Mobile GPS Opens Doors to Content, Commerce - Part 2

Mobile GPS Opens Door to Content, Commerce - Part 2

This article is derived from a panel discussion at Digital Hollywood 2009. Because of its length, it will be broken into two parts.

At a Digital Hollywood session last week, panelists considered the impact of GPS and location-based services (LBS) on mobile content and commerce. Moderator

GPS-enabled phone

David Waite, director at Altman Vilandrie & Company, led a discussion with Josh Shabtai, vp of marketing at ringtone provider Vringo; Dr. Christophe Ramstein, CTO of Immersion Corporation, which OEMs tactile feedback on the handset; Jason Yim, president/executive creative director of digital marketing agency Trigger; and John Underwood, COO of Aggregate Markets.

Next, the conversation turned to LBS and commerce from the point of view of the mobile operators. “From my perspective as an app developer who works with a number of carriers, the upside for them is that we’re creating new reasons for consumers to use data which translates into ARPU,” said Shabbtai. “It boosts ARPU for them and that’s been the primary driver.”

What about retailers? Asked Waite. “Content owners can market content,” he said. “Retailers can leverage this as well as another marketing tool to transact commerce. How are they thinking about this?”

Ramstein noted that there’s a model of a pre-launch with a free marketing tool, followed by a mechanism for a follow-up app to monetize directly.” “That’s an interesting mechanism for retailers,” he said. “More interesting to me is augmented reality-targeted advertising. Advertisers can be very specific about who they’re trying to reach, based on location. It’s a win-win because the consumer isn’t harassed by advertising they don’t want and advertisers spend less money reaching consumers.”

The popularity of the iPhone and iPhone apps has led some content owners to presume that an iPhone app is always a killer app. Not so, says Yim, who pointed out that owners should take more care in choosing appropriate platforms. “Everyone is rushing to iPhone, but sometimes a WAP page might do better service, or Blackberry,” he said. “With rushing to get content on mobile devices, sometimes you have to be more careful with the brand. We see apps flooding the market that don’t deliver what the brand deserves. At some point it damages the brand. Because of the noise level, we’re finding that if you’re creating content without a launch plan, nobody sees it. We have a lot of clients who want it to get out there, but if you’re not showcased inn the iTunes store or have other hooks into your campaign, it’ll just sit at the bottom. It’s much more complicated process now.”

When it comes to interactive content, including gaming, is there an opportunity to inject advertising or commerce, asked Waite. Yes, said Yim, “but you want to keep the challenge barrier low.” “What you win during the game, such as coupons, can automatically pass on the discount and we can automatically pass on that discount through the phone, like a Fandango ticketing system,” he said. “Tie that into LBS where you’re sitting in a movie theatre waiting for the movie to start. We know you’re at the theatre, so we give you a quiz about the movie and you can go up with a scanner to the popcorn line and pick up a free popcorn.”

Waite then asked the question that everyone is asking: From a content providers perspective, what is the right business model for maximizing market share and revenue?

Shabbtai wanted to reframe the question. “You have to stop looking at how we monetize content with advertising and ask, how do we make content profitable,” he said. “Trent Reznor is looking at the value of his entire content, and how to create incremental revenue and use the distribution of his content to get people there to share. It’s a scary avenue because sometimes making your business more profitable means slashing costs. The other reality is the same networks driving down the value also make it cheaper.”

“We’re trying to sell content in a market that has seen some of the worst consumer gouging as any business,” he added. “We’re also competing in a market in which lots of 12 and 13 year olds driving sales are now putting their phones up to the computer speakers and sucking a song in. At Vringo, we’re experimenting with other models. You can’t put all your eggs in one basket. You have to experiment, try new things.”

Underwood reminded listeners that, “the broader definition of profitability is how you measure ROI.” “It may work for Nine Inch Nails,” he said. “But that’s not a trivial issue for a large media company.”

“The same challenges on PCs carry over to the mobile device,” he added. “There’s no right or wrong answer. Same problems, same solutions.”

With regard to potential partnerships in the mobile ecosystem that will create profitability, Ramstein noted that “every player has different motivations.” “If everyone in the pipe isn’t making money, the whole thing stalls until there’s a way to make it a win-win,” he said. “We’ve had several deals fell apart where some bit player wouldn’t agree with what we were trying to do because they couldn’t make 2 cents off it. Any business model has to be very carefully thought through with how every partner will make money. In my opinion, now that we have this new publisher/player in the market—the app store–it allows a bypass of some players. So it’s getting better in that regard. But now Apple controls everything, they’re the gatekeeper. It’s a tricky game, and I don’t see an easy way through it.”

Yim believes the model going forward, from the consumer behavior side, is a pull system. “There’s limited hardware, there’s the privacy and annoyance factors,” he said. “There’s limited memory on phones. One point that’s interesting in the Blackberry app store, App World, is that it’s an approach to mimic Apple but they aren’t looking at it holistically. With Apple, it is seamless all the way through. With Blackberry, just downloading an app is completely different. The download isn’t in the background, it’s multi-step. Cosmetically it looks the same but it isn’t the same for the user. We have to think about that. Everyone will start using this end-to-end approach. Another delivery mechanism is bundling: if I buy the DVD, maybe that unlocks a code to get an iPhone app from the store for free. All these media pieces are starting to interconnect.”

Looking beyond mobility to other screens, Underwood noted that he’d like to say we’ll have common features and standards, but that’s a long ways off. “In the cable industry, their consortium Canoe is starting to get all the cable MSOs together,” he said. “Then they’ll realize that these standards are completely different than PCs and mobile. And here we are completely fragmented, having to develop three different ways. It’ll keep a lot of us employed.”

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