Telecom providers plans to strike at mobile ads

Recent news reveals that global telecom providers may “bomb” the mobile ad space by blocking ads on phone networks, in order to get a share of the Internet advertising cookie. The telecom providers believe that since they have paid for the infrastructure they are entitled to some of the profits reaped from mobile ads.

Never mind the CPM

Mobile ads are on the rise, no doubt. Across all channels we are seeing 50%+ mobile market share. The problem with mobile users is that they are generally a lot worse customers. E-commerce sites generally experience a significantly lower conversion rate from mobile users than desktop users and mobile ads are more often than not worth a fraction of desktop ads.

If telecom providers are going to demand a share of the smaller pie, well, we are going to see some very unhappy shareholders at Google and Facebook. Though I would argue that Facebook would suffer less than Google as most of Facebook ads are on facebook.com or their app, on an https connection. Unless the telcos plan to issue MITM prone certs, I don’t see how they will easily be able to extort ad money from Facebook.

Google has a significant portion of ads from off-site ads via their Adsense programme. These are the likely target for the bomb. I don’t doubt that Google with their technological prowess could work around this block but they may not want to play cat and mouse with global telcos who could, in a fit of anger, throttle mobile visitors to bandwidth heavy Google properties like YouTube.

What will happen?

If the big telecom providers decide to launch the bomb I suspect that we will see a string of lawsuits, probably anti-trust and net neutrality related. Even if the advertisers don’t bend to the demands for revenue sharing, the lawsuits will cost time and money for all parties.
With text messages decreasing rapidly and mobile data becoming ever cheaper, at least in Sweden, the telcos are feeling the pressure. It used to be the case that buying a phone off a telco was more expensive in the long run but these days it tends to be cheaper than buying the phones straight off, say Apple. Data is also way more expensive than texts for the telcos and this means that their margins are shrinking quite rapidly. We should expect more schemes like this in the future as margins and stable revenue shrinks.

It is unlikely that this scheme will succeed in the long run as the technical prowess of the big advertisers are like to be enough to work around the majority of blocking attempts like this but telecoms providers double-dipping may well be the future as shareholders demand growth in a soon to be saturated market.

-P

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Mojang Vs Putt-Putt: Trademarks and User Generated Content

Notch just tweeted a letter from Putt-Putt (TM), claiming that Mojang (MineCraft creators) infringed on Putt-Putt’s trademark. Their Cease and Desist (C&D) letter includes a screenshot of a Youtube search for putt putt craft. See the images below.

Mojang VS Putt-Putt Page 1

Mojang VS Putt-Putt Page 1

Mojang VS Putt-Putt Page 2

Mojang VS Putt-Putt Page 2

Mojang VS Putt-Putt Page 3

Mojang VS Putt-Putt Page 3

The thing Putt-Putt doesn’t seem to get is that, this has really nothing to do with Mojang as the videos are User Generated Content (UGC). They could send C&Ds to the content creators, but sending it to Mojang makes no sense as they have no control over the content. What happened to doing your due diligence before sending C&Ds? This is a waste of lawyer time and money. Mojang can do absolutely nothing about the videos, nor should they. If Putt-Putt feels that their trademark has been infringed they have to take that up with the content creators, either map or video creators.

This really one of the issues with UGC, who has the responsibility for potential infringement. I don’t know if this actually “hurts” their brand but Trademarks has to be protected so I understand why Putt-Putt sends the C&D… I just wish they would send it to the right people rather than those who can do nothing about it. This will turn out to be a massive PR loss for Putt-Putt in my opinion, it won’t do a thing for Mojang and probably not much for the videos on Youtube either.  If their lawyers cannot do proper due diligence, then they should be ashamed of themselves for wasting everyone’s’ time and money.

 

-P

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Follow-up: MTGx Investor Presentation

I’ve finally had a chance to properly look at MTGx‘s investor presentation that Rikard Steiber posted on Twitter a few minutes before my last post went live. I apologise for the delay but my master thesis had to take priority 😉

I will not discuss everything presented in the slides, but on the parts that specifically interest me.

[Edit: Embedded the slides, had forgotten you could do that with Slideshare]

xVentures: MTGx incubator/investor arm. xVentures is very interesting as they can actually offer  startups a lot than traditional incubators and investors lack: advertising and sales infrastructure. Both of of these are usually a problem for startups and one thing is for sure, MTG knows their advertising.  From the slides (The Pitch):

60 channels in 35 markets
TV operator, Radio, Digital
Media cross promotion
Content cross creation
Local sales force to sell
Local editorial to curate

Ability to advertise in 60 channels across 35 markets? That is an amazing opportunity for most companies and startups in particular. Let’s not forget that MTG(x) are used to selling B2B. I am quite positive they can assist startups with marketing (Sorry, most people (including myself) are just not as good at marketing as we think) and pricing.

Viagame: I could not really understand why MTGx would spend the time and money on Viagame, it is, as I said in my previous post, a deviously hard market to make a decent buck in and they basically had nothing that differentiated them from the competitors. I was wrong. They do have one thing, which is mentioned in the slides: Leverage unsold TV inventory to drive online traffic and sales.

Leveraging the unsold inventory, where they were unable to sell advertisement, to generate (some) revenue. It is quite brilliant. The margins on each sold game are probably around 15-30% (I believe Steam takes ~30% from game sales), which is a healthy margin for relatively small investment on MTG’s part (Shelf-ware distribution tool, basic adverts for Viagame etc). The unsold inventory would otherwise be ‘wasted’, now a profit can be made, albeit smaller than if the inventory had been sold but it helps smoothing out the revenue streams – no/smaller dips in revenue if inventory goes unsold.

xCreations: ‘Youtube style’ production/content (my own interpretation). Rikard Steiber correctly identifies that ‘old media’ have not been very good at embracing Youtube and they, in my opinion, have often failed to create the type of content that the Youtube viewers expect, thus it makes sense to create a small and innovative team to embrace the Youtube-styled content. Perhaps on their own platform, perhaps not.

I would love to see production companies embracing gaming content (my personal favourite among the Youtube content). eSports on Youtube, game play commentaries and Let’s Play are quite big business these days and they could be so much more with proper production companies behind them. Companies like Yogscast have come a long way with their production, they got a really good crew going right now, and they are still growing, but many others are still 1-3 man operations and could use a good production crew. Yes, I know they get support from Maker studios/The Game Station etc. but it just doesn’t have the same finesse as traditional production for the most part.)

The slides make me even more excited to see what MTGx has in store for us. Will the be successful?  I don’t know. I hope so, it would mean more jobs in Stockholm, which is never a bad thing – except if you want to buy an apartment. MTGx still have a long way before they can revolutionize digital media but god knows it is sorely needed. ‘Old Media’ seems to have trouble to adopting to Youtube-style content. More innovation is never bad in my opinion. I will continue to keep an eye on MTGx and other potentially innovative companies in Sweden.

P.S. I should say, if you found these things interesting, you probably should apply at MTGxJobs.com, they seem like nice people and currently got 25 jobs up for grabs. (And no, I have no relation to MTG(x))

Now back to writing my thesis. Perspectives on ES/ERP implementation success (in the onward and upward phase). Interesting stuff if you like large scale implementations of IT systems and the factors that leads to successful implementations.

-P

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