mobilestance.com

The slow news week after Christmas is notorious for the oft-derided “year in X” reports, but rather than take time exploring the value of such “Remembrance(s) of Things (less than a year) Past,” mobilestance.com would like to take the time to indulge in our own year end recap of the most notable US Mobile Marketing developments in 2007 (and yes, the illustration on the left depicts “Old Man 2007″ knowingly handing an iPhone to “Baby New Year 2008″).

And what a year 2007 has been. Between the flurry of VC and M&A activity, the reality of a declining global ringtone market and the re-orgs that followed, the explosion of ad supported business models, growth in consumer use of key mobile data services, notable marketplace exits, divestitures and bankruptcies, new entrants in the wireless space (yes, I’m talking about Apple here), and the aggressive moves on the part of the internet portals (most notably Google, but also Yahoo and even AOL and IAC), 2007 may yet be remembered as the year mobile finally “happened” -much to the delight of the Business 2.0 crowd.

After reviewing the list please take a second and weigh in on what you feel was the most important Mobile Marketing event of ’07 by participating in the poll at the end of the piece. Also, since 2007 was such a busy year no doubt there’s plenty more that could be added to this list… that said feel free to leave a comment if you’d like to add some additional insight or if you feel something crucial has been overlooked.

Thanks much… and now without further delay, mobilestance.com proudly presents “The 2007 US Mobile Marketing Game Changers.”

1. Google Steps it up. Not content to merely sit on the sidelines and play by the rules set forth by the US carriers, the search giant spent much of 2007 re-writing the rules of the US wireless industry. With their conspicuous “open access” lobbying effort, leadership in the Open Handset Alliance, the launch of their open Android platform, and their plans to enter the upcoming 700 MHz US wireless spectrum auction has a legitimate player, Google has stirred the 2007 US wireless pot like no other single corporate entity. While it remains to be seen as what will ultimately come of its aggressive moves in the space (although it seems Google has single-handily forced the biggest hole to date in Verizon’s vaunted walled garden) , it is clear that Google is determined to usher in a far more flexible (read: marketer-friendly) US wireless marketplace… a market that will likely be a boon to innovative third party mobile application developers, hybridized business models, and - most importantly - accelerate consumer adoption of “beyond voice” mobile services.
2. The Rise of MMS. 2007 was the year that US consumers finally got behind MMS in large numbers, exiting news for marketers not satisfied with the simple Joys of Text. In November of 2007 the MMA reported 33% of all US mobile phone users reporting monthly use of “Picture and/or Video Messaging” - that’s up dramatically from a paltry 16% in 2006. In the younger demographic segments the numbers are even more attractive, with monthly usage peaking in the 18-24 year old group at an astounding 55%. So what does this mean? Bottom line, now that MMS has reached critical mass in the US marketers are free to (finally) capitalize on the expanded interactive and multimedia prowess of the enhanced messaging channel. The possibilities are endless… everything from moblogging, MMS-based couponing, photo contests, video alerts, pattern recognition, html email-type CRM communications and so much more. Sure, there’s nothing actually new with all of these tactics… but now we’re talking about the difference between MMS-based marketing campaigns with real ROI back to the brands, versus the eternally frustrating”test campaigns” of earlier years.
3. Enter the iPhone. So much has has already been written on the sleek Apple device that it’s become extremely difficult to assess its actual impact. Never mind the recent eye-popping stats released on the iPhone’s disproportionate share of the overall browsing universe, or recent efforts (while fascinating and seemingly quite worthwhile) by marketers to leverage the device to deliver hypertargeted messaging to the forward-leaning, early-adopting, free-with-the-dollars demographic. No, the real impact of the device lies in it serving as a “showroom model” for the full potential of the mobile marketing channel. An independently sold (from the carriers, mind you) Wi-Fi/GSM hybrid with a beautiful touch screen, snappy web browser (snail-like AT&T EDGE network speeds notwithstanding), usable video, music and photo management options… and coming in February, a public SDK for the development of third party applications and a (rumored) flash plug-in for the device’s browser - a first for the “mobile” web (and hey just because it’s the holidays let’s not get into a debate on what is or is not actually the “mobile” web - for now let’s just go with it). It’s amazing how quickly the standard for what is “possible” in mobile has been raised since the release of the iPhone less than six months ago - and how what once passed for cutting edge has so rapidly become not simply dated, but altogether irrelevant. More than any other event in the mobile marketing industry’s short history, the entrance of the iPhone has fueled a frenzy of interest in the space - both from brands and agencies alike. The motivational equivalent of the ‘69 moon landing… with all the junior rocket scientists that followed.
4. Mobile Advertising Comes of Age. After a few years of luring in the shadows of the mobile marketing industry, the mobile advertising market became incredibly hot in 2007, punctuated by major acquisitions by leading interactive and mobile firms, as well as a dizzying array of venture-fueled deals in the space. The two leaders in the nascent mobile advertising industry, Third Screen Media and Enpocket were promptly acquired by AOL and Nokia, respectively - while Microsoft, once again outmaneuvered in the interactive ad firm acquisitions game, was forced to settle on European Mobile Ad Firm Screen Tonic. The remaining independent mobile ad firms were also firing on all cylinders, with Amobee, Millennial Media, AdMob, Greystripe, and Quattro Wireless all expanding on the heels of fresh investment capital raised in ‘07. Newspaper giant Gannett made a major investment in SMS-based ad firm 4INFO, while Google and Yahoo played a bit of small ball (we can gut Google a little slack here… they’ve been busy rewriting the rulebook for much of the rest of the mobile industry after all). The former taking the much anticipated step of expanding AdSense into the “mobile web,” while Yahoo! announced mobile publisher services and plans to integrate mobile inventory into their Panama ad platform. As for the internet display advertising giants, DoubleClick (soon to be Google) launched their publisher platform, while aQuantitative’s Accipiter Unit (now owned by Microsoft) tied up with NYC-based MoPhap to bring mobile capabilities to their publisher-side interactive ad serving platform. Add daily press releases by major web publishers bringing mobile inventory online, and I think you get this picture: 2007 was the year that nearly everybody in the space simply had to have a mobile adverting play. Sure, there was a bit of herd mentality going on, and no doubt we’re in for… shall we say, a bit of a “correction” in the coming years (this kind of activity surely cannot be sustained indefinitely) - but regardless, the business and technological systems are now in place for brands to reach out and communicate directly with consumers via the mobile handset. Keep in mind this is very different than previous (primarily SMS-based) mobile marketing activity that simply leveraged mobile as a direct response channel activating other forms of media such as television, print and radio (as so eloquently described by Jeff Minsky of OMD in a then accurate but increasingly outdated assessment of the channel - sorry Jeff, but I couldn’t take that one lying down!). Using mobile as a broadcast-type media may be a bit controversial to some, but as long as there remains checks and balances with regard to consumer privacy (yes, the carriers seem to be pulling their weight here, although some needed to be prodded a bit on the subject) an effective system of reaching consumers via their mobile devices should flourish in the months, years and decades to come.

Reader Poll - 2007 Mobile Marketing Game Changers

 Loading …

Zumobi’s (formerly Zenzui) much anticipated launch of their widget-based mobile content application was announced yesterday (beta version). The then Zenzui was spun off of from Microsoft in March of this year, and has been busy attracting third party content developers, such as Flickr and MTVN to provide content to its application ever since.

The application features a unique user interface, with content widgets are arranged in “tiles” so that users can “zoom” in and out of content areas by using the familiar “9 up” arrangement. Reviews of the application have been mixed, in that the interface has been viewed by many as slick, but ultimately overly complex. The company anticipates a hybrid pay-for-distribution (a la cable television) / ad supported business model, although I have my doubts that the application will reach the critical mass needed to attract major advertising dollars.

A few months ago I was asked to draft a POV on the business prospects on the application. Below are some excerpts from this report that (should be) OK to share publicly:

• While on its face the ZenZui application seems to offer an elegant mobile browsing-like experience, it is faces many severe challenges from both a product and business-model perspective that would seriously put into question the firm’s prospects for success (both in the short and long term).
• ZenZui’s decision to target “Heavy (mobile) Users” is likely born out of necessity, and one should not assume that the ZenZui product will follow the usual technology-adoption curves. Several key factors render ZenZui exclusively a “Heavy User”-only product in both the short and mid term. Optimistically, one would need to look out beyond 2010 before the product’s scale would appeal to even the least risk-averse national brands.
• As of today the application is only available on Windows Mobile devices (<2% of current handset market). Unspecified plans to expand to J2ME devices (roughly 60% of handset market) and BREW (roughly 25% of handset market) would do much to alleviate this, but lack of any (even approximated) release dates in either of theses two environments leads one to assume they are very far from even an alpha launch (update: the J2ME version has been slated for release in “2Q 2008.” Not exactly a hard release date).
• Also somewhat surprising was that fact that Palm was specifically identified as an unsupported format (with no development plans), despite the popularity of the platform among Zenzui’s identified “heavy (mobile)-using” consumer target.
• Without regard to specific memory requirements, the main challenge from a handset resource allocation perspective is that in order to function properly the ZenZui application would need to be “always on” (running in the background) on the end user’s device. It is well-known among mobile developers that multithreading on a mobile device is fraught with challenges, and that other than the most expensive Windows Mobile, Apple and Blackberry handsets, other (more common) handsets would likely suffer severe performance issues if the ZenZui application were “always on.” In the short term this issue would seem to reinforce ZenZui’s decision to target “heavy (mobile) users,” as they would likely be the only ones with handsets that could support the application, regardless of development environment (Windows mobile, J2ME or BREW). This limitation could be overcome over the long term once handsets “caught up” to this requirement (an unlikely scenario in the next few years due to the 18-24 month handset replacement cycle).
• ZenZui’s non-standard coding environment assumes that developers will be willing to learn a new programming language in both a new / untested medium (mobile) and an application space that has yet to reach any legitimate level of consumer acceptance (ZenZui). As it is, brands and digital publishers are just beginning to embrace the need for “mobile-dedicated” sites in general, and when they do so are overwhelmingly choosing to code in resource-saving standard XML, or parse their standard web pages through a web-to-mobile “auto rendering engines,” which essentially remove page images and parse the (online) page into a standard mobile style sheets on the fly.
• Numerous high-profile research studies relating to consumer adoption of mobile data products and services identify price sensitivity as the top barrier to adoption. Other than the severe handset requirements detailed above, Zenzui’s other major price-related barrier to consumer adoption is the requirement that, due to the Zenzui application’s need to refresh its (local) content over-the-air via the carrier data networks, the user must subscribe to an unlimited (“all you can eat”) mobile data plan. As of 3Q 2007 the majority of wireless subscribers have balked at unlimited data plans, which (notable AT&T iPhone bundled voice/data rate aside) can cost consumers a hefty $15 to $30 per month.
• By pursuing a pay-for-distribution / advertising revenue-share hybrid business model, ZenZui seems to be following a model highly similar to that employed by the Cable Television Industry (Cable System Operator model). While clearly brands are comfortable “paying for placement” (even in the advertainment space), most digital content providers are not. High profile digital publishers will likely balk at paying a CPM and/or CPC on use of their content (on the contrary, many content brands would insist on payment for allowing Zenzui to gain distribution on the back of their content and brand equity). In the short term ZenZui has circumvented this issue by giving their product away to their content providers, but over the long term this will likely become a barrier for many premium content brands.

You can watch the Zumobi youtube promo video here:

Microsoft has opened up advertising inventory in the US on its MSN Mobile homepage (mobile.msn.com), Reuters reported today. This follows similar moves by Microsoft in Belgium, France, Spain, Japan and the United Kingdom. Currently the MSN’s homepage is rotating banners from Bank of America, Paramount Pictures and Jaguar in an above-the-fold position, just below the search window.

In my testing of the new, ad-enabled MSN Mobile home page, I found that Microsoft seemed to be serving ads from an internal ad server, and is clearly not optimizing the ad size for all handsets, as MSN served the same 215 X 34 ad unit for both my Blackberry 8830 (Verizon), Samsung A717 (AT&T) and Samsung A900 (Sprint)… while a broken image was served to a Motorola V3T operating on T-Mobile (perhaps due to the fact that the handset screen width is smaller than 215 pixels!). Also, it seems that MSN is unfortunately not supporting “Text Under” links below the banner, which have been shown to significantly increase click-thru by adding an additional “clickable” call-to-action.

In addition to serving the mobile ads internally, MSN appears to also be (in some cases) hosting the post-click advertiser mobile microsites. In the case of the Jaguar ad shown, clicking on the link takes you to a Jaguar mobile microsite hosted (and possibly even created) by Microsoft. I’ll leave the site criticism for another day, but if you visit the site you can see for yourself that the most critical image asset - the advertiser logo - doesn’t even render correctly.

Bloomberg.com published a piece today about how the carriers are keeping the cost of mobile advertising artificially high due to carrier revenue share. Google, Yahoo and Microsoft are apparently upset that they must pay the carriers a percentage of ad revenues generated by carrier referral traffic (i.e. traffic coming from the carrier portal, or “deck”).

I’m a bit neutral on the topic myself. The carriers have every right to charge for what is a pretty big value add in mobile - generating traffic. If the portals feel they don’t need the traffic, let them try to survive on a 100% off deck model (as opposed to the hybrid strategy currently employed by most major mobile publisher brands). Obviously the portals value the traffic generated from their presence on the carrier deck, or they wouldn’t be there in the first place. What I do take issue to is the artificially high CPM “price floors” set by the carriers, but that’s a topic for another day.

I must (partially) disagree with Chad Stoller of Organic, who is quoted in the piece as saying that “the carriers are too busy trying to protect the money they are making now to look at the next way to make money.”  In my view the carriers are simply grabbing the money now while they can. Most agree that their walled gardens are on borrowed time, and with the open handset alliance and other initiatives, it’s only a matter of when - not if - the carriers iron grip on the mobile spigot will come loose. Until then, it’s hard to begrudge a company for leveraging their position for immediate gain, just so long as the long term prospects are not jeopardized.

Long term, the carriers face a bleak scenario anyway - one of the dreaded “dumb pipe” syndrome (ad integrated location data notwithstanding). But let’s face it, that’s really what they are… they’ve just been damn good at pretending they’re providing value in other business value chains (media, entertainment, commerce) for the purposes of immediate revenue streams.

And for those that are willing to do some digging…  quality off-deck inventory is available for way less than the $50 CPM often quoted in the industry press.