Wednesday, February 16, 2011

Mobile Will be a Powerful Ad Medium, But Agencies Will Struggle With Apps

WPP chief executive Sir Martin Sorrell predicts it will be difficult for advertising agencies and other companies to profit from apps, though mobile will become a powerful advertising medium.

Though the app market has tripled in size to $15 billion, the advertising industry overall is about a trillion dollar industry, he notes.



Asked how the ad industry can make the most of the boom in apps, he was cautious. "I think the real answer is 'with difficulty' because it's not dissimilar to what you're seeing with newspaper and periodicals."

The amounts of income are becoming more significant but are highly fragmented, he said. "You have a vast array of applications and a vast array of designs and consumer loyalty is quite fickle ... It's very volatile."

VIDEO: Sorrell on apps, mobile and social networks

What is a Facebook Phone?

Two upcoming Android devices from INQ, the Cloud Touch and Cloud Q, feature new Facebook integrations with single sign-on and easy one-touch access to popular Facebook features. The home screen features a user's "News Feed" (including your friends' updates, pictures, videos and links) and quick links to Chat, Messages, Places, notifications and more. Users also can also check in to your favorite shops and businesses with Facebook Places, right from the home screen.

HTC's ChaCha and Salsa phones feature a dedicated Facebook button that gives you one-touch access to a user's favorite Facebook functions, allowing users to update your status, upload a photo, share a news article and check in to places. Facebook Chat, Messages and your friends are also integrated, so when a user makse a phone call, the screen displays the user's friends' status updates and photos, and birthdays.

With enough customization and personalization, a multi-purpose smartphone can be transformed into a device with unique characteristics and value for users, even when built on a standard hardware platform. If you wonder how a differentiated communications experience can be built, this is one example.

Google CEO Eric Schmidt Speaks at Mobile World Congress

How Telefonica Deals with Mobile Data Challenges

"White board" App for iPhone

Mobile Payments Business Models: Attackers Face Hard Choices

One way of looking at the business potential for mobile payments is to look at the volume of retail payments, the volume of credit card or debit card payments, and then estimate how much of those activity streams could shift in new ways. In the U.S. market, as compared with some others, the analysis is a bit more tricky.

For starters, the payments process is well developed and efficient. But the latest wrinkle is that the actual payments processing business associated with bank cards bearing the "Visa" and "MasterCard" labels is itself in serious danger of massive shrinkage, by reason of new banking regulations that dramatically cap fees. See http://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act or http://www.cutimes.com/News/2011/2/Pages/DoddFrank-Regulatory-Overhaul-Likely-To-Get-Tweaked.aspx.

Deutsche Telekom CTO Ed Kozel says the business model is still in its formative stages, especially in the United States. "Nobody knows what the final version will look like; everybody is still experimenting with their business model," Kozel said. "Will it look like Visa or something else?"

So here's the big and immediate rub: in a payments ecosystem that is efficient, adding one more player either reduces the overall industry revenue, or raises costs to retail partners. On the other hand, if a new player tries to create a new system, displacing or eliminating some participants, there is the obvious problem of determined opposition from the existing players that are threatened.

The former strategy, though arguably prudent, makes it harder to add value to the new experience. The latter strategy means a protracted fight with stubborn foes already facing revenue pressure. Also, if some sort of accommodation with the existing order is the approach, then all the existing players are threatened if a rival and replacement system gets traction. That threat is most obvious for relatively restricted payments using Apple's iTunes or PayPal, for example. But there always is the "threat" that a niche process can improve to the point where it can become a viable substitute for the existing "card-based" system. especially if tightly and elegantly integrated with the mobile device.

RealNetworks Business Model Has Changed

Most of its business now comes as an application enabler, largely for mobile service providers.

The Roots of our Discontent

Political disagreements these days seem particularly intractable for all sorts of reasons, but among them are radically conflicting ideas ab...