Telemedia Month Newsletter

Issue 29 • MAY 2012

Digital engagement on the rise, but user experience and payments still an issue with 65% of digitally active consumers using mobile, the connected media space offers huge potential to media companies and telemedia providers, but consumers are being let down by poor connectivity, badly designed user interfaces and a consuming payments landscape.

These were the key headlines from the CONNECTED SUMMIT in London on 15 and 16 March, as the media, marketing, retail and live events industries gathered to look at how to monetize the growing trend for digital interaction with brands and entertainment.

According to opening keynote speaker Darren Mark Noyce, founder of consumer and brand analysis company SKOPOS, the digitally active are increasingly becoming the general population and that this is driving interaction.

“News on the move: provides a number of needs,” he explained. ”Mobile and digital satisfies a range of human needs: its on the go, a quick fix, an enhancement, a substitute and provides catch up. Similarly at live events and sports, mobile is an enhancement – a second screen when on tv or at the game – and a replacement when you can’t watch it live or on tv, or both.”

In particular, mobile voice apps are doing well. “There has been a leap in interest in voice apps from 29 to 38% in our research,” Noyce says. “The Siri ads on TV have helped – despite reality not really living up to what is shown – but it shows potential and consumers actually accept it now. The industry isn’t having to push technology on to them.”

Within the media industries, digital interaction – particularly around TV shows – is again gaining ground as users start to adopt it through second screening and just simple familiarity. And some better press about doing it. As the second keynote speaker, Ed Boddington from Harvest Media and Chairman of industry body AIME, told delegates at CONNECTED: “TV voting is converging and we have managed to make it work and get over the scandals of the past. Now have a very strong industry. Revenues are increasing – slowly.”

As Bod points out, shows such as The voice and Britain’s Got Talent are now doing voice short codes that make mobile voting transparently priced. “This,” says Bod, “will bring more users and customers into the mix”.

According to Bod, there will be a lot more live play along apps as well as SMS votes coming back too. “But,” he says, “the greatest challenge is dealing with volume and with volume spikes. “ Social media is also playing a role, explains Bod, and is starting to skew the market, especially when it comes to payments and revenue generation.. “American Idol in the US offers free Facebook voting and here in the UK, Five’s Big Brother uses Facebook credits for votes,” he says. “Interestingly, about 10% of votes for the show came this way.”

In Puerto Rico, he expounds, they used Facebook credits to pay for votes. “Average votes per unique viewer was 30 (as opposed to 1.5 for non-Facebook voters and operator payouts were 25% higher – and it was a huge success,” says Bod. “So online voting has a huge role to play and revenue to generate.”

But while digital usage is on the rise among the population, there are issues, warns Noyce. “There are issues, both technical and experiential. Mobile is still, the worst customer experience of anything digital, but if you can make it a portable shortcut to what people want and is advantageous to use then its great. If it just cuts corners, it’s a poor experience.”

SEE PAGE 13 FOR MORE FROM THE SUMMIT

THIS MONTH... ...

News

The latest news from the industry, along with analysis of what that news means, including: • Cross Country Trains launch 3 customer for Payforit4 • £7.9m raised for Sport Relief by 3 text message donations • Telecom Express to make Fantasy 4 Leagues even more engaging • Android sales turn European 5 mobile back to growth • Textlocal’s Message 2.0 to 6 revolutionise marketing • Racing UK sees boom in stream to 7 view mobile betting • FreMantleMedia and Hasbro add 7 gambling to Mobile triv

Analysis EdItorIAl Mobile payment woes Paul Skeldon looks at how, according to the BBC, the public just don’t want mobile payments 9 AdUlt Mobile adult ready to boom Julia Demambro tells us why mobile adult is ready to explode across the world 10 oPErAtor oPErAtorS A Ator S Wasting time on social MNOs are wasting time and money trying to get comsumers to follow them on social media, warns John Strand 11 SoCIAl Soical killing MNo SMS traffic While MNOs are trying to use social, the likes of Facebook are killing their traffic margins 12 EVENtS Connected 2012 Highlights A taste of what you missed at Connected Summit this month

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The leading industry directory of services 15

Latest news at www.telemedia-news.com Catch our blog at www.telemedia360.blogspot.com

NEWS CrossCountry Trains enables mobile payments with Payforit 4 from ImpulsePay passengers on board CrossCountry Trains services will be the first to benefit from the new version of the Payforit mobile payment system, Payforit 4. ImpulsePay has enabled Payforit 4, launched last week by the UK’s mobile operators, for CrossCountry Trains to allow passengers to purchase onboard Wi-Fi access using their mobile phones.

Using ImpulsePay’s Payforit 4 service customers will be able to charge Wi-Fi access to their mobile phone bill, making it a much easier way to pay and up to seven times faster than using a credit card.

“CrossCountry is in the process of deploying Wi-Fi services on board our long distance train fleet and we want to make accessing the service as simple as possible for our customers. Adding a mobile payments solution is a key factor enabling us to achieve that goal,” said Richard Edwards, Fleet Project Manager at CrossCountry Trains. “We chose ImpulsePay because they have previous experience of working in the rail industry and their focus on providing innovative solutions, such as Payforit 4.”

Payforit 4 is the latest version of Payforit, the mobile payments solution backed by all the UK network operators. It allows

businesses to use direct operator billing to charge consumers’ mobile phones, eliminating the need for unreliable premium rate messages. Launched to the mobile industry last week, Payforit 4 offers even greater functionality and a number of improved features for merchants, which means even easier purchasing for the consumer.

As the first company to use Payforit 4 from ImpulsePay, CrossCountry Trains will be able to offer its customers oneclick billing – allowing registered users to make subsequent purchases with just one click. The new version of Payforit will also allow CrossCountry Trains to embed the payment process within their own pages (either web or mobile), instead of sending the user to a separate payment page. This helps to increase conversion rates as the consumer has the comfort, security and recognition of the merchant’s branding.

Payforit 4 will also help CrossCountry Trains to reduce checkout abandonment.

Backed by all UK mobile phone operators, ImpulsePay’s Payforit 4 service carries out the billing over the Internet as opposed to using text messages. No sensitive information leaves the security of the

mobile operators’ billing systems, making it inherently secure, as it only requires the consumer’s mobile number.

“ImpulsePay gives us a great new payment method to allow access to our new Wi-Fi service,” Edwards continued.

“In addition it was very straightforward to integrate the ImpulsePay code into our solution.”

CrossCountry Trains is currently rolling the service out to its 57 Voyager and 5 High Speed Trains, serving popular cities, such as Edinburgh, Newcastle, Leeds, Manchester, Birmingham, Oxford, Bristol, Southampton and Plymouth.

“Payforit 4 will make a dramatic difference in how Payforit is used,” said Chris Newell, CEO of ImpulsePay. “It has always been quick and easy to use for both the consumer and the retailer. However, with the improvements that Payforit 4 brings to the system it is now even better and will result in even greater conversion rates for brands like CrossCountry Trains.”

“As the first brand to offer the new Payforit 4 system, CrossCountry Trains will now be able to allow anyone with a mobile phone to buy on board Wi-Fi access,” continued Newell.

Text donations raise £7.9m for Sport Relief this year’s sport relief has so far raised a record total of £7.9 million via £1, £5 and £10 mobile donations. In line with previous years all SMS donations made by the public have benefitted from 100% out payments thanks to the mobile network operators (MNO’s) continued support to the third sector.

All money raised by the public is spent

by Comic Relief to help people living incredibly tough lives, both at home in the UK and across the world poorest countries.

Helen Puddefoot , Head of Campaign Management, Sport Relief said, “2012 has been a record year for mobile donations for Sport Relief, seeing the donation amount from SMS more than double since 2010, clearly demonstrating a huge appetite for SMS donations. The mobile channel continues to form an extremely important part of our donation strategy and over the coming months we’re work-

ing collaboratively with MIG to develop some exciting new projects for Comic Relief in 2013.”

Rob Weisz, VP of Sales, MIG, a Velti Company, commented “MIG has worked with Sport Relief and Comic Relief since 2009.

Throughout this period we’ve seen SMS donations go from strength to strength, with the current Sport Relief contributions smashing previous years’ totals.

SMS donations are a trusted, efficient and engaging method for the nation to donate on multiple price points (£1, £5 and £10) and our high performance, high capacity interactive platform has been specifically designed to support mass participation broadcast events. I’m delighted this year has delivered such ground breaking results.”

This year’s fundraising activity included: “John Bishop’s Week of Hell” in which comedian John Bishop cycled from Paris to

Calais; he then rowed across the channel accompanied by Davina McCall (the hell part?), Freddie Flintoff and Denise Lewis; then ran from Dover to London’s Trafalgar Square by completing three marathons in just three days – Supporters of the event donated £1 by texting the keyword ‘SPORT’ to 70011 ‘John Bishop’s Week of Hell documentary’, which was televised on 22nd March.

Viewers of the show were invited to donate £5 by texting the keyword ‘HELP’ to 70005 For ‘The BT Sport Relief Challenges: Walliams V’s The Thames’ (140 miles in September 2011) supporters were able to donate £5 by texting the keyword ‘SWIM’ to 70005 On the main ‘Sport Relief’ night, which was broadcast on Friday 23rd March, viewers were invited to donate £10 by texting ‘YES’ to 70010.

NEWS

Telecom Express teams up with Fantasy League to develop more engaging services consumer engagement specialists, Telecom Express, is to capitalise on its recent investment in Fantasy League, the originators of the fantasy sports concept and Professional fantasy football to add consumer engagement and develop new products.

Fantasy League was formed in 1991, the first company to introduce the fantasy sports concept outside of the US. Initially they offered a fantasy football newspaper game, radio show and television programme, where players picked their fantasy team of real life footballers and scored points based on their performances. Fantasy League then introduced online games in 1996 and mobile games in 2000, as well as introducing games on additional sports,

music, film, property and finance.

As well as offering own-branded consumer facing games at www. fantasyleague.com, Fantasy League provides bespoke white labelled solutions to leading brands such as The Sun’s ‘Dream Team’, ESPNScrum, William Hill, The Football League, Bauer Media, McDonalds and Barclays. Brands benefit from connecting with their consumers via multiple channels, data collection, generating additional advertising or sponsorship revenue and generating consumer engagement and brand loyalty.

Telecom Express have been offering consumer engagement solutions to brands and media outlets since 1989 and therefore bring a wealth of knowledge and experience to the Fantasy League team.

Telecom Express will use its mobile and digital expertise to implement development into new channels such

as mobile, tablets and social media.

They will also focus on expanding the domestic and international markets, in order to grow the business further.

Rob Ellis, Managing Director of Telecom Express explains: “We’re delighted to announce Telecom Express’s investment in Fantasy League, which has enabled us to further expand the suite of services we offer our clients. Their fantasy gaming technology is second to none and combining the expertise of both companies will ensure Fantasy League retains its position as market leader.”

Andrew Wainstein, Founder and CEO of Fantasy League adds: “The partnership comes at a time of huge opportunity thanks to the continued growth of, and synergy with, the range of new media platforms available. We knew Telecom Express would bring even more to the table to help us achieve our goals and growth plans for the future.”

NEWS

Western European mobile market returns to growth, fueled by strong android demand thE WEStErN European mobile phone market returned to growth after three quarters of consecutive declines, according to International Data Corporation (IDC). total shipments grew 1.3% year on year to 44.8 million units, according to IDC’s European Quarterly Mobile Phone tracker. Market growth was supported by healthy performance in the smartphone segment, which accounted for 63% of total shipments in the region. total smartphone shipments increased 37% year on year to 28.2 million units in 1Q12 from 20.6 million in 1Q11. the total feature phone segment continued to shrink, with shipments down 30% to 16.6 million units, compared with 23.6 million in 1Q11.

“Despite the fragile economic environment in most European countries, higher unemployment rates, and less disposable income, consumers showed that they are still willing to invest in smartphones when manufacturers understand their needs and offer them the right products,”

said Francisco Jeronimo, European mobile devices research manager, IDC. “During the quarter the biggest contribution to the segment came from the most expensive devices. the top-tier price band — devices priced over €400 — accounted for 49% of total smartphone shipments in the region, compared with 46% in 1Q11, with Apple’s iPhone 4S and the Samsung Galaxy S II toping the sales ranking.”

Android shipments increased 124% year on year to 15.5 million units and represented 55% of total smartphone shipments in the first quarter 2012. Google’s operating system has been able to compete with Apple’s iOS in the high-end price-tier segment, but more importantly it dominates the lower-end price tiers where Symbian and BlackBerry were traditionally strong. iOS continued to grow due to the strong demand for the iPhone 4S. total shipments increased 59% year on year to 7 million units and gave Apple’s OS a market share of 25% in smartphones, up from 21% in 1Q11.

BlackBerry OS is losing its shine with consumers. Shipments were down 27% year on year to 2.5 million units and market share fell 9% in 1Q12 from 17% in the first quarter 2011.

In 1Q12 Symbian represented less than 5% of total smartphone shipments in Western Europe. the operating system lacks operator support and the latest version of the OS, the Symbian Belle, has failed to attract consumers in the region.

During the quarter shipments were down 70% year on year. IDC estimates the last Symbian devices to be shipped by the end of the first quarter 2013.

Windows Phones grew 156% year on year to represent 4.1% of total smartphone shipments, up from 2.2% market share in 1Q11. the Nokia Lumia range has performed interestingly but it still below expectations. Nokia’s new Windows phones to be launched this year will continue to contribute to steady growth for the OS.

NEWS Textlocal’s plan to change British business with the launch of Messenger 2.0 in the run up to the Jubilee, Textlocal want to get behind British business and believe they have revolutionised online mobile messaging handing them the power to be creative, unique, fast and direct with their communications with the launch of Messenger 2.0.

“Messenger 2.0 could be described as a bespoke project management tool for your mobile messaging campaigns,” Textlocal CEO and Founder Alastair Shortland explains. “It has been developed through years of experience working with all types of businesses with the aim of making them more profitable. It has a plethora of new benefits, for example, any business can auto-schedule their entire campaign so that they reach different recipients at specific times, all in literally a few clicks. Imagine how powerful this can be for a busy business owner, like a local hairdresser. Messenger 2.0 gives that hairdresser the power to reach all their customers in seconds

with a targeted weekend offer every Friday for the rest of the year, in just a few clicks. It has everything, even a slick reporting system containing graphical displays of all your activity for the past 30 days. There’s nothing like it on the market.”

Textlocal understand the demands and strain on British business and so have developed the most advanced and easy to use system on the market to take some of the pressure off in terms of time and cost efficiencies.

Many of the new features within Messenger 2.0 are even free to use.

Take their Mobile Web tool for example, they provide a platform so simple to navigate around that any business can build their own mobile website 0for free, and then fire it out as a link contained a text message. With this, they have exploded the ‘160 character’ content constraints usually associated with mobile messaging.

Shortland added “If you’re a restaurant, you can literally build a free web page containing your whole menu for free, and send it to your whole database of contacts in seconds for pennies. There really is nothing else on the market that removes the need for large marketing budgets and draws response rates as high as 97.5%.”

Textlocal believes that if every business in Britain started using Messenger 2.0 they would see growth, whether that be growth in customer base, ROI or profits, mobile messaging provides the perfect solution to bringing your brand to palms of your customers hands.

Of course direct mail and email still exist, but when you think of the continual rise of the cost of the British stamp, and the artwork costs associated with these channels, what a better alternative mobile messaging is to communicate directly without a high price tag.

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NEWS Racing UK sees huge uptake in bet-to-view streaming on mobile racing uk has announced a huge uptake in live streaming from its 33 racecourse on the iPhone and iPad via the bet-to-view facility, which allows racefans to bet and watch on the go.

Racing UK’s bookmaker partners have all seen a large appetitie for streaming on mobile devices since the Apple-integrated bet-to-view facility was implemented last autumn.

Paddy Power, for instance, last month delivered 24% of its total live streams of Racing UK races on mobile, such as iPad or iPhone.

Darren Lovern, on behalf of Paddy Power, who earlier this month announced “phenomenal” mobile betting turnover which accounted for 38% of its sports-book stakes in April, said: “This is a fantastic percentage of live race streams and shows that mobile TV as a consumer proposition has firmly arrived.”

Another bookmaker who has successfully harnessed the power of mobile TV is Skybet, who report that 52% of live Racing UK streams came via mobile last month.

Conor Grant, from Skybet, said: “We are absolutely thrilled with the amount of our customers who are watching Racing UK live on their mobile device, and so enhancing their betting experience.”

Racing UK manages the media rights for 33 UK racecourses, and its Director of Business Development, Simon Brydon, added: “The streaming is only six seconds behind live TV, easy to use and is a high-quality very reliable viewing experience.

“The duration of a live race is also ideal sports content length for consumption on 3G networks, and with everyone increasingly on the go, it is no surprise to see more and more racefans betting and watching on their mobiles.”

He continued: “All 14 Racing UK bet-toview rights owners automatically have mobile rights included within their Betto-View Licence Agreements. We’d like our bookmakers’ customers to have the ability to watch live each race they bet on via any online or mobile platform - irrespective of which platform they placed the bet on.”

Racing UK broadcasts horseracing from 33 of the leading British racecourses and is shown on Sky 432 (UK, NI, ROI), Virgin 536 (UK, NI) or UPC 411 (ROI).

Credit cards (69%), PayPal (40%) and debit cards (37%) dominate global payment preferences but, particularly in developing economies, alternative payments are rising in popularity with 14% using gift vouchers.

FreMantleMedia to develop online and mobile gambling games for Habro fremantlemedia Enterprises (FME) has inked an agreement with leading global branded play company, Hasbro to develop Trivial Pursuit and Connect 4 branded slots and instant win games for the online and mobile channels.

Trivial Pursuit and Connect 4 are highly successful, well-known and iconic global brands. FME plan to develop and translate themes from each brand for online and mobile gambling.

Both titles will be available to UK and European players via the OpenBet and GTS platforms.

Simon Murphy, Head of Gambling for FME, EMEA, commented, “We are hugely

excited to be working with Hasbro to develop Connect 4 and Trivial Pursuit premium branded gambling content. The new addition of the gaming brands to our portfolio further strengthens our position as one of the leading developers and distributors of branded gaming content.”

FME’s Gambling division has previously licensed, developed and distributed branded games for online, mobile and land based slots across a number of brands including The X Factor, Britain’s Got Talent, The Price Is Right, Family Fortunes and SPACE INVADERS. The deal with Hasbro further establishes FME’s growing slate of non-TV intellectual property.

COMMENT INDUSTRY WATCHER

Mobile payments has some way to go Mobile payments has made it on to the BBC news, but reports from Joe Public are not promising. Is it ever going to gain mass appeal? Paul Skeldon wonders good to see mobile payments make it on to the national TV, although as the BBC’s technology correspondent Rory CellanJones take on it nearly made me choke on my cornflakes. Reacting to the O2 Wallet launch a month ago (on the ball the Beeb science team), he downloaded it - along with Barclay’s Bank’s PingIt and Starbucks’ loyalty app and set forth to spend a day not using cash. He failed.

And while he was forthright in saying it was all just hype and that mobile payments were nowhere near where operators would have us believe, he did concede that it was coming.

The interesting thing about this was the viewer feedback to the story. Most hated the idea of using their mobile to store money and pay, claiming that if they lost the phone they were double-stuck having no money and phone.

So what does this mean? Well, keep up the good work everyone, it will come, but it shows just how far off true mobile payments actually are. The tools are starting to appear now, but getting people to use them is going to be mighty hard. Even if Apple does build NFC into this summer’s iPhone 5. >>>READ MORE ON MOBILE PAYMENTS ON THE TELEMEDIA 360 BLOG HERE>>> 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 T-Rex - all of it| What we’ve been amused by Veep | Who we’ve been following Jarvis “Mr Social Networking 2012” Todd | What we’ve been reading about The Stone Roses | June 2012 will bring... Some exciting news about our World Telemedia event in October in Marbella

OPINION

ADULT

Why adult mobile is still a great business model Kicking off a quarterly series of thought leadership pieces from the mobile adult sector, Cherrysauce founder Julia Dimambro shows that mobile adult’s time has finally come and its going to be quite a climax born in the ‘70s and like most young girls of that time, I assumed I would grow up and become a princess by marrying Prince Andrew (that was a near miss, hey?) or failing that, become a veterinarian, saving little puppies and kittens for a living. Absolutely NOWHERE on my list of dream careers did it state that I was going to be the founder and owner of an adult mobile company (and yes, my parents ARE proud!).

I guess what I’m trying to say is that I am probably the most UNLIKEY person to be heading up an adult mobile business for the last 9 years because coming from a middle class family, I probably have a slightly slanted view of the adult industry, what it represents and how to make money from it.

As a result I have been speaking and writing about the subject for many years now and I am quite often proved right on my predictions about this politically charged and fast-paced industry, although I have to humbly admit, I have no idea whether this actually IS my slanted view or just a complete fluke.

So I thought I would kick off in my very first article for Telemedia-month with why, in my opinion, adult entertainment on mobile is still a GREAT business model to invest in.

Mobile has been used to distribute adult content and services for more than a decade already with premium rate SMS being used as the billing mechanic for the delivery of adult text and images. I remember building Private Media’s 1st mobile wap site as far back as 2003 with Bango.net.

When I started Cherry Media later that same year, one of the things I realised very

quickly with my own d2c WAP site was that adult entertainment and mobile was clearly a match made in heaven.

Arousal, by its very nature, is impulsive.

You can’t predict what is going to turn you on or where or when it will happen. The uptake of mobile devices created different customer behaviour patterns compared to its media predecessors such as the internet and DVD. As you would expect some of the very first WAP sites to launch on mobile were adult sites (Cherrysauce was among them) – after all, the adult industry has an impressive footprint in defining new media channels such as the infamous VHS/Betamax story.

Combining these new behaviour patterns with the early adoption of mobile by the adult industry allowed the undisputed customer demand for adult entertainment (estimated to be worth around $13 billion a year) to act instantly on those impulses, for the first time, wherever they were, as opposed to hoping that the impulse or desire could/would survive long enough in order to get in front of the computer or TV at a later stage.

Mobile allows impulse because it is the first digital device to be with you ALL the time and arousal is an instinctive impulsive – so combining the two is clearly a match made in heaven.

The latest Juniper Research report on Mobilising Adult Revenues still echoes these original concepts, highlighting human nature and other characteristics, such as privacy, ubiquity and convenience as reasons people turn to mobile for their adult entertainment, but also, quite rightly, includes the uptake of smartphones and tablets as one of the leading drivers for this entertainment sector for the next few years.

This, of course, is obvious when you think about it. Adult entertainment is based on visual stimulus, but the fantasy part of the experience calls for a deeper level of immersion, something which smartphones and tablets are the first to supply in mobile entertainment, via the increased level of interaction they offer.

Another thing this vast and rapid uptake of smartphone and tablets is providing to the industry sector is the video experience. Video is pretty much a key product for adult entertainment, as much for revenues as for context and audience. Most (successful) adult entertainment services are built around video in some way.

This ties in seamlessly with the sharp spike in customer uptake of video streaming via mobile devices. Morgan Stanley for example, predicts that video content will account for a whopping 69% of all mobile date traffic by 2014.

I could go on with more examples to further demonstrate why adult mobile has huge commercial potential in the coming years, but I’m sure I’m already causing a space issue with my ramblings.

However, if you are interested to see what the industry experts recommend you should focus on for your adult mobile strategy then check out our Adult Mobile Predictions for 2012.

I’ll leave you with my one of my absolute favourite ‘porn quotes’ of all time, something Russell Buckley from Admob shared with me years ago. “Erotica is using a feather, pornography is using the whole chicken.” - Isabel Allende For some reason, I can only see that chicken plucked when I relate it to porn.

OPINION

SOCIAL

MNOs waste millions on Facebook..... ... and ignore the low-hanging fruit. So warns John Strand, head of Strand Consult, whose analysis shows that less than 2% of mobile operators’ customers “Like” them you can’t read the press these days without an article telling how fantastic Facebook is (apart from this magazine, obviously – Ed.). Indeed with 900 million members, it’s one of the world’s largest countries. Facebook has milked its IPO to full effect. It’s as if the world is infected with a “Facebook fever”.

But our job here at Strand Consult is to look beyond the hype and to help mobile operators be more profitable.

Operators have started to ask us, what should we do about Facebook? How much of our marketing budget should we invest in it?

From our dialogue with operators around the world, we see that they are in a race to get Likes on their Facebook pages. The hold competitions inside their companies for different teams to get the most Likes. Facebook has upped the stakes by adding a new measure of People Talking About This, as if to provide a real-time finger on the pulse of what’s hot.

Strand Consult has made an in depth study of how mobile operators use Facebook. We have yet to find the definitive link between Likes and profitability.

The main reason is there is no inherent value in a Like. There are a variety of schemes and trick that companies can do to get Likes, such as free and discount offers. Indeed agencies specialize in helping companies develop campaigns simply to get Likes.

The most sobering of our findings is how few Likes operators have as a function of their subscriber base. For all the time and money they invest in Facebook, no network operator we found

had more than 3% of its subscriber base as fans in Facebook. There is one exception of Telenor Norway with 3.59%, which is the dominant player in its market and has the advantage of being in a highly digital country with deep Facebook penetration. Turkcell was higher than the others, but not higher than 4%.

We were especially surprised when we looked at the American operators, Verizon, AT&T and Sprint, operators that spend millions of dollars in marketing and have internal and external teams working on Facebook. For all their work, they can’t budge much above 2%.

Such small results hardly seem worth the effort.

This is not to say that operators should not have a Facebook presence. Indeed, we have seen solid evidence from around the world that social media—operators’ own support websites, Facebook, Twitter, and other user-driven tools, can help reduce support costs. For those tasks, we recommend social media. But we have yet to see Facebook as a solid driver for leads and sales.

We suspect that there is a drive for Likes because it’s measureable. More of some number seems likeca good thing.

But measurable does not equate to meaningful. A mobile operator could slash prices to get more subscribers, but it’s not the number of subscribers that matters, but how much they spend and how well they are retained.

At a deeper level, we sense desperation among mobile operators. Profits are squeezed, and the long term outlook is not positive. So getting more

likes seems like something a marketing director can influence in an environment with larger forces of his control.

We suggest that operators need to take a hard look at their marketing investments, and put Facebook into perspective with other marketing channels. The attention Facebook receives is over the level of any other media, but its results underperform other channels.

Consider the fact that Facebook shows any company’s posts to just 16% of the community that Likes a page.

This is part of Facebook’s algorithm to show posts only to a subset of the community. The ability to serve updates to the entire community that Likes a particular operator’s page must be purchased through Facebook’s “Reach Generator”. In practice this means that just 0.32% of subscribers can be reached via Facebook.

On top of that, unless operators undertake the task to identify the people who Like their page (which can be a difficult task for technical and legal reasons), they may engaging with people who are not even their customers.

ANALYSIS

SOCIAL

Facebook is killing MNO’s SMS traffic and revenue The golden days where SMS traffic and revenue simply continued to grow are almost over, as customers are now moving part of their mobile communication traffic over to Facebook facebook is killing the mobile operators’ SMS traffic and revenue. For many years and in many countries, SMS has been an excellent source of revenue for mobile operators - often generating almost 20% of the operators’ turnover.

But those days are almost over. The question is whether there is anything at all that mobile operators can do about this?

There is no doubt that when you examine the global SMS traffic, how it has developed over time and its importance to many mobile operators, SMS has been one of the biggest cash cows in telco history. For years, mobile operators have tried to create new types of cash cows to keep the SMS cash cow company in their cash cow stables.

First the operators thought their mobile portals would be their next big cash cow, and more recently they thought it was going to be mobile data. Imagine their disappointment when it turned out that the competition on the mobile market became so tough that they had no option but to sell mobile data as inexpensive flat rate products.

In other words the operators have yet to find a new cash cow that comes anywhere close to their SMS cash cow and now many operators are seeing an increasing number of customers moving their SMS traffic over to Facebook, resulting in their SMS cash cow getting thinner and thinner. In countries like Denmark and Norway this trend is very visible, as an increasing number of customers are reducing their daily SMS traffic because they are moving their communication over to Facebook chat or Instant Messenger.

Today, over 800 million people around

the world use Facebook on the Internet and over 425 of them use Facebook on their mobile phone. Measured in minutes of use, Facebook probably transports more mobile traffic, number of messages and time spent online than the world’s largest operator.

People who believe that Google is currently the biggest threat to mobile operators may not realise exactly how much time mobile customers are using on Facebook and how Facebook is currently changing the way over 800 million people communicate on a daily basis. The biggest difference between Facebook and Google is that Facebook is a communication tool that people use to keep in touch with their family and friends every day.

In many ways one can compare Facebook’s development in the mobile industry to how the Internet affected the media industry. Market players like Google, Skype, Twitter and MSN are only marginally important to the mobile industry compared to Facebook.

The question is whether operators can do anything to limit the damage that Facebook is making on their cash flow?

Is there any way that mobile operators can retain their SMS revenue even though customers are using Facebook to communicate? Strand Consult believes the answer is yes and that the solution is quite simple.

If you look at how most operators market and sell SMS, you will see that most operators charge the customer for each individual SMS he or she sends. In practice this means that the customer has a choice between sending an SMS that the customer knows costs money, or

alternatively use his flat rate data subscription to write a message via Facebook if the recipient is on Facebook.

However mobile operators in Denmark have been selling SMS as a flat rate product for a number of years. A Danish customer pays between €3 to €6 for a flat rate SMS subscription, that is part of their mobile data subscription package. This has resulted in almost all Danish mobile customers purchasing a SMS package every month as part of their mobile subscription, without questioning whether they need it and also without worrying about how many or few SMSs they actually send per month - as they feel their SMSs are “free”.

So despite the Danish market seeing exactly the same trend of decreasing SMS traffic and Facebook traffic skyrocketing, Danish mobile customers are actually still paying the same for their flat rate SMS traffic. Or to put it another way, mobile operators have taken out an insurance on their Danish SMS revenue by marketing and selling flat rate SMS to almost all Danish mobile customers as a natural part of their mobile subscription. Strand Consult explains these and many other current challenges in our customised workshops that we hold for mobile operators around the world. During these workshops we show operators how to easily take out insurance on their SMS revenue on both their prepaid and postpaid markets. If you would like to learn more about these unique workshops, please do not hesitate to contact us to receive more information about how a number of mobile operators are now handling the many challenges they are currently facing – including those that Facebook is giving them.

EVENTS

CONNECTED SUMMIT 2012

MAKING CONNECTIONS Highlights from the show Earlier this month the inaugural CONNECTED SUMMIT took place. Here we take a look at just some of the key thinsg to come out of this inudstry gathering in London the launch this month at the CONNECTED SUMMIT in London of Payforit4 can be seen as the beginnings of the UK network operators starting to get mobile commerce. The Connected Summit demonstrated that media, TV, radio, retail and live events are all crying out for simple, small value mobile payments to generate revenue from interaction and engagement.

But there is still the issue of payouts.

Undoubtedly, Payforit4 marks the start of much better – and lets face it more realistic – payouts, but to many in the media industry, the retail sector and other areas of entertainment who are increasingly becoming mobile centric, payouts are the single biggest stumbling block to using

mobile payments to buy things.

And while all this rumbles on, other payment tools – preloaded services such as iTunes, mobile operator wallets, mobile offerings from card companies and banks, as well as third party payment tools are already starting to gain ground. They may not be consumers most convenient choice, but they work.

Of course, with the likes of iTunes, pay outs are as bad as the bad days of PRS, with Apple routinely taking 30%. But that will change. Also, PayPal, card companies, banks and mobile operator wallets offer payouts comparable to credit card companies, and so merchants, hungry for some sort of mobile payment mechanism, are starting to adopt.

Ed Boddington, in his opening keynote on day one stressed that already PayPal accounts for 64% of online micropayments while PRS, once the doyen of this space, is down to 20%.

Where does this leave Payforit4? Well, it certainly now looks better and has some backing from operators – though it still seems unclear as to how much they are actually going to push it marketing wise: with Voda and O2 rolling out stored value wallets one would think they have something of a conflict of interest or at the very least the prospect of a confusing marketing campaign if they do push PFI4.

Much of this was addressed in the seminars and workshops at Connected, but in

M-COMMERCE IS NOT ABOUT MOBILE, ITS ABOUT MAKING CONSUMERS SMARTER

Retail used to be a simple funnel process, but according to Allan Ellerton at Simpson Carpenter, retailers now need to align their strategies to what consumers want. “It’s about presenting the same face to the consumer regardless of channel – and looking beyond the sale but at the whole shopper journey,” he told delegates.

According to Ellerton’s research, the shopping process has now become fiendishly complicated for consumers – and more so for retailers. “There are now a huge number of different ways that they are doing their shopping and activity around shopping.

Retailers need to guide the user through this mire and get them to buy. But this is a much tougher job for the retailer,” he said.

Increasingly Consumers are using mobile to help them through this. Tablets and phones are driving engagement at new and odd times. “M-commerce isn’t mobile, it’s taking place on phone but at home and at work,” he explained. “11% of purchasing is done on the move. M-commerce is just a second screen that people shop on while doing other things.”

Continuing he said: “Our research tells us that m is integral to their shopping experience. 71%of smartphone owners use their phones when they are shopping, but it’s not sophisticated. They want to find a store, share with friends, check reviews and download vouchers. It is making shoppers smarter rather than mobile.”

Contrary to many people’s feelings, however, Ellerton stressed that infrastructure has also improved greatly, making this process easier. “But most people don’t go all the way to the buy button,” he said. “Many don’t see the smartphone as a place to buy physical goods. Increasing disconnect between how brands and consumers see m-commerce.”

Turning to brands, Ellerton stressed that many see it as a quick way to get people to buy. Users however see it as a way to get info and essentially window shop- wish lists and what is available in this market.

“Retailers and brands need to adapt to what they are doing rather than making them do something they don’t want to do,” he said. “56% have researched on mob, 75% have on tabs, 98% on pc _ still a huge opportunity.”

Ellerton’s colleague Paul Griffiths, then spoke about the extensive research the analyst has undertaken.

“We broke the research into various categories and found that 8% buy electricsal, 46% research them. This is across all types of goods,” he explified. Agreeing with his colleague he stressed that brands and retailers have to look at how to “use the devices as a branding tool rather than a purchase tool. For now”.

INDUSTRY EVENTS

CONNECTED SUMMIT MARKETING 2012

the main streams of the conference, with input from media companies and service providers, it remains clear that they are not convinced.

With 65% of digitally active consumers using mobile, the connected media space offers huge potential to media companies and telemedia providers, but consumers are being let down by poor connectivity, badly designed user interfaces and a consuming payments landscape.

These were the key headlines from the CONNECTED SUMMIT in London on 15 and 16 March, as the media, marketing, retail and live events industries gathered to look at how to monetize the growing trend for digital interaction with brands and entertainment.

According to opening keynote speaker Darren Mark Noyce, founder of consumer and brand analysis company SKOPOS, the digitally active are increasingly becoming the general population and that this is driving interaction.

“News on the move: provides a number of needs,” he explained. ”Mobile and digital satisfies a range of human needs: its on the go, a quick fix, an enhancement, a substitute and provides catch up. Similarly at live events and sports, mobile is an enhancement – a second screen when on tv or at the game – and a replacement when you can’t watch it live or on tv, or both.”

In particular, mobile voice apps are doing well. “There has been a leap in interest in voice apps from 29 to 38% in our research,” Noyce says. “The Siri ads on TV have helped – despite reality not really living up to what is shown – but it shows potential and consumers actually accept it now. The industry isn’t having to push technology on to them.”

Within the media industries, digital interaction – particularly around TV shows – is again gaining ground as users start to adopt it through second screening and just simple familiarity. And some better press about doing it. As the second keynote speaker, Ed Boddington from Harvest Media and Chairman of industry body AIME, told delegates at CONNECTED: “TV voting is converging and we have managed to make it work

and get over the scandals of the past. Now have a very strong industry. Revenues are increasing – slowly.”

As Bod points out, shows such as The voice and Britain’s Got Talent are now doing voice short codes that make mobile voting transparently priced.“This,”says Bod,“will bring more users and customers into the mix”.

According to Bod, there will be a lot more live play along apps as well as SMS votes coming back too. “But,” he says, “the greatest challenge is dealing with volume and with volume spikes. “ Social media is also playing a role, explains Bod, and is starting to skew the market, especially when it comes to payments and revenue generation..“American Idol in the US offers free Facebook voting and here in the UK, Five’s Big Brother uses Facebook credits for votes,”he says.“Interestingly, about 10% of votes for the show came this way.”

In Puerto Rico, he expounds, they used Facebook credits to pay for votes. “Average votes per unique viewer was 30 (as opposed to 1.5 for non-Facebook voters and operator payouts were 25% higher – and it was a huge success,” says Bod. “So online voting has a huge role to play and revenue to generate.”

But while digital usage is on the rise among the population, there are issues, warns Noyce. “There are issues, both technical and experiential. Mobile is still, the worst customer experience of anything digital, but if you can make it a portable shortcut to what people want and is advantageous to use then its great. If it just cuts corners, it’s a poor experience.”

But payments and poor UI aside, CONNECTED demonstrated that the power of mobile and media together is awesome (indeed it was described by Rich Holdsworth of Wapple as “F**KING HUGE” on an acid pink slide early on day one). Tapping into this huge market is well worth the candle.

Increasingly, thanks to second screening – especially on tablets – consumers are interacting with TV shows and marketing, In the high street, shoppers are also increasingly looking at how to engage with retailers and brands. The potential here is phenomenal.

But again and again it is shown that mobile is viewed as being costly and bad payouts reinforce this for both consumers and merchants. And it is a shame as there is a definite hunger for mobile interaction with these things and a definite thirst amongst media, marketing and retail to use it. All we need is for – to coin a phrase from the early 90s – to get the ducks singing from the same hymn sheet, and this can be a really lucrative market for both telemedia and the media industries. Let’s hope that Connected Summit 2013 will be able to demonstrate some real progress on all these points.

RADIO DAYS

According to Michael Hill, UK MD of Radioplayer, radio is looking for new digital ways to expand. “If you look at this year’s Sony Radio Awards the winners included 6 music – an all digital won station of the year. Digital is growing.”

“But,” asked Hill, “are we doing enough around user experience for digital radio?

Many people found it hard to use their pc as a radio and in 2011 the UK radio industry wanted to sort it all out with a standard interface. They wanted the same shape and layout but with their own brands on them. It needed to be consistent but separately hosted.

“And we solved the UX issue without having to centralise it,” says Hill. “We make it easier for consumers. If you have a radio the volume knob is always in same place. That’s what we want. Along with presets and search.”

In sorting UX for radio, people start to use it differently. 9am is a new peak (it’s 8am for normal radio).

“This is people at work,” he told delegates. “There is an even bigger peak at 12pm, driven by tweets about live lounge and other things going on on air Social starting to drive it.”

Connected TV also coming along, Hill says, and this provides radio with a huge interactive opportunity.

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