Notes from MRG Conference 2011

A couple of weeks ago I took part in a short session at the 2011 Media Research Group Conference, which took place in London. I took some notes during the day (mainly with the earlier speakers). They are below and in chronological order, though firstly a quick exec summary:

The four papers I enjoyed most were

Synthesising these talks, my key take-aways were:

  • Run lots of prototypes and versions
  • Ask audiences what they think, rather than just infer from behaviour
  • Set up the tests in such a way to drive people towards the behaviours/answers you desire
  • Be aware of contextual reasons that might provide counter-intuitive answers

And now for the detail…

 

Tim Harford – Problem Solving In a Complex World

Tim Harford, author of books such as The Undercover Economist) , initially walked through examples of problem solving such as

  • Archie Cochrane – a Prisoner of War who conducted experiments to find out what was making people ill in the camp
  • Thomas Thwaites – a student who took 9 months and spent over £1,000 to try and make a toaster from scratch and even when cheating largely failed
  • Cesar Hildago – who has mapped 5,000 product categories. But Wal-Mart has 100,000 types of product in a store, and in New York there are probably 10bn

His point was around the God Complex – the conviction that no matter how complex something is or how little data is available, you know the answer. It is dangerous and yet you see it everywhere.

We need to step away from the god complex as we can’t solve things in one step. Instead, we gradually learn over time through trial and error.

For instance, Unilever wanted to create a new nozzle through for their detergent production. They hired a mathematician who failed to sufficiently improve it. Instead, they created ten random computer generated models and picked the best. They then created ten variations of this. They repeated this process twenty times. Ultimately the nozzle was much improved, although they don’t know why.

Business successes are random processes – there is no silver bullet for the perfect CEO or strategy. However, instilling a start-up culture allows experimentation to see what is best. Google has a target failure rate of 80%, but this failure has to be quick, rather than being too big to fail. In order to do this, we have to overcome loss aversion.

In the BBC documentary about Fermat’s last theorem,  Goro Shimura said in reference to his colleague Yutaka Taniyama :

Taniyama was not a very careful person as a mathematician. He made a lot of mistakes, but he made mistakes in a good direction so eventually he got the right answers. I tried to imitate him but I found out that it is very difficult to make good mistakes.

Tim fielded a couple of questions relating to popular business books

  • Tom Peters’ In Search of Excellence profiled many companies to see what made them successful, but three years after the book was published around one third of them were in trouble (e.g. Wang, Atari). Were they actually excellent, or is excellence fleeting?
  • James Surowiecki’s Wisdom of Crowds is often misunderstood as he himself said that it only works in specific situations – when expert judgement is no help and where the crowd can be polled independently (Duncan Watts has shown how randomness becomes important when things are dependent

Claire McAlpine – Mediacom – How are you integrating behavioural economic thinking into your work?

Inspired by thinkers such as Steven Johnson (Where Good Ideas Come From) and Chip & Dan Heath in addition to Thaler & Sunstein etc.

Hunches are where we collide ideas – these could be our ideas over time, or our ideas with other people’s. For instance, the Gutenberg printing press was inspired by the wine press.

We need to overcome cognitive biases (such as picking the second cheapest wine on the list) and recognise things such as information deficit and availability bias. We are more Homer Simpson than Spock – we are not rational agents. We may have good intentions but these can quickly be forgotten if we are in a “hot state”.

There are three stages to integrating behavioural economics

  • Identifying the behavioural context
  • Identifying the behavioural journey
  • Identifying choice context and ultimately creating choice architecture

Claire gave the example of Special Constable recruitment. By identifying two choice contexts – career and inspiration – Mediacom were able to frame their media strategy (both in terms of creative and placement) for two separate audiences

By understanding how behaviours differ, we can seek out how to encourage the desirable ones to be replicated. The ultimate goal is to be able to switch the default behaviour, which we often resort to as a mental shortcut.

 

Mark Barber (RAB) and Jamie Allsopp (Sparkler) – Media & the Mood of the Nation

Mark and Jamie went through the research findings of this research which covered 3,500 smartphone survey responses from 1,000 people, qualitative depth interviews and diaries and EEG brain scan experiments.

The research came about from the general move in advertising from systematic (logical) to heuristic (emotional) processing, and observations that advertising works better in mood-enhancing environments.

The findings were framed using James Russell’s Circumplex Model of Affect, which places results on two -5 to +5 scales of arousal (energy) and valence (happiness).

Radio was compared to both TV and online. While all displayed rises in happiness and energy, radio showed the highest average increases in total and across the most dayparts. While this may be caused by other activities people are doing while they listen to the radio, it nevertheless means that people are in a more receptive frame of mind when it comes to processing advertising messages.

 

Becky McQuade (Sky) and Anne Mollen (Cranfield School of Management) – Online Engagment: We might be getting there

Anne said that there are two schools of thought with engagement

  • It is bankrupt as it is not a metric since it is too abstract and not credible (unlike retention and acquisition)
  • It is viable (she is in this camp)

The academic studies in this area have been focused on perceived interactivity and telepresence (her paper is here), but it hasn’t as yet properly been joined up to commercial requirements.

Her definition of engagement is “cognitive and affective commitment to an active relationship” and requires

  • Utility/relevance
  • Pleasure/enjoyment
  • Dynamic and sustained cognitive process

Using Survey Interactive, they ran an online pop-up survey with 60 engagement statements (reduced from an original list of 150) on 12 point scales across 14 Sky websites (and on a NetMums panel), resulting in over 12,000 responses. This found four drivers of correlation. From the largest to smallest, these are:

  • Cognitive processing e.g. enjoyment
  • Temporal needs e.g. hedonic and utilitarian value (what we need and want)
  • Self-congruence (identity with the brand)
  • Social identity (context, environment, peer to peer communication)

Conversely, engagement isn’t

  • A measure of human behaviour – there was low correlation between engagement and time spent, frequency and recency
  • Behavioural footprints (actions such as subscriptions or likes) – there was only a small positive correlation among a subset of those engaged
  • Activism (such as loyalty) – engagement is context dependent and not a behavioural type

The study was specific to advertising, and found those engaged had higher ad recall, improved core message delivery, more favourable opinions towards the brand and a higher likelihood to purchase (but not higher purchase intent).

Becky and Anne closed by saying for engagement to be viable it has to have a close relation to ROI and KPIs. Their NetMums study showed engagement has an impact on trust, satisfaction, loyalty and add responsiveness and has a high positive correlation with the Net Promoter Score.

Anne isn’t linked exclusively to Sky and will talk to others on a confidential basis around her engagement scale, but given academic competition to publish there is only a limited amount she can say publicly.

 

Stuart McDonald (News International) and Euan Mackay (Kantar Media) – Show Me the Money: Proving the value of tablets

Given that the results of the research are being used to inform News International’s commercial strategy, they didn’t really go into how value was proved. The research was conducted among News International’s subscriber base, and tested interactive advertising on a beta app (The Times app doesn’t yet have advertising) against a premium engagement index, comprising of perceptions of an ad being

  • Memorable
  • Relevant
  • Engaging
  • Trustworthy
  • Premium

 

Richard Curling (Google) – YouTube Skippable Pre-Rolls: Measuring the power of choice

Given “Hurry sickness” – the malaise where people feel short of time so perform tasks faster and get flustered by any delays – we’re increasingly looking for shortcuts.

YouTube “true view” means that users get to choose their adverts – if they don’t like an advert, they can skip it. Advertisers only pay for adverts that are viewed all the way through. Google interpret a high view rate as a high quality score, and this will factor in alongside price when bidding in an auction for advertising space. Thus, high quality ads are rewarded (though arguably very low quality advertising can benefit from a lot of free, interrupted views).

Using Ipsos MediaCT, Google tested the effectiveness of these ads using biometrics (heart rate, respiratory rate, skin conductance, motion- via Innerscope), depth interviews and eye-tracking. These found that both skipped and “true view” ads scores higher on their engagement metrics, though the true view ads scored highest. However, this wasn’t as clear-cut as you might expect – people opting in might have higher expectations and so could be harder to please. Conversely, the engagement of people forced to watch an ad might pick up towards the end as they get ready for their content to start

Richard’s recommendations for advertisers were to

  • Entertain the user, since you are the content
  • Be clear, and support user choice
  • Embrace “natural” targeting

 

Afternoon sessions

I was paying less attention to these, since I was mentally rehearsing my speech

  • Ross Williams and Becky from Ipsos MediaCT presented their “Big Brother Research – Who’s Watching Who?”, which combined social media monitoring of Big Brother properties. with Facebook polls. While Big Brother wasn’t as big as other properties, it had a 80-20 proportion of comments to likes on Facebook (indicating an engaged audiences), while alternative programmes had the opposite ratio
  • Steve Cox of JC Decaux presented “Airport Live” – following a small number of passengers at both their departure and arrival airports to see what they were noticing
  • Matthew Dodds of Nielsen and Nick Metcalfe of the Telegraph presented “Telegraph Print + Net Online Multiplier study” which took 5 groups of people (Telegraph print readers, Telegraph online readers, readers of both, non-print readers with matched demographics, non online readers with matched demographics) from UKOM to test uplift in advertising measures
  • The Good The Bad & The Ugly of Media Research was hosted by Max Willey and featured myself, Dave Brennan, David Fletcher, John Fryer, Stef Hrycyszyn and Loraine Cordery talking about whatever we wanted to for three minutes. David Fletcher won the prize, for his tale of why people think they want online dashboards but don’t

 

Industry Updates

  • BARB is looking into a non-linear database that would report on archive programmes on demand, and catch-up from longer than seven days after transmission. They will also evaluate, and possibly publish topline results of, the TV+online data
  • POSTAR – now have tube and bus data, and are looking at GPS devices to see how people move around. This is being validated and they hope to get it into a reporting system soon
  • NRS – concentrating on fusion with UKOM data, but hope to get more granular data and move online in future
  • RAJAR – moving the diary online, and continuing to explore the viability of passive meters
  • IPA – bedding down touchpoints. Touchpoints 3 included word of mouth, mobile internet, social media, gaming and on-demand. Touchpoints 4 will bring in tablets and apps, and change from a device-first structure to a content-first structure. It now has 60 subscribers (including each of the top 20 agencies) and has launched in the US. They are also piloting an app to go alongside the diaries
  • UKOM – the past year has been about stabilisation after some data issues. The contract is currently out to tender and whomever is successful (they would take over in January 2013) would look to measure all devices and locations (ie beyond home/work fixed internet to include mobile and video)

sk

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Google Firestarters: The New Operating System For Agencies

Firestarters #3, hosted by Google and curated by Neil Perkin, featured three fascinating and provocative presentations from Mel ExonMartin Bailie  and James Caig on “The New Operating System For Agencies”

Each of the three talks had slightly different emphases:
• Mel posited that brands need to be useful, entertaining and epic, and so should its marketing. To the point that the marketing and product is indistinguishable – the marketing singularity
• Martin argued that agencies should decide whether they are interested in outputs or outcomes, and indeed whether they are serving the right master – should agencies be dealing with consumers rather than clients?
• James talked in favour of open ideas and innovation so that agencies can diversify their revenue streams. Experimentation and sharing in the short-term pays off in the long-term

However, what I found surprising was the level of agreement , both among the speakers and in the audience, with some of the more disruptive suggestions. While there are the odd exceptions – Zag, Victors and Spoils etc – most agencies still seem to represent fairly traditional models.

Why is this? A few suggestions
• Semantically, the agency of the future doesn’t exist yet
• The status quo is difficult to change, and progress tends to be slow, phased and invisible
John V. Willshire makes the excellent point of the Prisoner’s Dilemma here
• Particularly in a recession, it takes a brave company to emphasise long-term strategic development (and investment) over the short-term cash-flow required to keep the business running
• Start-up culture might accelerate innovation, but start-ups motivate its staff members to bear the long hours and high risk due to the potential of a vast reward. Agency contracts tend to stipulate that all ideas generated are agency property
• Marketing agencies are generally unknown at the company level and distrusted at the industry level so becoming consumer-facing is a big challenge
• With brands increasingly present across multiple sectors and disciplines, it might be hard for an agency’s own product to offer credible independence

These are all obstacles, but none are insurmountable. Things can and will change. Hence the excitement in the room.

So, synthesising the views of the speakers (and casually ignoring the slight disagreements) with a couple of my own, the agency of the future will
• Be more strategic and focused on the long-term. This requires investment to slowly change the core but to quickly innovate around the edges.
• Meditate on strategic decisions before acting. Martin’s advocacy of real-time insights is one of the few things I (partially) disagree with – the filter challenges make it very easy for a small tail to wag a very large dog. (SIDENOTE: This isn’t a reaction to his jibe that “research agencies are shit” because they don’t do real-time, though that opinion is as reductive as me saying digital agencies are shit because they don’t create banner ads I want to click on)
• Focus relentlessly on the public as people rather than consumers of a particular product, brand or industry. True cultural understanding means engaging with people as peers, whether through traditional market research, observation or hiring spokespeople
• Prioritise the opinions of the target audience over the opinions of the client, since no client other than Apple can dictate what people want and can have
• Widen teams to encompass a variety of generalists and specialists required for the situation.

Taking these points to an extreme, one example of an agency of the future could be an incorporated joint venture between a brand and various specialists (client marketers, strategists, creatives, PRs, researchers, designers etc), where everyone is a partner with a financial stake in the long-term success of that brand. Even more extreme, agencies could engage in multiple JVs, acting as the pivotal node between brands in different industries, with complete autonomy in how ideas are distributed between brands or kept for themselves. In some ways, they become mini Unilevers – a holding company bringing together disparate, individual brands. This would enable
• Greater integration between the brand’s desires and the actions of the “agency”
• More potential reward for the team members
• Reduced dependence on account managers to mediate between the two (sorry, account managers)
• Greater agency synergies in creativity and ideas, in addition to the bargaining power from media buys
• Reduced duplication between different stakeholders e.g. social media can be concentrated with one person rather than spread across multiple agencies or client departments
• More control over which ideas are invested where – they could be kept for the JV themselves, or even shared across multiple brands

Of course, this proposal has a ton of holes in it (can holes have weight?) and is pretty impractical. Nevertheless, the first two bullet points should be critical for any future agency. There should be no cross-purposes – is the desire to generate profits or to make a great campaign? And there should be more reward for success. Steven Spielberg was paid $250m for Jurassic Park yet Universal Studios didn’t moan (loudly) because it was only a pre-agreed cut from enormous profits. It is better to work together for a big win, than to antagonise and penny pinch for the sake of “fairness” with others.

While failure can be random and out of the hands of the individual; shared reward should be a priority for the agencies of the future.

sk

NB: Slides and notes from the talks are available from James here, from Mel here and from Martin here

Google Firestarters #2 – Design Thinking

The second Firestarters event, hosted by Google and curated by Neil Perkin, was an excellent evening – probably even better than the first evening. There were lots of interesting people to speak to and debate with in the break-out session and afterwards, while the Google catering is unrivalled. I’m amazed the staff aren’t twice the size they are, given the volume of cupcakes around.

The primary reason for the quality of the event is the speakers. Both were very interesting.

Tom Hulme (IDEO)

Tom talked about design thinking as a set of beliefs. He advocated it as a form of divergent thinking. Strong companies that perform well tend to be good at optimising and being efficient in their areas of expertise. Creativity in opening up new avenues can bring in new aspects to a business, which they can subsequently optimise and renew the cycle. Traditionally these would be have been consecutive but with things moving so quickly they should now be concurrent.

Tom’s 8 steps for design thinking are

  1. Challenge the question
  2. Be user-centred (and do so in context. Focus groups are not the place to introduce ideas)
  3. Look to extremes
  4. Messages or experiences? The answer is both – they are coherent.
  5. Be holistic – the business model and marketing model are now indistinct from one another
  6. Value diversity
  7. Launch to learn – prototyping is now redundant as it is so cheap to launch and run A/B tests
  8. Stay in beta

Tom is a very charismatic speaker and came up with wonderful examples – from Sneakerpedia being an example of message and experience combining, to Steve Jobs’ calligraphy course as an example of diversity to his open document containing useful tips for start-ups.

He also ended with a great quote: “Looking at why people really hate stuff is wonderful inspiration to come up with new ideas”

John V Willshire (PHD)

John is well-known for his unique analogies, and he didn’t disappoint with a seamless weaving of Bad Religion and Adam Smith.

John was a counterpoint to Tom, in that he argued the case against process. Channelling Bruce Nussbaum, he said that companies are only comfortable with design theory when it is packaged as a process. And then they are principally purchasing the process, rather than the idea or outputs themselves. Real work, in other words.

Process might make bad things good, but it also makes great things good. It levels things out into mediocrity.

When Adam Smith discussed the division of labour, he noted that the benefits to industry would be in dexterity, time and technology. However, he noted that this process wasn’t applicable to agriculture due to its unpredictability and variety. As John noted with regard to marketing agencies, “The sell is industrial. The work is agricultural”.

sk

Image credit: http://www.flickr.com/photos/dunechaser/3339729380

Broadcast in a multi-platform world

Last week I attended the Mediatel Media Playground 2011 – the first session of which was Broadcast in a multi-platform world. Below are my notes.

Notes for the other sessions will follow later in the week. However, I found this seminar the most enjoyable and thought-provoking due to the sector being highly competitive with players who would traditionally be in separate markets, and the willingness of the speakers to engage in debate on this.

Details

According to the website, the themes of the debate were:

Platforms, content owners, broadcasters, manufacturers and the confused consumer too – the new broadcast world.

  • How are consumer viewing and listening habits changing?
  • What is Connected TV? How will it best be sold to the consumer?
  • How will broadcasters and programme makers stand out in a world of TV clutter?
  • How should VOD be sold to agencies and advertisers?
  • The role of the EPG
  • Who needs who most? Are these uneasy alliances going to come crashing down?
  • Is YouView just too late now or the catalyst to Connected TV taking off?

The session was chaired by Torin Douglas, Media Correspondent for the BBC and the panel consisted of:

  • Dara Nasr, Head – YouTube & Display at Google
  • Oli Newton, Head of Emerging Platforms at Starcom Mediavest
  • Dan Saunders, Head of Content Services at Samsung
  • Jeff Siegel, Head of Advertising at Rovi
  • Nigel Walley, CEO of Decipher
Notes

My notes are chronological, so will broadly follow the themes above. All “quotes” were hastily scribbled down, and so are subject to error and misinterpretation.

Introduction

Nigel Walley opened by saying that in many ways new media isn’t that different to old. “Broadcast is the original recommendation engine” albeit editorially driven rather than through algorithms.

He also said that we are now in a “post VOD world” where new media is a support to broadcast and not an alternative. This is actually a boon to live TV as those time-shifting need to actively avoid mobile and laptop to keep away from spoilers.

Oli Newton said that consumers don’t realise what technology they already have and what it can do – he used games consoles as an example of this. He sees the children being the main educators in spreading these forms of behaviour.

Dan Saunders talked about the rise of connected TVs (Smart TVs, in Samsung parlance). Samsung sell 1 in 4 TVs in the UK, and 75% of these will be connected. He says that smart TV isn’t a separate category but a price point in the overall line-up between HD and 3D.

Jeff Siegel notes that worldwide 50% of connectable sets are now connected (though Mat Watson of ITV disputed this for the UK, saying it is much lower)

Dara Nasr believes that digital and broadcast empower one another and the online/offline divide has disappeared

Consumer understanding

Nigel Walley believes it is a confusing time for consumers as there are different technologies, different players and different acronyms (DTRs/PVRs/DVRs).

For instance, an average household could have an IPTV for the Olympics, Virgin for their TV and broadband, a PS3 for the kids and a DVD player for Mum. All of these can play iPlayer but the BBC has done no strategic development to say which one is better. Nigel thinks Virgin should be the priority as it the best platform to correlate VOD viewing to the broadcast audience.

Unsurprisingly, Dan Saunders disagreed. He thinks a TV tuner with an internet connection allows viewers to augment broadcast to something meaningful – thus Samsung comes to the fore in Freeview homes.

Dara Nasr said that Youtube follow the user. To be a TV company they need to be on TV, though at the moment it is mobile that is growing their audience.

Nigel Walley questioned his strategy as on the same device there can be multiple versions of Youtube. Dara countered by saying this was because their API is open to external developers. They “want to be accessible everywhere, and see what wins”.

Oli Newton said it was not about names but what gives the best viewing experience. “It is being of the web, not on the web”.

Jeff Siegel agreed in that we should focus on features and not on definitions. On TV, the quality of the video is the main thing – scores and additional information can be mobile if necessary.

Nigel Walley feels the quality of the interface has been the main problem in the past but this is improving. In future, he sees Sky and Virgin could be the dominant app on a TV rather than a separate device, “but there is a technology race to go through first”. This might change how they are used – for instance Youtube is used differently on a TV to how it is on a PC

Nigel noted that another problem to date has been a lack of promotion of connected TVs. For instance, stores don’t have internet connections to enable them to demo it.

Oli Newton said that consumer understanding is the most important thing – they need to be able to ask the right questions in store. Apple’s “ad-ucation” has been good at this – even non-users know how to work an iPhone.

Impact

Nigel Walley sees the film industry as being most under threat as connected TVs can deliver a better experience. It will be hard to break through the system of broadcast promotions, trailers and TV guide features that build up a linear broadcast schedule.

Dan Saunders argued that connected TVs can only have a positive impact for companies like ITV – people are buying TVs to watch TV after all.

Nigel Walley then accused TV companies of not understanding the difference between customers and consumers. Sky and Virgin have customers with transactional records while BBC and ITV are trusted brands to consumers – thus they should treat BSkyB as a business partner rather than a competitor.

Role of EPG

Nigel Walley argued that platforms aren’t doing enough to promote channels. The EPG is dull and boring and wastes all the promotion that goes into a channel launch

Dan Saunders questioned the role of the EPG. It isn’t being used effectively for advertising and there is currently too much on the front page

Jeff Siegel feels it has to be consumer friendly before you can even consider advertising

Oli Newton feels that if you have a smart TV, you don’t care about the channels but the content – that’s where the power of the EPG is. The EPG is the best place to advertise “but has been woefully let down”

Nigel Walley concluded that “the EPG is still software, it is not yet a media”

Competing platforms

Oli Newton noted that there “content sinkholes” e.g. the Channel 4 programmes available on Youtube are different to those on 4oD and again different to those on TV VOD services.

Oli also feels that Youview “is a bit pointless” – other serices, that already had a head start on the interface and simplicity, are now occupying this space.

Nigel Walley said that the original Youview scope was great, but that was in 2007. Stores are already discounting things that are better than Youview.

Nigel finished by saying that with devices and manufacturers battling it out, broadcasters are now further down the value chain. However, they have the valuable content that lets them punch through.

The perception of disruption

Network effects hasten the rate of innovation. Therefore, the rate of technological change is faster now than it has ever been (at least if my memory of Solow-style exogenous growth models is correct.

This tends to be iterative. Small, continual improvements that improve the efficiency of processes and provide new opportunities for people to achieve their desires.

But, over time, this can be problematic.

Particularly with user perceptions.

The core proposition (and branding) of a product or service will try to remain fairly constant. But feature creep will bloat and complicate.

It is even possible that some innovations will supersede the original benefit in terms of usefulness and relevance, but it gets lost in the perceptions of users since it is only additive to the core proposition.

In order to focus upon the most useful innovations, a disruption is necessary. A break with the past.

Mobile is a good example of this.

Mobiles have evolved at a rapid rate. They got smaller as technological processes improved but then bigger as new features emerged. Cameras, music players and internet connectivity all augmented the core proposition – a device to make calls on, wherever you are.

But the internet has superseded the phone network. Email and social networks (and Skype) sit alongside voice and text, along with the numerous other benefits the mobile internet offers.

And a disruption was needed to make these innovations apparent. Because ownership doesn’t equate to usage.

This disruption was led by the iPhone.

Nokia has tended to lead technological innovations, but Apple repackaged the device. It brought back usability and simplicity, with the mobile internet at the core of the offering.

Nokia, Sony Ericsson and Samsung (NSS) may offer “smartphones” or internet enabled phones. But they are perceived fundamentally differently to the disruptors – Apple, BlackBerry and HTC/Google (ABH).

NSS represents an easy choice – a safe upgrade on something familiar with. The bells and whistles may be a bit shinier, but the phone is basically the same. And behaviour remains similar.

ABH are disruptive. They represent a new type of phone. People will think more carefully about switching. The benefits are framed in what is different or better to their current phone. Once they have invested, this behaviour needs to be justified and so they utilise the functionality. Behaviour changes.

The data from Essential Research’s Brandheld study illustrates this.

Looking purely at those claiming to own a smartphone (we gave them a consumer friendly definition outlining benefits; many wouldn’t know whether their phone allowed third party apps to be developed), there was no real difference in claimed internet use via a computer. ABH owners spend 25 hours a week online; NSS owners spend 24 hours.

But when the data for mobile internet usage is explored, a different story emerges.

  • 65% of ABH smartphone owners access the mobile internet every day; 29% of NSS smartphone owners do so
  • 78% of ABH smartphone owners access the mobile internet at all; 63% of NSS smartphone owners do so

The ABH figures are actually skewed by BlackBerry. 87% of iPhone owners say they use the internet on their phone on a daily basis. They are also far likelier to use services such as games, maps and commerce based services.

Is there hope for the incumbent? I’m not so sure. Clay Shirky noted, with regard to media companies, that there is no incentive to disrupt the core business model. Executives are used to things working successfully in one way, that they will seek to protect this for as long as possible rather than embrace the risk of the new.

Can this be combated? Maybe, but maybe not. It seems to be cyclical. Eventually the disruptor becomes the incumbent, and the process repeats itself.

On a sidenote, as previously mentioned I don’t think the iPad will disrupt the computing space. It is disrupting a market that is nascent; the mobile market was well established before it was disrupted. If anything, I think the iPad will just precipitate touchscreen laptops.

The data I used above was from Brandheld. More information about the project can be found here, and I’ve included a Slideshare presentation below that indicates some of the key findings (Although I worked heavily on the project and analysis, I didn’t write this document. As you can tell. I don’t possess Keynote and I would never include the word “insight” in a presentation)

sk

Image credit: http://www.flickr.com/photos/jesse_sneed/2383953694/

Recommended Reading – 26th February 2010

I’ll try to make this type of post a weekly occurrence. My previous link updates were quite unwieldy, so I’ll try to limit these recommend reading posts to around five items.

Ten movie recuts – because it shows how perspective is dynamic and how, through editing or otherwise, we don’t necessarily see the full picture

A couple of posts on Google caught my eye – this book review looking at Google’s business practices (One thing they don’t do is ask for permission) and this Wired piece on their famous algorithm, and how it gives them their competitive advantage

87 cool things is a presentation that Google made last year, showing innovative ways that people have used their video and maps services – both entertaining and useful.

I admit to being pleasantly surprised, but the OK Cupid blog is very informative, and has some great posts on analysing the information it receives from its users. This particular post looks at profile picture myths to see what type of picture is more likely to prompt a response from another user. On a data note, this website is packed full of really useful MS Excel tips

Similar to a post I linked to last week, this post on job interview questions to ask planners is applicable beyond the advertising industry – the questions are penetrative and potentially very illuminating.

sk

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Fighting potential irrelevance

Disclaimer: My employer, Essential Research, has worked with several of the UK network providers in the past, and hopes to do so again in future. All opinions expressed in this blog post – and this blog in general – are my own.

The first to market isn’t always the ultimate category “winner”. There were cars before Ford and social networks before Facebook, to give just two examples. Incumbents may hold the greatest influence, but through innovations and developments of products and services their position is rarely fully secure. Eventually a change of business strategy will be required.

I’m wondering if this is what the mobile phone networks are about to undergo.

For the past decade or two, the networks have had the power in the mobile market. They controlled the distribution – through both spectrum and their walled garden approach to content and services. Hence the huge bidding war when the UK government auctioned off spectrum for 3G a decade ago.

But this looks to be changing, as penetration of internet-enabled handsets that access the world wide web – both on a 3G network and on Wifi – shift the focus. While the debate over open access (symbolised by Google) and closed access (symbolised by Apple) continues, it appears that the shift in focus is to the detriment of the networks but the benefits of the operating system, and thus the handset.

This article – on the news that O2 and Orange are joining an open platform for applications – says that ‘The mobile phone networks fear that at the moment they are in danger of becoming little more than “dumb pipes in the air”‘

I’m sure they have methods to standardise the services across different screen sizes, resolutions, handsets and operating systems but it will be interesting to see whether it can compete with the OS based offerings of Apple, BlackBerry, Google and Nokia.

Do this mean mobile networks will go the way of ISPs? Viable businesses, but not wielding the level of power that AOL et al were hoping to achieve.

It is possible, but not inevitable. The main issue for networks is that when they work, they are invisible. We only notice when they fail, and most people will only contact network customer care when they want to complain (sales calls/contract renewals excepted). No matter how good (or otherwise) this service is, it is still ultimately dealing with negative issues.

A handset and operating system should also “just work”, but its visibility means we can also be delighted – whether through eye-catching menus or a satisfying tactility to the buttons or touch screen.

This visibility also means the handset is more closely associated with the service. Networks are still defined by the coverage and quality of voice communication above all else.

The networks risk becoming a utility, where price and quality are the only defining features.

The need to diversify is apparent, but I don’t think this should be in applications.

Aside from the handset/OS competition, there is a huge question-mark over the long-term viability of the applications market. Should HTML5 launch and grow, the balance of power may once again shift – this time from the operating system to the software or service provider. To the consumer, the delivery mechanism is largely irrelevant – they just want the best possible service in the most convenient format.

I’m also sceptical about exclusive content deals. Orange have successfully done this in France, but it raised anti-competitive issues and, ultimately, I think audience scale will mean openness will win out (I also think this is true with handsets trying to get content exclusivity).

Instead, I think partnerships – across a range of industries – are the answer. Mobile networks already have a significant presence in certain areas – such as O2 with live music and Orange with film – and these can be extended. There are also plenty of opportunities to provide complementary services – O2 moving into finance seems like a logical step, for instance.

Like gambling, one of the hardest things in business (so I’ve been told) is knowing when to call it quits. The era of networks dominating the monetisation of content and internet-based services looks like it is drawing to close. Yet there are many potential new revenue streams to develop. Whether picking the right strategy requires the luck of the gambler or not, time will tell.

sk

Image credit: Me

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