Cell Life

We just published a rich white paper on Mobile Advertising and Marketing on CellStrat website. Check it out under the link :

http://www.cellstrat.com/whitepapers.html

Let us know any comments.

Thanks

MT

I came across this term used to measure the revenue from ad spending. eCPM is “Effective Cost Per thousand impressions”. In layman terms, it means revenue per thousand impressions. Even more simply, it measures which ad formats or ad models lead to higher ad revenue. This metric creates a unit to measure ad revenue impact.

eCPM = (total earnings / impressions) x 1000

This metric assumes that 1000 impressions is a large enough sample to measure the impact accurately. 

Higher the eCPM, better the ad revenue from an ad format or ad model. This metric is relevant to firms developing ad platforms in print, online or mobile world. It helps them figure out what kind of ad platform, format and technology will lead to higher ad spending by advertisers for minimum no of impressions.

MT

Amol Sharma wrote an interesting article in The Wall Street Journal (http://online.wsj.com/article/SB121030196400479989.html?mod=rss_media_and_marketing&apl=y&r=529113) on the tools being used to measure the impact of Mobile Advertising and Application Usage. Mobile measurement firms M:Metrics, Nielsen and comScore are working on technology to electronically measure the mobile ad views and mobile application usage. So far these firms have relied on customer surveys to determine what applications and ads are being seen by mobile users - this has led to very imperfect scoring patterns for mobile campaign impact measurement. The issue is that mobile ad views and data usage statistics is in the domain of carriers networks and IT systems and the carriers are highly reluctant to share this information with mobile measurement firms or advertisers in fear of impinging on customer privacy, mobile spamming and customer dissatisfaction.

The traditional method of recording customer patterns are opt-in surveys which are highly subjective and depend on customer desire to share accurate data on their usage and preferences. The more sophisticated method involves electronic monitoring software running on phones or digging into the usage logs which carriers control. The monitoring software has to deal with a zillion phone styles and operating systems and needs carrier support which is always a dicey job.

Nobody has forgotten the spam and consumer privacy issues in the online world and the last thing carriers and consumers want is the same set of problems in the mobile space. But advertisers would like accurate measurements of customer usage patterns to see the return on ad-dollars. So we have the classic consumer privacy problem here.

What might make mobile advertising appealing to consumers such that they cozy up to the idea of information sharing ? Perhaps free services to go with advertising or high degree of ad personalization - all of these techniques require prospecting usage logs and customer data which carriers control and determining customer preferences and mobile web usage patterns.

Amol’s article mentions that more likely than not, customer surveys and electronic monitoring will co-exist even after another decade.

MT

Today, I had the opportunity to interview Mark Emery, Senior Director of Agency Relations, at Air2Web (www.air2web.com) - the premier mobile marketing solutions firm based in Atlanta, GA. Here is an excerpt from that session :

What is Air2Web ?

Mark : Air2Web is a Mobile Marketing Infrastructure and Solutions firm. Air2Web provides tools to ”promote, service and transact” to brands and ad agencies on the mobile phones. ‘Promote’ means customer acquisition campaigns, promoting products and services using mobile coupons, trivia, polls etc. ‘Service’ includes services like loyalty management, customer service management, some examples being store locator, account updates/alerts etc. ‘Transact’ includes purchases by consumers of content like ringtones, games, wallpapers etc.

Air2Web is technology ambivalent and works across all carriers, all devices etc.

Air2Web is not a mobile advertising firm but rather bills itself as a mobile marketing leader. The distinction is important because Air2web works with carriers, brands and agencies for running custom mobile marketing campaigns using its cutting-edge mobile platform. Air2Web does not sell ads or ad space as is the case with classic ad placement firms.

What kind of mobile channels Air2Web uses ?

Mark : Air2Web uses messaging / SMS as the primary platform for mobile marketing but also has done campaigns using WAP site banner ads, J2ME handheld applications etc.

Air2Web specializes in custom marketing campaigns using SMS as underlying technology but has several successful instances of custom WAP sites like Starbucks locator service, live Weather Channel doppler radar tracker etc. Air2Web can further personalize marketing campaigns if users opt-in for location sensitivity using their zip code transmission or via customer preference databases with brands.

What is the customer reaction to Air2Web marketing campaigns ?

Mark : Air2Web has seen very positive feedback from its marketing campaigns, one of the main reasons being that it is an opt-in “conversational” service as opposed to a broadcast platform. All Air2Web campaigns involve customer desire to review certain brand web sites, download specific content like ringtones or wallpapers or participate in promotions like coupons, gaming etc.

Why does Air2Web succeed with so many brands and agencies ?

Mark : Air2Web has a ready-made infrastructure platform with premium carrier partnerships in place. Air2web can launch marketing programs very quickly by sharing its pre-booked SMS shortcodes across a no of campaigns. Air2Web has standard pricing structures and clean packaging for brands and agencies.

How does Air2web measure customer impact for its campaigns ?

Mark : This is an area which is still maturing in mobile marketing world. Air2Web has measured the customer response via print campaigns run by brands like SelectComfort to track user response to various marketing techniques like coupon, shortcodes etc.

Also Air2Web does direct marketing campaigns on demand and on customer opt-in so it can track the profile of its audience and their interest in Air2Web campaigns.

What is the most effective strategy in mobile marketing ?

Mark : Opt-in by customers works best when it comes to consumer effectiveness. This is facilitated by users sending shortcode SMSes, participating in polls or downloading content on demand.

Who are your top competitors ?

Mark : Sybase (Mobile365), ipsh!, The Hyperfactory etc.

(CellStrat note : This market is fragmented. We feel it will consolidate at some point when there is critical mass)

What are some of your clients ?

Mark : Air2Web has a roster of blue chip clients eg AT&T, AmEx, UPS. PGATour, Walmart, FootLocker, Weather Channel, Domino’s, eTrade, eVite etc

What are Air2web strategic advantages ?

Mark : Premium partnerships with carriers, robust and ready mobile messaging solutions which scale rapidly, cross-carrier and cross-device support and partnership with agencies are some strategic differentiators for Air2web.

What are future growth areas in mobile marketing ?

Mark : There is blurring of lines from a technology perspective. SMS-based, on-device/J2ME, WAP sites, video streaming are all coming together as a comprehensive marketing strategy in the mobile world.

Thanks Mark for the time spent. Stimulating discussion and great ideas on mobile marketing.

 MT

Google is very friendly with Yahoo these days. That is incredible, to say the least. These are cut-throat competitors in mobile advertising and search arena. Interestingly, the common enemy from Redmond is bringing these two firms together to drop the advertising competitiveness and try to work in complementary fashion. If it passes US anti-trust scrutiny, Yahoo is discussing a long term partnership with Google to source ads from Google and place them alongside Yahoo search results and emails. It seems Google ad leads to a much better pattern match and hence higher profitability than Yahoo model could achieve on its own.

If Google can sign a long term partnership with Yahoo, then Microsoft will be discouraged to make further bids. After all, Microsoft is interested in Yahoo with its intrinsic properties and search facilities (Yahoo’s internal search initiative is called Panama). A Microsoft bid for Yahoo which uses Google search technology in its search platform would not make any sense.

Both Google and Yahoo bottomline will benefit from the said partnership between the two, though, by going this route, Yahoo would essentially validate that Google is indeed the pre-dominant search technology platform. Yahoo will become more of an aggregator at that point in the search space rather than a search firm itself.

With a Google-Yahoo alliance, Microsoft will probably go after Facebook or other smaller social network portals to boost its internet offerings. There are rumors that Microsoft has discussed an acquisition with Facebook, the fast growing social network. Will Mark Zuckerberg at Facebook sell or should he sell to Microsoft ?

MT

WiMAX got a new lease of life yesterday in the developed world. Sprint announced a breakthrough agreement with ClearWire of Kirkland, Washington to create a joint venture under the name ClearWire but with 51% stake owned by Sprint, 27% by ClearWire investors and the remaining by some other high profile investors. Sprint is the third largest US wireless operator and is betting on WiMAX in 4G race as opposed to AT&T and Verizon, the two biggest US mobile operators, who are betting on GSM version of 4G called LTE or Long Term Evolution. WiMAX has the unique advantage over LTE as WiMAX equipment is available now and LTE is 2 years behind WiMAX.

The deal with ClearWire is a complex transaction with an alpha-soup list of investor firms participating including Comcast, Intel, Google, and cable operator Bright House Networks. Why are these firms interested ? Intel needs a new chip wave now that Centrino is everywhere already. Plus Intel has been investing in WiMAX chip development as the next evolution of the WiFi enabled chip. Google is the preferred search provider on ClearWire WiMAX devices and its Android platform will find a big network partner. Comcast and Bright House are looking for a way to expand into high speed mobile services and wireless broadband - now that AT&T and Verizon are beginning to erode cable market share with their own high speed TV offerings and innovative quad-play bundling of wireless, wireline, TV and internet. Essentially bundling is the new mantra for getting customers and cable providers need a wireless channel partner to cover this one missing piece in the cable package.

With this WiMAX deal, Sprint has one less thing to worry as it was coming from low cash liquidity position and needed money to launch a 4G offering - it got its wish fulfilled by getting some partners with big pockets to invest in its nascent 4G endeavour. Now it can go back to focusing or investing in its core CDMA business and in time make it attractive enough to sell to interested parties, eg Deutsche Telekom at a good price. Sprint Xohm service, its WiMAX trial launch service, is all but dead or in essence, will be merged into ClearWire. Sprint is taking a non-operating role in ClearWire and is talking about having ClearWire manage itself independently with separate wireless assets and separate management structure.

Well - the ClearWire deal looks interesting on the face of it and Sprint does have one less thing to worry about now that its WiMAX / 4G path is clear. But in reality, the challenges remain. With an alpha-soup combination of ClearWire investors, this firm will be chauffeured by multiple backers with sometimes varying agendas. Historically speaking, such complex deals have a high failure rate. Plus it remains to be seen if Sprint core CDMA service ends up competing with its WiMAX offering. We think success of ClearWire depends on letting it be a truly independent company with dedicated management and letting it compete openly.

In any case, WiMAX got a new lease on life. Now with this announcement, it will trigger a chain reaction and network equipment vendors like Nortel, Samsung, AirSpan, Lucent etc will make hay by selling WiMAX equipment. Intel will sell chips for WiMAX - PCs with WiMAX-enabled chips will be hot. More PC software will be sold.  Google gets a mobile momentum on next generation wireless network. Cable firms have a high speed mobile partner. Nokia and other device makers will sell high end WiMAX phones. Consumers get truly personal mobile broadband everywhere, on their cellphones and laptops. They can potentially ditch their wired DSL or cable modems and replace it with wireless broadband. Everybody is happy at the end of the day. Lets see if this theory works or not. Regardless, the ClearWire announcement may trigger a larger WiMAX adoption in other developed countries. So far WiMAX growth story was limited to developing countries in Asia, Sprint announcement is a big boost to this technology in the western hemisphere.

MT 

The global telecom market is prime for consolidation. So far the emphasis was on regional or local consolidation. Now the biggest service providers both in developed and developing world are itching to create a global foot print to offer a truly global and seamless wireless and telecom experience.

On the heals of Deutsche Telekom bid rumor for US operator Sprint, one hears that Bharti, the largest wireless operator in India, is interested in MTN of South Africa. MTN is the largest African operator with service in 21 countries in Africa and Middle East. MTN has 68.2 million subscribers, including 15.2 million South Africa alone. Bharti, which has grown at breakneck speed in India, is now looking to invest in other promising countries and create a footprint across a developing world. Bharti has no other option but to expand in other countries; if it does not create a multinational presence, the western telecom behemoths will capture the developing markets given time and lots of financial muscle. Vodafone is already in India, having acquired a controlling stake in erstwhile Hutch, the second largest India wireless carrier. AT&T is rumored to be eyeing a license bid in India.

Bharti move is in line with the known desire of large firms from newly rich countries like India and China and cash-rich regions like Middle East to assert themselves internationally by acquiring assets across the world.

Separately, France Telecom SA is interested in buying Swedish operator TeliaSonera AB. The global telecom consolidation is all but inevitable. It is just a matter of time. We think in few years, one will see a couple of giant wireless/telecom operators with a footprint on multiple continents offering not only a global scale but also a new level of global mobility and connectivity to their multinational clients and also to the international traveler.

MT

T-Mobile, USA announced yesterday the launch of a 3G UMTS/HSPDA based network in New York City. The plan is to rollout 3G in various metros around the country where T-Mobile offers service. This leads to intensification of competition in the 3G arena with all major US wireless carriers now providing service in 3G spectrum. T-Mobile has a niche in younger segment and has captured the hearts and minds of the college crowd with compelling products like SideKick (of course iPhone is the new fad on the campus now) and innovative rate plans like MyFaves sharing plan.

T-Mobile brings some strategic advantages in the 3G race. Though the smallest operator among the big 4 in US, they are owned by the venerable Deutsche Telekom (DT) of Germany - one of the largest carriers in Europe and a major GSM player. GSM is the dominant mobile standard in the world and T-Mobile, USA is only one of two major US carriers to support this standard (the other being AT&T). A 3G phone from T-Mobile, USA will allow seamless international 3G roaming on the parent network in Europe plus T-Mobile, USA can leverage the years of experience T-Mobile Europe has in 3G space.

T-Mobile has excelled in the younger segment in US markets - a segment which tends to use high speed data services like messaging and mobile web. So a 3G launch bodes well for this firm and one can expect high uptake in its customer base for the new service.

The chess moves in the US carrier space continue to get more interesting everyday. Yesterday, a press report suggested that DT was planning a run on Sprint, the third largest US carrier, which is facing severe operating trouble and is available for a deep discount. A combined Sprint and T-Mobile USA would face difficult integration issues but would create a dominant player in the critical US market, able to compete better with the biggies, namely AT&T and Verizon, in the US wireless space.

MT

Today, there is a shocking news report which states that Sprint is considering spinning off Nextel business unit. Sprint acquired Nextel with great fanfare for $35 billion dollars and today’s announcement indicates that essentially that strategy has been a monumental failure. This is a glaring example of how large mergers in technology seldom work. The two technologies CDMA and iDEN from Sprint and Nextel were never fully integrated and Sprint tried hard to move the Nextel subscribers to the Sprint network, a strategy which failed not only due to technology integration issues but also due to completely different employee cultures in the two firms. Now Sprint is giving up on the integration challenge and considering spinning off Nextel, perhaps to make itself more attractive to potential bidders.

Sprint may also spin off Nextel into a separate company. Separately, Deutsche Telekom is mulling a bid for Sprint and wants to combine its US carrier unit T-Mobile with Sprint, in effect combining the third and fourth largest US wireless operators to create the largest one ahead of AT&T and Verizon. We feel that this is a no-go to begin with - this would not pass the muster with US Antitrust department. Not sure how Deutsche Telekom can imagine a run for Sprint knowing fully well that it is a difficult antitrust case.

Yet another angle to the Sprint saga involves a complex WiMAX transaction with ClearWire. The combined entity is looking for funding and Google, Intel etc are supposedly interested.

With so many big endeavours, Sprint management and their CEO Dan Hesse have their work cut out. Lets see where this one ends. To us, it had seemed that a combination with Comcast would have made a more logical sense for Sprint.

MT

Microsoft withdrew its $47.5 billion bid for yahoo this past weekend. Microsoft came out a winner on this one. It saved them from a messy merger and one which was disliked by the rank and file of Microsoft employees. They left a top online competitor in limbo state searching for answers and responding to lawsuits, criticisms from shareholders and employees alike. $47.5 billion was the appreciated offer based on Microsoft raising the bid from $31 to $33 a share in last few days. That’s a lot of money left on the table for Yahoo team and shareholders. It would have been a great exit strategy for an iconic internet firm which revolutionized the portal concept.

Can Yahoo do it alone ? Sure. But with no new breakthrough business models and powerful Google capturing it all in the online ad space, Yahoo faces an uphill task. The likely outcome of this saga is that Microsoft will swoop in later and get the Yahoo prize at a much lower valuation; if not that, Yahoo will loose further market share to Google and the team in Redmond will shift its focus elsewhere eg forming alliances with AOL or FaceBook etc. Yahoo is discussing a deal to outsource the ad display to Google - that will essentially validate Google’s dominance as the pre-eminent search engine with most bang for the buck. That is the reason we feel Yahoo should have taken the bait even though we feel any combination of Microsoft or Yahoo could not dethrone Google from its leading perch. As stated before, innovation does not happen in a box however you assemble that box.

MT