Tag Archives: Mobile

Facebook: Show Me The Money

Amazing how a website and a company that did not exist a mere ten years ago is so popular. There are some who cannot even start their day without logging in to Facebook and updating their status. Others criticize the site and boycott it due to privacy concerns. A lot of shareholders who bought Facebook shares at the IPO price are furious, while other investors and industry analysts are hopeful about the future and what the company may become. There is already a movie about Facebook out there, with rumors of a sequel. Not only are there hundreds of books about Facebook in bookstores, there are actual businesses out there that help you make your Facebook profile and photos into an actual, real-life book. There are songs about Facebook, even a mini Facebook musical! Facebook is all over the place and in our lives, whether we like it or not.

The latest Facebook news that had everyone excited was the 1 billion active users number.  At the beginning of this month, on October 4th, Facebook announced that it reached another milestone with 1 billion monthly active users, according to an Amazon Web Services (AWS) factsheet.  The previous milestone was on July 2010, with 500 million active users.

The active user term, which is different than registered users, is defined by Facebook as “the number of users who have logged in during the previous month.”  While merely logging in doth not a truly active user make, the term is still a lot more interesting to me than a registered user, especially considering the many fake accounts created on Facebook for purposes such as increasing the number of “likes” for a specific piece of content.  Facebook announced last month a significant increase in efforts to delete fake accounts and false likes.

Other than the 1 billion active users, the AWS factsheet lists a number of other interesting facts, some of which piqued my interest:

Age Demographics.  Median age of users has been declining since 2007.  On the milestone date of July 2010, the average median age of users joining that week was 23.  As of September 2012, it went down to 22.  This steady decline in median age is a good indicator of increased total user activity volume in the future.

Global Reach. The top five countries where people connected from at the time the latest milestone was reached were, the United States, India, Brazil, Indonesia and Mexico, in that order.  (Turkey was Nr. 7) same top five in July 2010. With the exception of the United States, the top countries are all emerging economies, which is good for future growth expectations.

Location Based Content.  There were 17 billion location-tagged posts, including check-ins, since the launch of the check-in capability in August 2010.  That there were a simple average of 17 location tags per active user is good news for the future of location based services.

Mobile.  Facebook now has 600 million mobile users.  A 2011 year end report by ITU (International Telecommunications Union) that surveys the global mobile and online landscape puts the worldwide number of mobile phone subscriptions at 5.9 billion, which has probably reached 6 billion by now.  That means roughly one out of every ten mobile users in the world is on Facebook via their mobile phone.  That is also good news. Or is it?

Mobile has been a risk factor for Facebook for a while now.  In February of this year, Facebook’s original SEC filing for its IPO listed mobile as a core part of the company’s strategy:

“We are devoting substantial resources to developing engaging mobile products and experiences for a wide range of platforms, including smartphones and feature phones. In addition, we are working across the mobile industry with operators, hardware manufacturers, operating system providers, and developers to improve the Facebook experience on mobile devices and make Facebook available to more people around the world. We believe that mobile usage is critical to maintaining user growth and engagement over the long term.”

At the same time, the same SEC filing pointed out to risks to the company’s bottom line due to mobile usage:

Our advertising revenue could be adversely affected by a number of other factors, including … increased user access to and engagement with Facebook through our mobile products, where we do not currently directly generate meaningful revenue, particularly to the extent that mobile engagement is substituted for engagement with Facebook on personal computers where we monetize usage by displaying ads and other commercial content.”

Even before the IPO, Facebook had its eye on the mobile world.  The company acquired Instagram in April of this year, for a cool USD 1 billion, although Instagram will remain independent of Facebook and will not be integrated into the company, at least not in the near future.  Facebook CEO Mark Zuckerberg commented:

“Now, we’ll be able to work even more closely with the Instagram team to also offer the best experiences for sharing beautiful mobile photos with people based on your interests. … We think the fact that Instagram is connected to other services beyond Facebook is an important part of the experience.”

Zuckerberg explains how they have been addressing the mobile issue at the TechCrunch Disrupt conference in San Francisco last month.

“Q: Is mobile a strength or weakness for Facebook?

A: There are more users, they spend more time on Facebook, and we’re going to make more money on mobile ads. … We’ve had right-hand-column ads and it’s been great, a multi-billion-dollar business. But on mobile, we can’t do that. It’s clearly going to have to be different. We’re seeing some great mobile ad products being developed. There’s a huge opportunity. The question is getting there.

Clearly we’ve had a bunch of missteps there. The biggest mistake we made as a company was betting too much on HTML5, because it’s just not there yet. … We just couldn’t translate it to mobile with the quality we wanted.  We had to start over and rewrite everything to be native. We burned two years. It may turn out it was one of the biggest if not the biggest strategic mistake we made.”

The company has also been testing its own mobile ad network according to BusinessInsider‘s Owen Thomas, who explains the tests:

“Facebook is doing a limited test of ads on mobile websites and mobile applications, displaying ads to people who are logged into Facebook.  So, if you are logged into Facebook on ESPN, and you head over to ESPN’s mobile site, you might see an ad for Domino’s Pizza.  That ad won’t say that your buddy Nicholas loves Domino’s, though: According to a Facebook rep, these ads won’t have the “social context” that ads on Facebook’s own website show.

An ad network could be a lucrative new source of revenue for Facebook.  But the ad-network space on the Web is incredibly crowded and competitive, with Google dominating the business.  The mobile-ad space is just getting started. And Facebook has a lot of data on users—not just demographic information, but the apps they use, and the apps their friends use.  One pool of customers for a Facebook mobile ad network: app developers who want to get more people to install their software.  Facebook is already selling ads on its own website and mobile apps that help encourage users to download new apps. Placing those ads on other Facebook-enabled apps and mobile websites could tap into big app-promotion budgets.”

Nicholas Carlson, also of BusinessInsider, talks about why the Facebook mobile ad network is such a big deal:

“Right now on the web, the most successful advertising business other than search is advertising targeted to specific users based on lots of anonymized data collected about them. [e.g. location, age, gender, web surfing history, purchase history].  Web publishers know who is looking at their ad inventory and they can sell their inventory to advertisers looking to reach certain types of people.  The problem that Facebook’s ad network will solve is that at the moment, mobile app publishers do not have the same amount of information about the people who are using their apps and looking at their ad inventory.

The reason that web publishers know who is looking at their ad inventory is that web users, in their surfing, download something called “cookies” to their browsers. When they load a new page, the publisher of that page can read past cookies downloaded, and build a data mosaic of the person looking at their ads.  On mobile, apps are separate pieces of software from browsers. They cannot look at the cookies downloaded in the browser. iPhone browsers don’t download cookies at all, anyway.

So mobile app makers are flying blind. Right now, they are selling ads using a very old-fashioned model. They are guessing what kinds of people might like the content that their app offers, and then asking advertisers if they would like to buy ads to reach those kinds of people. Advertisers don’t like to buy ads this way these days, and they don’t have to.”

Last Wednesday, Facebook announced the rollout of its mobile app installation ads program to all developers. That means that all developers on Facebook can build ads that link from Facebook’s Android and iOS apps to either Google Play or the App Store, resulting in ad revenue for Facebook.

Facebook’s stock price will certainly benefit from any additional revenue the company can get.  The company’s stock price closed last week at USD 19, exactly half of its IPO price of USD 38.  There are two main reasons for this poor stock performance.

One of them is the expected and scheduled unlocking of shares over the next seven months.  The current volume of 700 million shares is expected to increase to 2.5 billion shares.  A Bloomberg article published mid-August lays out the schedule:

“The shares freed up yesterday represent 14 percent of the 1.91 billion that will become available for sale in the coming nine months. The next expiration date comes between Oct. 15 and Nov. 13, when restraints are removed on about 243 million shares. Lock-up expires on about 1.2 billion shares on Nov. 14, and for 149.4 million shares a month later. A final round comes May 18, 2013, with 47.3 million shares becoming available.”

The other reason is the uncertainty around Facebook being able to generate new revenue streams.  Until now, Facebook had two main streams of revenue: Advertising and Payments.  Advertising, as we touched upon above, is moving away from PCs towards mobile and how Facebook’s mobile strategy will play out remains to be seen.  Payments, which until now really means Zynga, the social game developer, is not looking too great, mostly because Zynga is trying to move its gaming transactions away from Facebook to Zynga.com.

So Facebook really needs to figure out how to show its investors and the rest of the business world the money. The company is reported to be kicking a few ideas around, according to Erin Griffith who covers New York startups for PandoDaily:

“On its quarterly reports, “Payments” is the category of revenue that Zynga falls into. The hope is that Facebook will expand this category beyond small game-related transactions and into virtual wallet territory.  The company has also said it will take its real time bidding ad exchange off its own site to be implemented across the web. It’s another ad-related product but unlike the Sponsored Stories Facebook is hand-holding its advertisers through, this opportunity has advertisers salivating, because no other site on the Web has as much data about so many people, voluntarily supplied with a real name attached, as Facebook does. There’s also dating, e-commerce, and search. Perhaps one of its acquisitions from this quarter–Karma? Face.com?–could create new streams of revenue.”

Facebook’s recently announced online gift store, Facebook Gifts, is one of these ways.  Wired.com’s Ryan Tate explains:

“Citing its unique ability to recommend products, Facebook opened an online gift store. The move edges the social network onto the turf of e-commerce king Amazon, but at an opportune time: Amazon is busy making movies, computer hardware, cloud computing services, and entering other markets far afield from its core business of selling physical goods.

Not that Facebook is trying to usurp Amazon just yet. The launch of Facebook Gifts is modest: Facebook is emphasizing sub-$50 products like socks, cupcakes, teddy bears, and Starbucks gift cards. The idea is that Facebook will see words like “happy birthday” or “congratulations” on someone’s wall and prompt friends to buy the person something through the new store.

It’s an obvious and proven idea, one Facebook acquired when it bought year-old mobile gifting startup Karma in May. In the ensuing months, Facebook has rebranded the service and created a desktop version of the app, which is what is being launched today as Facebook Gifts. (From 2007 to 2010, Facebook operated a store by the same name, but it only sold virtual goods.)”

Another idea is Social Search.  Matthew Ingram of GigaOm explains:

“… The social network already handles about one billion search queries every day, and [they are] basically not even trying. For comparison purposes, that’s about 20 times as many as Microsoft’s Bing search engine gets — and about a third of the 3 billion queries that Google handles every day. But it’s not just about volume: the critical factor is that Facebook’s searches are all about finding socially relevant information, from people to brands and related topics.  To give just one example, the Facebook CEO said a question might be something like: “What sushi restaurants have my friends gone to in New York, and liked?” This is the kind of answer that Google simply isn’t very good at providing — or at least, not yet. It can show you sushi restaurants within a few miles of your location, and it can show you ratings from Yelp and other services to help you choose, including reviews from its recently purchased review providers Zagat and Frommer’s, which are starting to show up in the “one box” results for restaurants. But it can’t really show you which ones your friends like, unless they all happen to be on Google+.”

The idea I really like is the Integrated Social Utility concept. Why launch a gift store instead of providing Amazon with the social customer data? Why go into social search, instead of providing Google with the relevant social activity and user recommendations?  Why build an e-wallet instead of partnering with PayPal? Why create a matchmaking website and not leverage the experience of eHarmony?

Facebook is not an e-commerce site. Nor is it a search engine, a payment business or a dating site.  It is a social utility.  Just like other utilities, it is meant to work with other businesses, not compete with them.  That means it can be the provider of all kinds of social data to whoever is willing to pay for it.  Facebook has the ability to be the irreplaceable partner of every internet based business out there, integrated into their systems, providing them with data about their customers they otherwise would not be able to get. If the other businesses are willing to play ball, I believe that is the best long term strategy for Facebook.

But do not take my word for it.  Zuckerman said it way back in 2007, at his first interview with TIME:

“Q: Why do you describe Facebook as a “social utility” rather than a “social network?”

A: I think there’s confusion around what the point of social networks is. A lot of different companies characterized as social networks have different goals — some serve the function of business networking, some are media portals. What we’re trying to do is just make it really efficient for people to communicate, get information and share information. We always try to emphasize the utility component.”

Well, Facebook, you clearly talked the talk in 2007. Now, five years later, please start walking the walk.  Your investors and the rest of the billion people are waiting.

Reklamlar

1 Yorum

Filed under Posts In ENGLISH

Tweak Or Overhaul?

In Listen Up, Biz Leaders: It’s Time to Rethink EverythingFortune editor and columnist Geoff Colvin reminds us about the recent fates of former industry giants such as Motorola, BlackBerry and Kodak.  Colvin comments on the angst felt by many high level executives about the viability of the strategy, organization and business models of their organizations.  He then recommends a self-diagnostic of three questions to see where thing stand:

  • What is our core? Are we certain that our core business will hold up?
  • How is today’s unprecedented environment changing our customers and their behavior? Does that mean more or less demand for what we provide?
  • Is our industry being deeply restructured, and if so, how will it affect us? Are we experiencing a hiccup or an earthquake?

Every now and then the leadership of a company must raise its head, look around and make decisions that lead to change.  The correct amount of change, however, depends on the situation.  Sometimes a small shift of the steering wheel is enough, other times one must stop the car, get out, and look for an airplane going in the opposite direction.  There is no prescribed formula.  Only through rational analysis can the best courses of action be decided.

“Not every company needs to change its strategy, even in these tumultuous times. But every company needs to determine if its strategy requires an overhaul or just thoughtful tweaks.”

Yorum bırakın

Filed under Posts In ENGLISH

Cashless Society: Be There or Be Square?

Square caught my attention this summer, when I came across a VentureBeat article called Square credit card readers now being sold at Walgreens, FedEx Office, and Staples.  A credit card reader sold at office supply retailers?

Basically, Square is a payment system where a small, square-shaped reader plugs into your Android, iPhone or iPad’s earphone jack, and allows you to process credit cards, as if you had a POS machine.  The reader is free, after a rebate.  You can choose fixed or flexible pricing, either a flat rate of USD 275 per month, or a variable rate of 2,75% of the charged amount per swipe. Payments taken during business hours usually become available in your bank account the next business day.

Pretty neat, especially when compared to all the hoops a business must jump through to get a POS machine in Turkey.

Generally speaking, a business that wants to obtain a POS machine and the ability to accept credit cards in Turkey, must first fill out an application with a bank and open an account there.  Then come the negotiations, which are not really negotiations but terms dictated by the bank about all the payments the firm has to make to the bank.  Types and amounts of payments vary by bank, common ones are POS machine charge, POS machine setup fee, bank commission rate for the charged amounts (as high as 4%), service fee, loyalty program fee, account processing fee, to name a few.  There are also some penalty fees, if the monthly amount charged through the POS machine is below the quota assigned by the bank.

If there is an agreement, the applicant then must provide the bank with all kinds of documents such as list of authorized signatures, a certificate of good standing with the Chamber of Commerce, copies of the national ID cards of all the partners , a copy of the tax registration certificate,  a certified copy of the article of incorporation and myriad others.  After doing all this, if the applicant is deemed worthy, it is time to sign a bulky agreement with the bank.  My favorite part is where most banks tell you that they cannot give you a copy of the signed agreement, so you have no idea what you just agreed to, and in case you need to look it up in the future, well, tough luck.

Naturally, after comparing the Square to all that hassle just explained above, I thought that it was a pretty good, possibly a disruptive innovation, especially for small businesses and individuals.  It turns out, I was not the only one.  Over the summer, Square signed a deal with Starbucks where customers at participating U.S. Starbucks outlets would be able to pay for products using the Pay with Square app.  Then at the end of August, Square announced a new partnership with AT&T, making Square readers available at 1,000+ AT&T retail stores all over the U.S.

So, Square is doing well in the U.S., but I am more interested in how, if at all, it would work in Turkey.  What does this innovative payment system mean for developing countries like Turkey? Could it become mass market, or would it merely be just another cool gadget, only used by few? Ignacio Mas of CGAP, an independent policy and research center dedicated to advancing financial access for the world’s poor, housed at the World Bank, talks about it in Are Lower-End Shops Ripe for Electronic Payments?.

“In developing countries, … most people do not have a preference for electronic payments, and the installed base of cards and smart devices is still low. The former is by far the bigger obstacle. The majority of people in developing countries who have an electronic account do don’t have much value stored in them, and many more don’t even have an account. It’s hard to create a preference for paying in a currency you don’t have. In this situation, only merchants that tend to serve the richer banked elites will see a reason for accepting electronic payments (and, more significantly, the merchant discounts that come with that). Accordingly, we’ll observe the usual slow progression down-market.”

CGAP’s analysis rings true.  In developing countries like Turkey, cash will continue to be king for a long, long time. Visions of a cashless society come up more and more often in business circles these days.  The cashless society idea, where everyone uses a credit card, debit card, NFC or a gadget like Square instead of cash, sounds cool and may work in a country like Sweden, but around here it is nothing but a pipe dream, at least for the near future.

Sure, credit card usage has grown at an impressive rate in Turkey over the past few years. But a significant number of credit card owners are “revolvers“, people who use the credit card to buy things they otherwise would not be able to afford, as a substitute for a loan, if you will, instead of “transactors“, who simply use the credit card as a convenient payment tool. If you include transactors using the “installments” method of payments, a phenomenon unique to Turkey, number of revolvers becomes even more significant.  So, the large number of credit card users does not necessarily mean that people prefer credit cards and are willing to abandon cash.  It just means that they enjoy spending money they do not actually have, even if the cost of doing so is high.

With its huge underground economy, uneducated customer base, low level of trust in financial institutions and a widespread habit of tax evasion, I do not foresee electronic payments winning over cash in Turkey anytime soon.  Anybody who tells you different is trying to sell you something.

Yorum bırakın

Filed under Posts In ENGLISH

Smartphones: Post-Verdict Apple-Google Relations

This past month, Asymco released a study of the smartphone market that included the following graph on market shares of smartphone platforms, 2007-2012:

Interesting,  no?  Meanwhile, a recent Fortune article asks the question: “Are Apple and Google really ready for patent detente?

The answer, which I believe has a ring of realism to it, is also included in the article:

“Smartphones are the fastest growing segment of the trillion dollar mobile phone industry, thanks in large part to innovations introduced five years ago by the iPhone. … Having achieved dominance in a market that generates hundreds of billions of dollars a year, [Google] is not about to cave over a $1.05 billion verdict against [its] clients. Nor is [Apple] likely to back off [its] insistence that competitors “invent their own IP” on the strength of one verdict and a handful of patents. Apple has tens of thousands of patents and dozens of lawsuits pending against manufacturers of Android devices.”

I have a feeling Apple is not going to kiss and make up anytime soon, especially after a big win like the Samsung verdict. To get a feel for what Android has cost Apple in terms of smartphone market share, all you have to do is look at Asymco’s graph.

Yikes!

Yorum bırakın

Filed under Posts In ENGLISH

Global Mobile Ad Spending Outlook

eMarketer recently released their Mobile Ad Spending Worldwide Forecast 2011-2016.  According to eMarketer’s study, global mobile ad spending is expected to reach $6.43 billion at the end of 2012.

Key takeaways from the forecast are:

  • US mobile ad spending will top all other regions in the world for the first time this year.
  • Mobile, despite rapid growth, accounts for just 1% of total ad – spending worldwide.
  • Mobile ad market in Asia-Pacific remains far bigger than in Europe.
  • Mobile advertising, though just 2.3% of total ad spending in the UK, is expected to take a record share by 2016, reaching 11% of total ad spending.

While this is good news, a recent Trademob study will probably upset some mobile advertisers and make them think twice before spending their money on mobile.

“In June 2012, we conducted a study of six million mobile clicks across 10 global ad networks. An enormous 40% of paid-for clicks were found to be COMPLETELY WORTHLESS showing a conversion rate from click-to-download of below 0.1%. Further analysis showed that 18% of these were highly indicative of click fraud and 22% happened accidentally.”

40% is HUGE. You have to ask yourself: how much is your mobile ad worth, really?

Yorum bırakın

Filed under Posts In ENGLISH

Distimo’s “Most Popular Social Networking Apps” Study Or How NOT To Display Data

Distimo, a private company based in Utrecht, The Netherlands, provides app store monitoring tools for developers, as well as app store market reports for device manufacturers and carriers.  They also publish a monthly report on the app store market. You can access the latest report here.

In that report, also discussed in a Techcrunch article, I came across the graph below that shows the most popular social networking apps between July 2010-June 2011.

This is a GREAT example how graphics like this floating all over the internet can be greatly misleading. Here are the reasons:

  1. The data is for DOWNLOADS, NOT USERS. Something like “popularity” is so vague, it can mean anything from downloads, to total users, to new users, to users who gave it a score of higher than 4 out of a possible 5, etc.  Also, an app like Facebook, which has been around for a while, is expected to have diminishing numbers of downloads over time. To compare it with NEWER apps is meaningless. Just because I downloaded something last year does not mean I am not still using it! And just because I downloaded something does not mean I am using it at all, PERIOD!
  2. The data is for iPhone apps ONLY, ignoring the many other types of mobile devices out there. Plus, a lot of people still use non-mobile devices (including yours truly) to access their Facebook accounts.  A Facebook announcement earlier this year claimed 845 million monthly active users including 425 million users who access the service on mobile devices. Of course, this does not mean that 425 million people use their mobile devices ONLY, and the remaining 420 million people use their desktops and laptops. The 425 million most likely use both mobile AND non-mobile devices.  To use iPhone downloads as representative of overall popularity is ludicrous!
  3. Last, but no the least, country selection. Wherever a country is marked in black on the world map means THERE IS NO DATA for that country. Really? Hailing from Turkey, the SEVENTH largest country in terms of Facebook users, according to Socialbakers numbers for the last six months, I find that very hard to believe.

Sitting in my office in Istanbul, which, by the way, according to Socialbakers, is the THIRD largest city in the world in terms of Facebook users, I am shaking my head at Distimo, and its extremely careless interpretation and presentation of data.

1 Yorum

Filed under Posts In ENGLISH

How To Make The Best Of Opt-In

I have always thought that customer relationship management (CRM) of Turkish companies in general was a bit lackluster. Contrary to what most corporations think, customer relationship management is more than just keeping customer records in a database. After collecting good customer data, it must be successfully mined, analyzed and used in creative ways to increase customer profitability without pissing people off.

Unfortunately, most Turkish companies merely treat CRM as a tool that allows them to carpet bomb messages to customers in various media, mobile SMS being the most popular, rather than deliver surgical strikes. And thanks to slow progress in the legal field, most of them got away with it without significant penalties so far. To prevent the erosion of goodwill, as well as to spend marketing budgets more efficiently, Turkish companies need to get more serious about opt-in to realize the benefits.

My colleague from our Mitchell Madison Group years, Derek Martin, currently Sales Director at Velti, talks about how to use opt-in to get the right message in front of the right customer while increasing customer value in Getting Past Opt-In.

“By actively cultivating and managing opt-in lists, companies can continue to develop and enrich relationships with customers and foster trust and openness. In a customer-empowered relationship, these traits can make the difference between success and failure.”

Yorum bırakın

Filed under Posts In ENGLISH