Hugh Spear's Blog

WAP Billing the natural next step for mobile payments

Representing my company Dialogue Communications I have had a number of recent meeting with mobile operators where I have outlined how we can help solve the problems hitting the mobile premium rate industry. These problems are three fold:

1. Premium SMS (or PSMS) reaches what is perceived as a saturation point and growth drops from 30% per year to about 5% per year.
2. PSMS Content Providers work harder to make their money and some of their efforts cause increases in complaints.
3. Mobile Carriers scale back the human resource available to run the PSMS business at the very same time as there are more complaints and an increasing need for responsible leadership in the industry.

Once we get into this 'perfect storm' of conditions, it is easy to just say the industry is not working as well as it should. But we could also introduce a WAP billing strategy, similar to Payforit in the UK. This strategy will do the following (according to research by Dialogue):

1. Reduce consumer complaints by 85%.
2. Increase click-through rates from 3% to 12%.
3. Increase premium revenues by 15% without cannibalising pre-existing PSMS.

These benefits are excellent in themselves, but when you combine it with other factors you have an industry poised for growth. The other factors are:

• Trusted payment frameworks like Payforit attract new players to the market. For example Soccer clubs in the UK Premier League are typical and are being signed up fast. They were reluctant to get involved in PSMS as it had a slightly tarnished image.
• Traditional mobile content providers are more and more shifting their advertising spend to online rathen than print and TV. A seamless click-through process such as that offered with a good WAP billing solution really simplifies the job of launching new services in new countries.

Dialogue provides good WAP billing infrastructure solutions for mobile carriers and content providers and it is well placed to help many telcos take this natural next step as PSMS revenues start to slow down.

Uniques vs Impressions - the mobile advertising paradigm shift

Whilst many marketeers are keen to drive traffic to their websites, they are generally counting the page impressions on those sites and using that to attract advertisers. The problem with this is partly that in the past people have generated 'clicks' artificially in some cases, but it is also that we don't usually know how many visitors we get.

In a mobile advertising environment we have far fewer impressions at the moment, but we can track unique visitors and profile the pages they read on each visit. If we are smart we can also learn more about these people by working with the mobile carrier. For example we will already know the make and model of their phone. And some analysts try to make marketing assumptions based upon this fact alone. But the mobile operator can provide far more information as follows:

1. Pre-pay vs Post-pay customer.
2. Male vs Female
3. High vs Low propensity to spend.
4. Location current, and address where phone user lives/works.
5. Age Group.

If you have all the above information, then you are going to be able to do a great job of targetting viewers with banner ads, and  even though the  traffic  is  relatively low, you  should be able to reach the people you want at the time of day you think they will be most responsive.

The mobile advertising market may be taking off slowly, but I would expect that when the case studies have been circulated a few times that it will become important for every business to have a mobile presence. This is where companies like Dialogue with their Mobile Site Building tool and wealth of experience in mobile marketing can really help.

I talk to people regularly who are busy keeping up their Search Engine Optimisation efforts on their website. They all say they wish they had started a few years earlier when there were fewer sites and it was easier to get higher in the rankings. In my view it is going to be just the same with mobile internet. The people and companies who get in first will do much better than those coming along later.

So what's stopping you?

iPhone vs Blackberry

After a few weeks of using an iPhone I decided to compare it with the Blackberry Curve and the Blackberry Pearl. My conclusion is that RIM is probably going to need to respond to the challenge from the iPhone.

Here are my reasons:

1. Networking - most iPhone users will experience using their device over WLAN and GPRS/EDGE. If you are in a meeting in your office you can probably get better coverage from WLAN. The Blackberry devices just aren't scoring on this front. This become even more important when roaming and data costs can be substantial.
2. Email Reading - the iPhone is easier to use to read emails. It has a better and bigger display.
3. Email writing - the Blackberry has a keypad which has a better feel than touching a flat screen. However I see some iPhone users working pretty quickly at typing, and I wouldn't be surprised if I change my mind about this eventually. I would actually prefer a T9 (predictive text) version of the iPhone keyboard as I think I could work faster. I do like the fact that the iPhone keyboard can be silent whereas the Blackberry will always click a bit.
4. Applications - the iPhone wins this hands down. Not only does it have more applications shipped, but even after a year there are hundreds of independently written applications to do all manner of things.
5. Coolness - the iPhone says 'I want to do stuff', the Blackberry says 'my boss wants me to do stuff'. Its just a perceptions, but important to the attitude of the end user.

So for my money the iPhone is the more useful device. RIM has taken the Blackberry from an overgrown two-way pager to something which looks like a phone and can do all the normal phone things. Apple have taken a media player and added a phone and not gone too far wrong. Its time for RIM and the other market leaders to recognise that the iPhone is going to change the way in which people work.

Beyond iPhone - where are we going?

I bought an iPhone in Dubai at the start of January 2008. It was 'unlocked' and I didn't enquire further about its origins. Once back in Australia I put my Vodafone Australia SIM into the iPhone and set about configuring all the features. Most things worked a dream as I have come to expect from Apple. There are a few glitches but I imagine that they will be resolved in the regular maintenance releases and also as Apple moves the product across the world. We pay a price for early adoption, but we also get to use all the toys before everyone else.

That said, I am impressed with how many iPhones I have seen in Sydney as the iPhone is not yet launched in Australia.

So what can I say about this device that hasn't been said a thousand times already? Well the reason I bought it was to try to validate the Steve Jobs vision that "we don't want the baby internet". Meaning we don't want a mobile internet which is any different to the "grown-up" internet. That is the internet we have already. Why do I want to investigate this statement? Well my company Dialogue Communications has spent a good deal of time and money developing Mobile Site Building and publishing products which expect that we will continue to want this 'baby' internet for some time to come. So I want to know whether its time to hang up our coding gloves and make a living out of importing 2 wheeled skateboards into Australia.

"We don't want the baby internet".

So let us examine the claim from Mr Jobs. On the face of it we, meaning the world in general, do not need any more websites, and if we run a company we don't want to spend more scarce marketing dollars creating a second website for phones. But can we get away with just the big site? Well thats the question Apple think they have answered in the affirmative with the iPhone. So here is the case for the iPhone being able to handle a big site:

• It has WLAN as well as EDGE / GPRS. And guess what you are in a wireless hotspot more often than you'd imagine. So data rich sites are perfectly acceptable on WLAN.
• There is the portrait/landscape flip thing which gives a pretty good viewing screen for such a small device.
• There is the fantastic pinch-n-pan screen navigation. Without this the challenge would be a real joke. I think this is the real smart thing which Apple has got right.

  But is that enough?

Well it is enough in a "if the bars not open then a glass of water will be fine" kind of way. Meaning that its the best web browsing experience I have ever come across in a device which fits into the palm of my hand. But it isn't as good as I'd like in an ideal world where we can be picky.

So what is the case for being able to scale down the big internet? Well there are two areas really 'Control' and 'Display'. We are stuck in this world with a few things which are difficult to change here they are:

1. We want a device which will fit into our hands and pockets and bags. So they must be small. They should also be light so we don't think twice about bringing them, and forget we have them until we need them.
2. We have hands with fingers and whilst our fingers may be larger or smaller, they are still a bit clumsy when you have a querty keyboard on the space the size of a match-book.
3. We have eyes which need writing to be a certain size before we know what it says. Some of us use glasses to help, but even my 7 year old son can't read the smallest print size we see on the iPhone.

Paper is Big

There's no getting away from the above things, they are physiological, and they conspire to keep all these mobile device manufacturers in gainful employment trying to solve these problems. It reminds me of a product launch presentation Nokia ran in 1998 for the Nokia Communicator. The product manager in the UK was Mark Squires and although he was expounding the merits of what was and still is a fantastic device, he still felt obliged to point out that when it comes to jotting down a few notes or doing a diagram to explain what your new widget will do, then there is a competitor product which is cheap, portable, easy to use, doesn't need batteries and isn't totally bad for the environment - Paper.

So what I'm trying to say is that whilst the early adopters like me, and these generation 'Y' people will cope with the iPhone as a web browser. The average joe will tell you that it is stupid to try to pinch/twist/flick and pan your way around the big BBC website to get to the bottom of Kevin Keegan's decision to try to bring soccer success back to Newcastle United.

So if there is a reason to have a mobile site which is designed with the small screen in mind, and you have to do a bit more work to create such a site. Is there something beneficial that you can do with this site to justify all the hard work? Well my view is that there are plenty of reasons to be cheerful about mobile site creation. So here is my top list:

Reasons to be cheerful about the baby internet

1. There are about 100 time more mobile phones around than there are PCs. So you aren't exactly wasting your time on something for the minority.
2. You always have your phone with you. Keys, Wallet/Purse, Phone - you go back home without one of these (unless you're going surfing in which case you're excused!).
3. You can obtain more useful demographic information about someone who has a phone. For example, their location, their make and model of handset (which can indicate economic group and lifestyle), whether they are pre or post-pay, and their unique mobile number.
4. A phone is more personal so it is more reasonable to assume it is always the same person browsing so you can make your site or advertising more targetted, and use the information you know to personalise your site.
5. You can sell things to people who have phones and they can pay without needing to key in credit card details, they can even pay without divulging their identity.

So the baby internet, may not be something we want to avoid, instead it might provide some fantastic opportunities to reach people more effectively with your products or services. So what about the iPhone. Well guess what, just because Steve Jobs claims the iPhone can navigate the big internet, it doesn't mean that it won't do the job a whole lot better on mobile sites which re-size and re-configure themselves to fit the iPhone precisely.

Where does the iPhone go now? It goes to the mobile internet and does it in great style.

2007 end of Year Update on Australian Premium SMS Market

I'm ready to provide an update on the Australian Premium SMS Market (PSMS). A briefing from Hutchison 3G last week, regular informal discussions with Vodafone, a briefing from Telstra yesterday 5th. December 2007 and lunch with Optus the same day, I now have a good feel for how things look at year end and a general view going forward for at least 2008.

So here goes:

Premium SMS Growth Rate All parties agree that there is now only slow growth in PSMS. It is positive but nothing like the 2006/07 growth rate of around 45%. The anticipation is that over the next year it will grow at 15%. This position is reflected in Dialogue's (www.dialogue.net) existing customers, but Dialogue is also winning new business due to better account management and higher quality of service. Interestingly this is true even when Dialogue's rates are not the best, our billing and settlement is more efficient.

WAP Billing Whilst everyone is still waiting for official results on the payforIT situation in the UK, it seems that the Australian networks have bought into the idea of billing from a WAP session, direct to mobile bill. Optus now have this solution completely in place, including MSISDN pass-through. I would expect to see this available on all networks with the possible exception of Virgin Mobile by this time next year. So its time to get your mobile SEO into place and pre-book your Google Adwords. Fortunately Dialogue has a superb 360 degree mobile internet offering which includes an excellent drag-n-drop Mobile Site Builder (MSB). It is fully payforIT compliant and will easily integrate into the the Australian WAP billing systems.

Premium SMS Complaints These are still on the rise and Telstra will, in the new year (2008) provide a score card to each SMS aggregator which rates their number of complaints as a ratio of the number of premium messages sent/received. My feeling is that this should be related to value of PSMS business, so we'll see if that idea can be sold into the very reasonable guys at Telstra. Optus have been providing this score card approach for 6 months or so, and it provides a good way of putting your own efforts into context. We believe that Dialogue has a good system, but we need to continually strive to improve things.

Offshore Bulk SMS Many aggregators are soucing bulk SMS from cheap off-shore providers, this enables them to offer cheaper SMS to their content providers, which helps them in turn to market and grow. Telstra has now given notice that they will be monitoring these overseas routes and apply interconnect charges, or shutdown international routes if they are abusing normal traffic exchange arrangements. I'm guessing that this will squeeze content partner revenues and may lead to even slower growth in PSMS. I think that 10c per message in Australia is a little high and 7c is a bit more in line with european pricing.

Restricted Access Services This is still stalled. There are probably only a few thousand consumers registered and purchasing 18+ content. I suspect that things may improve by the end of 2008.

Mobile Internet WAP or websites. Why bother?

I'm starting to wonder whether every business that wants a mobile site has really worked out why they want it. For many it is a reminder of the way in which many businesses obtained a website a decade or so ago. They decided they wanted one and then pretty much copied the style of someone elses site.

The problem with this approach on mobile is that in general it is impossible to cram all the details from a full size website, into the space available to view on a mobile phone, or other mobile device.  It is also going to be very difficult to navigate and probably frustrating to the end user.

So the approach we take at Dialogue Communications is to look at the business and what it is trying to achieve, firstly on the main website, which should be the place which all potential viewers should be directed. Then we look at why you would want to have a mobile site. What do people want to do when they are out and about and using their phone. With this approach we usually end up with a subset of the features of the main website, and may also have something quite different.

For example, a customer approached us with a Cycle Shop. A very successful business, with a very successful website. We didn't want to mess with this. But we thought that we could create a mobile site which was almost a 'must-have' accessory to the website. We used the mobile site for two feature areas: 'My Cycle' and 'My Rides'. The 'My Cycle' section included details about the bike the user had bought, when its next service was due and 'news' about any of the components. When a reminder was sent to the cyclists mobile to notify them of an impending service, the reminder would include a link to 'My Cycle'. The 'My Rides' section is all about organising cycling trips with a group of friends. You can send out invites and monitor who has accepted. You can then send out group messages, if the weather is too bad or you just stayed in bed. You can also 'blog' what happened on your trip.

In this way, we think you can give people something simple and useful which helps them and their customers and has them coming back for more later. So to answer the question I posed in the title of this posting. You bother if and only if you have something useful you can provide on a mobile website.