Monetization of Mobile Platform

The slides below are for a project that I have been working on in the past two weeks for one of my classes. I have really been fascinated by the growth of the mobile internet and what implications may result from always-on, constantly available internet access. How will users change their internet usage behavior, how will they utilize such easy online access, and just as important, how will businesses make money from the rise of mobile internet?

That means asking what new mobile advertising and location-based advertising and services will be prominent on mobile phone platforms. By examining the major advertising networks and the differences in their various market segments, as well as the impact of location-based technologies on new advertising efforts and the innovative services that have arisen to take advantage of location-based technologies, I wanted this presentation to highlight what advertisers and mobile users can expect to see in the next five years in a constantly changing industry. One important aspect of the future of the mobile industry’s development that is not stressed in these slides is mobile apps. Apps are the way to extend the usability of mobile internet service, and is a major player in the growth of the mobile internet. Also, I believe it will be the leader in efforts to monetize the mobile internet effort in the future, but due to the scope of my research this time, I did not cover it. I would definitely like to look into this sector in the future.

I relied on a variety of sources, including industry media like AdAge, TechCrunch, and marketing research firms like eMarketer and even some Morgan Stanley investor reports, so there’s a lot numbers to digest, but also some neat graphs and charts to make things easier to understand. Maybe this sounds like a cliche, but I really think the potential impact of mobile internet is going to change our lives. What are your thoughts on the growth of mobile internet and mobile advertising? What are the next big mobile web opportunities?

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Collective Power

News came out last week that social ecommerce site Groupon has received $1.35 million in funding from venture capitalist firm D.S.T, and has also received an evaluation of over $1 billion. Considering Twitter received its $1 billion valuation 3 years after it was founded, and Facebook received such a valuation after 2 years, Groupon’s $1 billion valuation after only one and a half a year after its creation may mark the coming of a collective-buying age. On Groupon, users can receive daily discounts of deals from many local services and retail stores if a certain number of people all sign up for the deal. Groupon epitomizes collective behavior as a way to scale, and thus reducing economic costs, so it can strike a win/win situation for both consumers and retailers.

Besides this economically-driven collective behavior on social commerce sites like Groupon, flash mobs are another kind of collective behavior that also demonstrate how collective power can be facilitated and even amplified by social technologies. A week before last Thursday’s Earth Day, I received an Facebook message from a USC student group summoning its members to dress in blue and green to resemble the earth and “flash” for 10 seconds in front of Tommy Trojan at a certain time during Earth Day to show our pride and make a public statement. Interested members could sign up on Facebook and coordinate what color they had decided to wear. I did not join the flash mob, but I heard from several friends who participated that it was a very successful event.

Clay Shirky in his book, Here Comes Everybody, states that today’s adoption of social media can help people self-organize, and therefore reduce the economic costs of organization, and reduce the threshold cost of collective behavior to make it more likely to happen. Flash mobs and collective buying on Groupon are both self-organized collective behaviors that are the beneficiaries of social media technologies; while it is known that the sum of collective individual actions is greater than individual actions taken on their own , modern social media technologies have removed the economic barriers and encouraged more collective voices to bring more power to our society.

Are Facebook’s “Open Graph/Like Button” the Reincarnation of Old “Beacon”?

Facebook "Like" Button, Levis

Facebook’s “Like” Button on Levi’s online store

Facebook rolled out universal “Like” button and “Open Graph” features yesterday, and is ambitiously partnering with sites all over the web to turn users’ personal interests and online activities into a newsfeed for the now-expanded Facebook ecosystem. While this behavior seems like déjà vu, recalling Facebook’s Beacon online tracking program which was launched 3 years ago and was forced to retreat due to the huge protests by its users, Facebook has grown since then from a start-up to the number one web traffic juggernaut on the web. Will this new launch result in another privacy backlash just like 3 years ago? Taking a look at what these new features have in common with Beacon, and what are some key differences from Beacon might give a hint to that question.

Both Like/Open Graph and Beacon adopt the opt-out setting, and the opt-out for Beacon was heavily criticized because it was not easy to access at that time. Overall, I personally do not like opt-out schemes, especially when it comes to sensitive issues like people’s privacy, Facebook should have learned from the recent privacy backslash towards Google’s Buzz and even their changes to privacy settings just a few months ago. Facebook might argue that people have to actually click the “like” button to personally “opt-in” to endorse it, but I still think Facebook could be much more discreet about handling users’ private information.

In Beacon, Facebook let advertisers place their ads alongside users’ purchasing activity online, calling it a “recommendation from a trusted friend”. With the “Open Graph” feature, Facebook lets partner websites pull users’ profile information and their friends’ “like” information, then these sites can personalize products and services on their site for the user according to what the user and his/her friends have previously “liked”, which is a different version of “recommendation from a trusted friend”. Besides that, the explicit number how many people in total “like” a webpage or product would also cast strong social proof effect to the user, even though these people are outside the user’s social circle, these “like”s still count as a word of mouth recommendation.

Now that the “Like” button itself and the data associated with can exist ubiquitously all over the web, this will further strengthen Facebook’s influence on the internet. A user’s identity and information are no longer confined to the closed Facebook ecosystem, but are now easily accessible across the web by numerous websites, and these sites no longer have to delete information they’ve gathered every 24 hours, a huge step forward from Facebook Connect. This means viral messages spreading through people’s newsfeeds in the Facebook ecosystem can be further amplified for greater organic publicity for companies.

Facebook’s new “Like” and “Open Graph” function are going to challenge many online services, from review sites like Yelp, to information-sharing sites like Twitter, and even search engines like Google, with their rich information system, at the same time, it will also open a vast array of opportunities for many third developers to develop new social platforms around it. If everything works out the way they would like, Facebook may completely rewrite the rules for social media.

How Will (Is) Mobile Internet Access Change(ing) Our Lives

Morgan Stanley’s latest April 2010 internet trend report predicts that the number of mobile internet users will exceed desktop internet users in the next five years globally, and thus mobile devices will become the next big platforms for people to connect to the internet.

Josh Levison from IPG Emerging Media Lab has also painted a very promising picture of mobile industry for us in last week’s class, and he predicted that mobile phones would be the primary engaging online tool in the near future.

I believe as mobile platforms keep growing, they will provide a strong and unique media channel to add atop the plethora of already existing media channels that can immerse people in an always-on media world.

Compared with other media channels, mobile platforms provide much more immediate connectivity to people, and the users’ mobile habits make the platforms more interactive. Because of mobile devices’ portability, they will also lead the development of location-based media outreach. This means storytellers can deliver more customized content to people’s phones according to their physical location, and that content could synchronize with billboards, posters, and other preset media content at that physical location to create a more immersive and interactive experience for people. I can image some serendipitous storytelling could be made possible now that mobile devices are becoming an internet portal. For example, a movie studio could deliver location-based messages to a movie fan’s phone to instruct them to find some hints about a movie near their current location. The hints could be hidden under a bus stop bench or be written as a special code in a billboard, and if the fan could discover the code and send it back to the movie studio, relevant rewards like movie tickets could be granted to reward the user’s participation.

The above mentioned method is just one simple way to engage users with mobile platforms. I can also see many other sophisticated mobile device interactions being adopted by adding a layer of the alternate reality gaming mechanisms to the overall storytelling design, and making the story a more personal experience for users.

Bright Future of Online Advertising

Recently I have come across some amazing graphs for online advertising. They’ve painted a pretty exciting picture of the bright future of the online advertising industry.

In the past ten years, online advertising has been a hot growth spot for advertising industry globally. The graph below from Techcrunch, composed of data released recently from the Interactive Advertising Bureau and PriceWaterhouseCoopers, has shown the continuous growth of online ads in the past ten years in the U.S..

source: graph made by TechCrunch, data from Interactive Advertising Bureau and PriceWaterhouseCoopers

Thanks to Zach for introducing the eye-opening graph below. Right now, the majority of ad money is still locked in traditional media, but the disproportionate relationship between the time spent online and the ads spent online is a very self-explanatory and shows that the money is just going to continue to flow to the internet.

More specifically, what is the most profitable area of online advertising in the U.S. right now? From the graph below, search ads rule, but traditional display ads still make a big portion of overall online ad revenues.

source: graph made by TechCrunch, data from Interactive Advertising Bureau and PriceWaterhouseCoopers

Twitter’s Future Growth Opportunities

Kaleidescope of Twitter Apps

I have been playing with Twitter for a while now, and I really love this “information network” and have marveled at how such a simple platform has been empowered by millions of peripheral third party tools. These third party tools have completed many needed Twitter functions like sorting conversation channels and uploading pictures which were not enabled by Twitter itself, and they really have made Twitter what it is today. I attribute it all to the beauty of an open source platform in today’s technology world.

Paul Graham predicted in 2001 (2001!), these kinds of light weight and open web-based applications were going to replace heavier, complete desktop apps. In the past ten years, the rise of  Twitter and other neat web applications have proven his prediction to be very true, it is a whole new collaborative world now. I devoted a post in the past on these neat and essential Twitter tools I use, and since then, I’ve been delighted to see many more have emerged. Some of these new tools are different from the previous functional, complementary ones. They seem to have created a whole category that adds more extensional value to Twitter, for example, Twitter feed analytical tools and vertical tools that explore Twitter’s practical applications in certain industries.

One of these new tools I liked very much is called Hush, and it uses people’s Twitter feeds to analyze their personal preferences. I tried it myself and hardly beat the game, and it seemed to be correct most of the time. Besides figuring out the easy questions like whether I had done certain things before, based on mentions in my Twitter feed, Hush can also predict complex ones like how I felt about stem cell research, or I would take the high road or the low road, which I swear I have never explicitly revealed on Twitter. It’s without doubt a very interesting Twitter application, and has huge potential of being used for some serious market research. But at the same time, it also alarmed me how much personal information I have shared in public.

A very insightful blog post published by Tech VC Fred Wilson recently has also reflected on the shifting of the focus of Twitter applications. Wilson pointed out in the post that the inflection point of Twitter applications has arrived, and the focus of third-party Twitter applications is shifting from filling Twitter’s functional holes to creating original value on their own and adding extensional value to Twitter.

Here are five areas from which Wilson predicted that the next generation of Twitter’s killer apps would emerge:

” Social Gaming – There have been a number of attempts to build social game experiences on Twitter. But I’m not aware of any successes of scale like we’ve had on the Facebook platform. I think we will see it emerge soon.

Verticals – We have some successes to point to here like Stocktwits for finance and Flixup for movies but this is a wide open opportunity in most verticals and we haven’t seen as much effort here as I’d have expected.

Enterprise – CoTweet comes to mind as well as the efforts that Salesforce has made to integrate Twitter. This is a huge opportunity.

Discovery – This is one area where there is a significant amount of effort. HunchListorious ,TweetMemeCadmusWeFollow , and MrTweet all come to mind.

Analytics – While Twitter will obviously be delivering better analytics to its users, particularly its marketing and business users, I believe that there is always a market for third party analytics. Google Analytics is available for free and yet none of the large analytics providers have seen their businesses suffer. There is simply a voracious appetite for information on the Internet. So companies like,Radian6HubSpotScout Labs , and others have a bright future.”

Very insightful post indeed. Twitter lovers and developers, you better keep an eye out for these areas, because they are where Twitter’s future opportunities lie.

Chinese Grassroots Remix

Tonight, Henry Jenkins, the media scholar who coined the term “Transmedia”, came to our class to share with us his insights into many current fascinating media phenomena such as convergence culture, spreadable message, and empowered grass roots fan culture. Last fall I read in the L.A.Times about Dr. Jenkin’s coming to USC Annenberg school from MIT, and since then I have been craving a chance to listen to his lecture, so tonight was truly a great surprise!

After Dr. Jenkins left, Professor Williams continued the interesting discussion on the clash between pop-remix culture and the current regulatory system, and prompted us to think deeper about this topic. Seeing so many different interesting examples of pop-remixes tonight, and how the internet has empowered individuals to remix and create pop culture, I was reminded of a recent online photo remixing phenomenon in China: a street photo of a homeless person nicknamed Xili Ge (Brother Sharp) by Chinese netizens flooded many Chinese forums and message boards and attracted millions of viewers marveling at his vagabond style and worshiping his mix-and-match fashion sense. The photo eventually hit mainstream media and even fashion magazines. Fervid fans also remixed his image with many pop culture images and created a whole new Brother Sharp phenomenon on the Chinese internet.

Here comes our Brother Sharp:

For more about how this fanatical fandom helped Brother Sharp find his long lost family, check out this post by China Hush:

Xili Bro, the vagabond of mix-and-match, reunited with family after 10 years