Telemedia Month Newsletter NOV.

Issue 44 • NOVEMBER 2013

Mobile payments to deliver huge economic boost to UK, finds Cebr study

THIS MONTH...

News

• Shoppers ditch payment cards in favour of phones

3 • Explosion in device sizes and types makes targetted design pointless 4 • Games the winner in the great app store revenue title fight, says MEF 5 • Platform aims to make AR affordable to the media world 6 • WorldPay and PayWizard team up for digital media payments 7 • 1 in 7 European consumers now buys through mobile

8 • Buy Game Credit uses txtNation for Xbox games credit

9 • Autobytel buys Advanced Mobile to take car dealers mobile 9

Analysis Editorial Could this be the one?

Paul Skeldon is in love... sadly with an m-payments service that isn’t due to launch until September 2014. Sigh 11 OPINION WORLD TELEMEDIA Busted by the Affiliates market?

Rory Maguire reports back from a heated session at World Telemedia Amsterdam that has started to sort out the affliate marketing issue

12

consumer adoption of mobile payments will deliver wide-ranging benefits for the UK economy, according to a new report published today by the Centre for Economic and Business Research (Cebr).

The study, commissioned by Zapp, predicts that 20 million adults will use their mobiles to pay for goods and services by the end of the decade, with the value of purchases tripling from current levels to £14.2bn in 2018. The figure is even higher when all mobile transactions are included – such as bank to bank transfers – at £18.1bn, according to VocaLink data. By 2020, mobile payments will represent 1.4% of total consumer spending.

The report highlights four key areas where it is expected mobile payments will benefit consumers, businesses and the Exchequer: 1. Reducing fraud Some forms of mobile payment will help reduce fraud in the UK economy. Fraud losses on plastic cards stood at £388 million last year, with £68 million of these losses from cards lost, stolen, or intercepted in the post. Card ID theft also led to £32 million of fraud losses. The report argues that secure mobile (and other) payment systems

OPINION WORLD TELEMEDIA The state of the telemedia nation AIME’s director of industry affairs – Dave Ashman –relives his presentation at World Telemedia Amsterdam to showcase where the industry is at 13 ANALYSIS Social Gaming: That’s Entertainment Social gaming is a real business, not just marketing fluff or a sales funnel, believes Raf Keustermans, co-founder and CEO of social casino start-up Plumbee 14

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NEWS >>>from page 1 Mobile payments requiring PIN identification have the potential to reduce this type of fraud significantly, alongside declining use of cash – as many as one in 36 £1 coins in circulation are estimated to be counterfeit.

2. Lower transaction costs The report concludes that cash is the most expensive mainstream form of payment - once costs such as store count, preparation and transaction errors are factored in - at 2.8% of cash takings. The transaction cost of debit and credit cards amounted to 1.1% of total plastic card takings –the average for credit cards is likely to be higher than this, while the average for debit cards is likely to be lower than this. New payment methods that offer accuracy, speed and security and low merchant costs have the potential to significantly lower transaction costs. Shifting away from cash and card payments can thus help businesses reduce costs. The rise of mobile phone payment will help facilitate this shift.

3. Putting consumers in control Over a quarter of UK consumers incurred an overdraft charge in 2012.

The greater transparency offered by mobile phone payments, which can allow instant bank account balance checking, should leave many consumers better informed and able to avoid tipping over the edge of their authorised limits, the report argues.

Furthermore, the uptake of mobile payment by small businesses has the potential to move the ‘cash in hand’ economy over to mobile payments due to the increased convenience it offers. This will help reduce the “tax gap” in the economy – the difference between tax collected and the tax that should be collected. With the tax gap estimated to cost the exchequer as much as £32 billion per year on the latest estimates, mobile payments could therefore provide a substantial boost to government finances by improving transparency of earnings.

4. Reducing cashflow issues By offering instant settlement, new payment methods such as mobile payment should provide some respite

for the many businesses in the UK struggling with cashflow issues. The report highlights that just under a quarter (24%) of businesses in the UK reported late payments from customers to be a greater challenge than a year ago in Q3 2013. This share is even greater when looking at private small and medium-sized enterprises (SMEs), where the share stood at 28% in Q3 2013. This compares with just 14% for UK-listed companies.

Douglas McWilliams, Executive Chairman, Cebr, explains: “It’s clear that the UK economy stands to benefit in multiple ways from the widespread adoption by consumers of mobile payments. But for the full potential to be unlocked, consumers need to be reassured that mobile payments are hassle-free, safe, secure and widely accepted. That will require strong cooperation across the financial services, retail and payment industries.”

Peter Keenan, Chief Executive of Zapp, adds: “The report’s findings are fascinating as they’re the first to take a holistic view of the economic impact of mobile payments. It is easy to become fixated simply on the monetary value of payments that will be made over mobiles – this report shows there are much wider benefits to consumers, businesses, and the Exchequer. At Zapp, we’re building a comprehensive alliance of financial institutions, retailers and merchant acquirers and we’re confident that as a result we will play a major role in unlocking these benefits when we launch to consumers in 2014.

Zapp, which is set to launch in September 2014, is working to offer all bank apps the ability to offer quick, simple and secure mobile payments – initially on mobile retail sites and eventually within stores. Zapp’s proposition is that it will sit behind mobile apps for banks and allow secure payments when consumers click on the Zapp sign on websites.

Planning to launch once it has 40% online banking app owners and half of the major banks on board, Zapp hopes that it will be able to position banks as the key way to develop mobile payments. It proposes being cheaper, faster and quicker than PayPal and more secure than Amazon one-click.

Shoppers ditch payment cards for phones Following the surge in smartphone usage across the country, consumers now have access to more loyalty schemes on mobile devices than they do in their physical wallets, reveals a study by CloudZync. The research, which polled 2000 consumers, highlights that while our wallets are still bulging with an average of four traditional loyalty cards, people now have access to six loyalty schemes on their phones.

Tech-savvy electrical retailers are leading the mobile revolution as almost two thirds (62%) of consumers say that they access at least one loyalty scheme for electrical stores over their phones, followed by hairdressers (43%) and clothes stores (38%).

When looking at traditional loyalty card usage, it is no surprise that supermarkets lead the way, as 92 per cent of people claim that they regularly use at least one loyalty card for a grocery store, followed by coffee shops (51 per cent) and pharmacies (51 per cent).

However, these leaders in traditional loyalty schemes are lagging behind when it comes to mobile, as just a third (36%) of people access supermarket schemes through the device in their pocket, dropping to 33% for coffee shops and 27% for pharmacies.

The study was commissioned by CloudZync, creator of smart mobile wallet Zwallet, to provide retailers with insight into consumer attitudes towards loyalty schemes.

The research also found that loyalty card users have on average £83 worth of redeemable points across their loyalty cards at any point in time.

NEWS

#DEVICES Exploding array of devices and sizes making targeted design irrelevant designing mobile sites and apps to suit screen sizes may soon become pointless, as the breakdown between mobile, phablet and tablet devices becomes ever more blurred. Instead, websites and apps should be designed for user experience across everything from wearables to TVs. So suggest data from a massive study of traffic through Netbiscuits cloud, which found that, out of a sample of more than 1billion hits per month on its site, 67% of traffic comes from the top 100 devices and that these between them account for 26 different screen sizes from 2.36 to 10.1 inches.

Increasing numbers of devices are overlapping between screen size categories, making it more difficult than ever to identify break points without taking into account additional factors such as device performance. The ongoing

blurring of definitions this creates is likely to gather momentum in 2014, as device vendors continue trying to be ‘all things to all people’.

The Netbiscuits traffic shows that there are an increasing number of older Apple devices being used as new devices are slow to achieve full market penetration.

Nevertheless, Apple’s recent release of the iPhone 5S and 5C demonstrates a fast-expanding product portfolio which is adding to global device fragmentation as seen in the Android market.

The two new phones with the same screen size are built to different specifications and deliver different experiences – making it riskier than ever to design for screen sizes alone.

There are currently unprecedented levels of fragmentation on Apple’s platform with four device types and five operating systems in use, although this is

still a far cry from Android’s eight operating system versions alone. The complexity challenge for developers has always been high with Android, and the latest figures show Apple heading in a similar direction.

Devices at a local level continue to differ tremendously, making it difficult to deliver consistent experiences across the globe. In Latin America, the Top 10 devices represent only a third (35%) of the total web traffic, whereas in Western Europe it is almost half (49%). Device preference also varies.

Although Apple represented over half of the North American market, in Western Europe, Samsung had a third of the market share. Nokia dominated in the Middle East with over a third (36%) global traffic share.

The greatest proportion of other vendors existed in Asia Pacific where local vendors tend to be more prevalent, and hold over a fifth of market share (21%).

NEWS

#APPS Games the winner in app store revenue generation worldwide, finds MEF acording to the MEF’s latest global study, the Apple Apps Store accounts for 65% of global app download revenues worldwide, with Google play rapidly taking up 35% of the market this year alone. On average, 71% of revenues across both come from games, which make up 36% of downloads the study found – accounting for 89% on Google alone.

While established markets continue to dominate, the report also identifies the current limited impact of the Apple App Store and Google Play in growth markets, with the largest of the growth markets analysed – Brazil – still sitting outside the top ten countries with 1.18% of total revenue generated by both app stores.

The study comes out ahead of the MEF’s Global Forum in San Francisco on 14-15 November and reveals some key insights into the whole world of apps worldwide.

The report finds that aside from

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games, apps revenues and downloads are dominated by entertainment apps of one sort or another, but they account for just eight per cent of all downloads and generate only two per cent of total revenues. And, whilst the social networking category is sixth in terms of download volumes, it generates around three per cent of total revenues.

Across the world the percentage of total revenue generated from the Apple App Store and Google Play, according to Distimo’s data – which is incorporated into the MEF study – finds that Brazil accounts for 1.18%; Mexico 0.73%; UAE 0.26%; India 0.22%; Philippines 0.193%; and SA 0.192%.

Growth markets make up a small percentage of the total value of all of the revenue generated by Google Play and the Apple App Store in the top 40 countries listed in the report. This reflects the smartphone penetration and

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the dominance of mobile operator-led mobile content. However, these markets are growing and represent a major opportunity for the app economy.

The United States and the United Kingdom show a much lower growth rate, while strong growing countries show larger increases. South Korea is growing the fastest, growing year-on-year by a factor of ten, Japan by a factor of four and China by a factor of 3.5. The US and the UK both show a growth factor of below two when benchmarked against statistics from 2012.

Rimma Perelmuter, CEO at MEF said: “The global mobile ecosystem continues to expand into new markets and vertical sectors. Understanding the prevailing business models and regional variances that underpin this growth is essential to helping mobile businesses identify new opportunities across growth markets.

NEWS

#MARKETING Platform aims to make AR more affordable for agencies and media companies mobile augmented reality (MAR) – which uses smartphones to bring 2D printed media to life – is set to become more widespread with the launch of a new platform that aims to make developing these sorts of adverts and content cheaper and easier.

Until now the exclusive domain of large agencies with substantial budgets, PrintAR will claims that it will remove the barriers, which have traditionally excluded small and medium sized agencies from deploying this powerful and innovative marketing tool.

There are two parts to the PrintAR platform. The first is a free app that consumers download to their smartphone by scanning a QR code on the visual media to enable them to view the 3D experience – the Android app is available to download now from Google Play (www.play.google. com) and the iOS version is expected to

launch by the end of November 2013.

The second is a self-service on-line control panel that agencies can use to build campaigns using a library of 3D augmented reality “experience” templates. This dashboard, which can be accessed from any browser, also provides detailed analytics about the campaign so that the impact of the MAR campaign can be measured and evaluated. A fully interactive 3D augmented reality campaign can be deployed for less than £500.

PrintAR is the brainchild of Lee McLaughlin, managing director of app developers IC Mobile Lab Ltd. He said: “The use of augmented reality is increasing rapidly in the advertising and marketing world because it is powerful and engaging.

It turns a static poster or any other piece of visual media into an engaging and compulsive experience for the consumer.

However, its application has been limited because even when using other browser paltforms it’s still a complex and costly business to produce the AR content.”

He continues: “What we have done with PrintAR is simplify the process by making it easy and intuitive to create 3D augmented reality content for smaller digital and marketing agencies. This opens up a world of possibilities for developing engaging and innovative campaigns. We have an online dashboard with various metrics on how consumers are interacting with the campaign making it a highly measurable method of advertising.”

Revenue is generated by charging per campaign, where a campaign comprises of print media being overlaid with digital content. Campaigns can be charged on a pay per engagement model or on a monthly subscription model.

NEWS

#PAYMENTS WorldPay and PayWizard team up to integrate payments for digital media with a view to making digital media merchants more customer friendly, more flexible and quicker to market, payment processor WorldPay and subscriber management company PayWizard have joined forces.

Under the tie up, PayWizard clients will gain access to acquiring services from WorldPay, as well as 200+ payment methods, ensuring that local payment preferences can be catered for. Similarly, WorldPay merchants operating in the digital media landscape will be able to use PayWizard subscriber management services to increase revenue and profit by understanding customer behaviour and preferences, and therefore helping to create better targeted marketing and promotional campaigns of higher value services.

According to PayWizard, 16.8 billion video-enabled devices are set to be in the

global marketplace by 2015. In addition to this, 2013 is the year that the number of mobile devices will exceed the world’s total population with two thirds of the world’s data in video format by 2015, making this a rapidly growing market for merchants.

Integrating with WorldPay will allow multi-currency processing, enabling merchants to expand abroad, as well as gain access to improved security measures such as Visa Verified by Visa and MasterCard SecureCode. Additionally, the relationship allows merchants to provide recurring transactions for subscriptions and the option for refunds, improving the customer experience at the payments page.

Shane Happach, Chief Commercial Officer, eCommerce division at WorldPay, comments: “The integration of WorldPay’s payment services with PayWizard’s Enterprise subscriber

management system enables merchants to improve monetisation opportunities.

It will greatly improve the customer’s experience with the merchant, resulting in an increase of revenue, brand loyalty and enhanced relationships between merchant and customer. It will provide a powerful solution to digital content merchants looking to grow and expand globally.”

Jamie Mackinlay, Commercial Director, PayWizard Group, comments: “PayWizard Enterprise is an industry leading platform that provides subscriber management and billing for multi-screen media. Full and off-the-peg integration between PayWizard and WorldPay will greatly extend payment handling and the mobility features of our platform as well as significantly simplifying project management and implementation for our customers.”

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NEWS

#RETAIL 1 in 7 European smartphone owners make online purchases via their device, finds study

the number of European mobile shoppers grew by 43% over the past year, with 20% of smartphone users accessing online retail sites and apps using their device. In addition, 1 in 7 European smartphone users have completed a retail transaction on their mobile phone in a month.

So finds the latest comScore data of the European mobile market, which looked at mobile phone use across France, Germany, Italy, Spain and the United Kingdom. In the

three month average ending August 2013, 20.4% of the EU5 smartphone audience accessed online retail sites, displaying an increase of 2.8% in the past year.

Spain was the fastest growing market with a growth rate of 66.5% to almost 3.3 million smartphone users accessing retail sites on their mobile. Italy ranked second with a growth rate of 61.3% to almost 5.6 million smartphone users accessing those sites on their device.

When looking at the year-on-year growth of smartphone owners accessing online retail sites, Italy ranks first with a 4.8% increase, reaching a level of 19.3% of smartphone users accessing retail sites in a month. In terms of audience size, Germany had the largest number of smartphone users accessing retail sites (9.9 million), followed by the UK with 9.7 million.

Taking a picture of a product while in a physical retail store was the most popular in-store activity performed by smartphone owners in the EU5, with nearly a quarter of

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users (23.5%) doing so during the month.

Europeans also tend to seek advice from friends and family when making purchase decisions, as 14.3% sent a picture of a product and 14.0% called or texted friends/family about a product. ?Approximately 1 in 7 European smartphone users (14.6%) purchased goods or services via their device in August 2013.

The number of Europeans engaging in mcommerce transactions has increased by 37% over the year from 16.6 million users in August 2012 to 22.8 million in August 2013.

An analysis of the top 5 goods and services purchased via smartphone showed clothing or accessories (5.4%) and consumer electronics/household appliances (3.8% of smartphone audience) were the most popular retail categories. Other services or goods purchased by smartphone owners in Europe were books (3.8%), tickets (3.4%) and personal care or hygiene products (2.6%).

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NEWS

#PAYMENTS Buy Game Credit uses txtNation for Xbox games mobile billing and messaging company, txtNation is enabling BuyGameCredit.com to sell Xbox points and Gold Membership, using mobile payments.

The points can be used to purchase Microsoft Xbox games, meaning this is a quasi-physical product, previously typically sold ‘physically’ in a retail environment. Working with the mobile network operators, txtNation were able to negotiate lower transaction fees after discussing this specific business case, allowing Buy Game Credit to remain competitive. txtNation enabled Buy Game Credit to provide mobile payments through their website and mobile site via Direct Billing across a number of countries worldwide, connecting to the txtNation

Gateway APIs to power their in-site purchasing.

The new payment method went live first in Sweden and Norway before other countries, all with a successful launch and great response. Buy Game Credit spoke to their customers via a survey and found that 93% would never buy their Xbox points with any other payment method than mobile payments. txtNation’s Chief Business Development Officer, Danny Marino commented positively on the new service “This is an exciting new service, which has been made possible by our close relationships with the mobile network operators. Buy Game Credit’s research has shown there is an appetite for mobile payments among gamers.”

#MARKETING Autobytel buys Advanced Mobile as car makers and dealers move autobytel, the company dedicated to helping consumers and car dealers connect online, has acquired Advanced Mobile ( www.advancedmobile.com), LLC, a provider of innovative mobile communications services designed specifically for the automotive industry. As a result of the acquisition, Autobytel will offer auto manufacturers and dealers the ability to connect with consumers using a preferred method of text communication via a secure platform that protects consumers’ privacy.

In addition, Autobytel will offer dealers a comprehensive suite of mobile products, including mobile apps, mobile websites, Send2Phone capabilities and text message marketing.

Founded in 2006 and based in King of Prussia, Pennsylvania, Advanced Mobile serves the automotive industry with a full range of advanced mobile technologies. These technologies facilitate communication between dealers and car buyers on smart phones and tablets at the time, place and in a manner preferred by consumers. This advanced platform will be the core of a wide array of mobile services Autobytel offers to its dealer and manufacturer customers, and will also be

available to consumers through Autobytel’s websites.

Since 1995 when Autobytel pioneered the automotive Internet, the company has grown to become a leading provider of new and used car leads and marketing services for dealers and manufacturers nationwide. The company’s flagship website, Autobytel.com, is one of the nation’s leading online resources to help people research, shop for, buy, sell and own a car.

“We led the way nearly 20 years ago when we invented online car buying, and we now intend to lead the way in mobile,” explains Jeffrey Coats, President and Chief Executive Officer of Autobytel. “Last year, more than 326 million U.S. wireless subscribers sent more than 2 trillion text messages, or more than 171 billion per month. We believe that the explosive growth in smart phone and tablet use represents significant mobile communications opportunities, especially for the automotive industry, which has been searching for ways to safely and legally utilize mobile technologies. This acquisition enables us to offer the industry the mobile resources it requires to successfully communicate with car buyers in a preferred manner.

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OPINION

FROM THE EDITOR

Are you the one that I’ve been waiting for?

Most of us spend our lives looking for ‘the one’... well I think I may have found it: and I think it could well be the start of something beautiful. If only I could find a woman that did the same as Zapp, the mobile payments solution likely to actually gain public acceptance figures out this week from Cebr that mobile payments is likely to have a huge – positive – impact on the UK economy comes as yet another company unveils a mobile payments solution to a world growing weary of m-payment promise that seemingly comes to nought.

But Zapp could be different. Zapp is the brand name of the mobile payments service being rolled out by Vocalink – the bank funded tech and network company that runs Bacs, Link and most other retail money moving networks.

Why do I think Zapp is ‘the one”? Well, it has quite a lot going for it and could well make mpayments do the one thing that it really needs to do to take off with both merchants and consumers: it actually makes paying by phone better than paying in all other ways bar, perhaps cash.

Let me explain. Zapp is a really clever idea – it sits behind banking apps (so no need to download an new app or indeed remember any more passwords and so on) so if the bank buys into the idea, the consumer just clicks the Zapp button at payment and it fires up their banking app to let them pay. Simples. Secondly, being developed by Vocalink – and therefore co-operatively funded by the banks – the chances are that most, if not all, banks will buy into it. So it gets ubiquitous reach from launch. Also, it uses the revolutionary idea that what it actually does is send ‘tokens’ instructing payments back and forth so it is super secure. If it gets hacked all the potential thief can do is pay your bill.

If that wasn’t enough, it takes advantage of the Vocalink Faster Payments technology and so the money moves pretty much instantly. Merchants, therefore, get their money straight away so it really helps with cashflow.

It works online and on mobile and, come its proper launch in September 2014, it will also be able to be used to pay in store – with minimum infrastructure needs. Sure you can connect it to NFC or even bluetooth, but it will also work with QR codes.

In short, it ticks all the boxes needed to actually make mobile payments work. It offers ease of use, it is quicker than card payments, quicker and cheaper than PayPal, more secure than Amazon one-click (and potentially quicker) and, with the banks backing it, likely to be everywhere all at once when it launches.

Not being an app or website also helps as it doesn’t require the consumer to do anything.

In short, it looks like it can’t fail.

But, you know me – never one to fall for the hype, there is a flaw. Come launch, Zapp wants to have 40% of consumers able to use it. That means 60% won’t be able to use it. Following a massive marketing push that will start next spring, this could horribly backfire. It is also possible that Google Wallet, Amazon one-click and PayPal are not going to take this lying down and they are likely to be offering some really interesting tech solutions to make mobile payments more appealing.

That said, none of them are going to be as straightforward as what Zapp, on paper at least, is proposing. This time next year I am hoping that m-payments will be run of the mill. This could be what Zapps it into the mainstream.

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 Street Hassle – Lou Reed | What we’ve been amused by Tim Green | Who we’ve been following @Mrskeldon | What we’ve been reading about The Circle – and what social media is really about| November 2013 will bring... the home stretch before a month of parties.... oh yes

OPINION

WORLD TELEMEDIA REVIEW

Busted by the

Affiliate market?

The affiliate marketing issue has blighted telemedia for months and it was one of the key debates at World Telemedia in Amsterdam last month. Here Rory Maguire, acting MD of AIME, talks us through what happened when the industry came together to discuss the issue true to the 21st century civilisation that Europeans have developed over the past 100 years or so, a good lynching party has to start with a healthy debate. The healthy but very heated debate was provided to us courtesy of World Telemedia, and the stage was set with three participants; myself as MD of AIME, Jonathan Levack, the fresh-into-the-company policy maker at UK premium rate regulator PhonepayPlus and in the middle, our beloved Telemedia star Paul Skeldon. The topic for debate: Busting the Affiliate Marketing Issues.

Earlier in the day, several World Telemedia attendees and AIME met, courtesy of Oxygen8’s meeting room at the top of the spiral staircase, to discuss how it would be possible to both utilise affiliate marketing for internet based mobile-charged products, but also to remain operational in the UK. At this point of time, it feels to a large quantity of premium rate merchants that utilising affiliate marketing in the UK brings a very high risk to their companies.

Some of the companies present had been subjected to PhonepayPlus Emergency Procedures in June and July due to malware that had seized their advertising in the hope to make the author a quick buck over a few days. Other companies were genuinely frightened to continue marketing to UK consumers in fear of the same issue and the phrase “the UK is closed for business” came up many times.

The same malware and others, it was reported to me, pop up in other countries, but the advertisers, often notified by the local regulator / trade body or competitor, deal with the malware or rogue affiliate swiftly, will refund affected consumers if any and will notify their affiliate marketing of the issue, sometimes instructing cessation of business with the sub-affiliate. So why is the UK different?

The opportunity to discuss this came up in the mid-morning session. I was given the stage to present my view first, which is that whenever there is money available in the internet environ-

ment, there will be scammers ready to fleece both businesses and consumers of that money. The internet provides a great hiding place for low level scammers.

In the case of the charge-to-mobile industry, service providers are putting their marketing money into the internet in exchange for good leads from diverse sites that consumers may visit. Affiliate marketing – pay on results – is very efficient for lead generation, but a scammer will work out quickly that while only a few consumers will buy the product based on its description, even more will buy the product if it comes with a promise of a high value freebie. Shopping vouchers, free movies, free software all seem to work well. The scammer is after the marketing money, not the consumer’s money, but consumers will have been misled and damaged in the process.

As the providers of the services put in place mechanisms to deal with the known scams, the scammers have come up with the next great idea. The latest one is to lock the browser with a virus and offer unlocking only if the consumer signs up to an offer.

As an advertiser, the trick is to ensure that your detection mechanisms are constantly evolving to detect consumers entering your service via false promises or malware, use reputable Affiliate Networks and ensure contracts with them are sound. As a consumer, don’t go browsing around without virus protection (who does?), don’t download dodgy software and if you were promised something at the beginning of your journey that looks different to the offer at the end of the journey, don’t buy! It feels like common sense to me.

Over to Jonathan Levack for PhonepayPlus’s view of the issue.

I am not sure that he got a chance! The poor man was there to represent his organisation and personally did not deserve the verbal bashing that he received on their behalf, but the mood was definitely that of an angry mob and not the usual disgruntled individual.

Serious comments came from the floor about the deployment of their Emergency process and the subsequent Tribunal decisions, “why did you not report this to the police?”, “why did you not call us first?”, “the UK is hostile to us now”, “how can I be held responsible for the illegal act of another party?” and many others.

At one point, the conversation heat was so high, that it the verbal lynching may have turned to a physical one. All the audience needed was wood, rope and nails to complete the job.

I have never seen such collective anger and it is truly distressing to see the industry and regulator so far apart on this topic. There is a lot of work to do to recover from where we now are.

If you are affected by any of the issues discussed here, you can write to AIME on Telemedia@aimelink.org

OPINION

WORLD TELEMEDIA REVIEW

The state of the

TELEMEDIA NATION

One of World Telemedia’s key objectives is to set out where the industry is at and where it is going. Here Dave Ashman, director of industry affairs at AIME, relives his keynote presentation from the show there’s no denying the Premium Rate Services (PRS) market has had a difficult year. Unlike previous economic blips, the sector has not been recession proof, as the sustained pressure on the consumer’s cost of living has altered consumer attitudes towards small value spending, whilst the growing prevalence of free content and over 130 rival payment types is forcing provider to demonstrate more value.

During 2012, the UK Mobile market grew by 4% and Payforit 19%, whilst fixed line services saw a 14% decline. Regulatory hardening in recent months has also injected a new market risk and the resulting market paralysis that followed the regulatory response to rogue affiliates is likely to show sharp market decline when 2013 revenues are reported.

On a wider European level, EU regulation has introduced new threats to the markets of all member states, with examples of such threats clear in the proposed redraft of the Payment Services Directive (PSD). According to market analysis, this will cut PRS sector revenues in half as early as summer 2014, unless providers join forces behind the AIME campaign to convince a majority of EU member states to vote the proposal down.

Despite this difficult backdrop there are prospects on the horizon. OpenMarket has been key in driving growth of 17% in the Charity sector, whilst providers IMI and Velti have been at the forefront in driving growth of 152% in the ‘other entertainment’ services vertical. Mobile personalisation also remains a growth sector with a 7% growth reported in the most recent market research.

Elsewhere in Europe, PRS markets have sought to evolve to provide billing for quasi-physical goods, tapping into the consumer requirement for low friction purchasing of everyday necessities, such as travel tickets, toll roads, vending and parking. In Sweden, PRS has enabled bus drivers to dispense with carrying cash, reducing the incident and risk of robbery while reducing boarding queues. In Eire, PRS also proved a more convenient method than that of physical cash, with Oxygen 8’s joint venture with O2 providing 10,000 daily toll road users with the option of a charge to mobile bill payment channel. Without the current threat of PSD, this success could be repeated in the UK. PRS still holds all the cards when it comes to customer acquisition, with some mobile gambling providers reporting conversion rates of up to 70%, far higher than any rival payment types on offer. The mobile gambling market itself is a behemoth, with mobile-billed revenues exceeding growth of 50% on last years’ figures, as new markets such as mobile in-play sports betting begin to swell. 29% of user now access betting services via smartphones, providing a fertile ground for sector leaders txtNa-

tion, backed by a strong suite of international connections, to provide the global coverage that gambling operators increasingly require.

The continuing challenge for PRS remains in tapping the $100B potential of this worldwide market, as gambling operators are habitual in moving consumers on to debit or credit card for future deposits and wins. For this to change, improvements to mobile payout rates, know-your-customer verification capabilities, and cross-network account crediting capabilities need to be discussed and developed.

In much a similar fashion, the Publishing market presents a growing opportunity for PRS billing. With digital circulation increasing by around 275% and online advertising securing only a fifth of the revenues achievable from a similar print based campaign, there has been a resurgent interest in publisher paywalls.

The success of the Financial Times’ to bill directly for online content has this year led publications such as the Telegraph and The Sun’s to introduce paywalls.

Results have reportedly been mixed with The Sun, whose payment consultant (we are told) omitted to advise them to introduce a charge to mobile payment route, causing a sharp decline in circulation, contrasting with the other publications who have echoed the Financial Times success. Executed correctly, charge to mobile is well placed to cater for main and niche digital publications, high quality editorial analysis or customized content delivery in the form of subscriptions or pay per page billing.

Thinking outside the box to pair services naturally accessed on mobile devices with a streamlined consumer payment experience is now imperative for success, as innovators Impulsepay have demonstrated through the use of the Payforit Scheme to open up new niche verticals such as WiFi access on Virgin trains, and premium access features on leading room site website, Sparerooms.com.

With the imminent launch of Payforit 4.1 due to bring a seamless charge to mobile billing experience to the exploding Gaming App market (worth $70 billion worldwide), this could well be the next success story.

There is work underway to stabilise the market, continue collective discussions with mobile networks and open discussions with App Stores, regulators; and market players in different verticals. The full degree of success relies upon all providers joining AIME; strengthening the collective industry voice and speeding up the pace of change. This support is not about philanthropy; members stand to gain and it can be no accident that the leading industry successes are being driven by AIME members.

ANALYSIS SOCIAL GAMING

Social gaming

THAT’s ENTERTAINMENT Social gaming is a real business, not just marketing or a sales funnel, writes Raf Keustermans, co-founder and CEO of social casino start-up, Plumbee “we compare ourselves with other forms of entertainment, not other gambling companies,” declared our COO and co-founder, Gerald Tan, at London’s Mobile Gaming and Gambling Summit in September. It is a perspective that many traditional gambling companies will have also adopted for their own businesses as they strive to keep pace with the ever-changing demands of the consumer.

However, for social casino companies, this philosophy is part of their DNA; rather than something that has evolved through necessity. It is another crowbar separation that keeps the social gaming and real money gambling sectors very much apart when it comes to identity, business model, demographic, mon-

etisation models, and more besides.

That DNA is largely evident because of the youth of the social casino space – having emerged from relative obscurity only three years ago. By the end of this year, it will be an industry worth $2 billion (£1.3 billion) and accounted for 43 per cent of Facebook’s gaming revenue in Q2 2013. They are notable statistics, and help shed light on why the traditional online gambling industry has long coveted the social gaming sector.

Indeed, despite the many and varied differences that separate the two sectors, there are many similarities and affinities that are contriving to bring convergence between them. For instance, we’ve seen games studios and entertainment companies, such as EA, Disney and Zynga, who are looking to move into gam-

ANALYSIS SOCIAL GAMING

bling where it had previously been a taboo subject. I remember when I joined EA from Unibet in 2008 that there was a certain amount of controversy; people were asking whether by hiring someone from a gambling company, that EA was endorsing the gambling industry. Thankfully, times have changed.

The entertainment industry is considering using gambling as part of its offering going forward, and perhaps we will see more instances of gambling companies moving in the other direction.

More and more gambling companies are now emerging from their silos, so to speak, to think more broadly about their role as entertainment providers, and how people will be consuming their products in five to ten years’ time.

One challenge that both online and land-based gaming companies have faced in the past is that they have regarded their core business as the ‘standard’; where everything is a function of that ‘standard’ world. However, what if that standard world isn’t around in five to ten years’ time, or is at least smaller or different?

If companies only use social gaming to get a bigger audience for their core business or brand, it is likely that they are missing a huge chunk of the potential.

IGT is one company to have invested heavily in building its social business, acquiring Double Down Interactive for $500

million in 2012. The company’s recent Q3 earnings report has highlighted the impact that social gaming is having on its entire business, with DoubleDown Casino revenue accounting for $61.4 million, or more than ten per cent, of total revenues for the period. Indeed, DoubleDown’s growth represents a 105 per cent increase in revenues over the same period in 2012. Even for a company of IGT’s size and scale, the performance of its social gaming division is helping to drive the growth of the whole business, with other gaming companies such as Caesars Interactive Entertainment and WMS also seeing positive returns from the space.

Social gaming is a business that even in the absence of real money offerings has proliferated on the desktop channel, and is now leading the way again via mobile. It is a business that is already having a direct impact on the bottom lines and growth prospects of those gambling companies to have acted early, and effectively engaged social strategies. It doesn’t have to be about marketing. It doesn’t have to be used as a sales funnel through which to channel players to real money offerings.

However, it does have to be treated as a real business if social casino companies and gambling operators are to continue to thrive.

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Nord Connect Ltd International PRS Numbers, Fast Reliable Payments, Competitive Rates, Worldwide Access

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Enarpee

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UK’s leading provider of interactive platforms for mobile, web and TV

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ImpulsePay The UK’s newest directly connected API. Payforit & Direct-to-bill technology

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