January 19, 2008
 

Part 3.0: Smith on Mobile & Widgets

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Frank Capra's film, "Mr. Smith Goes to Washington" opens with a series of rapid-fire telephone conversations. Who back in 1939 would have thought that mobile phones would become almost glued to everyone's hand in the 21st century? Most likely, everybody!

Almost 70 years ago, the phone was already a fixture in America's hand and mind. In Part Three of this five-part series on Dave Smith's trip to MadAve, as compared to everyone back in 1939, few of us can predict what the phone and all its modern-day components will stick to in the next 70 months, let alone 70 years!

Jimmy Stewart's character Jefferson Smith was the character everyone was calling about. So here is Dave Smith of Mediasmith, where he makes his call on the mobile business today and tomorrow; followed up with his take on widgets.

Hello? Here's Part One and Part Two for those of you who, for the last two days, were on your crackberry! It's for you!

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Tim: Let's deep dive now into your mobile practice. What is it about your mobile program that we should know about?

Dave: Well, first you should know that it's not just one medium. There's the WAP deck. It's the Wireless Application Protocols that are controlled by the Verizon's and the Sprint's of the world. These are primarily what we use today, where you can get all your information posted on that WAP deck on your mobile device. Then there is SMS, Short Messaging Service. If you have a teenager, you better have it because that's how you communicate with them when they are out and about. And very quickly coming is MMS, or Multi-Media Service. Some folks have it today with their SMS.

Tim: I understand the first two. Is MMS providing the capability to attach a video and see the attachment?

Dave: Sure. And if you combine that ability with the phone to have GPS, it's the classic application that's been talked about. Say it's early in the morning and you're walking by a Starbucks. They can use that technology to give you a coupon for a discount on a Latte, or a free bagel with the purchase of a Latte. It could also be used not only from a personal communications standpoint but from a promotional standpoint. For instance, there are companies such as AirPlay that basically give you the opportunity through Sprint to play along with an NFL or Major League Baseball game while the game's actually happening. And you could play against your friends. "Is he going to pass? Is he going to run?" Further, if you've got something like that on your phone when you approach the stadium you would get a message saying "Download this application now, so that you can play along with the game while it's going on!" It's a great application of SMS, MMS and dedicated software. So even things that we wouldn't think would have an advertising availability or capability, do.

Tim: Sure.

Dave: There's also search on mobile. Search on mobile is going to be huge. As people are moving around they have needs and their phone can be the device that helps them, say with a data base such as their yellow pages. Say a person is looking for an Italian restaurant but are not exactly sure where it is. They type in "Italian restaurant." Since the mobile phone knows where they are due to the GPS it will then list all the Italian restaurants in the neighborhood, nearby.

Tim: Cool.

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Dave: Through applications like Java and Brew, there's the capability to put widgets on your mobile phone. You could put an application say, from EBay that lets you know a bid time is coming up. It could give you the opportunity to up your bid on a certain item. EBay is experimenting with things like that. There are many different types of media that will be incumbents in the mobile environment, in the future. It's not just one dimensional.

Tim: Right.

Dave: That's the thing that people don't really understand about mobile. If you go to South Korea or if you go to China, you'll be amazed at the uses of mobile. There are more teens and 18-34s who are on the Internet through mobile in China than there are through PCs. And the audiences in Asia on mobile among 18-34s are equal to primetime TV in the US. It's huge over there. In South Korea they are playing multi-player games with each other rather than reading books or watching TV.

Tim: Speaking of international markets, can someone in our business with a need to reach one of those markets easily plan, negotiate and execute a net-based buy from the US. I know how it's done with TV, but is it as simple with the Internet?

Dave: If you've gotten the market intelligence, you certainly can. You do need to subscribe to things like the directory sources and the rating sources. It's the same as it is here. You have to have studied the marketplace. Mediasmith placed search in the last 12 months in 20 countries. We place web advertising as we do print in a number of countries around the world. Some are easier than others. China is a very difficult place to do business with, if you're not in China. It's much easier for us to do business in Australia and the UK or in Germany and in countries that a little bit open. The Chinese very much want to do business with people in-country. There are different ways they do business on the Internet than we do. For example, there are no 3rd party ad-servers really successful in China due to buying practice. Everybody wants to buy the home page. The deployment of things can be a little more problematic if you're not familiar with what's going on there.

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Tim: How about Off-Deck? Is this non-WAP platform going to be relevant in the US?

Dave: Off-deck is huge in the rest of the world. It's going to be a factor here. There's going to have to be a certain type of breakthrough applications to prove its viability. Some big company is going to have to have a hint that people will go to their website and download it for their phones. iPhone and the Google phone will be the first major examples of these open systems. Verizon has announced a similar program. We'll see.

Tim: That's not impossible. People hate their carriers.

Dave: But one of the issues is that according to the folks that measure phones, there are some 400 different combinations of handsets and operating systems out there. So it's not as easy as saying, "Oh, you have Windows XP on your desktop. Here's the version you need." So that's one of the issues relative to Off-deck.

Tim: Right.

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Dave: That said, as you know, Susan Bratton just started downloadable media association. Downloadable media is not going to be loaded to the PC or the iPod or the vPod. Phones are a natural. As phones get bigger and bigger hard drives, and bigger and bigger memory in the phone, the phone is a natural place for that too. There will be applications off the WAP deck available for people. In fact they are doing it right now. People are downloading songs. People are downloading pieces of information, so it's happening in various vertical areas and it will become larger. It will not always be controlled by the Telco's even though they are doing their best to maintain control.

Tim: Question, in order to access Off-Deck applications, isn't your ability to do this predicated on using the On-Deck platform? Is Off-Deck just static information that you just download or do you need a carrier to communicate with the satellite?

Dave: Our resident expert on this is VP, Account Director Derek Leedy. According to him, the carriers are analogous to ISPs in that they provide mobile connectivity to the web. The real question is will they be continue to control the content or just be dumb pipes. The current primacy of On-Deck usage has been based upon the decreased perception of risk customers feel when they download a game or content from the carrier.

Tim: That's true.

Dave: Much like the early days of AOL, the carriers provide a walled garden of content, and this content is becoming stale, leading customers to search beyond the deck or "Off Deck." For example, an article in Monday's NY Times cited that Google received more traffic from the iPhone on Christmas than from any other mobile operating system. It has since fallen behind the Nokia backed Symbian operating system. However, this is amazing given that 63% of the smartphone market is comprised of Symbian while Apple accounts for just 2%.

Tim: Right.

Dave: Yahoo reported the same type of disproportionate mobile traffic. The truth is that the current internet browsing experience is awful for most consumers. This had led to the rush of players like Yahoo! and Google to court mobile application developers to use their standardized program that will work with the web layer of most smartphones.

Tim: It's getting more interesting, everyday!

Dave: Finally, the iPhone is more indicative of a bigger sea-change, it is disruptive to the carriers since the device is becomes the primary concern of the customer and if the mobile internet is nearly as good as the desktop then the distinction between the two begins to blur.

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Tim: Okay, let's talk about widgets! I don't personally feel that the term "widgets" is all-that-clear a descriptor to describe their importance. It reminds me of somebody with a propeller hat on. For example, I didn't know that Facebook applications are really widget technologies.

Dave: If they were to remake the film, "The Graduate" today, the guy at the cocktail party would say to Dustin Hoffman, "Just one word, Widgets!"

Tim: Really? Tell me why.

Dave: Let me give you some examples. Facebook just opened up their API this past May. Slide, a widget company, "Favorite Friends" has over 15 million unique users a month. Their video application has over 20 million uniques a month. That's bigger than Time.com and Newsweek.com combined a month! Websites struggle to get a million or two million or three million unique users when they start up.

Tim: Right

Dave: This is an application "on" a website, not the website itself that has over 15 million unique users a month.

Tim: Okay, let's talk for a moment about "Top Friends". I won't use that app because in my opinion, and with some of my friends, I fear that those people who I don't choose as a "Top Friend" would think, "Oh okay, I'm a second class citizen."

Dave: Apparently 15 million people disagree with you!

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Tim: LOL! Let me ask you this, once I download a Top Friends file, what am I doing with it after that? How often will I really go back to it?

Dave: I downloaded not because I wanted to specify some friends over others. Although I did specify you as a Top Friend" and you have not yet responded! What's interesting about it is that what comes with it is the ability to put a skin over it. And into that skin they can 3rd party ad-serve. And they sell those ads on a CPM basis. So recently for example there was an ad for "The Bee Movie" when I went and looked at "My Favorite Friends."

Tim: Okay, I understand.

Dave: Slide has something like 135 million unique users world-wide behind their widgets. I can pick the widgets that they have targeted against a specific profile within those tens of millions of eyeballs. And 3rd party ads are served into those widgets in a non-standard way, instead of just using a standard banner. So it is a new way to serve up interactive advertising to them. The user or visitor can click thru and go to your website. They can click thru and get more information on this. They can do anything they might do on a normal web page. It's just simply another way of bringing information to people.

Tim: Okay so when I click on a Slide app, I'm actually being taken off Facebook, correct?

Dave: You might. But many of these keep you on the same site. There are many different types of widgets or applications or gadgets. Some call them gadgets. There are some that keep you on Facebook as well. It just depends upon the application. Regardless, the sponsor is embedded into the widget ad placement. One of the things we tell our clients is that it is no longer required that they have to bring everybody to their website. If they can get the branding in a place where the consumer would prefer to stay, that should be fine.

Tim: I agree with that.

Dave: If you could do branding for your company inside a Starbucks, would you care if they went to your store or not?

Tim: Absolutely.

Dave: That's what advertising on Facebook, MySpace, and other social networks are going to be about in the future; Embedded advertising. That's just one aspect of Widgets. Another one is something is something I touched upon earlier. Take the Southwest Airlines program. It's a great example. It's a downloadable application to your desktop that you could program where you want to travel. So for example, if you have a need or desire to go visit a friend you need to fly to, but you would prefer to do it when it's affordable to you, Southwest's widget sends you a message to let you know when that opportunity arises.

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Tim: Got it.

Dave: Southwest took the idea and executed on it flawlessly. They took promoted their widget through their TV advertising, did some very engaging advertising and got people to download them. As a result, they made an incredible amount of money from bookings directly from the widget. They make over $60MM in bookings on an annual basis from this at last report. It's a very simple vertical application. It's programmed to a certain thing.

Tim: Wow!

Dave: Companies who are doing promotions. Burger King or McDonald's could do their latest promotion through a widget and get people to interact.

Tim: You could manage your portfolio this way.

Dave: Exactly. Widgets work best when there is only one vertical application, where you're only trying to get the consumer to do one thing on a recurring basis or for a special event. We have a number of ideas for our clients that are widget-based. Some of the executions right now are quite creative. I'll touch base with you when I can talk more about them.

Tim: Great.

Dave: So think of them this way. If you look at the numbers for Slide or you look at how fast Facebook is growing, it could be said that widgets are the fastest audience accumulation vehicle since primetime TV. We never thought we would ever have something again like that.

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Please click here for Part 4.


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