Insightful articles, opinion and commentary about mobile and web.

While last year was something of a bumpy ride for all the usual stars of the digital age, Simon van Wyk contends there are signs that 2013 will be bumpier yet. It’s time to fasten your seat belts and enjoy the ride. It’s going to be fast and furious.

Google

As Google’s stock price continues to slide, analysts are predicting grim times ahead. Google of course relies heavily on search for its primary earnings growth. Yet while there’s a huge volume of searches being made from mobile devices – mobile search now represents Google’s largest single revenue stream, the search giant makes considerably less money on mobile ads than it does on PC ads.Advertising is going mobile, yet mobile advertising is less profitable so far.

The cost per click on ads has been in decline for the last four consecutive quarters. Users are only half as likely to purchase a product after clicking on a mobile ad, as opposed to a PC ad, which further pushes down the cost that advertiser will pay per click.

Right before our eyes, Google’s less profitable business is cannibalising its more profitable sibling. So the big question for Google in 2013 is can they replace PC search with mobile search and remain profitable?

Facebook

Facebook of course was one of the most highly anticipated initial public offerings in history.  On the day of its IPO Facebook’s market capitalization equalled more than $100 billion.

At the time, Facebook shares were priced at US$38, but finished the first day of heavy trading barely above its initial public offering price, at Us$38.23. From then on, the share price plummeted. By September, shares hit a low of US$17.55 – as investors grew concerned over Facebook’s lack of a business plan to monetize its 1 billion members as well as its lack of a mobile presence.

However while initial investors are currently looking at a loss – there’s now improved visibility on the company’s mobile transition, and its move to become a true mobile company, as well as opportunities from new products which were not available at the time of the IPO.

For example, Facebook is promoting Photo Sync, a new feature for its mobile app that allows people to automatically upload every picture taken with their mobile phones to a private Facebook album. They then choose which photos to share on Facebook, but the automatic upload makes that process much faster and easier.

Turning Facebook into your photo repository is a consummate business move. Just think about getting your hands on the new glut of information from the geo-location data attached to the photos. This information will surely become increasingly valuable as Facebook sharpens its ad targeting capabilities.

Facebook is also planning to grow its user base—and mobile revenue—by expanding the reach of its mobile messenger app. Anyone with a mobile phone can sign up for Facebook Messenger, using just a name and phone number and is ideal for users in countries where email or computer access is not so pervasive.

While Facebook doesn’t currently make money from its messenger app, which includes free texting, group chat, and photo-sharing, and it works across devices—so users can message from mobile devices to the desktop, and vice versa. The more people that message on any Facebook platform, the higher the level of engagement, and the more potential ad revenue for the social network.

In addition, Facebook’s ad exchange, FBX is now serving a staggering 7 billion ad impressions daily, and has the potential to become a highly lucrative revenue channel for Facebook. While the beta rollout of Graph Search promises to change the way you find things on the social network and potentially beyond.

With this recent spate of announcements, Facebook’s future looks bright. While its share price still has some way to go to regain its initial valuation, of late the stock has been rallying. While the share price closed at $26.63 at the end of the year, by 24^th January the share price had hit $31.49 which is considerably higher than its all-time low.

Instagram

Facebook’s acquisition of Instagram for a whopping US$1 billion last year took everyone’s breath away. While Instagram has a massive number of users uploading a massive amount of data, the company wasn’t (and still isn’t) making any money.

So we’ve all been expecting something to change.  And this came in December with the announcement of new terms of service that allows Instagram to sell your photos. Now you can’t begrudge a start-up from wanting to make money – but the way Instagram went about it has drawn ire. For hooked users, withdrawing from Instagram will be painful – for some it won’t even be an option. But as of January 16 all your precious content is now available for exploitation. It’s a simple matter of Instagram making money off your content without paying you.

How hooked users are remains to be seen. Will users remove their content? Or will they be happy to use the service and have their images exploited? I think the lesson for us all is to beware of start-ups that have lots of users, no business models and sky-high valuations.

LinkedIn

And finally, LinkedIn, the quiet achiever. With more than 200 million members, the professional social network has enjoyed phenomenal success. Since LinkedIn went public in May 2011 with an opening day price of $45, its shares have almost tripled in value and are now trading at more than $122.

LinkedIn has of course been busy during 2012, successfully introducing an influencer network, and redesigned profiles and Company Pages.  The company also launched its much anticipated iPad app for its highly active mobile users. The app features a clean, simple interface and just three options: updates, profile, and inbox.

As to where the company goes this year is up for debate. Almost everyone agrees that the company is poised to make a huge acquisition and there are a multitude of potential candidates to choose from. According to Forbes, LinkedIn has tremendous opportunity to expand in the job postings market though its fast growth may be slowed down by potential competition from Facebook and Google.

This article was first published in Technology Spectator.

Simon van Wyk, Founder of HotHouse, Australia’s leading digital services company, discusses how reinvention is imperative for Harvey Norman

With the news last week that Harvey Norman expects to record as much as a 39.1% fall in full year pre-tax profits, how long the company manages to defer the eulogy of, “Gone, Harvey Norman Gone,” is anyone’s guess.

What is certain is that the iconic Australian retailer needs to make dramatic changes if it’s to stand up to the rigours of competition from more nimble online players with their vastly more attractive pricing and broader product ranges. It’s time for Gerry Harvey to reinvent the business. Long successful, Harvey Norman’s business model is suddenly broken.

Seamless continuum

But it’s not just a matter of throwing open the doors to a website. It’s not about retail vs etail. It’s about providing consumers with a seamless experience online and off. Smart companies are integrating their offline channels with their website and mobile channels to reflect the fact that customers don’t see the physical stores as a separate channel to the online sites. In fully embracing a multichannel strategy, Harvey Norman will need to adopt an appetite for self-cannibalisation and start analysing what’s selling online versus offline in order to maximise market share.

For physical stores to remain relevant and provide the main point of contact with customers, then they have to be so much more than a place to acquire merchandise. Look at the standout success of Apple Stores across the globe.  They reimagined everything and reworked the concept of try before you buy to provide value.

In looking at customer behaviour, there are huge opportunities to better integrate offline and online channels. Depending on the particular product, consumers may choose do research online yet still want to buy in the bricks and mortar store. On the other hand, some may be at the local shopping mall and see a product in a store yet decide to delay the purchase while they search for better prices online. Others still may use their smartphone while in store to do quick fire price comparisons.

First brand touch point will be mobile

Indeed we’re already very close to the point where more people access the internet via a smartphone rather than a desktop. Smartphones and tablet devices have changed our lives permanently. At some time very soon, mobile will be a consumer’s first touch point with a brand. But this does not mean it will necessarily be the last.

Compelling customers to translate online behaviour to a trip to your local store to get their hands on the item in question right here, right now should not be under-estimated. Savvy retailers will make multiple channels work as one.

For instance, some retailers are offering ‘Click and Collect’ services allowing customers to nominate their preferred store to collect the order. So online purchases actually drive the customer into a store where further offers can be made. At Apple Stores, the value proposition is delivered via the ability to test-drive any product loaded with the applications that take your interest, and have someone to show you how to use it.

For Harvey Norman, the expected profit slump portends of the retail shake-up ahead, not just in their business but in the retail industry as a whole. It is very much the time to act and respond to these behavioural changes.  There are big opportunities and rewards to be gained in the dynamic online retail environment. Clearly success requires a very different formula from what has worked in the past. The traditional way of doing business with those deliciously fat margins of old is being consigned to the history books.

Of course, it’s not just Gerry Harvey and retail chief executives that must become strategic in the internet space. Virtually every business needs to reimagine its business model, products and services.

Mary Meeker recently invited us to ‘re-imagine’ virtually everything. The growth of mobile, an ever-more-sophisticated array of smartphone devices and tablets in addition to faster connection speeds is ushering in a whole new world.

Smartphones are of course another stage in the revolution that started in 1995. The real outcomes of this revolution are all around us with almost every industry being reshaped by new competitors and the global realities of the digital age.

While marketers have only recently carved out a digital budget from the traditional TV and print spend, the mobile era presents yet another challenge.

Too many businesses are still using old world media thinking and using digital media primarily as an extension of their offline media plans. Where’s the world of mobile re-invention and re-imagination in this?

Of course, brands have been quick to invest serious dollars on a splurge of apps and new opportunities to engage with consumers with a fast, crisp, seamless brand experience anywhere, anyplace.

However, I think that most businesses have failed to appreciate the true nature and magnitude of the shift to smartphones and tablets.

First brand touch point will be mobile

Yet we’re already very close to the point where more people access the internet via a smartphone rather than a desktop. Smartphones and tablet devices have changed our lives permanently. At some time very soon, mobile will be the very first touch point at which people experience your brand.

This point alone makes it imperative to have a mobile optimised website. In the mobile age, it’s not a matter of shrink-wrapping your regular website to fit the small screen. If you have a large customer base, then your mobile website truly has to be optimised for the greatest number of devices, and that means that the navigation is structured in a way that makes sense for the small screen and content is relevant for users on the go and displayed in a way that maximises the use of the available space.

Responsive design

To do this properly, you need to understand what your users actually need from you when they are mobile, and the devices they use. You also have to decide how you treat tablet users. And you need to understand responsive design.

Indeed, responsive design is not about HTML but about responding to the needs of your customers across devices. Given the investment you’ve already made in your website, ideally you would want to leverage this investment but present the content in a slightly different format depending on screen size or device. So when consumers switch from their desktop to a mobile device, the quality of their experience is consistent.

In this way you can give your mobile site users access to a comprehensive number of features that you already provide on your desktop website, but optimised for the mobile environment. Not only does this provide a consistent experience to your customers across all connected devices, but gives you the ability to provide your customers with access to browse your entire website content on the go. At the same time it gives you the reassurance that your mobile site and desktop website content and offers are always in sync. After all, who needs the complexity of managing separate content for your mobile and desktop websites?

Mobile apps

In the mobile era though, it’s not just about websites. Another important decision you need to make is what you do about mobile apps. If the business case warrants an app – does this mean native or can you go hybrid? While there is certainly a need for native apps, many business cases are better served as a responsive website.

The decision comes back to what you’re trying to achieve. If you simply want to serve images and text to the largest audience possible, then a responsive site is a must.  If the content requires user manipulation or utilises features of the device, then a native app is the way forward.

With audience reach and brand engagement starting on a mobile device, the market priority is to ensure that your customers always have easy access to the most critical content and features, on every device.

This article was first published in Marketing Magazine.

Simon van Wyk takes a look at Mary Meeker’s latest state of the internet report

Late last month, internet analyst and venture capitalist Mary Meeker, from Kleiner Perkins Caufield Byers, delivered her latest state of the internet address.

Her presentation is, as always, packed with facts and figures as well as some interesting observations on how technology has compelled businesses to “re-imagine” their products and services and how they deliver value. She expects the magnitude of upcoming change will be breathtaking as we reach near ubiquitous high-speed internet access in the developed world, and benefit from unprecedented global technology innovation, the availability of inexpensive devices, access and services as well as vastly accelerated reach.

General trends

Mary’s slides tell us that internet growth is continuing unabated and in India, internet traffic via mobile devices surpassed internet traffic via the desktop for the first time, anywhere in the world in May this year.

Countries like China, India and Vietnam are recording triple digit growth in 3G subscriptions, while Australia joins Korea and Japan with 3G subscriber penetration levels of above 75%.

The growth of Android-based phones has ramped four times faster than iPhones and 29% of US adults own a tablet or e-reader which is up from a mere 2% just three years ago.

As of May this year global mobile traffic accounted for 10% of total internet traffic and is the source of 8% of US ecommerce revenue.

Time online

In terms of time online, according to ComScore, Facebook commands 13% of time spent on the internet in the US which is more than Google at 11%. (In Australia, Nielsen Online NetRatings reported that Google clocked up 1.59 minutes per user compared to Facebook’s 08.31 minutes during April.) Yet Facebook’s ad revenue was just $3.1 billion which was just a fraction of Google’s $36 billion. This anomaly (and this is something that investors are looking at pretty closely) can be explained by the simple fact that there’s no scientific way to measure advertising effectiveness on Facebook beyond valuing a “like,” a share or a click-through. Reporting to your board that you have 100,000 “likes” is one thing. How it impacts your bottom line is quite another. Yet that massive time-spent figure represents fertile opportunity for brands and advertisers like no other.

On the topic of time online, there’s still a wide gap between media consumption and media spend. While internet ad spending has grown, compare the amount of time spent consuming print, television, the internet and mobile with the advertising spend on that medium. There’s still room for internet ad spending growth and a huge opportunity for mobile where advertisers currently seem to ride roughshod over the third screen. The medium attracts only 1% of the US ad spend, yet it commands 10% of the time. Compare this to print. Even though people spend less than 10% of their time with newspapers and magazines, advertisers direct 25% of their spending to them.

Search

While mobile search scores significantly higher click-through rates, it also achieves lower cost-per-clicks. For this reason, it is set to play an integral part of pay-per-click advertising in the future. Interestingly, poor mobile monetization is affecting key metrics from Facebook and Google. Google’s cost-per-click is down in part because its mobile ads generate lower revenue than comparable desktop search ads and increased mobile usage is dragging down Facebook’s overall revenue per user.

Mary’s presentation extends to 112 pages in all. If there’s one single take away it’s that technology disruption and mobilization is affecting all businesses in all industries. The rate of innovation is faster and more far reaching than we’ve ever seen before. The old status quo has been replaced with shockingly fast moving change and there’s still a lot more to come. You could say, “we ain’t seen nothin’ yet!”.

This article was first published in B&T.

Xander Black, Creative Director at HotHouse, discusses why great work online is so much more than specific technologies or beautiful visual design

The internet is a breeding ground for ideas. New ones emerge every day. ‘Memes’ come and go on a daily basis and the good ones linger on… go viral and become part of the language of the internet itself.

Whether it’s Lolcats, the Star Wars Kid, or the history of dance, we’ve all seen them, laughed at them, and passed them on to others to enjoy. The internet has become the best vehicle the world has seen for the genesis of ideas and their proliferation. A single idea can spread across the world in a matter of hours.

These days, when you want your new campaign to be seen, you’re not just trying to stand out from a page of news content. You’re not even just competing against your competitors. Online, you’re competing against the very best that the internet has to offer.

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Treat your marketing like a garden and you’ll survive the economic downturn.

Have you seen the classic film Being There? The main character Chauncey (played by Peter Sellers) is a mentally-challenged gardener who through a few twists of fate ends up being a respected political adviser and commentator (I can heartily recommend you getting it out on DVD – a funny film with pointed social commentary that still stings today).

Anyway, when he’s asked his opinion on world events, Chauncey starts talking about the only thing he knows – gardening – and he slowly and deliberately describes the process of planting seeds, watering them, pulling out weeds, pruning, and harvesting. Everyone who listens to him puts their own spin on what he ‘really’ means, and he quickly becomes an internationally respected political guru.

Chris Abraham, interviewed for our recent HotHouse podcast, says Chauncey Gardner’s gardening analogy is particularly apt for online social media marketing today.

Abraham, online PR specialist and president and COO of online consultants Abraham Harrison, based in Washington and Berlin, argues that despite the right-now, viral nature of the Internet, building a company’s brand through social media takes time.

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HotHouse content director Ray Welling talks to Chris Abraham, president and COO of online consultants Abraham Harrison, based in Washington and Berlin. Chris is a leading expert in online public relations with a focus on blogger outreach, blogger engagement, and Internet reputation management.  An international pioneer in online social networks and publishing, he works as an Internet analyst, web strategy consultant and advisor to firms across the globe. He specializes in web 2.0 technologies, such as online collaboration, blogging, and consumer generated media.

Chris talks about the ins and outs of social media marketing, which he calls “online conversation marketing”, and why good gardeners make good social media marketers. Listen to the podcast below.

 

 Chris Abraham podcast [34:19m]: Play Now | Play in Popup | Download

Microsoft has added a “standards [in]compatibility list” to Internet Explorer 8. The purpose of the list will be such that when a user visits one of the sites IE8 will automatically switch to “IE7 compatibility mode” (or something to that effect) to render the page. Frequently noted is that “microsoft.com” itself is on the incompatibility list.

Also in Internet Explorer-related news, an exceptionally large list of frequently visited news sites in Norway have begun to display notices to IE6 users that they should upgrade to a newer browser, some even suggesting alternatives to Internet Explorer altogether.