Telemedia-Month Newsletter JULY by annika micheli

Issue 41 • JULY 2013

#PAYMENTS Consumers want m-pay but banks and third parties steal a march

THIS MONTH... News

• Sq1 launches new chat platform to fill the void 3 • 160bn consumer apps to be downloaded by 2017 4 • BokBok aims to make m-games more social 5 • Shoppers who shop weekly via mobile has doubled since 2012 6 • UK leads Europe in m-retail with 41% of shoppers now on mobile 7 • UK m-ad spend set to hit £1bn in 2013 8 • Syniverse buys MACH for E550m to create cloud giant 9 • Lack of digital know-how costs retailers £12bn, says O2 10 • Dallas Cowboys go Dutch for mobile coverage 11 • UK texters write Shakespeare twice over in a life time 11 • Life saving app uses GPS to keep Europe safe 12

Analysis

despite some much needed marketing for Payforit in June at the Payforit Summit, research has found that consumers trust cards and want card payments to become much more integral to every kind of shopping experience they have. And, while there is a growing thirst among consumers for mobile payments, operators are likely to lose out to a raft of third party services and offerings from banks who seem to have stolen a march on the issue. In June a raft of new mobile payment services were launched that tie cards or bank accounts to payment apps and allow consumers to buy conveniently and speedily using mobile. New findings from a survey supporting the launch of WorldPay Zinc, the new pay as you go mobile payment service that enables card payments on the move, reveal that many of the UK’s four million small businesses could be missing out on an extra 20% of revenue simply because they are not offering customers the option of paying for goods and services by debit and credit card. The research also reveals that 87% of consumers are likely to spend more money per transaction when paying with a debit or credit card, as opposed to cash, highlighting the potential benefits to small businesses of accepting card payments. In the last year, one in five (20%) UK consumers has had to abandon a purchase due to a small business or sole trader not accepting card payments or because they were not carrying enough cash to make a payment. These businesses are not only missing out on potential sales, but they are also risking their reputation and customer loyalty. Over half of consumers (54%) find it inconvenient when small businesses don’t accept card payments, rising to 66% amongst 18-34 year olds. The implications are far reaching on a national level also, with 72% of people left with a negative impression of a business that fails to accept cards. Customers associate businesses that don’t accept card payments as

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Editorial Hot stuff Mobile billing is hotting up, but it needs to be pushed to get traction, argues Paul Skeldon 13 OPINION Wrapping up mobile payments Following the successful inaugural Payforit Summit in London, Rory Maguire takes a look at what needs to happen next 14 OPINION A tale of two transactions IDC’s John Delaney takes a look at how two big telecoms deals are going to reshape how mobile works 15 ANALYSIS The best audience Sponge’s Phil Gault looks at how wifif holds the key to engaging the most lucrative audience 16 ANALYSIS Destination Amsterdam World Telemedia Amsterdam is set to get going in October, but we need your input now. So see what we have planned and stick your oar in 18

Directory

The leading industry directory of services 22

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NEWS >>>from page 1 Mobile payments shake up having poor customer service (28%), being unprofessional (19%) and even perceiving the business as unsuccessful or struggling (18%). In an increasingly competitive economic environment, this poses a real threat to small businesses and sole traders. Donna Dawson, Behavioural Psychologist, commented: “The research shows that we are heading towards becoming a ‘cashless’ society: in an increasingly fast-paced world, we find using cash to be inconvenient, unsafe and slow. Already we have become used to the ease and speed of mobile, internet and card payments. As a society, we are beginning to demand the ease and convenience of being ‘cashless’, and those service providers who do not keep up will lose out. The most important reason for service providers to take heed is that using a card changes our fundamental shopping behaviour: 87% of us spend more on a card and, freed from the constraints of cash, we transform from ‘careful’ shoppers to more ‘impulsive’ and ‘extravagant’ ones.” The launch of WorldPay Zinc coincided with the roll out by VocaLink – a company better associated with developing faster payments between banks – of Zapp, a mobile payments tool that gives consumers direct access to the money in their existing bank accounts through their mobile phone and real-time payments. Payments will be processed by linking a mobile phone number to a bank account. This means that payments can be made via smartphone with no need to use a card, keeping account details securely hidden and speeding up the payment process.

Consumers get greater control because they can always check their balance before deciding to pay. VocaLink is collaborating closely with a significant group of stakeholders including financial institutions, merchants, merchant acquirers, billers and telcos, to set up, build and deliver a new framework for ‘Zapp’ mobile payments. This proposition will put the UK at the forefront of payments innovation globally. However, some operators are starting see that to gain a foothold in mobile payments, they need to partner – and fast – with third parties to make mobile payments work for them. Telefónica Digital has announced that it is to partner with Monetise to develop and manage new and existing mobile payment and commerce services for its customers. The agreement comes as the strategic and commercial merits of Monitise’s proven and established platform technology enabling consumers to bank, pay and buy via mobile are recognised by an increasing range of businesses keen to take advantage of the worldwide Mobile Money opportunity. Under the terms of the agreement, Monitise will complement existing technology partners, taking a lead role in the development of a global technology platform to support payment and mobile commerce services. The initial focus of the partnership will be in the UK. The multi-year partnership with Telefónica Digital represents the latest milestone in Monitise’s strategy to be the leading global enabler for Mobile Money.

The company has built a payments and commerce platform onto its proven and trusted bank-grade and interoperable core mobile banking services. Monitise’s ecosystem connects hundreds of organisations from banking, payments, mobile, merchants and media to millions of consumers around the world via its Bank Anywhere, Pay Anyone and Buy Anything product range. The partnership with Telefónica will leverage Monitise’s mobile payments and shopping technology. Monitise announced in December 2012 that it was targeting mobile commerce opportunities to capitalise on the accelerating convergence between financial institutions, retail, mobile, online advertising and social media. This was followed in March by a new three-year deal with Visa Europe to develop and deploy Mobile Money payments and commerce solutions for Europe’s leading financial institutions. Visa Europe, which predicts that by 2020 half its transactions will be via mobile, has existing partner relationships with both Monitise and Telefónica Digital. “The future of payments, technology and mobile are irrevocably bound together. Mobile technology has the potential to fundamentally change the way that people pay and are paid – enabling them to do this via any device, at any time and in any location,” said Visa Europe’s Chief Marketing Officer Mariano Dima. “With Telefonica Digital and Monitise we are now working together to enable new ways to pay in our increasingly mobile world.”

#CHAT Square 1 revamps platform to fill a hole Square 1COMMUNICATIONS is set to launch its new mobile SMS/MMS chat platform known as MESSAGE² After news that one of the UK’s largest SMS aggregators was to cease supporting its PSMS chat platform Square1 brought forward the launch of MESSAGE² to assist several companies that had been given the news that their current service was to end within a agreed period of time. Square1 are working closely with these companies and the aggregator to ensure a seamless transition in all aspects of service from maintaining billing continuity, user experience and the provision

of a platform that gives the clients the flexibility and service required now and in the future. Mark Birkett, Sales Director commented: “We moved the launch of our MESSAGE² platform forward by several months to fit in with the urgent needs of these clients, I have been very impressed with the flexibility and hard work that the team at SQ1 have put in to meet the difficult deadline. Not only have we managed to launch on time but we have also added many new features into our offering that have been requested and needed by many of those already operating in the text chat sector.

NEWS

#GAMES 160 billion consumer apps to be downloaded in 2017, driven by free-to-play games

THe latest report by Juniper Research has forecast that in 2017, over 160 billion apps will be downloaded globally onto consumer handsets and tablets. This sharp increase, from 80 billion in 2013, is a result of many consumers in developing markets upgrading from featurephones to smartphones, and a growing number

of apps downloaded at no upfront cost. The report, Future App Stores: Discovery, Monetisation & Ecosystem Analysis 2013 – 2018, found that the majority of annual downloads will be in the games category, with at least 40% of downloads arising from this area. Furthermore, app stores will seek to improve stickiness by developing social functions for gameplay. For instance, the recently announced Google Play Game Services allows for real-time multiplayer games and leader boards across not only the Android platform but also iOS and the web. This, coupled with an increasing number of apps which are free at the point of download, will lead to an explosion in the total number of apps downloaded. Nevertheless, the challenge remains for developers to profit from their apps, as the downward pressure on pricing leaves

many the only option to offer their apps for free at the point of download. The rise of the app store has, also, effectively cut many Mobile Network Operators (MNOs) out of the value chain. Report author Siân Rowlands stated “carrier billing has become an increasingly viable option for MNOs who want to see a share of app store revenues, and also for app stores who want to distribute their content to unbanked consumers. However, MNOs must realise they won’t see as great a revenue share as they did during the pre-app store era”. The report has also found that only 5% of apps will be paid for at the point of download in 2017, down from 6.1% this year, while storefronts will improve their discovery services for consumers, as the influence of Amazon’s Appstore recommendation engine becomes more prominent.

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NEWS

#GAMES BokBok aims to make m-gaming less solitary as it brings it back to the social arena mobile entertainment has often been the mainstay of single gamers immersing themselves in the latest blockbuster, brain teaser or Angry Birds clone, but one UK company has teamed up with top UK-based app studio Locassa to bring a social spin back to the mobile market. Real Social Games, a London-based startup, chose successful app studio Locassa for its first foray into the mobile entertainment space. BokBok, launched late December, is simplicity itself, proving that a great idea can be executed without the usual fuss and complexity visible in many apps. A simple two-person game, BokBok does away with the usual online or local network connectivity and instead opts for a single-phone / dual-user approach. With a split screen and a simple concept the game is truly social and a

firm favourite of the Locassa team on their social outings to the local pub. Simon Lee, CEO of Locassa explains it’s appeal: “What we love about BokBok is that it is immediate and social. Too many games immerse the player in a virtual world, only big enough for one. With BokBok, the app becomes a tool for the game, not the whole game world, it’s a refreshing change.” He goes on to stress the simplicity of such an idea. “For me, the most enjoyable apps on the app store are those which ooze simplicity. Make it simple enough for anyone to use and your target market goes through the roof. BokBok uses gestures and eye-catching design so effectively, it was a pleasure to work on,” he says. Locassa has worked with many top companies, but this latest release shows that the app world is not solely the do-

main of the big corporate anymore. “It used to be that the only people asking for apps were the big brands we see every day, but in recent months that has changed.”, Lee explains. “We increasingly work on apps for individuals and startups who have a great idea. Apps aren’t cheap but creating a quality product, where the idea is simple, doesn’t have to be overly expensive.” Locassa believes that simplicity is key to app design something they think people get completely wrong most of the time. “People think that apps have to be detailed and do everything include make you breakfast in the morning, but this simply isn’t true,” says Lee. “The best apps are those which take away all of the unnecessary noise and focus on the core function and give the best user experience.”

NEWS

#RETAIL Volume of smartphone shoppers making weekly purchases doubles in a year new research from eDigitalResearch and Portaltech Reply suggests that a third of smartphone shoppers are using their mobiles to make a purchase on a weekly basis, a number which has almost doubled in the past 12 months, with an additional 25% of smartphone shoppers now purchasing items every month. The research also found that smartphone owners are increasingly using their mobile devices in store to help aid purchase decisions when outside the home. 68% said that they have used their mobile to browse, shop or find product information when out shopping, a number which has grown from 36% in the past 12 months alone. Of those, 20% used their mobile just to make a purchase in store Derek Eccleston, Commercial Director at eDigitalResearch, says: “Whilst some retailers are sceptical of in store smartphone shoppers, worried that it will lead to too

much price comparison and an increase in competitor sales, our research suggests that the majority of in store smartphone users are actually using their devices to browse websites rather than making a purchase. Retailers should therefore be considering in store initiatives, such as free internet access to their customers, to help enhance shopper’s overall experience with their brand and increase engagement levels”. The study also looked at the opportunities for retailers to connect and engage with mobile customers. Results suggest that 26% of respondents would be ‘very interested’ in receiving personalised offers or recommendations sent to their smartphone direct from retailers as they enter stores. However, when looking at those shoppers who make mobile purchases on a regular basis (weekly and monthly), the figure doubles to (50%), highlighting

the need for retailers to get to know their customers and understand them in order to target the right sort of information to the right audiences. Mark Adams, Partner at Portaltech Reply, comments, “The most important clarification from our research is that mobile is now all pervasive, its use as a browsing and purchasing channel for customers has become mainstream and when we think mobile we also need to think tablet devices since purchasing via a tablet device has higher conversion rates than smartphone. In addition to this we now need to address the usage of in-store browsing via mobile devices since this has become a standard activity. All of this means a mobile strategy is central to a retailers’ multi-channel strategy and we need to incorporate the mobile experience from the ground up when designing and implementing a multi-channel customer experience”.

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NEWS

#RETAIL UK drives European mobile retail, with 41% of consumers shopping from phones leading pan-european onlineFlash Sale pioneer vente-privee.com has found that, of the eight main European markets in which it operates, the UK is by far the most mobile-orientated, with 37% of its UK turnover coming from mobile. Looking at how it operates in France, Spain, Germany, Italy, UK, Belgium, The Netherlands and Austria, vente-privee. com has found that overall 32% of its sales come from mobile devices. This is up six per cent on the end of 2012. Breaking down the mobile turnover figures by device, 53% of turnover came from tablets, 47% from smartphones. However, The UK takes a substantial lead ahead of the seven other European countries, with France in second place at 29%. There is also an impressive difference between the UK and venteprivee.comâ&#x20AC;&#x2122;s other European countries

with regards to its percentage of mobile clients: 41%, with Germany second at 35%. Women represent 71% of mobile clients on vente-privee. comâ&#x20AC;&#x2122;s UK site with an average age of 39 in comparison with 41 for non mobile clients. In terms of the average number of orders made by UK clients on venteprivee.com, mobile clients make 7 purchases per year, with more than half of their purchases bring made by mobile. Non-mobile clients in the UK however, have a lower yearly purchase figure of 5 on average.

Globally, over 1 million visits are made to vente-privee.com daily via mobile and the vente-privee.com mobile application which was launched in 2010, has since had 3.5 million downloads. In 2012 for vente-privee.com as a whole, August was a period, which saw +7 points in relation to the yearly average of turnover coming from mobile.

NEWS

#ADVERTISING UK mobile ad spending edges ever nearer to £1 billion in 2013 mobile advertising in the UK is expected to touch almost £1 billion ($1.6 billion) in 2013, up 90% from £526 million spent last year ($834.9 million), according to updated figures on advertising spending from eMarketer. Despite continued economic struggles in the UK, digital ad investments are growing robustly. Digital ad spending, which includes online and mobile formats, will rise 12% between 2012 and 2013 to reach £6.1 billion ($9.7 billion) this year. eMarketer expects expenditures on digital advertising to surpass £7 billion ($11.1 billion) by 2015 and £8 billion ($12.7 billion) by 2017. eMarketer’s June 2013 forecast represents an upward revision to this year’s expected mobile and digital ad spending totals, based on data pointing to healthy growth in Q1. Total media spending projections have also been raised due to the

faster-than-expected growth in digital. Search will account for more than half of all investments in online and mobile advertising through 2016. Advertisers are taking particular advantage of the opportunities mobile search offers. Display ad spending will total one-fourth of digital ad expenditures in 2013, but its share is growing rapidly thanks to massive increases in video advertising. The strength of the digital ad market is reflected in the amount advertisers are investing to reach individual UK residents on online and mobile platforms. In 2013, on average, £127 ($202) will be spent on digital advertising for each UK internet user. This is more than four times the worldwide average and higher than the amount spent by advertisers in the US. Total media ad spending is forecast to reach £13.98 billion ($22.19 billion) this year, up 3.7% from last year. The

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UK economy is still ailing after a dismal last few years, and this has hindered potential growth of the ad market. But the advertising sector is stronger than other industries in the UK, boosted by substantial gains in online and mobile ad investments. The digital ad industry is the largest single component of total media spending, surpassing even TV. Despite continued uncertainty about the European economy, advertising investments saw a slight bump in growth in 2012 due to the London Summer Olympics and the UEFA European football championships. Similar increases are expected in 2014 for the World Cup and Winter Olympics when total media ad expenditures are projected to reach £14.67 billion ($23.29 billion). eMarketer forecasts that this year’s growth rate will match last year’s rate of increase and will spike to 5% next year.

NEWS

#BILLING Syniverse buys MACH for E550m, creating a mobile and online cloud behemoth cloud computing specialist Syniverse has completed its acquisition of MACH for approximately €550 million. The combined company now serves more than 1500 mobile service providers, enterprises, ISPs and app providers in nearly 200 countries, offering a full suite of advanced solutions that help Syniverse’s customers ensure seamless, high-quality end-user experiences in an increasingly complex mobile ecosystem. The acquisition brings to Syniverse roaming, messaging, network and fraud solutions that will simplify the complexities of today’s mobile landscape, enabling all types of mobile service providers around the globe to deliver the experiences their end users demand. Former MACH CEO Morten Brøgger has been appointed Syniverse’s Chief Sales Officer, responsible for leading

the company’s global sales organization. Brøgger said he looks forward to propelling the combined organization to deliver unrivaled mobile innovation to its customers. “Unprecedented bandwidth demands alongside mounting business and technical complexities are resulting in significant challenges and opportunities for today’s mobile service providers. This acquisition ensures we have the flexibility to develop advanced solutions that enable mobile service providers to deliver the anywhere, anytime, any-app experiences mobile end users have come to expect,” said Jeff Gordon, President and CEO, Syniverse. “By combining our expertise and core competencies, we are now able to offer more choices to our customers around the globe, which will ultimately lead to an enhanced mobile experience for end users everywhere.”

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“In addition to rich experience and expertise in mobile solutions, Syniverse and MACH have shared an unwavering focus on customer satisfaction,” Brøgger added. “A key component is helping our customers to deliver seamless, ubiquitous access to advanced services by interconnecting the various network types and service providers that exist today. With the acquisition complete, Syniverse is better positioned to accelerate time to market for the critical solutions required by the mobile ecosystem.” The transaction is expected to be accretive within a year. Deutsche Bank acted as sole M&A adviser, and Debevoise & Plimpton, Latham & Watkins, and Shearman & Sterling acted as legal advisers to Syniverse in connection with the transaction. Barclays, Deutsche Bank, Credit Suisse and Goldman Sachs provided debt financing for the transaction.

NEWS

#RETAIL Lack of digital know-how costing UK retailers £12bn annually, suggests O2 study uk retailers are missing out on £12 billion in potential sales by failing to engage consumers through digital channels. New research from O2, conducted by expert retail analysts Conlumino, found that retailers are struggling to harness technologies that enhance customer experiences inside and outside the store. Three quarters of consumers say they don’t get a seamless experience shopping through digital and traditional channels, such as mobile apps or social media to in-store purchases. The study found that, while retailers are struggling to harness technology, over 50% of all purchases are now influenced by digital channels such as mobile apps and social media in addition to retailers own websites. Consumers aren’t satisfied with the experience they currently receive, with 93% saying they find some aspect of the

digital shopping experience frustrating. These frustrations are causing consumers to spend less, or take their business elsewhere – resulting in a huge missed opportunity for retailers worth up to a potential £12bn in lost sales. The study highlights a disconnect between the digital experiences retailers think they deliver and reality, revealing that, although 46% of retailers think they do a good job of joining up the digital customer experience, nearly three quarters of consumers disagree, complaining they don’t get a seamless experience when they engage with retailers through digital and traditional channels. The research also finds that 56% of consumers say that interacting digitally is more convenient, while only 15% of people don’t use digital at all to interact with shops and brands. However, while some retailers under-

stand the benefits but are still struggling with the technology, with just 40% of retailers recognising that digital engagement helps drive sales, a low figure considering the majority of consumers say they use digital channels for some aspect of shopping. In addition, a fifth have trouble integrating new channels like social media and apps with existing technologies and less than a third use social media tools to engage and understand their customers Ben Dowd, O2 Business director, explains: “Smartphone penetration is expected to reach 90% in the next three years and the impending arrival of 4G with O2 this summer will herald an era of ubiquitous connectivity. Retailers that don’t act now risk missing out on huge sales potential. The findings reveal just how crucial digital engagement has become for retailers when it comes to stealing a march against the competition.”

NEWS

#SPORT Dallas Cowboys go Dutch for mobile coverage the dallas cowboys are set to use the technology of Dutch company Mobile Viewpoint to broadcast their training sessions, to do on the field reports during out-games and for press conferences. The Dallas based American football franchise is seen as one of the most technology advanced in the league. The decision by the Dallas Cowboys to implement Mobile Viewpoint technology was based on a meeting that the management had with the Mobile Viewpoint representatives at the NAB conference in Las Vegas last April. In two weeks the two WMT sets will be available to the Dallas Cowboys, in time for the NFL pre-season. Michel Bais, Managing Director Mobile Viewpoint: “Clearly sports and our technology blend together well. After the very successful support of the project Torch Relay with the BBC just before the 2012 London Olympics this is the second major sports player to embrace the unique technology of Mobile Viewpoint. Sports on television are all about ‘live’ and ‘location’ and those are the two elements our technology supports to the max.”

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#MESSAGING Text mad brits write equivalent of Shakespeare twice over text mad brits will write almost two million words in a lifetime – enough to input the complete works of Shakespeare twice - a new study has found. Research by online discount shopping site, NetVoucherCodes.co.uk, looked into the texting habits of 550 twentysomethings. Respondents were asked to provide the average number of words from their last ten text messages as well as the average number of texts they sent per day over the last month. Researchers found the typical text consisted of 19.7 words whilst the text-per-day frequency averaged at 4.2, equating to 30,200 words a year. Participants were also asked at what age they started texting, with the majority saying they started between the ages of 14 and 15. Therefore, by the time respondents

reach the grand old age of 80 they will have texted a staggering 1,993,200 words. Not only is this more than enough to write the complete works of Shakespeare (884,647 words) twice, it could reproduce Tolstoy’s epic War and Peace (561,093 words) over three and a half times. A spokesperson for NetVoucherCodes. co.uk commented: “The current 20-30 age bracket are the first generation to have grown up with mobile phones and most likely will be using them well into their old age. “It’s staggering to think that we will text almost two million words over the course of our lifetime –this will probably increase for each subsequent generation as they become more reliant on instantaneous communication.

NEWS

#HEALTH Lifesaving emergency app provides exact location information to emergency service echo112, a new lifesaving app that saves time in the event of an emergency, has launched for iOS and Android smartphones. Helping users to get the assistance they need quickly, wherever they are in the world, echo112 enables local emergency services to easily find a user in distress by providing details of their precise location. Using the GPS technology in smartphones, echo112 is a simple-to-use app that works anywhere in the world and is the only emergency app that not only calls the local emergency services but also provides precise details of the user’s location. The perfect travelling companion, it displays the emergency services’ number for the user’s current country and will direct dial to the local emergency services operator for assistance. It also shows and transmits nearby addresses and coordinates so that the emergency operator can get the user’s exact location via the echo112.com website.

The app was created by Jocelyn Corniche, a hospital ER anaesthesiologist based in Lausanne, Switzerland, and founder of medical app development company mobilemed. As an emergency doctor in the air ambulance service, he has seen first-hand how vital it is to be able to locate someone quickly in an emergency situation. It was when he realised how difficult it was for the emergency services to locate people in trouble that he had the idea for echo112. “Echo112 is the guardian angel on your smartphone,” Corniche said. “Giving local emergency services direct access to your location and by making it quick and easy for you to contact them, echo112 can save precious seconds, which can be vital in an emergency.” Echo112 is free to download and there is no need to register or provide any personal details. When the user needs assistance the app is activated by pressing the SOS button:

the emergency number for the country will be displayed and a call initiated to the operator. The user’s exact location is sent to the echo112.com website and the operator can then visit the site and enter the user’s mobile number for their precise location, including coordinates and the nearest full address. If they have no mobile data connectivity then their location is sent via SMS. The international app has been developed following the success of the Swissonly version of the app, known as My144. My144 has been on the market for two years, in which time it has been downloaded 150,000 times. There are at least two known examples of when it has been used in emergency situations, involving walkers who suffered medical problems whilst in remote locations. Echo112 is currently available in English, French, German, Spanish and Italian and works anywhere in the world.

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OPINION

FROM THE EDITOR

Hot stuff Mobile payments are reaching critical mass –but only in the industry. It needs brand and consumer by in or Apple wins, argues Paul Skeldon things are hotting up in mobile payments and one can’t help feeling that we are entering a phase in their development where soon something is going to break through and people are going to start actually using them. But the big questions still remains: what are they going to use? As our lead story again this month suggests, there is a growing hunger among consumers to use mobile in some way to pay for things as the UK market in particular edges closer to a cashless society. However, depending on who’s research you read from banks, card companies, third parties and operators, everyone in the business seems to have different ideas of how this is going to play out. Its like Betamax verses VHS, only with some dozen or more different technologies and business models to chose from. Now, clearly it is a case of horses for courses, but the over-riding imperative with mobile payments is that it has to be at least as convenient as cash and cards to gain any attraction. Ideally, it needs to either be more convenient or add things to the process that make doing several things at once more convenient. And, as yet, I have not seen any that really offer this. Currently, the banks and payment companies are stealing a march, with tie ups and products that offer to tie cards and accounts to phones. But where is the actually payment mechanism, the consumer trust and the branding to make brands implement and consumers actually use these services? The same could be said for all these tools. Take Payforit. It has come on in leaps and bounds and, when you actually see it in action, it does offer some convenience and speed to pay for digital content. Its not quite there yet, but its getting there. However, no one outside the mobile industry really knows about it yet. Brands need to see what it offers and consumers need to be reassured that, even though it is operator billing, it is outside of the frightening world of traditional PRS. What it needs, in short, is marketing outside the mobile industry. But this criticism extends to most of the current payment tools. Barclays has done a good job with Pingit – well it got a lot of media attention when it launched – but ask anyone in the street and they probably don’t use it. Similarly, ask any retailer or brand and, while they may be aware of it, they don’t use it either. And this is the big flaw with mobile payments. Everyone is treading very carefully around actually pushing it. No one wants to get caught out offering something that consumers may find scary. And so they don’t offer it. A lot of money has been pushed into all these mobile payment tools, but it could all be for nowt if someone like Apple comes along, sticks a nice front end on it and starts taking a hefty cut of what is essentially just a credit or debit card transaction. It has the chops to develop something that looks good and people trust it (especially the CIA!) and it could be what gets people paying. But much like it did with the music business, it could also kill all other offerings at a swoop. And it may not just be Apple who pulls this off: Google could too. Or Facebook. It will be interesting to see how this plays out over the next few months as we all take a breather over the summer. And we await the arrival of OS7.

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Editorial Editor Paul Skeldon paulskeldon@me.com | Sales & Marketing info@telemediamagazine.com | Production Director Annika Micheli annika@telemediamagazine.com | Publisher Jarvis Todd jarvis@telemediamagazine.com To subscribe, please go to www.telemedia-news.com What we’ve been listening to Wilder (remastered) –The Teardrop Explodes | What we’ve been amused by Where’s Edward Snowden? | Who we’ve been following What ‘they’ do with our data | What we’ve been reading about Mobile Payments| July 2013 will bring... better times (hopefully)

OPINION

Rory Maguire

Wrapping up

Mobile Payments

Following the successful – and inaugural – Payforit Summit, Rory Maguire explains why the event was a success and where more work needs to be done

as part of the organising team for the Payforit Summit on 26th June, I was grateful to be able to take a deep sigh of relief later in the evening once it was all over and book a session with my therapist to help equalise my yin and yang. The next day though my commercial instincts took over and I asked myself if the Summit had met its objectives? The main objective was to promote the concept of mobile payments to a new audience. We don’t mean adding more complexity with mobile banking or mwallet solutions, which is what a lot of the current “buzz” seems to be about, even if there is little activity. No, what we mean is consuming services on your mobile and paying using your mobile bill. The major advantage of charge-to-mobile is that it is available to nearly 100% of mobile consumers. By presenting the relevant information at the time of purchase, the Payforit scheme avoids the pitfalls of pricing transparency and “not knowing what you are buying”, particularly on a small screen. While there are some disadvantages of charge-to-mobile, as we saw from the Boku presentation by adding the choice of Payforit mobile payments to the existing credit card, debit card, PayPal etc payment options the “checkout success” ratio jumps up by 30%.

This is great news in any sector. But to focus on one sector (that was well represented at the Summit), for an online publisher whose audience is moving to mobile and whose ad revenues are diminishing, this is fantastic news. This significant commercial uplift is already realised by big brands such as Sony for their Playstation community, Playjam for their Smart TV gamers, Spotify and Facebook. Tim Green (Mobile Money Revolution) gave a big picture of all things mobile payments and Anne Caffrey (Vodafone) gave a “State of the Nation” address on mCommerce. The rest of the day was packed with different speakers from different areas of the mobile payments industry, all very happy to share their expertise with the audience of 150 who gained huge benefit from the day and the networking opportunities afterwards, courtesy of the evening sponsors Peekaboo and IMIMobile. So were we successful in meeting objectives? 20% of the audience were new faces; AIME has gained interest from prospective new members and the sponsors ImpulsePay, Oxygen8 and Bango had interest shown in their Payforit solutions. I would have liked the “new face” proportion to be higher, but I think we ran a great inaugural event and there is a significant amount of follow up marketing and PR that can be done on the back of it. Oh and one more thing. Anyone who reads this publication will be familiar with the criticism that is levelled at the mobile operators for not attending “mobile payments” events. Well, this event was also sponsored by the UK operators Three, Vodafone, O2 and EE with presentations and support from them throughout the day. I think that is a major coup and shows that the operators are firmly behind Payforit, AIME, the existing mobile billing industry and the new sectors that will be joining the mobile billing revolution. LOOK OUT FOR PART 2 OF THE PAYFORIT SUMMIT AT WORLD TELEMEDIA AMSTERDAM (see page 18)

OPINION TELECOMS

A tale of two

Transactions

With the take over of O2 Ireland by 3 and then Vodafone buying up Germany’s Kabel Deutscheland, John Delaney, Research Director, Mobile – IDC, explains how the world of operators is changing across Europe the british have a mordant attitude to most things, and buses are no exception. “You wait for ages for a bus,” people say here, “and then two come along at the same time.” I it felt a bit like that with regard to telco M&A. At breakfast time yesterday, it was announced that Hutchison’s mobile operator in Ireland, 3, is to acquire Telefonica’s Irish operator O2 for around €850 million. Soon afterwards a much bigger transaction came along, when Vodafone announced its firm offer to acquire German cable operator Kabel Deutschland for €7.7 billion. However, although these two acquisitions were announced within hours of each other, they have very little else in common. The Irish transaction is part of a slow but steady trend towards fewer mobile operators in European countries (pace France). For some time, Ireland has looked like one of Europe’s most overprovisioned mobile markets, with four mobile operators, as well as numerous MVNOs, fighting for market share among a population of 4.6 million. Consolidation has been on the cards, and O2 has emerged as the candidate because of Telefonica’s pressing need to raise cash to continue paying down its massive debt, which stood at €51.8 billion in March 2013, and which Telefonica aims to get below €47 billion by the end of the year. For Hutchison, this transaction continues the strategy of building scale in its European markets – organically in the UK, through acquisition in Austria and now in Ireland too. The combined 3/O2 will have around 2 million active subscribers, around 38% of the Irish market. The deal is subject to approval by EU regulators. However, recent precedent looks encouraging. The EU approved 3 Austria’s acquisition of Orange Austria last year, albeit with some conditions designed to mitigate the impact on competition. The German transaction is a very different story. Here, the

principal driver is service bundling and the pivotal role of TV. Multi-play bundling has for several years been a strong trend in the European fixed-line market, first with dual-play (home phone plus home broadband) and then triple-play (dual-play plus TV). Successful multi-play providers have seen positive effects both on ARPU and on customer retention. The addition of mobile to the triple-play bundle, to make quad-play, proved a more difficult sell for a while. However, more recently a number of drivers have made the proposition more attractive, including growing penetration of mobile broadband and migration from prepaid to postpaid. Operators in markets such as France and Spain have seen strong uptake of their quad-play bundles, and we are likely to see the same trend in other European markets. In Germany, Deutsche Telekom has all four elements of quad play, including an increasingly strong TV proposition with about 2 million subscribers. Vodafone Germany had already gone some way towards addressing its deficit in TV and home broadband, signing an agreement in May with Deutsche Telekom to offer services using DT’s network. At the time, some commentators saw this as reducing the likelihood of Vodafone bidding for Kabel Deutschland. However, it is more attractive not to be beholden to one’s competitors for service delivery, and it seems that Vodafone has felt this strongly enough to make a generous-looking offer, representing a premium of about 35%, to acquire its own German cable network. We believe that this deal will prove beneficial for Vodafone. Operators that only have a mobile network will be at an increasing disadvantage, being, in effect, locked out of a growing customer segment looking for quad-play deals. In Germany, where market leadership is a tightly-fought two-horse race between Vodafone and DT, Vodafone could ill afford to tolerate such a handicap.

ANALYSIS

NETWORKS

How wifi could unlock your

BEST AUDIENCE

The rise of wifi – not least amongst operators keen to pass off traffic from clogged 2 and 3G networks –is seeing a shift in how to engage with consumers. Phil Gault, Director of Strategy, Sponge explains what that could mean

Of the myriad new dynamics at play within retail marketing, two seem particularly significant: first, the accelerating shift from traditional broadcast models to 1:1, often customer-led communications; and second, the collision and convergence of the physical with the digital. Booz & Co has just released a new study that perfectly illustrates the first point. 37% of the marketers surveyed expect their spend on print to decline by at least 5% over the next two years. TV is broadly flat. At the other extreme, fully 96% anticipate increasing their investment in shopper marketing. And top of the pile is Mobile. 100% say they’ll dedicate more funds to the channel, with three quarters of respondents planning increases in excess of 5%. What we are seeing here is a re-focusing away from

the top of the ‘funnel’ and towards those moments when people are actively in the mood to buy; what Google calls the Zero Moment of Truth. Of course, retailers still need to invest in attracting new customers and driving footfall. But that is only a means to an end. Ultimately, what matters is how effectively you convert those shoppers into buyers - or (at the very least) engage them sufficiently so that they identify themselves and grant permission for further dialogue. Here’s a tragic case in point. I was talking to a very senior marketer at HMV not long before they went into administration. He shared the frightening statistic that every year 130 million shoppers visited one of their stores…but 100 million of those visits didn’t result in either a sale or an identifiable data trail.

ANALYSIS NETWORKS

Making Stores Work Harder HMV may have been an extreme case, but it’s far from unique (especially as the showrooming phenomenon grows). The challenge is clear: how do you extract the maximum possible value from these casual shoppers? This is where Mobile comes into its own. Consider these two datapoints: - 63% of mobile searches trigger an action within one hour (source: Nielsen / Google) - 65% of shoppers are happy for retailers to send them content on the basis of their location (source: Cisco) This is a potent combination: immediacy of need plus proximity to the point of fulfilment…plus, of course, the fact that smartphones allow retailers to create fully digital experiences that are contextually specific. To capitalise on this, you need two things: the right content to trigger the desired behaviour; and permission to deliver that content via mobile. Which takes us to the main topic. Using Wi-Fi To Drive Sales & Loyalty Let’s start with a definition of what Wi-Fi marketing means: a 100% permission-based solution in which shoppers register for free in-store Wi-Fi in order to benefit both from the service itself and to receive timely, relevant and personalised content. An excellent example would be the Starbucks Digital Network in the States, which encourages dwell-time by providing free, sometimes exclusive content from high-end providers. In terms of turning shoppers into buyers, this ticks four important boxes. First and foremost, it means you can recognise a customer when they enter your store and communicate with them pre-purchase. It allows you to enhance the shopping experience via digital technologies. It creates a bridge between your physical and digital estates, helping drive your omni-channel proposition. It generates valuable new metrics: for instance, frequency and length of visit (Wi-Fi knows both when you enter and leave a store). Making It Happen The technology to do all this exists today; indeed, we’re about to launch something very similar for a major multiple. The consumer appetite also exists. To cite just two examples: IPSOS Mori and The Logic Group have found that 42% of us want to receive offers whilst in the act of shopping, not afterwards; whilst Maritz reports that 73% of people are interested in interacting with loyalty programs via their smartphone. There is one key barrier, however: the nature of the deals that have been struck between retailers and their chosen Wi-Fi provider. Quite clearly, in many cases the provider has traded up-front revenues in exchange for long-run commercial benefits – including insight into individuals’ shopping habits and the ability to monetise that via advertising. What this means in practice is that many retailers struggle to get access to the realtime data that makes Wi-Fi marketing so powerful.

This is a challenge, but one that will be overcome. The prize is simply too big. As Graham Cove, Director of Wi-Fi for EE, puts it: “Properly deployed, Wi-Fi offers a three-way win for the shopper, the retailer and the provider. To drive both sales and loyalty, providers need to allow retailer branding on-site and make it as easy as possible for them to access useable customer data.” At a time when both shops and shoppers need all the help they can get, this three-way opportunity needs to be seized – and soon. How Wi-Fi Can Support The High Street In the future, Wi-Fi’s potential to drive salience and sales will make it a key weapon in the trench warfare between retailers. But there’s a related area that also offers massive opportunity. The principles that apply to individual retailers work equally well for geographical communities. The provision of free Wi-Fi in urban centres is a growing trend. O2 has just announced a major deal to cover the 100,000-strong business community of Canary Wharf. Camden has led a group of 17 London councils, brokering a deal whereby registered devices can access free Wi-Fi for 30 minutes a day (and then purchase additional time from a provider of choice). In Northern Ireland, Bangor has just extended the geographical reach of the service it first launched in 2012. And Mansfield is endeavouring to raise the £38,000 it needs via crowd-funding techniques. It’s early days, and some of the initial hopes may prove overoptimistic. Whilst it certainly won’t hurt, I’m not sure that Wi-Fi in isolation will “keep people in town a lot longer instead of rushing home to check their emails” as Sarah Nelson of Mansfield forecasts. But there are clear and immediate benefits; a principal one being the fact that Wi-Fi offers local businesses a highly targeted (and thus affordable) channel for reaching shoppers in the immediate vicinity. I expect the next step to be even more exciting as businesses group together to make collective offers that drive local residents back into town centres. And it needn’t just be about ‘money off’. With a bit of vision, there’s a real chance here to create platforms that can inform and assist the community, harness its collective energy and re-ignite civic pride. It’s one way in which the Big Society could start feeling a bit more tangible and meaningful. This would also represent a high-value marketing opportunity for brands that want to be seen as community hubs or enablers. This could simply be ‘proud local businesses’ like Cardinal Security who have stepped forward to contribute £20,000 to the Mansfield fund. Or – as it becomes increasingly true that the service is the product is the marketing – it could be that brands like The Co-Op will see this as the ideal way to put themselves at the heart of the communities they serve.

ANALYSIS

WORLD TELEMEDIA AMSTERDAM

Destination Amsterdam BUilding on the success of the Marbella event last spring, World Telemedia Amsterdam is now gearing up to deliver a wider range of insight, learning and case studies for the industry, that this time will see drill down into not only the vertical markets where telemedia can be put to use, but also in looking inwards and the very workings of the industry in turbulent times. Outlined here is the beginnings of the show programme and of course a call for your input to make it the show that you want it to be. This year we are majoring on the issues facing the telemedia industry – particularly the issues around international markets, traffic and of course fraud, crime and arbitrage. We will of course also be looking at how telemedia technology is being used in everything from chat and dating to retail, gaming and marketing. The event will also feature, running alongside it, the second mAdult Summit, looking at how to capitalize on growing numbers of smartphone users if you work in the adult business – both from a content point of view and a billing and service provision environment. LEARN • DISCUSS • INSPIRE  Everyone attending the conference at World Telemedia Marbella should leave having learned something new, discussed their key issues with colleagues and been inspired (or inspired themselves) with some of the most innovative uses of technology in the premium communications space. To