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The BlackBerry Torch 9800 is being introduced this week on the AT&T network. The reviews are in and they are, at best, mildly enthusiastic. Essentially, reviewers seem to agree that RIM, BlackBerry’s maker, is just keeping up with the Android and iPhone, rather than leaping ahead.

While the Torch isn’t likely to light a fire under the Android and iPhone, the phone is significant because of what it represents about our smartphone future. BlackBerry, after all, has been the market share leader in mobile phones for business use. The Torch 9800 is BlackBerry’s acknowledgment that:

1. Such “consumer” features as a touchscreen keyboard can’t be ignored, the Torch has both a touchscreen keyboard and the more traditional BlackBerry keypad.
2. Apps matter.
3. Seamless Web connectivity is essential. The Torch, says its maker RIM, features “expanded messaging capabilities with intuitive features to simplify the management of social networking and RSS feeds” and integrates access to the BlackBerry Messenger, Facebook, Twitter, and MySpace, as well as dedicated YouTube and Podcast applications.

Perhaps even more intriguing than the BlackBerry Torch introduction is this breaking news: Bloomberg is reporting that the three leading cell phone networks in the U.S., normally arch-rivals, are cooperating to potentially create a new smartphone payment system that could replace credit and debit cards.

AT&T, Verizon Wireless, and Deutsche Telekom’s T-Mobile USA are supposedly involved in a venture that “would let a consumer pay with the contactless wave of a smartphone.” The system, which may involve Discover Financial Services and Barclays bank as financial providers, is planned for testing in four U.S. cities.

Richard Crone of Crone Consulting, an industry consultant, told Bloomberg, “This is definitely a game-changer.” Mobile carriers, Crone said, “are the biggest recurring billers in every market. They are experts at processing payments.”

The implications of this venture are enormous. For one thing, the move directly threatens the decades-old domination of Visa and MasterCard as the only credit/debit games in town. Discover, always a credit card laggard behind these two companies and American Express, could have much to gain.

Such a capability would finally bring the United States closer to Europe and Asia in terms of sophisticated smartphone usage. Contactless technology using smartphones to make store purchases is already available in the U.K. and Japan. Retailers would probably be only too happy to accept a new payment competitor, since they have fought with Visa and MasterCard over transaction fees for years.

While the new technology applies primarily to the store environment, it has an impact in the online world as well, since mobile payments without relying on credit cards could streamline e-commerce even further.

Reportedly, Visa and MasterCard are working on their own mobile payment systems. Some banks are also testing new technology. According to Bloomberg, Citigroup launched “MasterCard PayPass” stickers in June that, when affixed to the back of a mobile phone, can be used to make a contactless payment at some 230,000 U.S. merchants. Alternative payment solutions are also being offered by a number of start-ups, including Bling Nation, Boku, and Zong.

Payment systems are just one area that will change with the advent of ever more sophisticated smartphones. QR codes, which I’ve discussed in a previous post, are another. QR codes (they resemble a square barcode) embed information that camera-enabled smartphones can read with a “QR scanner” app. Magazine ads or window signs with QR codes can be scanned to receive promotional information.

For the upcoming Fall television season, for example, the Fox network is using “Fox Codes” in magazine ads to offer viewers access to Internet-based information about the network’s shows, including videos and cast interviews. CBS is reportedly using QR codes for some of its shows as well.

“Geo-triggered” applications are also in vogue. The Android and iPhone run such applications in the background and can alert users to a specific event. For example, DailyCandy, an email newsletter for women, just implemented “Stylish Alerts” as an Android app. When a consumer is near a current local event, such as a designer sale, the app can send an alert to the shopper’s phone. The service is only available in New York City for now, but will likely be expanded to other cities.

With today’s smartphones, we are finally witnessing the convergence of mobile communications with the Internet. From a marketing perspective, this puts an individual consumer within reach, just when that consumer is ready to shop and make a purchase. Major new opportunities for retailers and online marketers alike to connect with consumers will now be available. In fact, the smartphone of the future is just around the corner. Are you ready to take advantage of it?

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Pondering The Future of Smartphones

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The other day, we covered how Google is testing a new paywall system for newspaper called Newspass. But given where the newspaper industry is headed, there’s a very a plausible chance that Google is coming too late to the party.

Essentially, newspapers have struggled with their online revenues because they’ve been unable to successfully implement either a paid subscription or micropayment model on a widespread level. Google is hoping to change that with Newspass, a new a paywall system that offers users one-click access to multiple sites/networks through a single Google Account (like Google Check Out). Essentially, Google seems to be testing whether paid subscriptions and micropayments become more viable revenue models if users can manage their purchases through a single, third-party account.

As good as an idea that Newspass looks like on paper, however, the product faces quote a few challenges.

1. Google’s Non-Search Track Record

Google’s track record beyond search-related products is less than stellar. Essentially, the list of Google’s failures is long and growing, with Google Wave added to it less than a week ago. So if Google hopes to keep Newspass off of this list, it will need to ensure that a strong marketing strategy is in place.

2. Marketing Challenges

Now, Google has had some success beyond search, and Google Checkout is one example that’s particularly relevant to Newspass. But just like Google Checkout has to target both merchants and consumers, Newspass must also engage the market on two fronts simultaneously: publishers and readers.

As it stands, Newspass intends to solve a problem for publishers by catering to readers. That means that the Newspass team must successfully deploy two separate marketing strategies simultaneously. Granted, this isn’t impossible, but it does double the workload for Google.

3. Growing Digital Revenues

Newspass is set to bolster digital revenues, but many newspapers are already experiencing digital revenues growth on their own. As The Wall Street Journal reports:

Several newspaper publishers have reported solid growth in digital advertising revenue for the second quarter in recent days, helping offset continuing declines in print advertising. The New York Times, for instance, reported 21% growth in digital-ad revenue against a 6% drop in print advertising, keeping total advertising “roughly flat” with the year-earlier quarter. Digital now accounts for 26% of its total ad revenue, up from 22%.

4. Newspapers are Losing Less and Less

Even though print ad revenue has continued to fall, print might be pulling out of the nosedive. As we reported last month:

Editor & Publisher reported that even though newspaper print and online revenue dropped 9.7 percent year-over-year in Q1 2010, it was the mildest drop in three years. “The 9.7% drop compares with a 28.3% year-over-year decline in the last quarter of 2009, and a 29% drop in Q3 2009.”

Part of the cause behind these changes in newspaper ad revenues, no doubt, is that there’s just less competition. Essentially, enough of the smaller guys have gone out of business, that the largest ones (such as the NYT) have been able to capture more of the market more easily than before. But this also means that newspapers are under considerably less pressure to adopt entirely new processes — such as integrating an entirely new paid content system such as Newspass.

5. Increasing Production, Lowering Costs

Newspapers are also finding cheaper, more efficient ways of sourcing their content. For instance, the San Francisco Chronicle, the Houston Chronicle, and USA Today have started using a content farms to source content for some of their sections. This is allowing them to broaden their coverage of topics without having to invest in additional editorial infrastructure.

6. News Sources of Revenue

Many major newspapers companies are developing completely new sources of revenue by either partnering with or outright acquiring online marketing agencies. Specifically, Hearst, Gannett Newspapers, and the McClatchy company have all started offering online marketing services to advertisers in the various local markets they serve.

7. New Distribution Channels

Mobile apps are offering newspapers an entirely new distribution channel for their content, and the opportunity to bolster ad sales through mobile content is clear and present. The Globe and Mail, for instance, is already serving gets 7.5 million page views / month through its iPhone app alone, and advertising is embedded throughout each of these pages.

8. Subscription Revenue is Obsolete

Subscription fees are a revenue model designed to cover the costs of distributing content on a physical piece of paper that had to be delivered to readers’ doorstep. Online content isn’t plagued by such overhead, which is probably why online readers have been reluctant to pay for content.

With newspapers adapting to the new content marketing by adopting new advertising, production, and distribution models, they might be reluctant to try and impose such outdated costs on their readers. After all, the first newspapers to do so can risk losing their readers to any competition that holds out. After all, you can’t teach a new user and old (obsolete) trick.

9. Users Habits

There’s also considerable reason to doubt that, at this point, users will be willing to start paying for content. Essentially, users have been consuming free content for quite some time. They’ve also seen paid content models fail time and time again. So it might be impossible for newspapers and/or Google to convince users to start paying for content now.

10. Bad Blood

The relationship between newspapers and Google is a strained one at best. Essentially, many newspapers feel defrauded because they’ve received no compensation for their content appearing in Google News, but Google has made revenue off of the Adwords ads that appears alongside that Google News content. So it might be unrealistic for Google to now expect newspapers to trust them with revenue and sales data.

Early in the Game

For all the challenge’s facing Newspass, it’s still very early in the game. After all, the service is still only being tested, and only in Italy. It could very well turn out that Google doesn’t take Newspass beyond Italian borders.

Similarly, it’s just as likely that Newspass will pique the interest of many newspapers. While some newspapers cut Google out altogether, others have invested considerably in SEO.

The world of news publishing is going through so many changes, that it’s hard to tell where things will end up exactly. So like all things related to newspaper publishing, we’ll just have to wait and see what happens with Newspass.

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There are sure signs that Amazon is worried about Apple’s iPad. Their focus on rolling out a “cheap” version of the new Kindle WiFi, scheduled to ship August 27^th with a $139 starting price point compared to the current $189 version, will undoubtedly tempt some customers to rush out and buy one.

But Amazon shouldn’t be worried about the iPad as a Kindle killer. They should be thinking about India, not Apple.

When the new Kindle is compared to India’s $35 laptop,  and its price target of $10,  it looks a lot less attractive.

In a previous piece, I wrote off the $35 laptop as a wannabe computer because it lacked a number of important features, like the ability to store the large amounts of data usually associated with a hard disk or high capacity solid state drive. I still stand by this opinion.

But when the laptop is looked at as an alternative, cheap ebook reader in comparison to the Kindle or Apple’s iPad, it easily wins hands-down. This makes it especially attractive to me since I said I’d buy an ebook reader if it was priced below $50.

In India, targeting the ebook reader market could potentially be a match made in heaven, especially if you factor in that India’s schools are moving towards using laptops as a textbook replacement.

The one-time capital expenditure incurred with purchasing these computers would be than offset by the paper savings. Schools could load textbooks in an ebook format rather than stock their printed equivalents. And there’s more than ample time to recoup the costs over the 4-year or 10-year academic cycle of the students using them.

That’s fine for India, but what about us?

A $35 ebook reader could revitalize reading for a generation weaned on the Internet, video games, and cell phones. But it’s not a perfect solution because the laptop’s Linux OS will likely need a tweak or mod to be anywhere near the usability of the Apple OS. An intuitive user interface and a suite of useful apps would make it even more attractive.

After all, what’s a platform without widgets, apps and content?  And while apps are meant to up sell a device and distract the buyer with toys in order to pay more for a phone or for a reading device they have been the bugbear of many new computing platforms, whether you’re referring to the Palm PDA, Sharp Zaurus or until recently, the iPod.

But there are practical issues before India slays the Kindle. Costs associated with marketing, importing, and distribution to other countries have a way of inflating price. And, while hip with geeks, Linux hardly has adoption among the masses.

But with a $35 price point the India laptop has an advantage in low market cost over any device.  It does face an obstacle in regards to access to a reading inventory. It’s doubtful, after all, that Amazon will hand over theirs. Fortunately, having such an inventory accessible is a small hurdle, especially when there is quality content available, like the 33,000 books found at sites like Project Gutenberg.

Combine this inventory with cross platform compatibility into other ebook stores and the $35 laptop is suddenly an attractive proposition. The point is that as an ebook reader a device such as the one India has developed has tantalizing prospects and the ability to create market shift as well as be a potential Kindle killer.

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Companies are learning a tough lesson about customer empowerment: give your customers reasons to communicate and they’ll do so willingly, sometimes in ways you can’t control.

American Express recently released findings of a customer service survey the company conducted online among a random sample of 1,000 U.S. consumers age 18 and over. The same survey methodology was used in Australia, Canada, France, Germany, India, Italy, Japan , Mexico, the Netherlands, Spain, and the U.K.

The findings indicate, not surprisingly, that nine in ten Americans consider the level of customer service important when deciding to do business with a company. But only about one-quarter of them believe companies value their business and will go the extra mile to keep it.

Good News / Bad News

The good news is that, contrary to a commonly held belief, customers will talk more about a positive experience with a company than a negative one. Three-quarters of respondents said they are very likely to speak positively about a company after a good service experience, while 59 percent said they are very likely to speak negatively about a company after poor service.

But here’s the bad news companies need to consider: nearly half (48 percent) of respondents report always or often using an online posting or blog to get others’ opinions about a company’s customer service reputation. What are they looking for? Negative opinions.

According to American Express’ survey over half of respondents (57 percent) say they believe more in negative reviews than positive ones on blogs, and 48 percent believe more in negative reviews on social networking sites. Jim Bush, Executive Vice President, World Service for American Express, explains:

“The Internet has made service quality more transparent than ever before. In the online space, positive recommendations are important, but people often give more weight to the negative. Because consumers can broadcast their views so widely online, each and every service interaction a company has with its customers becomes even more crucial.”

Even more telling is the fact that Americans are seemingly losing their patience with poor service. In fact, 81 percent of respondents have decided never to do business with a company again because of poor customer service in the past. Half of the respondents say it takes just two poor service experiences before they stop doing business with a company.

According to Brand Reputation CEO Graeme Crossley:

“A customer that has a good experience will typically tell 3 to 5 people, but a customer who has a poor experience will tell more than 20. When this is trend occurs via the web, these numbers can rapidly multiply and could spell disaster for brands that don’t have strategies in place to combat online negative chatter.”

How should consumer ratings impact your social initiatives online?

When it comes to consumer ratings for a product or company, for example, should a company stay silent in the face of a negative review? Given the implications of this survey, probably not. Maybe a company can ask satisfied customers to post positive reviews on the same site, or respond to the review if allowed.

A similar strategy might be wise when it comes to social media. Companies need to be proactive and react quickly to both negative and positive feedback with the objective of both engaging a consumer in a dialogue and deflecting any negative follow-on.

Gatorade recently set up “Mission Control” (video below), a central facility that’s being used to monitor the sports landscape, monitor online discussions, track sports trends and buzz, track brand attributes, track media performance, and do proactive social media outreach. Obviously, not every brand marketer can afford a sophisticated “Mission Control,” but this is an example of how seriously big brands take social media – and it’s a good lesson for every company.

Click here to view the embedded video.

Combine perceptions about poor service with reliance on blogs and social networks for opinions about companies and you can see a conundrum looming for marketers. It becomes ever more important to not just provide good customer service, but also to monitor online complaints and do whatever possible to resolve them quickly and to the satisfaction of the consumer.

When a consumer takes the time to complain about a company’s customer service online, that company had better pay attention – because it appears that’s what other consumers are doing.

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American Express Study Finds Consumers Seek Out Negative Opinions

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For years now, every year was supposed to be the year that mobile “exploded.” But mobile is a really broad term and, if you think about it, even the Internet grew in waves and never really exploded all at once — there was email then surfing then downloading then social media, etc. Maybe what we should be asking is what aspects of mobile are likely to hit critical mass next?

I don’t have a crystal ball, but I spent last week on the Nokia N97 mini tour speaking with folks from Nokia and interviewing mobile bloggers, and there seem to be 5 major mobile trends to watch in the near future. Here they are (in no particular order).

Mobile App Advertising

With Apple having launched iAds, the mobile industry is abuzz with app advertising speculation. Essentially, between iAds and Google’s recent acquisition of AdMob, the industry is beginning to see some serious investment into mobile advertising platforms.

Although it might be another few years before mobile advertising goes mainstream, this is most certainly a space to keep your eye on. We’ll likely see additional acquisitions and product launches in this vertical, as potential contenders vie for a piece of the yet unbaked pie. And between now and critical mass, we’ll also probably see some considerable changes to how those ads are delivered and the end-user’s overall ad experience.

Mobile Commerce

Ecommerce via the mobile is nothing new, but it’s growing at a considerable rate. Between app store downloads, mobile gaming, and the rise of mobile pay-passes in Asia, mobile commerce is rapidly approaching mainstream.

According to James Whatley, what’s most interesting about this area of mobile is the potential for mobile carriers to also merge with or evolve into financial institutions. Currently, it’s more commonplace for RFID equipped handsets to be linked to user credit cards. But as more and more transactions are pegged onto the end-user’s monthly phone bill, we’re likely to see the rise of telecom-financial hybrids with the potential to revolutionize world capital markets.

Opensource Mobile Operating Systems

Between Android, Meego, and now Symbian, it seems that the mobile operating system is rapidly following the path of web-based technologies. Opensource mobile operating systems give carriers more flexibility and offer developers more opportunities. And as more developers converge on any given operating system and develop apps, the demand for that OS will rise as well.

As with web-based technologies, however, the war between opensource operating systems is more about data than revenue. After all, there are no revenues in giving an operating system away for free. Of course, there is no such thing as a free lunch, and privacy issues abound around mobile user data. So it’ll be interesting to see how legislators respond to the rise of opensource mobile operating systems, as well as how the technology itself adapts to legislation.

Handsets as Commodity Items

According to Andrew Currie of OpenAttitude.com opensource mobile operating systems become more commonplace, handsets themselves will become commoditized, allowing users to choose the OS of their choice. This will change the way that handsets are marketed because each device will be valued more on its hardware features and less on its functionality.

Of course, there will always be exceptions. For instance, Apple is unlikely to allow another operating system to be installed on its iPhone.

Augmented Reality

According to Simon Larose of KnowNokia.ca, as more and more of our lives are integrated into our mobile devices, these devices have considerable potential to automate the world around us. For instance, imagine your climate control system kicking in when you’re only a few minutes drive from home, or all your hardware going to sleep the moment you leave your apartment.

Indeed, this is another way in which mobile technology will influence the evolution and marketing strategy of so many non-mobile products.

Currently, many devices have the potential to execute such functions, but implementation rests on the individual users being very tech savvy and knowing how to hack their environment. It’ll be interesting to see how non-mobile companies begin to integrate mobile APIs into their more standard, everyday products (such as fridges, stoves, climate systems, garage doors, etc.) to offer users augmented reality.

Educated Guesses

All this being said, it’s important to remember that these are just the 5 mobile trends that currently seem to hold the most potential. The thing about any new space, especially a technological one where things evolve so fast, is that anything can happen. A sudden jump in technology can completely change market expectations, causing the whole industry to take a sudden turn in a completely unforeseen directions.

What is certain is that digital communication is now portable, and there’s no turning back. And the implications that this has for marketing, commerce, and finance will most certainly prove far reaching.

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5 Mobile Trends To Watch

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Recently Amazon announced that it has sold more copies of e-books for its Kindle e-book reader compared to hardcover books. While cynics might dismiss the announcement as a counter to Apple’s attempts to position its iPad tablet computer as the de facto reading device; the announcement does signal a shift in consumer habits and perhaps a tipping point in how we read.

With recent moves such as slashing the Kindle’s price from $259 to $189 it’s clear that Amazon believes such a tipping point has happened and is banking on digital editions of books to drive its growth.

Everyone’s happy right?

Maybe not. Cost is a big factor. The $189 cost of the hardware is a fixed investment and a barrier to entry given that walking down to your local used bookstore and picking up a book is going to set you back around $10. Plus, there is always the library. If I were to buy the Kindle or iPad, I’d expect to buy enough books to at least equal the cost of the reader, to make the device purchase worthwhile.

In its press release, Amazon’s claim that “Amazon sold more than 3x as many Kindle books in the first half of 2010 as in the first half of 2009“ is not a useful statistic given that its base number of sales in the first half of 2009 isn’t given. Look a little closer at Amazon’s announcement and you’ll see that e-books have outsold hardcover books. There’s no mention of paperback books. As The New York Times points out: “Amazon does not specify how paperback sales compare with e-book sales, but paperback sales are thought to still outnumber e-books.”

Going by my personal buying habits, I’d say that I’m typical of the average book reader, about 10 percent of my books are hardcover editions and the other 90 percent are paperbacks. If that’s a similar stat for Amazon’s sales figures, Kindle sales would have to grow another 800 percent to be anywhere near knocking physical books off their pedestal.

A Reading Paradigm shift?

One thing I’ve noticed is that major shifts in technology seem to sneak up on you – the changes are gradual and are usually only noticeable in retrospect after you’ve already converted to it. Whether it’s the shift from DVDs to blu-ray discs, buying music from iTunes instead of a CD or streaming videos over your Internet connection from Netflix, instead of renting Blockbuster, these changes can be sneaky.

In the broad scheme of things e-books might eventually win out over their physical counterparts and if they’re able to solve some of these challenges:

●     E-book readers will have to drop below the $100 price point, preferably $50 or below.

●     Mass availability of book titles: It’s not enough to have only 630,000 titles in the Kindle store. I want to have the choice to buy the digital equivalent of any physical book or magazine, even if I might only buy 100 such titles.

●     With fiascoes like the fallout around 1984, Amazon and others still have to resolve the question of ownership in Digital Rights Management (DRM).

●     How will e-books deal with such issues as censorship, whether through hacking or through the manufacturer?

●     Battery life: charging your Kindle every 2 weeks might be nice for some. The killer app might be battery life of 6 months or once a year.

This wishlist might take Amazon or Apple sometime to fulfill and it’s unlikely I’ll buy an e-book reader until this happens although I might end up eating my words at some point. Until that point is reached, the Kindle e-books still need to make up some of that 800 percent gap with their paperback counterparts before there is a true paradigm shift.

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Despite Amazon Fanfare Kindle Not the Final Chapter on Paperbacks

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Between the potential of Facebook Ads and the launch of Apple’s iAds, many are wondering what’s next for Google. Despite the rumors around Google Me and the potential of Google Android, it looks like the company’s very next move might not be into social or mobile advertising. Rather, the company might be looking at additional ways to middle-man more of the ad-purchases across the net.

Some recent moves by Google and its properties indicate that the company is moving to address the concerns from investors that it has limited short-term growth potentials. Specifically, the company seems to be pursuing three distinct sets of short-term strategies for monetizing more of the third-party content on the web.

Three Short-Term Revenue Solutions

Although Google posted a 25 percent gain in Q2 2010 over the same quarter the previous year, Google stock has dipped 21 percent since January, suggesting that investors are beginning to lose faith in the company’s ability to move beyond click revenue. Google seems to be reacting to these trends by aggressively pursuing three additional ways of capturing online ad dollars and monetizing third-party content:

1. New ad sales partnerships for Adwords
2. New ad software acquisitions
3. Added ad product development

On the sales partnership side, Google has struck a deal with Omnicon to bolster its display ad business. As the WSJ reported, Google will get guaranteed sales from Omnicon, and Omnicon will receive added technology and analytics support:

Under the deal, Omnicom [...] is expected to spend hundreds of millions of dollars to buy display ads for its clients through Google over the next two years [...] In return, Google will work with Omnicom to build a global “trading desk” that allows the company to buy display ads more easily on Google’s ad exchange, an auction-like system that matches ad buyers and sellers to advertising space across large groups of websites.

Omnicom says it was already buying ads on Google’s exchange using its own technology system.

As part of the deal, Google [...] will provide analytics services to Omnicom to help it understand how its display ads are performing [...]

As for new software acquisitions, it looks like a recent acquisition by Google may be integral to providing Omnicon with the aforementioned “trading desk.” Specifically, Google recently acquired technology that would allow them to middle-man ad buys on content and ad network beyond their own. As Adage reported:

Google recently acquired Invite Media, a company that specializes in software allowing advertisers to buy across multiple advertising networks, or what is known as a “demand-side platform.” Though he did not mention that acquisition, (President of Global Sales Operations for Google Nikesh Arora) suggested a trading desk-type system would be required to streamline the process for advertisers, which accurately describes how Invite Media’s software operates. “It allows very effective buying across the network,” he said of Google’s latest display efforts, “and every player in that ecosystem can get their fair share.”

Finally, some added product development seems to be coming to Google Ventures-backed Pixazza. The start-up has been on the campaign trail again, recently raising an addition $12 million for their crowdsourced “Adsense for images” platform. This new round of funding brings it closer to leaving private-beta, meaning that Google can soon be generating commissions from the third-party images that generate third-party sales. As TechCrunch reported:

Pixazza’s tagging technology is [...] compelling; the startup crowdsources workers to list products and tag them with the appropriate link to a retailer. Additionally, Pixazza shares advertising and affiliate revenues with publishers.
[...]
The company has also announced that it reaches more than 25 million unique visitors per month through its 75-plus publishers, which include US Weekly and Access Hollywood. Of these visitors, more than 70% are based in the U.S. Additionally, Pixazza says that the startup delivers commerce-enabled photos at a rate of 8 billion image views per year, a 60% increase in the last three months.

Pixazza plans to use its new fund fuel product growth and expand to international markets.

Although this last pursuit is admittedly longer-term than the previous two, it still rests on a product that has an established market presence, revenue model, and client/partner base (unlike Google Me or any potential Android ad platform). Of course, the service will have to come out of private-beta before any final call could be made.

Short-Term Survival

It seems that Google has no shortage of options for bolstering its short-term revenue growth. Two of the three options, moreover, rest on expanding the potential of the already proven Adwords platform. These two should be sufficient to sustain investor confidence until the next big product roll-out.

That being said, the looming question is what that next big product roll-out will be. Facebook has such a lead on “social graph” data that it might be reckless of Google to invest too heavily competing with Facebook Ads. However, iAds also has the advantage of tapping into the data of 150 million iTunes users, 4-5 million iPhone users, and 225,000 iPhone apps.

So, yes, while Google has to still expand its revenue sources in the very immediate short-term, its market predominance will still depend on the development of some new longer-term product. In addition to developing the potential of existing products to their full potential, the company must still seek to innovate new technologies if it hopes to retain its prestige and dominance.

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RockYou and Facebook announced a deal where RockYou will exclusively use Facebook credits and where Facebook will keep 30 percent of the revenue from the credits. In the same press release, the two firms discussed a “Deal of the Day” project where RockYou issued 6 million Facebook credits to users who interacted with ads.

What just happened? Did RockYou just admit defeat? Did RockYou single-handedly inflate the credits market? Did RockYou publicly admit to radically changing their business model?

RockYou’s agreement to exclusively use Facebook credits at the standard 30 percent cut to Facebook says several things:

1. RockYou didn’t have enough power to negotiate better terms than the 30 percent cut for Facebook
2. RockYou seems to be betting the farm on Facebook, as they’ve just foregone revenue from potential non-Facebook users
3. RockYou is admitting that its star may not be shinning as brightly as in the past and may not shine as bright in the future in their applications business

RockYou is far larger than the other two exclusive users of Facebook credits, Crowdstar and LOLapps, and a bet of this type usually only happens when you’re options are dwindling. Add to the mix the new focus on “branding and promotional” opportunities in the RockYou press release boilerplate, and you see that things are changing for RockYou.  No wonder. Just consider what it means that they serve 15 billion impressions a month or 500 million impressions a day to a social networks with combined populations of over 600 million registered users (sum the user base as listed on Wikipedia for each social network shown on the RockYou home page). That’s less than 1 impression per user per day.

And what about inflation? RockYou and Facebook flooded the market with 5 million Facebook credits in four days. but more recently, every game player I know (half of my Facebook friends) received 20 or 15 free Facebook credits sometime over the last two weeks. So in a not-unlikely scenario, it would seem that Facebook issued 250 million x 15 credits, or 3.75 billion credits. So, yes RockYou did contribute to inflation, but there’s a bigger inflationary pressure.

3.75 billion Facebook credits = $375 million value at the stated “15 credits, a $1.50 USD value”, or $0.10 per credit. If Facebook actually paid developers for these credits when used, that would be the equivalent of 70 percent of $375 M, or $262.5M net to developers. Whether that cash is actually paid out or not, that represents $260+ million of equivalent cash value on the market that didn’t exist before.  Why does this matter? Suddenly the cash equivalent of Zynga’s 2009 revenues (per Jeremy Liew) were dumped on the market. In commonly accepted money supply theory “There is strong empirical evidence of a direct relation between long-term price inflation and money-supply growth, at least for rapid increases in the amount of money in the economy”. This inflationary pressure can drive down real monetary value, making it more difficult for application developers tied to Facebook credits to grow revenues.

The Facebook application economics are changing, and vendors who are exclusively tied to Facebook credits are at the risk of both short and long term fluctuations on the value of Facebook credits and at the mercy of any Facebook credits promotions run during the period of exclusivity. While it may seem that Facebook has enough power to hold its developer partners over a barrel, you have to give them credit for successfully executing a strategy to lock in partners and extract money from their partners’ businesses.

As for RockYou, it may look grim, but look at the fine print of the press release. I’m hopeful that they haven’t really admitted defeat as they state that they will use Facebook credits as “the exclusive virtual currency in RockYou’s social games and applications”. While it does lock them into Facebook credits for virtual currency for their social games and applications anywhere they are distributed, it doesn’t sound like they are actually precluded from using real currencies such as PayPal and credit cards.

So is the RockYou deal the harbinger of bad deals to come, leading developers to lower income and inflation while Facebook reaps the benefits? It could be, and it’s definitely limiting, but the real test will come as more developers start to accept Facebook credits and take a long hard look at the agreements and the limitations on their distribution and revenues that come with such deals.

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RockYou At The Mercy Of Facebook Credits For The Next 5 Years

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If you’re like the majority of marketers and merchants out there, the bulk of your marketing efforts are targeted towards 18 to 40 year olds.

Failing to focus at least some of your attention on baby boomers means you would miss out on a demographic profile that,  according to a Nielsen report, has the following characteristics. They:

• Dominate 1,023 out of 1,083 consumer packaged goods categories
• Watch the most video: 9:34 hours per day
• Comprise 1/3 of all TV viewers, online users, social media users, and Twitter users
• Time shift TV more than 18-24s (2:32 vs. 1:32)
• Are significantly more likely to own a DVD player
• More likely to have broadband Internet access at home

The baby boomers demographic are those folks that were born between the years 1946-1964,  and are 46 to 64 years old this year.

From observing behavior at retailers and bookstores, I’ve noticed that many of the buyers for IDG’s “For Dummies” books and magazines like PC World and PC Magazine fit within this profile. They want information, but may not be motivated to shortlist 20 web results and scan through each to find the information they need. They have disposable income, they want results, and they’re willing to put their wallets where their mouths are.

While baby boomers have something in common with 20-something and 30-something bleeding edge tech consumers, it’s a mistake to assume they’re identical. For one, the boomer’s disposable income means they have more leeway to experiment and try out stuff, unless it’s excessively expensive or fails to deliver to any of its’ promises.

I’ve met a couple of baby boomers in the course of my consulting and was  not surprised to find a collection of smartphones on their desks. “Why do you need so many?” I asked.

“I bought the Blackberry but didn’t like it. Then I bought the iPhone and didn’t like it either, so I’ve been buying them till I found one I liked.”

And it’s not always having the best or flashiest product that gets the sale either. Sometimes it’s having a cell phone with larger keys and the capacity to display large fonts on the screen that gets the sale, over say, the ability to play DivX video or having the ability to connect to next generation 4G telco data networks.

Successfully Catering to Baby Boomers

Being able to cater to baby boomers is not just a matter of product design; it has to do with understanding the behavior of this demographic.

Take the example of seeing Facebook reminders from deceased friends as reported by The New York Times. While Facebook has been focused on its core teen to 20-something market and is gradually making inroads into the 30 to 40 year old profiles, being able to adapt its’ technology and appeal to the boomer generation, perhaps  by accessing national obituary records while being sensitive to users, could go a long way to creating site stickiness with them..

Tailoring information so that it is interesting, relevant, and attractive to the boomer, as well as easily navigated, could produce big pays out in long-term site loyalty and consumer interest.

Besides site design and site intelligence, webmasters and social networks should consider  creating baby boomer-specific communities or special interest groups within a sub-section within the website. It would be short sighted to not customize these sites in an attempt to appeal to a branch of the consumer base willing to spend the money needed to attain the specific item, be it DVD players or smartphones, which best suits their individual needs.

Not doing this could be the equivalent of throwing that demographic, and their purchasing power, away.

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Ignore Baby Boomers If You Want to Lose Out On Their Purchasing Power

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Today, online marketers try to find out as much as they can about customers, sometimes “paying” them to reveal personal information.

Rewarding a consumer for being forthcoming about their likes, dislikes and preferences may be one way to get valuable marketing intelligence. At the same time, it could reduce concerns about privacy, since the marketer would openly request such information and provide an incentive to get it. But it still leaves open the issue of consumer control.

A start-up company called Bynamite has a different idea: why not let the consumer collect and review personal information that’s floating around on the Internet and make sure it represents their interests accurately? By doing so, the consumer may someday be in a position to package and sell that information himself.

Ginsu Yoon, a co-founder of Bynamite, tells The New York Times:

“There should be an economic opportunity on the consumer side. … Our view is that it’s not about privacy protection but about giving users control over this valuable resource – their information.”

Bynamite enables a user to track personal information about themselves via a browser plug-in, currently available in a free beta version for Chrome and Firefox only. Bynamite monitors ad networks and e-commerce sites, collecting and assembling data that’s available about the user. Bynamite then classifies the data into categories, such as travel or shopping and the categories are prioritized according to the frequency the user visits sites or makes purchases within a category.

The purpose of all this is to give the user a picture of what online marketers “know” about them. Yoon characterizes this as a “mirror,” according to The New York Times, “showing users how the commercial Internet sees them.” If the user thinks some of the data collected is presenting a picture that isn’t accurate, the user can change the mirror by modifying the data received.

Ultimately, Bynamite hopes to convince users that they can “use their portfolios of interests as virtual currency.” Yoon terms it a “consumer’s Preference Wallet.” Some day, he says, “a person’s profile of interests could be the basis for micropayments or discounts.” Yoon adds, “I’m absolutely convinced that the direction [of Bynamite] is right, giving people a way to identify and use this store of value that is their personal information.”

That may be the pot of gold that awaits us – the notion that consumers can essentially package and market their own data. Ideas like Bynamite could represent a new way of doing business online. The consumer keeps watch on personal data and refines it so that it accurately reflects personal interests. Meanwhile, online marketers willingly offer incentives to consumers who make this information available.

This could present online marketers with an attractive alternative to the current practice of collecting information without a consumer’s explicit permission – which is the heart of the online privacy issue. That makes Bynamite a very intriguing idea.

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Over the weekend, Facebook posted the following notice in my account:

Facebook Gave You 10 Free Credits! You received 10 free Facebook Credits (a $1.00 USD value). Use them to buy premium items in your favorite games on Facebook. Go play!

Well, I only find one app to be useful: Scrabble. I used Farmville twice and Yoville once… both with my son sitting next to me begging me to try them out. Once was enough (the second use of Farmville was to give my son a gift that was available only on that day. That is not a judgment of those games. They just aren’t for me).

Note: The other Facebook app that was useful was Statustalker which Craig Ogg, Keith Bussell and I created to enable Facebook users to comment on each others’ statuses. Facebook loved the idea so much that they built it into the site.

While I have no use for the free coins, I had to post a snarky Facebook status about it. It was:

Can I buy a vowel in Scrabble?

with the Facebook notice. This lead to a surprising series of comments…

What does Aunt Naomi have that I don’t?

Don’t answer that question. Aunt Naomi commented that she got 15 free coins. Another female friend told me that she got 25 free coins. A few others had similar amounts. #WTF

I’m sure that there is a wide range of amounts that Facebook users received. Please add yours to the comments section below.

Testing 1, 2, 3

Facebook obviously is testing different amounts. What I’m wondering is it based on past behavior or is it to evaluate the effect of coins on future behavior?

Facebook informed me that my 10 coins had a value of $1 so my friend with 25 coins got $5 of value.

Is Facebook rewarding behavior of people who play games? My anecdotal info says no as two of the people have each played one game and received different levels of coins.

Are women worth more to Facebook? The small sample size I have says yes. This would be inline with the fact that most social gamers are women.

Is Facebook trying to see if coins motivate people and what level motivates people with different psychographic and demographic profiles? I’m guessing this is the one. Facebook must have given coins to 100 million users or more. That is a statistically significant sample. The value that I was given is nothing as the coins can only be used to buy things that have a marginal cost of zero. Give away millions of dollars of free stuff, learn from it and then knock of Zynga and other providers. That sounds like the model here.

So let’s see if we can get some data and figure out what’s up. I assume that there will be a lot more now that Facebook has learned from Zynga, Second Life and other social networks that have been using payment systems for years.

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Not All Facebook Users Are Created Equal: How Many Free Coins Did You Get?

Search Engine Keywords:

• how to get free facebook credits
• how to get facebook credits free
• how to get free facebook coins
• 5 free facebook credits
• Facebook Gave You 10 Free Credits
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There is nothing like a short URL to help increase retention in branding. Today Overstock banked on that announcing the purchase of O.CO and associated domains for $350,000.

The move helps Overstock in two ways. It allows them to highlight further the O in their name which they have built a lot of branding around. From a pragmatic standpoint, in a time where the adoption of shortened URLS for web and mobile is ever increasing, dropping to a smaller URL has definite benefit. Expect to see a lot of O.CO on Twitter.

According to Patrick Byrne, Chairman and CEO of Overstock,

“The O is such an important and recognizable part of our brand. In the new era of the Internet, where short and memorable web addresses are critical for capturing the attention of mobile and socially connected Internet users, our O.CO web address will help to reinforce our brand and expand our business among these audiences.”

Overstock’s brand already enjoys strong recognition among consumers but this might be step to spin off part of their brand as more upscale. Especially since O.CO plays very well from an aesthetic design standpoint.

One has to wonder whether Oprah feels she missed out.

Originally posted here:
Breaking News: Overstock Purchases Single Letter Domain O.CO for $350,000

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The summer blockbuster Inception introduced viewers to the concept of an “architect” as someone who creates the reality behind a virtual world. Avril Korman is no stranger to that concept. He is a professional designer and virtuatect for SecondLife (SL); perhaps better known on SL as Axi Krumin.  In a series of guest posts for Search Engine Watch Korman answers the question: what would you do if you could get anything you wanted, especially if money wasn’t a concern?

You might wonder who does this link to online marketing and e-commerce? Well, getting an insight into what consumers want if time, space and more importantly, money, was no obstacle can give you invaluable insight into what makes Internet users tick. In marketing  speak, think: “what buyers want.”

Within the SL universe, Internet users are able to get what they want, create what they want and buy what they want at a fraction of the price of their real life counterparts. Whether it’s choosing to live in a castle, or buying a designer handbag. All of these are items  people can own in SL, whereas in real life these items would be far too expensive to casually purchase.

Virtual world account created: Check. Finding an untapped pool of consumers: Check.

Taking an uncensored look at user demand and extrapolating it to the online or offline world? Priceless.

Since the goal of internet marketers is to match consumers search intent to demand, virtual worlds are an easy way to understand that demand in an unfiltered way.

As Korman says:

“But what if you could buy just about any outfit, no matter how high on the couture ladder, for under $10? That is the true secret of fashion in SL — you can go absolutely crazy and buy everything you ever wanted, with minimal real world financial impact. Folks who can’t easily afford a new outfit in real life, can easily afford 10 in SL.”

In this case you don’t even need to poll or survey users on what they’d want, they’re wearing their intent on their sleeves (or avatar’s bodies). As Korman says “When there are no consequences to what you can wear, it’s interesting to see what people want to buy and wear.“

Want, desire, and emotion, these are powerful triggers and being able to tap into these instincts or lack thereof, can bring your marketing and consequently bottom line to a new level.

Same products, different way to connect with the audience

You might be wondering: how relevant is the virtual world to the real one? Does it accurately reflect market demand? You’d be tempted to write off virtual worlds as places potentially filled with the blue-skinned Na’vi from James Cameron’s Avatar. You might want to think again.

Beyond Second Life there are dozens of virtual worlds including Electronic Arts’ (EA) popular The Sims. There are also virtual world hybrids that focus on fashion like IMVU. Each one has a very unique way for brands to engage with a very loyal core audience.

The virtual interface might be different, the look might be different, the virtual world economics are very similar to their real world counterparts. For example in the fashion vertical women still out shop men 10:1 and with some exceptions, men don’t place a high priority on clothing options, choosing to wear the default drab gray/brown/olive free clothing found in most virtual worlds.

While the virtual world might not be an exact mirror to its real world counterpart, savvy merchants and marketers are trawling the virtual universe to get a gauge of how popular a niche might be while consumers are flashing their intentions for all to see. A savvy brand might even create a virtual world storefront in order to enforce brand loyalty. Marketers, including affiliates, could capitalize on such loyalty by using virtual worlds like SL as touch points in bringing the consumer into the purchasing cycle.

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For Insight Into Buyer Behavior Simply Enter Your Nearest Virtual World

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Back in 2008, InternetNews reported that Twitter helped Dell generate $1 million in revenue via spontaneous limited offers announced via tweets, and people thought that Twitter had fallen into a business model. Then in April of this year Twitter’s “promoted tweets“, where sponsored messages could be inserted into Twitter streams, was revealed as at least one official leg of the Twitter revenue strategy. Now, another official leg of the revenue strategy was revealed that latches onto the idea from 2008, eCommerce.

The @earlybird account, as explained here, is intended to be a time-sensitive feed where deals are twittered to the masses of people wanting deals. All you need to do is follow @earlybird. Basically, like other accounts, the Twitter support page states “you can follow and unfollow @earlybird at your whim. You may also see these offers if someone you follow retweets an @earlybird tweet.”

On the surface this might seem like a great idea, but look deeper and you will easily see that this could become a completely mediocre offering or drag Twitter into competition with Groupon and it’s dozen or so competitors.

What will work and what won’t on @earlybird

Using @earlybird can be done right, and it can be done wrong, and I’ll briefly look at a few scenarios.

1. @earlybird promotes national deals with major brands
Example offer: Free 3G upgrade on new HP Tablet featuring webOS (I wish), first 10,000 users with US address who reserve at some link.
Why this works: This could have huge marketing and viral distribution potential for HP’s new webOS tablet while at the same time having a true nationwide appeal that anyone and everyone could get into. This takes direct advantage of Twitter’s broadcast nature and avoids local competition that would be provided by Groupon, LivingSocial, BuyWithMe, etc.

2. @earlybird promotes regional deal with regional service provider
Example offer: First 10,000 customers who register at link YYXZ get Rogers Wireless unlimited data for $20 CAD/month.
Why this fails: Rogers wireless is a Canadian wireless provider, and only a fraction of Twitter users fall in areas where Rogers has coverage. If I was following @earlybird, I would start to wonder if @earlybird was going to be relevant to me.

3. @earlybird promotes national deal with niche product
Example offer: First 10,000 users who click on this link get 50 percent off a 1 year supply of saddle conditioner and horse shampoo
Why this fails: Even though this might be a huge hit for the horse lovers out there, how many Twitter users would really want to see this type of deal? Sure it has national appeal, but it’s so far from my areas of interest I’m starting to worry that @earlybird was going to be a needle in a haystack in terms of deal relevance.

4. @earlybird promotes local deal with widely desired product.
Example offer: First 10,000 users who register at link get a free extra night and complementary breakfast at any Joie de Vivre hotel with 1 night purchase.
Why this fails: While I might buy this, since the hotel chain is great, they only exist in California. Millions of others who aren’t interested in deals in California will again be alienated or possibly question the deal selection.

Will @earlybird work?

If I signed up for @earlybird, and there was 1 deal a day, but only 1 in 4 days it might be relevant, I might consider trimming them from whom I follow. If there were 100 deals a day and 1 was relevant, I would definitely unfollow them without a second thought. At some point, I need to respect my time and make sure that the accounts I follow provide some value to me. If done wrong, @earlydeals won’t be relevant and could even lead me to associate Twitter with irrelevant deal spam. On the other hand, deal sites cater to certain users, are categorized by category, have deal alerts, filters, and narrow ways to apply my preferences to deals that I want.

The way I look at it, I’m a bit worried about @earlybird coming out the gate too generically and hurting its chances of getting long-term sustainable attention. With people like me wanting low cost travel from San Jose to Honolulu and tech deals on netbooks with Nvidia ion2 graphics, it may be difficult for @earlybird to satisfy the deal hunting needs of its diverse audience.

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When we discuss the rivalry between Facebook, Apple, and Google, we’re talking about them as ad companies trying to invent the next ad platform. Well, given what the next platform will be, Apple has a distinctive edge over Google and Facebook, and they’re already starting to leverage it.

Last week, Apple launched iAds, a platform that lets advertisers target users through existing iPhone apps. And to target those ads, the iGiant is letting advertisers tap into the data of over 150 million iTunes users.

This means that advertisers will have an additional layer of data through which to target iPhone users: purchasing history. That’s a data set that might prove more valuable to advertisers than any other.

The Mobile Frontier

When it comes to online advertising, Facebook and Google have very different business models (each with their pros and cons), but they’re still just showing conventional online ads. The real next frontier in digital advertising is mobile because mobile offers better targeting and is open to more possibilities.

With mobile, you cannot only target ads according to search history, social graph, and IP, but physical location. This could make digital larger than any other ad medium because it opens up so many more possibilities — from geo-targeted coupons and expiring offers from nearby points-of-sale, to ads for mom-and-pop shops just around the corner. Indeed, mobile advertising will really expand horizons for both performance-based ad models and targeting abilities.

Facebook and Google are foraying more and more into the mobile space, but Apple has been there longer. And while Apple hasn’t been there that much longer, it might just be enough of a lead to put them first past the post — or at least the first post, anyway.

Apple’s Lead

The iPhone has been on the market since January 2007, and there are over 200,000 thousand apps available. Google’s Android was only released about a year and a half ago and there are tens of thousands of apps available. Facebook has no mobile OS (but might be working on it), and has only its own mobile app for use on other OS’s.

So Apple has been collecting data on 150 Million iTune’s users’ behavior, location, and purchasing habits through over 225,000 apps over 3.5 years. This gives them a considerable edge in targeting ads.

Google’s Android may be on more devices, but Google lacks the years of valuable user eCommerce data that Apple has through the iTunes store.

And as Bloomberg recently reported, they seem to be handling user privacy better than Facebook has recently:

Apple doesn’t share information on individuals [...] Instead, [advertisers] can choose to advertise in certain “buckets” of applications, such as those on news or entertainment, based on characteristics of its users.

In designing its own ad platform, Facebook has often struggled with user privacy. They’ve amassed heaps of data on users’ “social graph”, but haven’t been able to give away that data without giving away users’ identity because the entire Facebook system is driven by identity.

You don’t install an app on a device, you install it on your personal profile. This means that app developers don’t just get access to your user behavior, but your personal network and life.

With an iPhone App, however, the developers have no way of knowing which “John Smith” a device is owned by. They can’t access his personal life or anything that gives away his identity.

But Apple can see what apps he’s purchased, installed and what you used them for. This data offers insight into your interests and purchasing power, and that’s something that advertisers can really use to target their message. After all, money speaks louder than words.

Nothing’s Certain

For decades, services such as Air Miles offered marketers data on consumer purchasing habits. Then the internet allowed us to target them based on sets such as search query and social graph. Now, the mobile web is bringing these possibilities together because it is both physical and digital.

For the moment Apple does seem to have a bit of a lead in the way of mobile ad delivery. But there are dozens of steps between launching iAds and iAds becoming the Adwords of mobile. A single wrong step at any turn can very easily cost them their lead.

What is certain, though, is that marketers need to start looking at targeting in different ways. Apple may or may not become the dominant mobile ad platform. But it’s more likely than not that mobile will the next dominant ad medium.

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