At the D: Dive Into Mobile conference I got a chance to compare the various business models companies have for making money in the mobile space. A lot of the conversation at the conference dealt with the strategies of the bigger firms, such as Facebook, Google, and Microsoft, but some of the lesser known firms had interesting models as well. These include new communications apps, which feature both ad-supported and subscription models.
Google and Millennial: Advertising Based on Context, Not Device
The conference began with a discussion with Jason Spero (above, right), head of Global Mobile Solutions for Google, and Mollie Spilman (above, left), EVP for Sales and Marketing for mobile advertising company Millennial Media.
When asked by moderator Peter Kafka of All Things D why mobile advertising still lags so far behind even online advertising, Spilman noted that it similarly took a while for online advertising to take off. "It's a new medium," she said. However, chief marketing officers and big agencies are allocating more and more of their budgets to mobile, she said, and this will accelerate as they get more comfortable with the media.
Spero added that advertising will follow consumer behavior and that we know mobile is attracting the attention of users. He suggested that the industry needs to do more to track users as they move back and forth between devices and needs to "stop trying to shoehorn the desktop model into mobile."
Kafka said he hasn't seen many location-specific ads but Spilman said that location is one of the data points Millennial uses in the majority of the campaigns it runs. It's not just like a billboard in a particular location, she said; it may depend on what content were you looking at or whether you were at the same place every day.
More work is being done on "semantic locations," Spero said, such as targeting people in airports or in sports stadiums. Google now also allows advertisers to bid for ads based on proximity.
To Spilman it is all about user identification. It is important to protect privacy, she said, but also important to provide better experiences. Spero noted that there are cookies within mobile apps to help identify users for targeting and to create a profile of users including info such as places you go to every day. He said Google has changed AdWords to try to track users across multiple devices, based on things such as logging into Google+ or Chrome. The company is very careful in how it shares data with third-parties and ad exchanges, he assured.
Much of the discussion talked about separating mobile from the device and into context. "For me, a smartphone or tablet used on a couch has more in common with a desktop or laptop than a smartphone or tablet used at a café at lunch," said Spero.
Waze: Mobile Advertising Centered on Maps
Waze CEO Noam Bardin (above) talked about how the company created a different kind of mapping and navigation service. Rather than buying maps from one of the big mapping services or enlisting Street View cars as Google has done, it relies on its 44 million users and 70,000 volunteer editors to create the maps and keep them up to date. "They use money; we use people," he said. He believes Waze now exceeds most of the traditional mapping products in terms of the freshness and accuracy of maps in many markets.
Waze is an advertising-supported business and launched an advertising platform in November, completely centered on location. For instance, a Taco Bell promotion shows off locations on the map, promoting the brand and its 10,000 branches. The idea is to drive traffic to stores and build recurring customers. Bardin said it is important to limit ads to no more than three per screen. Bardin noted that Waze is a completely mobile company; it has no Web presence. It is working with car companies to build its service into future cars and expects the first one in 2014.
MLB's AtBat Subscriptions on Many Platforms
Focusing on subscriptions has helped make Major League Baseball's AtBat the largest grossing app on iOS, said Bob Bowman (above), CEO of Major League Baseball Advanced Media.
The commissioner set up Major League Baseball Advanced Media in 2000 to deliver the content. The product started on PCs, not on mobile devices, but now between multiple OS, device, and video combinations, Bowman said the company supports 3,000 different combinations for video delivering around the world.
Bowman call the mobile device the first screen but TV is still very important, and going to a live game is the best.
Sixty percent of the users use the desktop client but mobile clients are growing; about half of the usage comes from paid viewers. For $19.99 a season, subscribers get live audio streams of all of the more than 2,000 games and for $130 a season, they can get live TV as well. Bowman said the service has between three and four million paying subscribers.
Among the various mobile devices, he said, "Apple takes its share of lumps, but they run a great store and it's a great phone," although he noted it has lots of competitors, singling out Samsung. "We love Apple but we love competition," he said.
Its mobile customers are split 70/30 between iOS and Android, with revenue even more heavily skewed toward Apple. In general, live games are more watched on tablets than phones, but the app itself is more used on the phone (presumably to check scores and hear the audio).
Asked about wrapping the phone experience the way Facebook Home does, Bowman said he is always open to experimenting, but said "we don't need to own every piece of the day." Instead, he said, if the average user spends 10 minutes a day with the app when not watching a game, that's enough.
Atom Factory: Apps to Sell Content, Build Communities
A number of the conversations discussed other ways of making money online beyond selling advertising.
For instance, Troy Carter (above), the CEO of Atom Factory and the manager of Lady Gaga, talked about how Lady Gaga is creating an application that will be part of her new album. This will be a major way of selling music. (Interestingly, he made the point that although digital sales are growing, physical CD sales through stores such as Walmart and Target are still driving the business.)
In addition, he talked about the power of fans through community sites like Gaga's Littlemonsters.com and Backplane.com, where he is an investor.
Xiaomi: When Smartphone Flash Sales Drive Services
Bin Lin (above), co-founder and president of Xiaomi, a high-end phone maker in the Chinese market, talked about how the company sells high-end phones only through its website, mostly through flash sales of devices sold for their bill-of-materials cost. The company's business model revolves around selling accessories and services on top of the phone, including building its own UI software that runs on top of Android, covering things like the dialer, contacts, SMS, gallery, weather, and music, and with some new features such as a theme market. New versions of the software come out every Friday at 5 p.m., and the companies deals with lots user engagement to help shape new versions.
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