Mobile, place your bet
The 3 GSM show in Barcelona had spectres of markets past, present and future hovering overhead. The ghost of telecom markets past, fondly remembered, mingled with the dwindling, surviving, remains of traditional markets. The ghost of mobile commodity market future was an unspoken troubling presence. The ghost of mobile commodity present was just a pesky, persistent – nonetheless ominous, presence that everyone wished would go away.
The market is going through a profound transformation, IP driven and convergence carried, that is changing the way we think of communications, what we expect from communications and how we will pay for communications. No one is quite sure of the grounds they stand on.
Commodities markets may be low margin, but they can be enormous – they tend to be among the largest of markets. Commodity pricing is usually regulated by supply and demand, but in the case of a commodity/utility/service that regulatory authorities tend to watch quite closely wide price swings and unstable markets don’t seem quite as likely as they do, say, at the fuel pump.
The future might seem glum to mobile operators contemplating dropping prices and free-falling ARPU, but a rescuer might be galloping down the pike to save them – the advertising industry.
In recent years technology has made it harder and harder for a huckster to make an honest living. Newspapers and other highly ‘perishable’ publications are wondering just how to deal with an increasingly connected world, with increasingly chained-to-the-Net consumers that are becoming accustomed to read the news on-line almost as it happens. Most are migrating to a mixed print/digital strategy and others, as the New York Times recently announced, expect to become fully digital publications one day. The demand for printed versions won’t go away anytime soon, but newspapers are already feeling the crunch and the advertisers that depend upon them to announce special prices for orange juice or sausages are wondering where to go. Television viewers in many parts of the world, now that TIVO is becoming more common, are time-shifting much of their viewing and escape from many of the ads aimed at them. Once-again advertisers are wondering how to reach their market.
Mobile media may well be part of the answer for these advertisers. The Barcelona 3GSM show had companies exhibiting services designed to connect pre-qualified mobile consumers to advertisers; they pay the mobile user – yes, the user – for each ad they listen to or view. This reduces the subscriber’s cost for mobile services, makes the operators happy that more users can afford their services and pleases the advertisers who pay only for exposure to a select pre-qualified audience that belongs to a market group they are targeting.
The mobile advertising market will be hot. I’ve seen studies that claim close to 80 per cent of those questioned would be pleased, well at least not upset, to receive timely, relevant, advertising. Surprisingly, well over half these would even provide personal details to guarantee they were accurately targeted. Other studies have found that content – music, video – downloaders have opted 60 to 1 for advertising subsidised versions in place of the full-price, no advertising, version.
Newspaper and television advertisers are quite pleased with the potential of mobile marketing especially for localised, buy-it-now, type advertising. Also pleased are those that advertise on the Internet, since within a few years there will be more users accessing the Internet via their mobile phone than via a PC. The fact that Internet users will seek products and services on their mobile just as avidly as they do from a PC, has not escaped Web companies such as Google and Yahoo, that are running to prepare themselves for the day when much of their advertising will be accessed by a large new mobile audience, by users who don’t have PCs, who rarely, if ever, access the Net today.
The big difference from the advertiser’s point of view is the intensely personal, individualised, experience that mobile makes possible. The nature of the mobile connection makes possible a sort of loyalty that broadcast TV can’t hope to match. Although not much good for involved sales messages, technical pitches and such, mobile permits the sort of micro-targeting ideal for a ‘50 per cent off sale’ of women’s shoes, supermarket bargains, an instant offer of a cut-price weekend trip package and the like.
Some operators are beginning to see the light – the rising sun of a new mobile market. Access to instant messaging, IM, social networking and email services such as Yahoo, AOL and Google are already pushing operator’s revenues in the USA. It is Hutchinson’s new X-Series, though, that should serve as a wake-up call to the industry. By bundling a number of applications that everyone wants for an affordable flat fee – access to Google, Skype, Yahoo! Orb, eBay, Sling, among others – they have kicked off a business model that heralds the age of mobile commodity. Like it or not, the rest are sure to follow, probably much more quickly than they would like.
In my last eletter, I closed by saying that, “These low cost handsets will certainly become the developing world citizen’s primary access to the Internet, and may very well become our primary access as well”. They won’t all be low cost, though, full keyboard, relatively large screened devices, with seamless connectivity via mobile technology, WiFi, WiMax, Bluetooth UWB, will be increasingly important to business users and increasingly important to a flourishing mCommerce, mobile commerce, market.
Mobile devices that can pay bills, remotely keep track of your home, deal with your bank, save fuel by optimise your trip plan, warn of traffic, fit in your pocket but serve as an office away from your desk, will become necessary to our way of life. They will also determine the way businesses are run internally and how they reach their market. Indeed, they may well become so important to the overall functioning of the market that many businesses might subsidise them, if they can be used to direct business to their door. It might not always be worthwhile for a single company to do so, but a handset that directed business to a variety of non-competing companies, depending upon the users needs, might well be subsidised by a good number of such companies. I wouldn’t be surprised if competing mobile marketing cooperatives eventually evolved to appeal to specific types of consumers.
Can it be that the future of mobile, of the operator’s sacred ARPU, is bound not to the mobile user, but to the mobile seller? Could it be that the mobile dependant business, the standard bearers of the new mobile economy will have to pay a steep going rate to get their piece of the mobile consumer’s attention, much as detergent suppliers pay supermarkets for exclusive, eye-level shelf space for their product?
It’s a new game, place your bets!