The Mobile Advertising Ecosystem

There are several business models for Mobile Social Networks (MSN). Asking users to pay for either community membership or for premium content like virtual goods are two examples. Lately, a few players have been experimenting with different premium models. Nevertheless, it seems to me that our market segment still favours the advertising-based business model.

When thinking about whom to choose as a partner I drew the diagram you see above to visualise which partners and options MSN currently have. In my view mobile social networks now have four different groups of potential advertising partners. In more detail, if you consider the various possible combinations for cooperations between partners, the money we look at can go through 7 different ways through the value chain) as the diagram illustrates. These four groups of partners are:

• Mobile Content / Service Provider
  A direct cooperation with mobile content and service provider can bring higher rates of the effective cost per mille (eCPM) for the social network’s inventory. On the other hand the cooperation requires a a higher sales effort from the MSN. To reach a 100% fill rate (defined here as ads shown by content partner/inventory offered by MSN) your inventory a MSN needs many business partners to gain enough advertising deals. It also takes a high technical integration effort and a lot time to manage the relationships with these partners. One well-known mobile content provider is e.g. Fox Mobile Group (Jamba/Jamster).
   
• Mobile Advertising Agency
  Mobile advertising agencies often work for several big brands and manage cross media advertising campaigns for them. Typically agencies wish to target a very specific audience for a very large MSN inventory volume within a certain period of time. For a MSN these specific types of demands are often difficult to serve properly. Two of such mobile advertising agencies are pi2006.es and glispa.de.
   
• Mobile Advertising Networks
  Mobile advertising networks pool different kinds of mobile players. They have elaborated ways how they can fulfill the specific needs of advertisers and help publishers to convert their inventory into revenues. From the point of view of a MSN their specific disadvantage is that MSN can not directly choose who advertises on on their site. Indirectly they can choose to put to put specific advertisers on “blacklists”. Examples of two such marketplaces are admob.com and adinfuse.com.
   
• Mobile Advertising Optimisers
  Mobile advertising optimisers offer a very tempting comprehensive monetization solution for MSNs. However, they represent a new branch of business in the mobile industry. If one is to believe them MSN can easily manage all their business cooperations and maximize the monetization of their inventory. On the other hand they represent a new part of the value chain which wants a bite from the revenue pie. Nexage.com and smaato.de are among those new players.

It should be mentioned that there is a even more complexity in the value chain. For example some mobile social networks like buzzcity.com offer their own mobile advertising networks. And you also can’t preclude that the mobile advertising optimisers integrate each other. So how does one choose as a mobile social network the right part of this value chain to work with? We don’t really know yet who in the value chain will survive in the long term because the mobile advertising business is still young. We know mobile advertising networks since 2006 (admob.com started in 2006) and mobile advertising optimisers since last year (smaato.de started with SOMA in 2008). Google introduced Adsense for mobile search just the other day. I am sure that we will also see another big movement in the industry when the first mobile ads appear on Facebook Mobile and MySpace Mobile‘s efforts increase in this regard. Facebook has got no ads yet, but just imagine the additional amount of mobile advertising inventory from ‘20 Million Users Now Accessing Facebook Through Mobile Platforms‘.

To me as MSN one must broadly consider of a trade-off between money (content providers, agencies) vs security (optimizers). The best business option for a mobile social network depends much on which strategy in general they pursue. If you go for the big money, you go directly to the content / service providers or/and advertising agency and accept the high business efforts and the risk depending on few big customers. If you aim for more secureness and less work, but at the worst also less money for your inventory, than you go for the mobile advertising marketplaces and optimizers.
 
But at the end, how to chose the right business partners for the corresponding cooperation? For an informed decision you need some criteria; I can think of a set of 14 criteria to bear in mind when selecting one. Firstly we can have a look on basic facts about the potential business friends like company age, references, team and investors. Some operating figures like the market coverage, achieved average fill rate and achieved average eCPM are also of interest. Than we should consider the business aspects like revenue share, contract duration, contractual specials and payment target / reliability. And of course don’t forget the technical issues like integration efforts, performance / scalability and support quality. But at the end it’s all about individual experience with specific business partners, because mostly you have to deal with young players in our turbulent industrial sector.
 
For peperonity.com we have found our strategy and good business partners. Understandably I can’t tell you the details, but I am open for discussion about the mobile advertising ecosystem from the perspective of MSN or a publisher in general. Our mobile industry is just vibrant and full of surprises :o)

(Note: This is my contribution for the ‘FACTS OF THE WEEK NO 1′ at www.mobile-facts.com)

Mobile Social Web – Web 2.0 für die Hosentasche

Two days ago I was asked by Mark Wächter, if I can fill in for facebook on the Mobile Media Summit at MedienForum.NRW in cologne. They didn’t ask me first, but why not :o) So I had the great opportunity to join the panel ‘Mobile Social Web – Web 2.0 für die Hosentasche’ (English: Mobile Social Web – Web 2.0 for the trouser pocket) and to discuss the developments in mobile social networks with Sarik Weber (Vice President – Marketing, cellity AG), Olaf Kroll (Director Business Development Europe, Fox Interactive Media / MySpace.com), Mark Wächter (chairman of Fachgruppe Mobile of Bundesverbandes der Digitalen Wirtschaft e.V.) and Ossi Urchs (F.F.T. Medienagentur).

Markus Nass made some pics with me in action, as carnival barker and in the panel. And here are my slides:

[slideshare id=465745&doc=20080611-peperonide-mk-mobile-summit-1213346077798560-8&w=425]

There were also other interesting lectures that day like the one by Dr. Rainer Deutschmann (Executive Vice President Mobile Internet, T-Mobile International AG), telling that they are changing more and more from a portal to a platform for third parties. And that it is important for them right now to explain to the user that they can now find the web brands like eBay – that they are familiar with on their personal computer at home – on the their mobile phone. And I just loved the statement of Michael Stenberg (Partner Director Mobile, Central & Eastern Europe, Yahoo! Deutschland GmbH): ‘the mobile internet is big’ :o)

Mobile Media Summit 2008 Agenda:

Mobile Internet – Kampf um die beste Startposition

• Keynote: Dr. Rainer Deutschmann
• Moderation: Ossi Urchs
• Panel participants: Mark Wächter, Dr. Rainer Deutschmann, Michael Stenberg, Matthias Büchs
• Presentations: Michael Stenberg, Matthias Büchs

Mobile Social Web – Web 2.0 für die Hosentasche

• Keynote: Sarik Weber
• Moderation: Ossi Urchs
• Panel participants: Maciej A. Kuszpa, Mark Wächter, Olaf Kroll, Sarik Weber
• Presentations: Olaf Kroll, Maciej A. Kuszpa

Mobile Advertising – Werbung direkt beim Kunden

• Keynote: Burkhard Leimbrock
• Moderation: Ossi Urchs
• Panel participants: Dirk Kraus, Mark Wächter, Burkhard Leimbrock, Stefan Meyer-Spickenagel
• Presentations: Dirk Kraus, Stefan Meyer-Spickenagel

On my journey through the world wide web I have discovered some interesting web 2.0 services like yasni.de – a search engine for people. This service wants to provide all public information about a person – it could be a good idea, if you want to protect your good reputation on the web. But I can’t really look through the system… the search result often vary in the number and some results are identical, but I didn’t find a way to merge them. My VIP-Rank (authenticity) vary all the time between 193 to 196 – I don’t know why, but Paris Hilton stays solid at 9 VIP-Rank :o)

Some similar services are spock.com, myonid.de and rapleaf.com – the preamble of their Terms of Service is just great:

“By using Rapleaf, you agree to act ethically and honestly. You believe that it is more profitable to be ethical. You want to make the world a better place by doing good, not harm. You agree to treat people kindly.”

and you directly feel that they just want to make big money with your trust and help ;o)

I also tried some social network sites like unddu.de, lokalisten.de, stayfriends.de and myspace.com, but my favorite is still facebook.com. It’s just fun to find lost old schoolmate, college friends and loose contacts. But it is also frightening how much time you can spend surfing, building and searching in all those web 2.0 services…

And here is the development of the google search result for my person specific keywords:

And some statistics for my log file on 2008.01.01:

Mobile User Generated Content (MUGC)

Mobile User Generated Content is a very thrilling subject, because it’s very multifaceted and mostly unpredictable. But is it a good amendment to marketing activities via mobile device? Under certain conditions it could be! And now I have almost five hours to find out the main conditions on my way to Augsburg in the train :o)

I should start to study more about phenomenons like Web 2.0, Social Networking and User generated Content, but definitely to write more about our work. You can already find articles about internet communities like myspace or youtube at Wikipedia, the free encyclopedia. You have to take a look on the article about the Internet Phenomenon – the power of the internet is impressive!