Mobile Black Swans and Turkeys

Part I: Tame Turkeys

On the return flight home for Thanksgiving this week, I read Nassim Taleb’s book The Black Swan and decided that tis the season to draw profound parallels between innovation and poultry.

And so while busy stuffing the family turkey I thought about how this all applied to my world of consumer engagement, retail sales and payment.

Here are my insights:

  • Chickens: Bertrand Russell’s wrote an anecdote about the benevolent farmer in 1912. The fat and happy chicken thinks the farmer is a benevolent protector until it is hauled away to the slaughter house.
  • Turkeys:  Nassim Taleb, in his book The Black Swan, says that the same holds true for the Thanksgiving turkey. However, he adds that the surprise for a turkey is not a surprise to its butcher.
  • Swans: So the black-swan question for the marketing community is: How do we play the role of the butcher not the turkey?

Moving your retail business from a step-by-step evolutionary growth to revolutionary, black swan transformation is not easy. In fact, it may be impossible. Corporations find it difficult to reinvent from within. However, to be aware of the nature of outliers and revolutionary innovation is a good first step.

You can rename your CIO: Chief Innovation Office, your CTO: Chief Transformation Officer and your CDO: Chief Disruption Officer. However this is all for nought if they cannot identify swans or at least the turkeys.

Look to social media. There is a succession of ever faster black-swan innovations starting with email and ending in SnapChat’s self-destructing messaging. Microsoft did not anticipate Google search, Google did not anticipate Facebook communities; Facebook did not anticipate Twitter micro-blogging; the same holds true for Instagram’s social picture publishing or SnapChat’s peek-a-boo messaging.  The same applies to retail as well as broadcast, payments, health, advertising to name a few rudely disrupted verticals.

Retail payments is a classic chase-the-tail solution mashup. But payment vendors have been more astute. The FIs ran a two-sided business to establish MasterCard and VISA credit services. The FIs have fought to be a part of any POS and prepaid activity in retail. With the emergence of digital payment, payment incumbents have aggressively invested and acquired companies in the mobile POS space (VISA/Square) and as well as in the cloud (VISA/Playspan).

VISA’s purchase of PlaySpan was particularly forward thinking. PlaySpan allowed gamers to buy virtual swords and pumpkin seeds for their virtual battle grounds and farms without leaving the game. Frictionless commerce engineering: meet VISA’s present day  V.me.

But even leviathans like VISA and MasterCard have been sidelined to commodity commerce rails.While they make nice transactional revenue, Amazon, iTunes, PayPal and Playstore and other consumer commerce portals have made the card credentials second fiddle. They discount the interchange and grab the CRM and big data.

Shopper marketing, Shopper engagement all follow similar twists. But not always evolutionary:

SMS was the black swan technology revolutionizing communication for the unsuspecting (but delighted) wireless carriers. We all thought QR codes, mobile apps and NFC would supplant this messaging channel.  WhatApp, Skype and Viber all have eaten away at the peer-to-peer traffic; however, for brands, SMS, and for some successful apps, the notification channel, remains the main opt-in and content delivery channel of choice.

Black swan on the horizon? iBeacons, WiFi Direct or LTE Direct? Maybe.

Proximity engagement is essential for a brand or retailer to drive path into purchase.  Shopkick and Beacons are valuable but are ultimately broadcast solutions.  Future solutions such as LTE Direct promise to extend the retail network and add more intelligence and peer to peer interactivity to this engagement.

However, in all the above cases it is difficult, if not impossible, to identify one strategy, vendor, agency that will bring revolutionary black swan ideas.

When attending events whether speaking or listening, it all seems so easy. Innovate they say. . .

Well so my friends, the innovator’s dilemma maybe just to avoid becoming the turkey.

Happy Thanksgiving!

 

Interview on Twitter, Blackberry & disruptive business models

While the market complains that the it is an overhyped initial public offering. Many of the detractors are using Twitter to voice their concern. Ironic, isn’t it?  Post IPO, the stock will most likely rise to $30 and wait for Twitter to show some lift in advertising revenue. This will come as the media dollars need a home and their are few options for the digital buyer.

Twitter has moved from a microblog to a trend-crowd-sourcing destination.

1 in 5 have accounts but more and more will use the service to scrap instant and succinct info from the web. With this as a unique value prop, Twitter will capture revenue and drive profit over the next 48 months.  http://watch.bnn.ca/#clip1036995

BNN Interview: Challenges with Twitter’s biz model pre-IPO

BNN 5 minutes: The Business News : October 4, 2013 : Challenges Facing Twitter’s Business Model and its Upcoming IPO [10-04-13 12:20 AM]

  • Positive: Twitter is NATIVELY mobile and will not have the same questions that FaceBook had on its IPO – i.e. What is your mobile strategy?
  • Positive: Twitter has an owned-content advertising model which is less impression based and more brand ENGAGEMENT. 
  • Challenge: Twitter is an social aggregation hub. We see lots of auto-twittering without visiting the social platform from third party sites. (See page 61 in their S-1 filing)  Referred to as blind tweeters (syndicated from other sites), these are a big slice of their user base.  This is an impression-based advertising challenge.
  • Challenge: Twitter is an advertising company. Specifically, mobile advertising with 65% of the revenue coming from small screen. The mobile advertising space is in a bubble. Same old story: Big growth in revenues, but no profits. The breaking bubble is evident in Jumptap’s exit to Millennial Media.
  • Challenge: Although the US is Twitter’s home it needs global growth. There will be global pressure from competitors like SINA WEIBO in China and LINE in Japan.

http://watch.bnn.ca/#clip1017318

The 2014 Ad Game Changer: Digital Maps

Gary Schwartz (16 September, 2013)

Of all the widgets and long-forgotten apps on your phone the one with most mobile mindshare is your map app. We have become a mobile society, and in the 2010s, map apps personify our wanderlust. When we open our mobile map, we have intent, direction and purpose. It is vitamin “M”: the ultimate upper and highly addictive.

And map real estate is hot: Apple buys Locationary, Embark and HopStop; Google buys Waze;  Bing is rumored to be in talks with FourSquare; Zillow, the map real estate tycoon, buys EasyStreet, and indoor mapping app company, Aisle411 raises a hefty seed round in the valley. As OEMs beef up their services, we are entering a new phase of map building. Location has always been a data grab. Now, the industry is starting to focus on monetising subway stops, street corners and highways across the world.

The principal challenge is that maps are a new and unique advertising paradigm, and the incumbent search business models, mostly designed for the web’s previous era as a stationary, desktop experience may need to be adjusted.
Galileo to Google

Google Maps, the grand daddy of digital mapping, was born in 2004 as a skunk works project by two Danish brothers in Australia.

First designed as a heavy client app, in 2004 the software came full circle as Lars Rasmussen and his brother were acquired by Google after making a web-based pitch. The same year, Google acquired Keyhole, Inc. and proceeded to use Keyhole’s mark-up language to launch Google Earth in 2005.

During the next five years, Google started to revolutionize digital maps. It is quite possibly the most exciting innovation effort by the company. Not since map mavericks Ptolomy, Copernicus and Galileo has mapping accelerated so profoundly. Within a few short years Google has redefined the way we see the world around us.

Google Maps rolled out road directions in North America in 2006 and their PC-based maps became the pre-GPS automotive assistant. However convenient and customizable, Google maps for the desktop were a print-on-demand version of London’s A-Z pocket maps. In many ways, a Google map printed out before a trip was no different from John Ogilby’s 1675 Britannia detailed strip maps that travels bought to find their way from Norfolk to Newmarket with inns, stables and other points-of-interest as well as clear directions and distances clearly marked. They balanced behind the horse on the coach seat as our laser-printed version would sit on our car dashboard.

But the small screen was the true game changer. The capacitive screen touch invented by Andrew Hsu, combined with the pinch-and-zoom mobile interface developed by Apple made complex map navigation simple, user friendly and, most importantly, mobile.

With multiscreen map adoption, Google Maps expanded. The company launched in Latin America and Asia, and started the subterranean mapping of subways in 2007. In 2008, a view from space; in 2009, a POV from the street and 3D rendering.  And more. Google mapped canals and bike paths, endangered forests and the ocean floors,  the moon and Mars and the ultimate conquest, Macy’s in-store experience.

This was phase one: Build a dominant innovative platform with simple APIs, establish market stickiness and trust by the point-A-to-point-B public.

Now add metadata

Google+ Local launched in 2012, allowing users to post reviews and images into pages hosted by third party sites. This year maps are becoming more customized, providing location-specific information on points-of-interest. While Google has maintained a focus on road navigation with its 2013 acquisition of the crowd sourcing road-warrior Waze software, the operative term on the new Google map is “explore.” Explore photos, recommendations, and restaurants.

Maps plus Google Glass makes the possibility of on-the-go exploration more immersive. Using the Google Mirror API developers can feed real-time GPS info and pre-rendered map images into the eye window of Glass wearers for “dexterous” driving, cycling or walking to the local mall. Glass becomes “a Segway for your head.” And taking maps to the edge of utility: Google Sky (which maps the stars based on your GPS location and vision angle) can be integration with Google Glass to show the outlines of constellations through a transparent filter to view the night sky.

Wow!

And then at the end of this epic journey, Google announces local advertising. Google Maps now allows short sections of advertisements to be placed directly onto the map itself. Local advertising is one of Google’s core business and Google Maps ad purchases are made through the same Google AdWords auction that buyers are already very familiar.

For Google this is simply a terrestrial version of browser-based search. When a consumer enters “Starbucks” in her browser, she finds links to buy “Starbucks Instant Coffee Bundle” on Amazon.com. When a consumer enters Starbucks in Google Maps, she finds local Starbucks to get the real deal (or if Tim Hortons is bidding, an ad for a competitively located Timmy’s coffee store.) Both these use cases involve path to purchase. One is virtual, the other is proximal.

Google hopes Map-based ads will follow the same digital success that Google has had with its search-based ads. Instead of auctioning AdWords at point-of-search, Google auctions ads at point-of-navigation.

Ptolemy what? There has to be more than just that. We’re just not fully there yet.

Don’t forget the Big Apple

Apple recognized the value of maps and knew that they had a Trojan Horse lurking in their mobile operating system in Google Maps. Google’s map app had become the dominant phonetop service with the most unique visitors of any app in-market. When Appl­e launched and preloaded its own proprietary map app in August 2012, Google’s traffic dropped making Facebook the winning app for unique impressions as well as time spend.

(After a few geographical faux pas) Apple started to establish its own relationship with the map consumer. But Google Mappers are loyal. When Google launched its new map app for iOS 6 in December there was a 30 per cent rush of Apple folk upgrading to the new operating system (MoPub.com). Affinity to a map app had influenced these consumers’ mobile behaviour. Quite remarkable.

However, Apple is committed to build a map following. While the company no longer needed to pay licensing to Google, which was good, the key reason for ousting Google Maps was that maps had become a data pillar. By replacing Google, Apple had direct access to a wealth of consumer data and potential advertising revenue.

Yahoo! Maps, Bing Maps, Nokia Maps, and MapQuest all use the NAVTEQ electronic map feed (best known for its automotive navigation services), and like Apple now, they own their own consumer data layer, which is crucial for generating advertising and marketing revenue on maps.

Bing is the major map contender.  In September, the company added 13 million square kilometers (316TB) of aircraft and satellite photography to its service. Microsoft’s large investment in Facebook in 2007 ($240 million) led to the 2013 decision adopt Bing as FaceBook’s mapping and search provider. To do this effectively, and compete with the market-leader, Google, Bing needs to beef up and differentiate its map offerings. Bing has already rolled out “Local Scout” which helps consumers find food and fun across all its screens. Rumors of a FourSquare acquisition (or possibly financing) may be part of this grand strategy.

(Microsoft acquisition of Nokia did not come with their HERE maps assets. Nokia’s HERE maps include road networks, traffic patterns and urban landscapes and as licensed by major properties such as Garmin, Oracle and Amazon.com. Will Nokia take the lead as the premier mapping and location services across different screens? Will they just sell off the asset to Apple after the Microsoft acquisition is complete?)

And the open-source mapping movement is also growing. Washington D.C.-based startup, MapBox, provides more custom navigation and interesting APIs built on top of Open Street Maps. Open is good and allows developers greater flexibility and affordability; Foursquare uses MapBox’s services to display its users’ check-in histories. However MapBox is not preloaded on your Android or Apple phone and while they have an iOS mapping SDK they have no Android footprint. MapBox will certainly play a roll as an embedded technology in sites all over the web; however, it is unlikely that they will be a standalone consumer utility on top of your phone and tablet.

With the proliferation of WiFi networks in retail, vendors such as Cisco drive mobile mapping solutions for shoppers that join the free network. The maps allows for hyper-local, custom mapping that includes restroom as well as promotional information on retail stores.

All of these digital map offerings are entering the mainstream at a time when advertisers are questioning consumer engagement on mobile, and trying to understand how best to follow their consumer in a contextual and relevant manner. Brands and retailers are re-evaluating the way we sell and, more importantly, engage across multiple screens. Their assumptions on path-to-purchase, built during the era of the desktop web, are no longer fully valid and reliable. The classic consumer narrative of home-to-store has changed and retailers and brand can no longer simply hire a Director of Shopper Insights and hope for the best.

Advertising and marketing is about providing a consistent message at aisle, and checkout, wherever the shopper finds the retailer. If the advertisers wants to get back in the game, possibly the most exciting place to be right now is on the map. When the consumer and shopper opens their map app when they have intent to meet someone, go somewhere or buy something. All this drives commerce. Maps provide unadulterated path-to-purchase.

Narrative: Going beyond advertising

So what is the new advertising paradigm for maps? Maps have layered functionality: terrain, roads, satellite, traffic, public transport and images. Then there is the exploration layer: recommendations and general points-of-interest. And now Google has provided an additional local advertising layer.

However, the adding an advertising layer may not prove to be effective in a map environment. There is more value to the exploration layer. Yes, maps help us move in a utilitarian fashion from Point-A to Point-B and that is why Waze and other transit acquisitions have been so important.  But maps also have a very non-utilitarian function.

Maps help the consumer simply “explore” and is what will ultimately connect map users to brands and content owners. Maps tell stories because precisely they have a beginning and an end, and are defined by intent and clear purpose.

Instagram, Twitter, and Facebook already situate the user’s photos and comments at a latitude and longitude: a country, a city, a bar. However these social graphs are not map applications and location is an important but secondary metatag.

The opportunity is to build a new bespoke map layer for brands and content owners. Think map first.

Startups such as Findery and CityMaps have map based UGC (user-generated content) engines. Where is the content input engine for brands? How can brands visualize content and actively map this data across all their customers’ screens?

One company called Mapiary, based out of Singapore, is developing the tools to allow brands and retailers to layer rich navigation onto the map. How can Unilever’s Becel margarine be more relevant to power walkers globally? Or how can Heineken weave narrative into a city pub crawl? Diageo, can map a DJ tour for Smirnoff. The NYTimes can map their 36-Hour travel series in a rich contextual manner. This is new digital cartouche and as important as the underlying map.

Where is the new vision of brand advertising? After all the innovation that Lars Rasmussen (Google Maps) and John Hanke (Google Earth) brought to maps we surely need to go beyond paid search models and allow owned content to become a rich and valuable layer in the 2014 map.

BNN Interview on the “Battle to Monetize Maps” discussing the positioning of Apple, Google & Microsoft. http://t.co/M1Pa0Qcijd 

Gary Schwartz is the CEO of Impact Mobile. Having been at the frontlines of the mobile industry for over a decade, Gary is the author of two books, “The Impulse Economy: Understanding Mobile Shoppers” and “Fast Shopper. Slow Store: A Guide to Courting and Capturing the Mobile Consumers,” both of which highlight the current state of the mobile commerce space and chronicle the significant impact that mobile is having on consumers, retailers and brands. Gary is also a chair emeritus for the Interactive Advertising Bureau and the Mobile Entertainment Forum NA and global director of the Location Based Marketing Association.

Jump, Tap, Exit. (Jumptap & Millennial)

by Gary Schwartz (14/08/2013)

Jumptap may be the last man standing of the incumbent mobile ad networks to have their exit. The acquisition by Millennial Media, its erstwhile competitor, in a predominantly stock transaction, may not be the glory finish that many had hoped.   What does consolidation mean to the mobile ad world?

Good things . . . in the long term.

Grooming a network

George Bell came on as the new Jumptap CEO in 2010 to ostensibly position the company for an exit.  Bell was the ideal candidate coming from General Catalyst and being an accomplish network deal maker. Back in 1996, Bell took Excite network public.  Apart from a few digital faux pas such as turning down the then two-year-old startup Google offer of $750,000 for their search engine, the Excite network continued to grow with impressive revenues through 1998.

Over the past two years, under Bell’s leadership Jumptap has grown its position in the crowded media market establishing global partnership into markets in Asia and vied for the budgets of digital agencies, direct response and brand advertisers and the inventory of publishers globally. And mobile budgets have grown for all mobile ad network stakeholders.

In Jumptap’s M&A prep this year, the company took in a $27.5 raise from WPP, Keating Capital and General Catalyst topping their raise to date at $121.5 million. A significant number. Key was Jumptap’s decision to bring on board John Hadl a mobile media veteran and rainmaker who advised Millennial Media, Admob and Quattro Wireless.

2013 was its make or break year.

Patents alone

On patents alone, Jumptap should hold significant market value. After the first patent was issued in June 2009, Jumptap has received 52 patents; at an impressive IP quota of one monthly. It has many more published patent applications in the pipe.

George Bell, has advocated from day one for IP differentiation and has continually stated that patents underscore the company’s commitment to ad targeting and smart ad solutions. The company holds a good spread of patents from ad targeting, coupon selection, bid optimization (realtime bidding) and the management of third-party data.

Augme Technology’s (a mobile media company) lawsuit against Millennial Media over ad targeting last year, patent mud-slinging seemed to be the first indication of a mobile ad war.

The Millennial Media acquisition may not vindicate the hard work and positioning on patents and network growth and may speak more to the general mobile ad market ennui.

Ups and Downs

The mega valuations that Admob and Quattro Wireless commanded from Google and Apple respectively four years ago soon rang hollow after Apple shelved Quattro’s platform and mobile ad sales showed halting growth.  It seemed that the online leviathans were just building a mobile ad network and waiting. Mobile buying remained challenging – there was not the scale and simplicity that is required to attract media dollars.

Then last year the market began to heat up with cool results: InMobi received strategic investment from Softbank,  Opera purchased AdMarvel  and Millennial Media, after trying for a Quattro-like exit, opted for an IPO which was surprisingly successful.

Markets results remained challenging. Velti and Augme, both of which had transitioned their business to mobile advertising away from their traditional higher margin mobile marketing business, showed slowing growth.

Of the ad networks, Millennial Media was the closest to turning a profit and generating consistent positive operating cash flow. Now with its expanded holdings what should the network focus on to grow?

“Cross Screen”

There is an oft-quoted line in technology that many are over optimistic in the short term and overly pessimistic about the long term.

In the short term mobile revenues will grow slowly and organically as budgets move into digital. However, in the long-term there is tremendous opportunity to accelerate these budgets if we can manage to simplify the mobile buy across all digital touch points.

Jumptap’s Unified Audience Exchange and their previous partnership with 24/7 (which has credibility on the PC side) was a sign of a multiscreen ad strategy. Networks like Jumptap and TapAd had begun touting the importance of a cross-channel ad buy.  Paul Palmieri, Millennial Media’s founder and CEO mentioned Jumptap’s expertise in cross-screen media a key asset to their network.

Brands want to follow their consumer across their many interactive screens. Google, Facebook and Pandora have made their mobile offering increasingly advertiser-friendly. Larry Page on his quarter call last month said that Google wants “ to make advertising super simple for customers. Online advertising had developed in very device specific ways with separate campaigns for desktop and mobile. This made arduous work for advertisers and agencies, and meant mobile opportunities often got missed.”

Digital consumer engagement has become a top priority for advertisers and publishers. There is a trend to make mobile advertising easier to buy. Online, mobile and offline media need to be seamlessly connected. Targeting across multiple screens (not just mobile) is essential for brands drive conversion and path-to-purchase.

Millennial will need to navigate through a rash of nimble new start ups in the space (App Nexus, Adelphic, Native, Nextage, Media Math). Consolidation, simplification and cross-screen budgets will help Millennial but it will be difficult for this public company to pivot.