Digital Media Journal

Apparently, there is only ONE App store today, and is owned by Apple.  But we know that it’s not true.  There are close to 120 application stores in operation as of July 2011.  Some of these application stores are owned and managed by handset manufacturers such as LG and Samsung.  Others are managed by owners of mobile operating systems such as Apple and Google.  In particular, the bulk of the estimated 120 application stores worldwide cater for handsets using the Android mobile operating system.

Samsung Apps

Applications Impact Operators’ ARPU

The growth and presumably success of these application stores will have a positive impact on operators’ data businesses as these applications give their subscribers a reason to access the Internet on their handsets search, download and engage the apps with mobile data.  Moreover, today’s applications are designed for multiple consumer segments, many of whom may not have had the inclination to download them in the first place. As such, mobile operators now incorporate mobile data as fixed bundle, vis-a-vis a VAS option, in most of today’s price plans, thereby increasing the operator’s Average Revenue per User (ARPU).

Strategic Challenges

However, such ARPU growth represents short-term advantage and risk stagnation over the long term as the premise of this strategy is based solely on providing a mobile data carriage service for their customers to use these applications to access the Internet.  Such an approach is not designed to prevent customer churn as handset users can switch operators with little to no switching costs.  For instance, Apple’s iCloud service will keep a record of all applications downloaded by their users (paid and free), thereby allowing any iPhone owner to access these applications following the switch to another mobile operator. In addition, the easy availability of Wi-Fi hot spots which most advanced handsets today are able to access without incurring mobile data charges diminishes the value proposition of the mobile operator’s data connectivity as a means to reduce the churn of their increasingly application-savvy subscribers.

Apple’s iCloud Service

Who Owns the User Data?

Furthermore, the growth of application stores will lead to the gradual shift of data ownership from mobile operators to operators of application stores. As these application stores are hosted on the cloud, the mobile operators have minimal, if not zero visibility on what their subscribers download, purchase history, and the incentives that promotes incremental revenue per application (e.g. in-app purchases). Such consumer insights will be owned by the owners of application stores that directly manages the end-to-end consumer value chain from app discovery to billing (for paid apps).

Confluence of Handset Design and the Internet Cloud

In addition, mobile handset manufacturers control the handset hardware specifications and user experience from the handset’s operating system. This control allows the manufacturers (working in tandem with mobile operating system developers) to influence the conceptualization process of these applications, vis-a-vis mobile operators which rarely have in-depth access to specific hardware and systems roadmaps which are proprietary information owned by the manufacturer. Therefore, the influence on application design resides primarily on the handset manufacturer, rather than the operator.

This influence brings me to the last argument that limits the future impact of operator’s data businesses. If the influence of the application design is primarily driven by the handset manufacturer, then it is not surprising to have applications that make full use of the handset’s hardware such as device GPS, accelerometer, etc. to maximize the apps’ user experience, while shifting most of the app’s processing work such as database queries at the apps’ servers hosted in other countries. This reduces the need to do multiple data transfers via the mobile Internet, reduces the need to have taxing computing requirements on the handsets and conserves battery life, a critical requirement for mobile users today.

In contrast, the price plans of mobile operators are primarily designed to have mobile data restrictions such as 200MB or 12 GB. If today’s mobile applications are not designed to increase the use of mobile data (described earlier), then any effort towards promoting variable pricing of mobile data is limited (if the mobile data restrictions are breached).

An Increasingly Fragmented Application Store Environment

So, the future of operators’ data business will be directly affected by the application stores. Not surprisingly, most operators’ today are launching their individual app stores to mitigate the risks mentioned earlier.  Bharti Airtel, MobileOne and China Mobile have launched their respective mobile application stores, and I will not be surprised if more will join these mobile operators to reduce subscriber churn and promote ARPU growth.

Airtel’s App Central

 First published on: Wed Nov 18 2009 17:12:05 GMT+0800

Christmas is just around the corner and traditionally, the final two months of the year will witness many consumer companies offering sales promotions in anticipation of the Christmas shopping season.  

ION Orchard

Not surprisingly, these consumer-focused firms will use a combination of discounting (inventory clearance) and force bundling of multiple products (perception of value for money) to encourage the budget-conscious Singaporean consumer to open their wallets.  For example, one of Singapore’s leading retail store, John Little, is holding a Christmas Sale at the Singapore Expo Centre from 18 to 29 November 2009.

Clearly, the clouds of pessimism that greeted Singapore at the start of the year is showing signs of clearing as Nielsen reported a rise in consumer confidence in a survey done in October 2009.  We should not be surprised to see consumers finalizing their Christmas shopping list as they begin to receive the latest Christmas promotional advertisements in their email inbox.

 One item which is likely to feature at the top of the shopping list for Starhub and M1 subscribers is the Apple iPhone 3GS.  Following their successful negotiations with Apple to secure the distribution rights for this iconic product, they are now accepting pre-orders which I believe will be available by the Christmas period.

  

 

As a Starhub subscriber, I have opted to reserve a set for myself as I wait for their price plans that are presumably tailored for the iPhone (just like SingTel when they released their handset in early 2008).

 

 

The only red herring is the possibility of Apple not being able to supply the necessary units to satisfy the worldwide demand of this product.  After all, Singapore is NOT the only country in the world with a supposedly insatiable demand for the Apple iPhone 3G and there was an initial period where the exclusive distributor, SingTel, was not able to meet the overwhelming demand for the handset in Singapore.

I was curious to know if there is still any room to grow the Apple iPhone 3G user population in Singapore.   Predictably, there is no breakdown in the number of units sold by the then-exclusive distributor, SingTel, following the handset’s debut on 22 August 2008.  As such, I relied on publicly available information and undertook a simple, unscientific investigation to satisfy my curiosity.  The investigative process is illustrated below:

Step 1:

 One of the primary applications of the iPhone 3G handset is the pre-installed Safari mobile browser which allows user to access the Internet on their handset.  Accordingly, any iPhone user that accesses the Internet with the browser will send the browser’s information to the destination website.  In this instance, the website owner can differentiate the browser types accessing their online site, giving them the information to adapt their content to meet the formatting needs of the various browsers in the market today. Using the same browser information captured by websites today, we can estimate the market share of mobile browsers in Singapore accessing the Internet:

Source: StatCounter Global Stats – Mobile Browser Market Share

 

The line graph above shows a brutal battle between Nokia (all models) and the Apple (just the iPhone) as users access the Internet on their handsets.  For example, more than 39% of all mobile browsers accessing the Internet comes from the iPhone on 18 November 2009.  In contrast, Nokia’s mobile browsers (presumably Symbian) constitutes slightly less than 27% on the same chart.The other handset models are clearly not used by their owners to access the Internet, suggesting that they are primarily voice-call users.  However, this chart is far too granular for me to extract meaningful information from the chart.  I then changed the graph’s layout to a bar chart:

Source: StatCounter Global Stats – Mobile Browser Market Share

This is much better.  The above bar chart is showing an annualized browser market share since the 1st of January 2009.  This is clearly more useful vis-a-vis the line graph above as I am now able to extract the percentage share of all mobile browsers in Singapore.  In this instance, Nokia’s has a indicative mobile browser market share of 32% while the iPhone has a 30% market share.  This sounds reasonable as Nokia has released multiple handset models which are capable of accessing the Internet since the launch of 3G services in Singapore in late 2004.  

Step 2:

Since we now know that 30% of all online mobile traffic is attributed to iPhone users in Singapore, we can make a conservative assumption that the same percentage (i.e. 30%) is applied to Singapore’s mobile market.  In this instance, the mobile market universe is based the number of 3G subscribers in Singapore.  More importantly, we have to use the entire 3G subscriber population in Singapore, which includes Starhub and M1, as there are avenues for a non-SingTel subscriber to use the iPhone by buying the handset at inflated prices from the secondary market (though prices are expected to drop following the announcement of Starhub and M1 to distribute the handset).  

Concurrently, we are excluding all 2G subscribers as the target audience are predominately voice-call users.  Hence, it is highly unlikely that these subscribers will invest in a relatively expensive handset with the primary intent to make voice-calls.

As such, the percentage of mobile browsers (described in the earlier chart) represents the mobile handset mix used to access the Internet.   Therefore, it is a conservative assumption that 30% of all 3G subscribers are using the iPhone to access the Internet.

Step 3:

According to Info-communications Development Authority of Singapore (IDA), there are 2,927,700 3G  subscribers in Singapore (pre-paid and post-paid).

 Using the above numbers, we can now make a conservative estimate that there are 878,310 iPhone users in Singapore.  Clearly, this number highlights the high probability that there are many non-SingTel users who own the iPhone.  According to SingTel’s FY10Q2  results which ended 30 September 2009, the mobile operator has 1,426,000 3G subscribers (I am unable to differentiate 3G pre-paid users from the financial results).  If this is the case, that will suggest that more than 60% of all SingTel subscribers are iPhone users.  That percentage does not make sense to me and confirms my belief that there are already Starhub and M1 subscribers who are using the iPhone as their primary mobile handset.

 So how many more iPhone users can Starhub and M1 add to the already more than 800,000 iPhone population in Singapore?  It is very unlikely that SingTel users will convert their subscription to either Starhub or M1 for the purpose of owning a iPhone handset.  This is because SingTel was the exclusive distributor and any of the operator’s subscribers seeking to own the device can only purchase it from their incumbent operator.  Hence, it is safe to say that any SingTel subscriber who wanted to own the iPhone would have purchased the device and is contracted over 2 years (for some it is 3 years as they re-contracted after 12 months for another 2 years if they want to purchase the iPhone 3GS).  This will mean that any incremental iPhone users following the entry of Starhub and M1 is likely to be their own subscribers. 

Based on this argument, I can assume that any subscriber who signed with either mobile operator between 2007 to 2008 (i.e. the maximum contract period when purchasing a subsidized handset from the operator) are the immediate target audience.  In addition, I am assuming that these subscribers are unlikely to enter into a contractual agreement with SingTel for the purpose of owning a iPhone handset (i.e. two operator plans running concurrently).  Finally, I would presume that any subscriber who signed a 2-year contract in 2009 will need to pay a penalty  (e.g. $300) to purchase the iPhone.  

Using the above-mentioned assumptions, I looked through the full year financial results of Starhub and M1 for 2007 and 2008.  Ideally, I should use the Net Additions metric to be absolutely sure on the number of new subscribers who signed with the operators in the said period.  Unfortunately, this metric was not provided consistently in both financial results.  As such, I am making an assumption that the change in the number of subscribers for each quarter is an indicative figure of new subscribers who signed with either operator.  

Based on the above table, the total number of M1 and Starhub subscribers who have completed their two year contractual relationship with their respective operators is 532,000.  It is my opinion that these subscribers are the prime target audience for the operators to promote the iPhone 3G handset.

However, not everyone who is free from their 2 year contractual period will purchase an iPhone.  Indeed, the 532,000 subscribers can choose any handset that is available in the market. Hence, I am assuming that 30% of this available subscriber base will purchase a iPhone 3G once it is distributed by Starhub or M1.

Therefore, I am making the case that there will be an additional 159,600 iPhone users in Singapore once Starhub and M1 finally offer the iconic handset (in Christmas?). 

Which means that we’re likely to have slightly more than 1.04 million iPhone users by 2010.  To put this in its context, the dominant English newspaper in Singapore, The Straits Times, has a readership base of 1.44 million with an average daily circulation of slightly more than 370,000  copies. 

If every iPhone user reads The Straits Times, that will mean that every 3 out of 4 reader is a iPhone user.  

– Darren –

//

First published on: Thu Jul 16 2009 19:41:10 GMT+0800

The last time I received a physical coupon was in the newspaper delivered to my home.  You see, there is a service provided by Singapore Press Holdings (SPH) where advertisers can insert such coupons in the bundled newspapers to be delivered to homes around the country.  Since the delivery is managed and controlled by SPH, the advertiser has the choice of selecting which geographical location they wish the coupon is to be delivered (e.g. the eastern side of Singapore would include towns such as Marine Parade, Bedok and Changi).

Setting aside the theory on how such direct marketing tactics are developed by advertisers, I have to admit that I will take the trouble to look through the coupon with great interest.  But the intent to encourage me to buy a product otherwise would not will fail on me because the promotional product has to be something that I need now, or aspire to own in the future.  Hence, the coupon has to address my demand requirements at the point of receiving the promotional instrument (i.e. coupons).

Assuming that the product or service in the coupon addresses this need of mine, I will pay close attention on the the nature of the coupon.  This nature represents what the coupon seeks to communicate:

1. Is it a price discount?
2. A conditional offer such as a ridiculously low price for the 1st 100 customers?

The nature mentioned above will determine whether I will make a purchasing decision or not (though I must admit that the second nature will not interest me).  Having said that, I must confess that this behaviour which I described earlier somehow indicates that I am reliant on coupons to make purchasing decisions for certain products.  This is because coupons intentionally influence the demand and supply of a purchasing decision.  Prior to this influence,I (i.e. consumer) may not have reached a point where the demand is so overwhelming that I have to make that purchase.  As such, coupons do play a major role in influencing my purchasing decision for specific products.  As a general rule, this influence will be the most effective for products which are not commoditized in the market such as mobile handsets, vehicles and consumer electronics.

Hence, companies that use coupons as a promotional strategy will need to make sure that the product or service in the promotion matches the need of consumers like myself.  This matching is aligned to my earlier posting on market segmentation on user databases.  In such instances, the medium which is employed to distribute the coupons play an important role in changing the usage pattern of consumers such as myself.  For example, a broad product category such as food and beverage, groceries or clothing will see the coupons being distributed through newspapers which are perceived as mass media platforms (see below).

As the products get more specific such as consumer electronics, then the medium used to distribute the coupons will change accordingly.  For instance, a coupon that offers three months free membership to a gym will work best in magazines that focuses on exercise and general fitness.

Hence, the effectiveness of coupons to influence consumer behaviour is dependent on first and foremost, market segmentation and matching products to consumer needs.  Following this, the distribution of the coupons through the right channels is critical as such channels represent the proxy of consumer needs.  Mixing both together with the right execution will probably get me to buy more than I would usually have done (which may not be a good thing given this economy…).

– Darren –

First published on: Thu Jul 16 2009 17:35:19 GMT+0800

When I think of direct marketers, the first thing that comes to my mind is: harassment.  And yet, the vast majority of of the direct marketing industry continues to adopt what I consider to be “untargeted marketing”.  In most instances, these direct marketing firms acquire databases from other firms which seems to have developed a great business model to collate mobile numbers and email addresses of individuals.  Despite myself being part of the direct marketing industry with my present company, I still find it difficult to figure out how these database firms can get these mobile numbers with such ease with the strict privacy regulations adopted in countries such as Singapore.  But that is another topic to be discussed in a separate post.

But seriously, why don’t these direct marketing firms target their offers to the right audience in the first place?  Speaking from my personal experience, I have been contacted by telemarketers (it seems that contacting unsuspecting individuals on their mobile handsets is the preferred mode of operation) throughout the working week with offers to join spas, take up a yoga course and sign up to a seemingly unlimited number of credit facilities from banks (which is not a good offer to make to today’s materialistic Generation Y individual).

This led to a massive problem of such mailers being dumped by presumably frustrated home owners (I do make it a point to dump them in the nearby rubbish bin). This problem has since been solved by the company responsible for delivering the mail to our mailboxes with anti-junk mail features such as appointing the postman as the sole person with the key that opens all the mailboxes so as to deliver the mail to them.  Nonetheless, the junk mail still persist with the postal company now working as the advertising agent to deliver junk mail to home mail boxes.  This post probably reminds me to contact them and remove my address off their “junk mail” list.

But back to the most common mode of direct marketing – the phone call.  While the offer seems to be so attractive when articulated in an almost perfect manner by the telemarketer (no doubt from a script), the unfortunate ending to this conversation is a firm rebuke from me that “I simply have no need for the product”!  In particular, I find it absolutely frustrating to receive such calls when I’m at home with my family.  The video below best describes how I feel when I receive such calls at home.

While I have no intimate knowledge of the business practices of these direct marketing firms that made these calls to individuals such as myself, I do know, however, that targeting the right message to the right audience is a lot of hard work.  I know this as I do this on a daily basis in my role as a Database Marketing Manager in my firm.  The fact is that direct marketing is a function, and the delivery method is just a conduit between the firm and the individual.  As such, the best practices of direct marketing is consistent in the traditional and digital (media) world as the intent of the message can be communicated through phone, email, SMS, MMS, Location-Based advertising and mobile barcodes such as QR technology.

Hence, the differences in delivering the message should not overshadow the common rule that the right message needs to reach the right audience: We need to target the right message to the most appropriate market segment.  No one is saying that this is the nirvana of direct marketing, but it is certainly the best possible way to deliver the best effective advertising message to the right audience.

Using my role as an example, I will need to ensure that:

1.  The consumer database has no duplicate entries – Each user will only appear once in the database.

2.  Fill in as many demographic information for each user as possible.  Usually, surveys are the best means of getting this information.

3.  Segment the entire database by demographic profiles such as age bands (i.e. Under 18, 19 – 24, etc.) and occupation (i.e. senior management, manager, senior executive, etc.).

These 3 stages form the foundation of basic database segmentation.  What comes next will require absolute discipline and maximum attention to detail:

1.  Contact a sample of each segment to deliver the advertising message.

2.  Record the result of the entire interaction between the company and the individual

• Was the individual interested to find out more?
• How many stages did the individual go through in the interaction before deciding on the next action?  The stages are similar to what is described as the consumer purchasing funnel.
• What is the next action of this individual?  Accept the offer or decline?
• If the offer is declined by the individual, what would be the reasons behind this decision?
• When was the call made – morning, afternoon, evening or at night?

3.  Consolidate all the recorded details and identify patterns in the five points above within each database segment.

4.  Create a regression model for each demographic segment and identify which variables (i.e. the points above) have the most significant influence to the success of the advertising message.

5.  Using the regression model, refine the advertising message and contact the users which meets the specification of a successful individual in the database.

The 5 points made earlier represent how I manage the direct marketing business in my firm.  Undoubtedly, I left out the specific details of how I undertake these responsibilities as they are trade secrets.  What is commonly known, however, is that the digital world which my business is predominately in (i.e. online, mobile, and digital billboard advertising) gives me the advantages which the traditional world do not have.  One such example is the collecting of feedback data from my email marketing campaigns.  I am able to find out through a click of a button on the number of individuals who opened an email, clicked on the links in the email advertisement and how many times the email advertisement is being forwarded to another individual.  Such tracking abilities are readily available in today’s online direct marketing industry.  These features are replicated, though in different variants, for the other digital media channels such as SMS, MMS and location-based advertising.

As such, the efficiency of the campaign feedback gives me the data needed to crunch the numbers and creating the regression models needed to identify the variables needed to improve future campaigns.  It is only through this constant improvement where direct marketing firms can finally say with conviction that they have made the best effort possible to reach the right audience with the right message and hopefully, at the right time.  If these efforts are made, then we won’t have instances described brilliantly in the video below.

– Darren –

First published on: Wed Jul 08 2009 14:04:33 GMT+0800

The television and newspaper have been the two most widely used mediums by advertisers to maximize the reach of their products and services.  Presumably, this reach is a result of the limited broadcast spectrum and newspaper license issued by the government respectively, which allows these media owners to establish distribution channels that reaches individuals in an economic manner.  

It is obvious that the two mediums communicate the advertising message in a different mode.  The television has the capacity to deliver the message in a multimedia format that encapsulates the visual and audio elements that are creatively expressed in a 30 second format used by broadcasting stations as the standard advertising unit.  This visceral creative in the video advertisement hopes to evoke the emotion of viewers that will either raise the awareness of the advertiser or motivate them to make a spontaneous follow-up action following the viewing of the advertisement.  An example of such an ad that encapsulates these two elements is from Monster.Com:

Given the deliberate thought process that goes into the development of the video advertisement (not to mention the production cost which rises in tandem with the creative effort), it is perhaps frustrating to see the video ads being stymied by the lack of reach from broadcasting stations that segments the daily programming schedule into different time belts with varying advertising rates.  Accordingly, advertisers with restricted budgets can run their video advertisements in limited frequency in the time belts which are most widely watched by viewers.  Alternatively, advertisers can run their video ads in other time belts with relatively lesser audience but at a higher frequency.

This approach seems to run counter to the assertion that television is a medium which advertisers can use to maximize reach.  While broadcast stations may position their rates as competitively structured with low cost per reach, the reality is that this metric is meaningless if the frequency of advertisement is limited.  Realistically, consumers who are exposed to the video advertisement will perhaps need to view it more than once to appreciate the advertising message. It is this reality that advertisers must accept as the true economics of advertising on the mainstream television medium.  This harsh reality is magnified further by the growing use of digital video recorders (DVRs) which allows the advertisers’ target audience to bypass their video advertisements in an increasingly time-shifting viewing environment.

Many progressive advertisers have since turned to the Internet to distribute their creative video productions.  Broadband penetration has been growing on an annual basis which accompanies the declining trend of dial-up subscriptions still offered by Internet service providers. As such, there are many channels available today that takes advantage of this high broadband penetration for online video distribution.

The obvious choice would be Youtube, which is perhaps the most consistent rich media site on the Internet today.  There is also Facebook which allow videos to be uploaded and viewed by the network of friends associated to the user (who placed the ad in the site).  Finally, there are branded portals which offer rich media video solutions for advertisers seeking to distribute their video advertisements to the supposedly large online community. 

While the Internet is clearly an alternative channel to distribute advertisers’ video messages, it is perhaps more important for the advertiser to appreciate the advantages the Internet offers over the television medium.  The most obvious advantage is the scientific measurement of the number of online users who viewed the video advertisement.  Unlike the television medium (specifically viewers receiving free-to-air channels on non-cable boxes) that tracks viewing on random sample of panelists, the online medium gives advertisers metrics such as the date, time and viewer’s geographical location (based on the user’s IP address).  These tools are readily available on Youtube to measure the effective distribution of the uploaded video.

The commercial solutions offered by portals offer a more sophisticated array of online tools for advertisers.  For example, AsiaOne’s Targeted Video Commercial service allows the advertiser to select the segment within the portal to distribute the video advertisement.  This allows the advertisement to be targeted to a specific target audience who will presumably appreciate the video’s subject matter and context.  Moreover, advertisers will know the percentage of all users who finished viewing the entire video advertisement.  Finally, advertisers can maintain a consistent brand positioning by customizing the design of the panel (or what is commonly known as the skin of the video player) that broadcast the video advertisement. 

At this point, it seems that the advertiser has an economic solution to distribute their video advertisements that sufficiently meets their objectives of maximizing reach.  However, I would argue that advertisers should now consider the influence of social media as the next evolution of online video advertisement, or what I term it as video advertisement 2.0.  In an earlier posting, I put forth the argument that social media is now a mainstream medium which is embraced by millions around the world.  As such, it is perhaps fitting to integrate the elements of social media into the production of the video advertisement so as to take advantage of this medium. 

What does this really mean?  The advantage of social media lies in the power to influence or instigate the viral effect of a message (which includes advertising).  Accordingly, the creative development of a video advertisement 2.0 should involve piquing the interest of the target audience, rather than communicating a direct message.  This is an evolutionary change, which will probably deter some advertisers as it risk missing the opportunity to deliver the supposed message to the target audience.  Yet, I would argue that the online user of today is perhaps more discerning then before and is usually sceptical at any advertising message that interrupts their online experience.  As such, the challenge to advertisers and creative agencies is to develop a video advertisement that really sets the people talking.  This “talking” is expressed through the many online forums today, none more evident than on social media sites such as Facebook and Friendster, as well as blogs written by anyone who have Internet access.  This is the viral effect which, if harnessed properly, will have a positive multiplier effect on the level of awareness associated with the advertiser.  More importantly, individuals with a strong social network have inadvertently become the advertiser’s ambassador by extending the distribution of the video advertisement to their network.  As such, the collective viral effect would have generated the word-of-mouth effect which translates into higher reach for the same video advertisement. 

Hence, it can be concluded that the viral effect of video advertisement 2.0 will require a rethink on the creative process leading up to the video production.  Thankfully, we have some progressive advertisers that worked with agencies that share this belief in incorporating social media in video advertising.   One of the best examples is the T-Mobile UK’s Life’s About Sharing campaign. 

Filmed in Liverpool, it triggered a tremendous viral effect on the Internet that led to the development of a second video advertisement being produced.

Samsung has dabbled into this field by coming up with the Extreme LED sheep advertisement that promotes the technology that drives its LED television products.

The advertisement generated more than 8 million views on Youtube and generated more than 150,000 postings on the Internet on the same keywords used on the video site. 

Finally, there’s the Evian Babies commercial which generated more than 6 million web entries.  Herein is another example of producing videos which trigger responses online.

As always, the power of the Internet allows advertisers to measure the social influence of the video advertisement that incorporates social media.  A case study of this measurement methodology is offered by Visible Measures which tracked the viral effect of the Nike commercial below.

In this example, the company tracks engagement, viral distribution and re-production into parodies on the same Nike advertisement.  These measures form the justification on extending the reach of the video advertisement with 2.0 tools and social media strategies.

It is perhaps fitting that I end this posting with an example closer to home.  Here’s one of the many MobileOne advertisements which has created a parody on Youtube

M1 Commercial

Parody of M1 Commercial

Hence, the Internet is an alternative video advertisement channel, and the economics is definitely more compelling than television.  What is recommended, however, is for advertisers to take advantage of the social media element in their video production process.  A carefully thought out advertisement will achieve a multiplier effect to extend the reach of the advertiser.  As the start of this posting suggest, it is the objective of the advertiser to  maximize reach, and this is certainly one way to do so.  

– Darren –

First published on: Tue Jul 07 2009 23:51:20 GMT+0800

It has been a long time since I last blogged on my site.  Back then I made a promise to myself to get involved in a blogging site that actually requires me to pay money to host the site as I’m a strong believer in ROI (i.e. blog more to justify the monthly fees!). It is not surprising, however, to have the realities of family and working life dictating how much time I can set aside to develop an editorial piece which is worthy to be published in my blog.  After all, I am determined to document my personal observations on digital media so that it serves as a journal of my journey in this exciting medium.

It is perhaps fitting that the topic of interest in my observation today is on the realities of social media marketing for businesses today.  Running a Google search on this subject will give you 234,000,000 pages in 0.23 seconds. As the number suggests, it’s no longer an emerging tool.  It is a tool that needs to be taken seriously by the community.

Arguably, it is no longer surprising to hear of a fellow online user having a Facebook account.  The service is not only accessible on the PC/laptop/Netbook, but is also on major mobile platforms such as the iPhone, Symbian handsets such as the Nokia N79 and even on the Blackberry. 

In fact, Facebook is one of the very, very few Blackberry applications that is certified by RIM to have the clearance needed to be installed on any Blackberry device, despite the high enterprise security features associated with such business-oriented devices.

Indeed, Facebook has transformed the social media scene in the maturing Web 2.0 online world.  You can even get a specific URL for yourself now that personalize your Facebook URL in the online world (though I still curse my slowness in getting my personal vanity URL from the site).  Under this backdrop, we now see the number of unique visitors to Facebook have exceeded MySpace in November last year, with a staggering 113 million unique visitors in May 2009 alone.

Clearly, social media is no longer a medium used exclusively by tech geeks or net-savvy Generation Y individuals.  In fact, Facebook is now used by a broader spectrum of users across various demographic groups.  As the graph below illustrates, the site is beginning to see a more broad based participation, signally that such sites are evolving into a mainstream communication channel.

It is perhaps not surprising that many businesses are trying to get into the social media space in the hope that this will be the next alternative marketing channel.  After all, Nielsen Online suggested in a March 2009 report that social networks and blogs are now the fourth most popular online activity, and ominously ahead of email which is the incumbent communication protocol since the evolution of the Internet. These sites collectively host online member communities which are visited by 67% of the global online population.  In particular, Hitwise reported that Facebook users spend close to 19 minutes on the social networking site, representing the period where companies on these social networking platforms can potentially reach out to. This is probably one of the main reasons why established media channels such as CNN chose to integrate Facebook in their online programming such as the recent live telecast of Michael Jackson’s memorial in Los Angeles.

Clearly, this rising number represents the size of the target audience which companies seek to engage and establish an online relationship with.  Assuming that such relationships are positive, the company would have created a parallel communication channel online to engage and build brand equity with these online users.

Invariably, questions will be asked on the sustainability of these social networking sites and virtual worlds that companies are presumably clamoring to establish their presence in them.  Indeed, one of the pioneers in social networking, MySpace, had to retrench many of their global staff strength as they seek to compete with the rising popularity of Facebook. 

But how do companies really do business on these social media sites?  Is it simply the case of setting up an account or a page in Facebook, with the belief that it will be populated naturally by the more than 200 million users on this social media site?

I would argue that businesses should not use the size of these online communities as the motivating force to establish their online presence in these social networking sites.  These social media sites are a conduit for online communities to interact on issues which may be relevant to the nature of the business’s operations.  This interaction forms the opinions and feedback which companies can use as a basis to improve their value proposition to their target audience.  Companies should therefore set aside resources such as a dedicated team that is focused on reviewing issues discussed on these social networking sites and if need to, respond to such feedback that allows the company’s position to be delivered with ambiguity.  This is important as the nature of such online interaction is uninhibited and is not moderated by anyone on these social networking sites.  As such, it is critical that companies respond unequivocally to issues which may adversely influence the public’s perception of the company.  Accordingly, a proactive and well-thought through process to interact with these online communities will reinforce the brand positioning of these companies, and foster a situation where relationships with their target audience can be built over the long run.

Concurrently, these consumers of social media actively provide demographic and psychographic data so as to get the most benefit and value from their online social networking experience.  In doing so, these users are presenting companies insights on the behavioral and lifestyle preferences which are used to fine-tune the targeting of potential customers on these social networking sites.  As these users in the online communities actively interact with their network through site-specific applications, uploading and sharing of photographs and discussions through dedicated group forums, companies will get to experience a richer set of data about these users.  As a result, the targeting of communication materials to these users is more specific than what conventional online marketers will do on websites.

Herein lies the realities of social media marketing.  It requires a dedicated and deliberate effort to ensure staff are trained to take advantage of this Web 2.0 communication channel.  Remember, it is now mainstream, and it will be foolish to ignore it.

– Darren –

First published on: Thu Mar 26 2009 11:51:43 GMT+0800

This week’s entry is inspired by a cartoon character.

Content is king, but sourcing and distributing that content to the audience cost money.  Revenue is needed to cover the costs, make a decent enough profit and reward all the content producers for the work taken to create that content in the first place.

This model works brilliantly during the early years where content acquisitions are limited to a few large content producers who have the economic capacity to do so.  Examples such as sending a reporter deep into a war zone, junkets in major entertainment events,etc. are indications on where the investment are needed to acquire content which the editors feel is relevant to their readers.  But the upside is that money was flowing in, allowing content producers to make, at times, good money. 

Next came the communication path which used to be vertically integrated into the editorial enterprise.  They own the media platform, and till today, the traditional print media is still active and have a audience size that is sufficiently enough to keep the lights on (for now).  When the Internet appeared and became a mass medium, the content producers decided that it’s time to monetize this new communication path, complementing the huge profits off their traditional products.  After all, content is king, and people will be willing to purchase content for its editorial value.

What happened following their push into the Internet communication path is a now a case study on how the digital economy is FUNDAMENTALLY different from the bricks and mortar world.  Content producers started by offering content at subscription rates in the early years.  However, there is no credible payment mode such as a Paypal, WorldPay or PayMo to give the early Internet users confidence to disclose sensitive payment information over a new medium such as the Internet.  Subscription rates plummeted, and content producers start to worry about the revenue model needed to make money off the Internet.  Costs started escalating as content acquisition costs remain unchanged, and needs a revenue stream to justisfy the investment in that area.

Their next step is to move into advertising.  Banners started appearing on the websites, and sales teams are compensated by how much inventory they can sell off the site.  Content is now offered free, and the hope is that every Internet user will be motivated to visit these content sites and drive up the pageviews needed to fill up the CPM inventory.  It’s sounds like a simple enough model, and content producers then felt that it is probably a better way to make money than the subscription model.

Fast forward to 2009, and we now see the number of content producers shutting down or struggling to make money in a “free content in exchange for advertising” model.  Here are some examples of venerable content producers who struggle to keep the lights on, and those who didn’t (i.e. shutting down):

1. The New York Times
2. The Rockey Mountain News
3. The Los Angels Times

This problem is not restricted to venerable content producers.  Newer upstarts also faced the same problem of monetizing their online assets.  A recent article from The Economist highlights some of these new companies who face problems, though some of them managed to find new parents who are now struggling with these problems as part of their acquisition:

1.  Youtube – Sold to Google (just in time)
2.  MySpace – Sold to Fox and recently restructured

3.  Facebook – Minority stake by Microsoft at US$15 Billion valuation
4.  Twitter – I have a plan….but I won’t tell you
5.  SpiralFrog – Jumps no more

The 4 companies above are just a snapshot of what today’s supposedly post-Google IPO, Web 2.0 poster cholds are trying to do to make money off their users.  There’s still Flickr (sold to Yahoo) and Bebo (sold to AOL) who are still trying to monetize their users accessing their sites.  The interesting thing is that there is minimal, if not no content acquisition cost.  Content is uploaded by the users, shared in many innovatve channels, and distributed across multiple platforms (online, mobile, OOH digital screens, Kindles, iPhones, Blackberrys, etc.).  It does sound like a great economic model. 

But the cost of distribution remains unchanged.  We still need servers to host the software to manage the content.  We need terabytes of hard disk space to store the content.  We need the bandwidth to distribute the content to global distribution points.  Even if the content acquisition cost is minimal (e.g. SpiralFrog), the fact remains that licensing fees need to be paid to other parties in the music ecosystem (e.g. music publishers, writers, authors, etc.). 

What I have described above sounds bleak.  Does that mean that Content is NO LONGER King?  Can we make money off the Internet at all? 

I thought so too for some time till I attended a Web Wednesday event at the Geek Terminal in downtown Singapore on 25th March 2009.  It was a speaker from Sulake, a company that originated from Finland and creator of the Habbo social networking site .  It is profitable, and made a profit of 50M Euros in their last financial year.  Average session time is around 40 minutes and they have close to 100M users as of last year. How did they make money then?  3 important points stand out:

1.  There is a revenue model from Day 1
Access is free, but upgrades are only available if you make payment. 

2.  Pricing model
Focus on micropayments.  Small payment anounts limits resistance to payments.

3.  ENter a market where payment modes are readily available
Payment modes are not restricted to credit cards.  It includes SMS payment, pre-paid gaming cards sold off 7-11s, and other micro-payment methods which charges low processing fee for payments as low as US$0.30.

Now all this sound like common sense, and it’s being practiced by at least this company who is still privately owned and profitable.  The fact remains that this is a company that has relied on basic common sense and financial discipline to ensure that the company grows organically at a stready rate.  While Sulake may not have the billion dollar valuation as Facebook, it does have a sustainable revenue stream that allows valuation to be based on actual cash flow.

The Internet does make money for some.  The question is whether one is willing to rely on their common sense to do so.

Cheers,
Darren

First published on: Wed Mar 11 2009 09:09:34 GMT+0800

One of my mandates in my current role as a Database Sales Manager is to define the entry points where data is captured, managed and stored in a CRM-focused database.  The obvious entry point is the web where the website owners use registration pages to get their users to sign up for benefits restricted to registered users.

This strategy worked in the early years on the Internet as users explored with a childlike innocence on how the digital medium brought them to places unimaginable before.  Registering their details online seemed to be the only path to get more information from website publishers.

It was only when website publishers decided to work with marketing agencies to target their users that triggered frustrations of being bombarded with irrelevant email advertisements and the fear that their private data is being used by third parties that are not related to the website they registered in the first place.

As the Internet user matures and gains more experience over the years, website publishers are beginning to see their users imposing their right to manage their data and privacy.  Increasingly:

1. More users are using fake names and details to get themselves registered on websites (with the same intent of getting “more” information then un-registered ones).
2. Email providers like Yahoo and Gmail give users the ability to have multiple email addresses at no incremental cost, vis-a-vis the old days when emails are tagged with the ISP we’re registered with.  Invariably, a user can have multiple email addresses used for different sites, some of which could be dormant and not checked over the years.
3. Any attempt by website owners to send irrelevant email advertisements to their users are met with contempt and revolt, leading to a drop in site traffic and lower pageviews (i.e. lower CPMs).

Undoubtedly, marketers are facing a challenge to engage with their users.  Most websites do away with the registration process completely, contented to focus on featuring banner ads and Google sponsored links to generate revenue.  Some sites simply left their registration pages dormant, given that they too know that the onerous data fields to compel users to sign up is no longer relevant for today’s Internet user.

Are the days of targeted and segment marketing over?

Interestingly, it is not, and even more surprisingly, there are sites where you can get real and factual information about the user.  There are even details that describe the social life of these users, allowing preliminary insights on the lifestyle choices these users make.

Where are these sites?  Try Facebook or LinkedIn.  Users over there contribute their real details without any hesitation.

The question is how we mine these data as a marketing professional?  That’s where a social web contract is needed between the user and the website owner.  You can read a very interesting post by Jeremiah Owyang, a social media analyst and researcher in Forrester.

More on this in my next post.  For now, please enjoy the slide below.

Rarely does a video encapsulates how this increasingly connected world is turning a lot of us into marketing sceptics.  Advertisers beware: it’s time to re-engage with your customers, not bombarding them.