers
Business executives who are out of their offices more than they are in. Need a device that can manage email, calendars, and provide up to the minute business information. This is the niche that RIM is going after with their Blackberry device and network.

Features Needed:

  • Business calendar that coordinates their lives on the road with those of their clients and business associates back at the office.
  • Intuitive email that allows them to manage large volumes of communication efficiently and effectively.
  • Mobile internet access for business information while in airports or hotels.

Useless Features:

  • Entertainment: MP3, video, etc. (who has the time)

While there are certainly signs that the mobile industry is becoming more consumer-centric, there is still a wide gap between rhetoric and reality in delivering an optimal user experience for the Mobile Internet.

By developing products to match actual needs, versus simply chasing the latest techno fad, the Mobile Industry might just deliver on what consumers are looking for, unless of course the iPhone beats them to it.

March 17, 2008   No Comments

Are Cell Phones Ready For The Mobile Internet Boom? (Part 2)

This is the second post on the potential of the Mobile Internet, and how the current line up of cell phones and their networks are hindering full development of this new platform.

If the data behind the promise of the Mobile Internet is so strong, what is holding back more significant usage? As I mentioned in my previous post, it’s the phones, the service, and the synergy, or lack thereof, of the two.

David Benjamin of the EE Times wrote about an interesting panel discussion at the recent Mobile World Congress in Barcelona Spain around the topic “It’s The User Experience, Stupid!” (hat tip to Digital Design Blog) that illustrated some of the core reasons why the Mobile Internet has been so slow in coming and why the mobile industry was caught flat footed by the introduction of the iPhone.

There were two observations that I felt were particularly apt:

  • According to Mike Yonker at Texas Instruments, “Searching on a computer is like going to a store, where the customers sees every product displayed, and can make comparisons, touch the products, even try things on for size. Doing the same search on a mobile is like trying to shop in the same store but through a drive-up window.”
  • Another panelist, Lucia Predolin, said that one problem is that people are nervous about using the full range of mobile applications — especially the Mobile Internet — because they worry about what kind of bill they’d rack up. With so many telecom companies advertising heavily the cost of their services per minute, users hesitate to explore possibilities that might devour their precious minutes

From a mobile service perspective, I found some additional insights from this article in Cellular News about analyses of actual cell phone usage by Olista, a consultant engaged in monitoring cell phone activity for the mobile industry:

  • 70% of users who sign up to content bundles failed to consume any mobile content, indicating that price was not a factor for these users and the barriers to usage were more likely to be associated with ease-of-use or technical problems.
  • 85% of mobile TV users abandoned the service after the first viewing and after passing through the advice of notice charge without hesitation, indicating that the user was experiencing navigational difficulties in moving from one TV channel to the next.
  • Another worrying statistic for operators and content providers showed that around 50% of all application downloads failed to complete successfully.
  • And finally, 30% of mobile users downloaded the same content over and over again such as the same music track, clearly indicating a misunderstanding of how their network works.

So what’s the solution?

Not surprisingly, several of the panelists at the Mobile World Congress cited the iPhone as being the best positioned to bring the Mobile Internet to life. In fact, according to a ChangeWave customer satisfaction study, the iPhone far outclassed the next highest mobile device with 77% of customers being very satisfied with their iPhones, significantly ahead of the runner up Blackberry at 50%.

However, the same could not be said for the iPhone’s service provider, AT&T, which only managed a 31% very satisfied level from a service perspective, which was a distant second to Verizon.

So as long as the iPhone is shackled to AT&T’s painfully slow Edge network, the Mobile Internet will have to wait for the device/service plan bundle that will do what Google did for the Web.

In my final post of this series, I’ll look at a couple of consumer insight based ideas or issues that may need to be levered or addressed before the mobile boom can truly become a reality.

March 12, 2008   No Comments

Are Cell Phones Ready For The Mobile Internet Boom? (Part 1)

This is the first in a series of posts on the potential of the mobile internet, and how cell phones and their networks need to lever market research and consumer insights to fully develop this new platform.

More than personal computers, cell phones are now the globally ubiquitous electronic device. There are not many inhabited places in the world where you can’t find someone chatting to someone else on a cell phone. As Joel Garreau from the Washington Post illustrates:

“From essentially zero, we’ve passed a watershed of more than 3.3 billion active cellphones on a planet of some 6.6 billion humans in about 26 years. This is the fastest global diffusion of any technology in human history — faster even than the polio vaccine.”

And in the US, as people are leaving their land lines behind, cell phone usage sophistication is finally catching up with Europe and the rest of the world.

In addition to having the value of a cell phone to users increasing significantly in the past 5 years, US consumers are finally crossing a tipping point that will lead to widespread adoption of elements from the mobile internet, such as web surfing or using dynamic GPS maps via their cell phones.

A couple of key insights and graphs from John Horrigan, associate director of research for the Pew Internet Project, illustrate this change:

  • The number of people who felt that it would be hard to give up their cell phone grew from 38% in 2002 to 51% in 2007.
  • “Even in 2006, the landline phone was still the most difficult device for people to do without,” said John Horrigan.

cell_phone_usage1.jpg

  • From the same study, we find that while daily usage is low for mobile data related activities, almost 60% of users have done one of these activities at least once.
  • Even mobile internet usage, which is hampered by sluggish networks in the US, has almost 20% penetration, with 7% of users using the mobile internet daily.

cell_phone_usage2.jpg

So if the interest is there, why are we still waiting for the full promise of the Mobile Internet? In short, there are three answers: the phones, the networks, and the lack of synergy between the two.

My next post will focus on why cell phones and networks aren’t delivering, and how good market research and consumer insights might just show them the way to unlocking the potential of the mobile internet.

March 10, 2008   2 Comments