During the past week Google made two significant splashes in the mobile arena. Their much heralded, bombing of middle America with Stealth fighters announced the landing of the “Droid” mobile device. Secondly, their acquisition of the leading U.S. mobile advertising company, Admob for $750M announced the full legitimacy of mobile advertising. When Google speaks, the rest of the industry should listen.

There was a time, not too long ago, when an entire industry seemed to get a simultaneous epiphany – that the Internet had created a legitimate “second” screen to television.  When this became “conventional wisdom”, the advertising Dollars, Euros and Yen started to shift from the “spray and pray” methods of television to the increasingly targeted methodologies of the web.

The same thought process can now be safely referred to as “conventional wisdom” for mobile.  The consumer is spending more time starring at their mobile screen, and less and less at their Web browsers, and even far less in front of the television.  With this reality, the web advertising giant is shifting more investment to the third screen  – which we should refer to as the consumers prime screen, the mobile screen.

We have transitioned from TV ad blindness (really a Pavlovian queue to go to the frig or bathroom), to web banner blindness.  We now, however, have the personal medium of the smartphone to reach consumers.

We have moved from the communal family device, the television, to a shared, yet personal device, the PC to the personal and un-shared device, the smartphone.

There will be some winners and losers in this new reality.  The winners will be companies that have invested ahead of the curve and have developed mobile and true multimodal next gen advertising vehicles.   Advertising and promotional technologies and processes that have broken with the “spray and pray” techniques of the past and capitalize on the true personal 1-1 advertising techniques, providing consumers ads that they want to view, will be the market winners.

The Android has positioned Google to be in your pocket, not figuratively, but literally.  The combined promotion with VZW and Moto, with stealth bombers creating a thinly veiled a sense of “Shock and Awe”, is a loud statement.

(Note to the Droid ad agency – Stealth bombers do not fly during the day, hence the word “stealth”)

See my other comments on the ad campaign at the end of this blog article.

VZW is a company with a great network and a lagging device lineup. Moto has raw engineering and production talent for mobile devices and has largely fallen off the radar screen in recent years.  Google, the dominant player in the present  generation of Internet advertising, is seeking to maintain and grow that position in the next generation.

So, Google is playing a pre-emptive attack strategy in mobile. VZW is playing catch-up to the iPhone.  Moto is, perhaps, playing their last “bet the company” card on Android technology.  Offense, defense and survival makes for three very motivated partners.

With the expected proliferation of Droids and other smartphones, Google’s purchase of ADMob is both stunning and obvious.   Another winner in this market shift will be, as I have written about in the past, the major social networks.

So who are the losers this past week?

On the Wireless Carrier side of the equation, Sprint and T-Mobile have to be concerned.  The gap between them and the leaders  (AT&T and VZW) is widening.   I  expect one less mobile service company in the U.S. in the next 12 months.

The emergence of Android platforms is likely the end of Palm as a mobile platform.  The Palm Pre never got the consumers attention and thus critical market share.

Too little, too late.

Palm will not be able to compete with Google and Apple in this round.  Their demise is written on the wall (in Graffiti).

RIM also has to be very concerned.  The launch of their touch screen device, the Storm was, well, stormy.   Blackberry has a strong market position and is well entrenched.  It has made significant growth in the consumer segment in recent years.  Will that growth reverse with maturing Android devices?  While Blackberry is in a much stronger position than Palm, the combined investment potential and application resources of Apple and Google will be a major challenge to RIM’s Blackberry.

All that said, RIM still commands over 20% global share in smartphones

Application developers will have to start to prioritize their porting and promotion of new applications between four major global platforms – Symbian,  Blackberry, Apple and Android.

It will be interesting to watch the global leader in the smartphone category – Nokia and their Symbian Operating System.  This platform is relatively unknown in the U.S. market, but is dominate in the rest of the world.

The next obvious question is how do these moves motivate other players in the industry to react?  Microsoft is desperately playing catch-up to Google in present generation search engines and advertising.  Their own version of a mobile operating system has made, at best, niche inroads.  Microsoft has suffered from execution issues and seems to be the biggest example of true  “innovators dilemma” in the last 20 years.

Yahoo has some mobile applications but seems to be a company unable to focus the attention necessary on any one initiative.  Perhaps some Corporate Ritalin is in order?

My conclusion is that both Microsoft and Yahoo will likely go shopping for a focused next gen advertising company.

Ad Agencies that have largely focused on managing creative production and bulk television ad buying are increasingly on the wrong side of the technology curve.  They are, however, in a good position with the depth of their industry relationships, to be a major force in the next wave of Internet/Mobile advertising,. The question is are they willing to move from their existing business models and develop the expertise in the methodologies, either in-house or through acquisition that can maintain their market positions in the value chain for the next generation.

The technology of smartphones, advertising and applications has now combined to make the next generation of consumer services and commerce a break from the past.  At least that’s what I hear from all of the “Conventional Wisdom”.

Notes on Droid Ad Campaign:

The more I thought about the Android “Stealth Fighter” ads the more I realized that that imagery was quite familiar.  I have added four additional videos for your viewing.  Theses video are the trailers for the 1953 and 2005 versions of “War of the Worlds” , the trailer for Armageddon and CNN footage of the bombing of Baghdad.

With these videos you can draw your own conclusions.  Please let me know what you think.

In my opinion, these images all have some resemblance to the Droid commercial.  In each of these cases the situation did not end well for the “entrenched” establishment.  Mass destruction was the result.  In one case a virus saved mankind.  This is hardly the message that a smartphone operating system might want to promote.    The droid-like figures eventually emerge to destroy everything in sight –they really do – you can Google it.  In the CNN footage a nation watched mesmerized by the imagery, only to learn that perhaps the wrong war was fought.

All interesting imagery for the first shot in a new generation of smartphones.

Subtle – this is not.

Today I made the jump, the leap, to Fios. For the record my previous home technology stack had been Vonage for voice, Comcast for Internet and TV. I have had VZW for mobile since the days they actually called it a “car phone”.

Since I was working from home today, I was able to observe the FIOS tech as he went about his business in my house. He arrived promptly at 9:00 and greeted me like the chef at a Japanese steaks house. “Okay, Mr. Spencer, you have one Triple-Play, three sets, two with, one without, HBO , Internet and Phone….correct?” Should I have ordered the soup also?

He told me that installation is an 8 hour job and that he would be in and out all day. No Problem. I went about my business, we went about is.

After a couple of hours I took a break from my work to see how Verizon guy was doing. He was busyattaching the “ONU” (Optical Networking Unit) to the side of my house. I found it interesting since during my early days at Bell Labs, in the 1980s, my department had worked on the Darwinian ancestors of the ONU. Back then the evolutionary process was first called FTTC (Fiber to the Curb), the unfortunate acronym -Far Access Remote Terminal, and lastly FTTH, Fiber to the Home. These were all technologies that were decades ahead of their time.

He then proceeded to install a battery backup for the phone service in my basement. The phones I use are all cordless and my family has 5 mobile phones. The battery back will not help my cordless phones and a blackout should not impact my mobile phones. This is a pure expense for legal air cover should the power go out and -GFB- I need to call 911. For such an advanced service, very backward thinking in 2009.

After buzzing out the phones, the Internet came up quickly and then the last pulling and tugging of cable to get the television service going. All went smoothly to that point. Just like the commercials, he sat me down and demonstrated my remote (without a cable guy glaring in from the window). Total effort was the advertised 8 hours.

As soon as he left and we started to use the service, the quirks emerged.

Firstly the Verizon set up disk only works on a Windows machine. I had to morph my Mac with a VM to fire up Vista. The setup program executed, updated and churned for 45 minutes. The only think useful that happened, through all the screens, T&C’s and other useless info, was that I got a Verizon email. One that I will never use.

I then tried to register at Verizon.Net. I tried several times and continually got a message that said “We cannot register you now”. This seemed strange. Then it hit me. Verizon has nothing that supports Mac, even Safari browser. So, I switched to Firefox and the registration worked perfectly.

Next task was to set up my personal and work email using the outgoing email server at Verizon. I prefer to use my ISPs outgoing service so that my free personal email with my own domain does not have ads on the bottom.

Everything seemed to work with just one small problem. The test emails that I sent to myself never arrived? I connected to the Verizon server just fine. The email was accepted by the server and then got lost.

This could not be a Verizon issue. After all, when I leave my house I have that nerdy guy with glasses and 300 of his friendsfollow me around to make sure my service is ok. Having served Verizon as a vendor for most of my career I appreciate that they take 99.999% reliability seriously.

I checked and double checked all the passwords, permissions etc. I stopped and thought about this and then I remembered another strange occurrence about 4 months ago.

I had just started a new job and was configuring my corporate email account on Google. Like most people (I assume), after you set up an email account you send yourself some test emails to make sure it works. I had the same problem with Google. I struggled with that one for a couple of hours. Next, I checked some bulletin boards and found out that Google mail was in the middle of a significant outage! Three hours later, without touching anything, my service was up and working.

I wondered. Could I be that unlucky? Could Verizon be having an email problem the exact moment I tried to use my new Verizon service? I checked the Verizon user self-help bulletin boards and…..Bingo!….. Verizon was experienceing hour plus delays in email delivery due to server outages.

I put email aside and next tried to tackle voicemail. There was nowhere on a Verizon support site or any piece of paper or booklet that I got from Verizon that instructed me on what to do to set up voicemail. I know that Verizon has some portal somewhere to listen to voicemails online and send yourself alerts, but they certainly like to keep it a secret.

Since I’m not exactly new to the telephony world, I just dialed my own number and walked through the VM set-up. But, I still wanted to find this portal. I figured it was accessible through Verizon.com – a logical guess. I had previously registered on Verizon.net and thought that user name and password would allow me into Verizon.Com. no such luck. I tried to register at verizon.com (with a non-Apple browser, of course!) and still no luck.

Now its time to call Verizon. I have to say one of the reasons I left Comcast was because their customer service was , well, sucky. Verizon, with my nerd friend and his army of techs clearly have their act together, right? Wrong….

I called customer support, waited 10 minutes with really bad music, and spoke to a lovely lady with a heavy Indian accent. I explained that I was trying to find the Verizon voice mail online portal. I am not sure exactly which word she did not understand, but I guess it was everything after the word “Verizon”. I gave here my address and phone number twice and she said, “Oh my, you have fiber optic voice service!” Bursting with geek pride I said, “Yes I do!”. I figured I must now be in line for some very special VIP treatment.

Her next words were, “I can’t help you , I will transfer you to Fios” , The line went silent and then I was put on hold with music for another 10 minutes. At this point another guy answered the phone, asked me for all the same information and gave me the same line – “I can’t help you, I will transfer you” click, ring, music, another 10 minutes.

The third person I spoke to understood what I was looking to achieve. He also told me that he could not help me but said the “e-desk” is the place for “you”. Frustrated and wanting to have a little fun; when he asked me if there was anything else he could help me with , I said yes. “The Verizon email? Does it always take an hour to deliver an email? Is that standard?” He launched into the tech support speech that I call “you are a dumb person with technology and let me tell you why….” He went on about how Verizon can’t be held responsible for the whole Internet and that was obviously the problem. After he finished reading from the prepared speech on his PC (obviously not a Mac) . I asked him , “If that’s the case, why did my email stall in a Verizon server for 67 minutes?” I gave him the server name and the IP address. I am not sure what I gained by that, so to that Verizon CS guy…..sorry.

He then connected me the e-desk. Finally some satisfaction? I got a recording that the e-desk ‘s hours of service had ended two hours ago. Click, disconnect. Oy.

Hey Verizon, I could have gotten this treatment from Comcast!

Epilogue:
In this change over of home technologies I had to cancel Vonage and Comcast. This is almost as frustrating as my Verizon help desk run around.

First Comcast:

After working my way through the automated phone system I finally got to they “cancel service” option. I nice upbeat guy answered and I told him I was cancelling my TV and Internet Service. He told me he was “Shocked” to hear that. That I was such a good customer. (paid my bills?). Then he starts to launch into the “Save this customer “script. These scripts can last 15 minutes. Once he launched into all of the new special offers and services that Comcast could bring me, I asked him to stop, jump to the last page of the script where you give me my cancellation confirmation number. He was “deeply saddened”, and asked Why would I leave?
I told him “Its not you, It’s me” and I promised to still be friends.

Next breakup call was Vonage. The guy on Vonage was “amazed” that I was a Vonage user for 5 years. I was one their longest tenured customers, practically a celebrity. I also asked him to skip the next 10 pages of script and just give me my cancellation confirmation number. He decided to read the next 10 pages anyway.

I also told Vonage , “Its not you, it’s me”, and my new BFFL Verizon. He could not believe I would leave Vonage. I even asked him if he wanted me to put Mike, the Verizon tech on the phone? Now, that’s a good Verizon commercial in the making.

So – To Comcast and Vonage – Bye, Loved it while it lasted, but we grew apart and you are not a match for Fiber.

And to Verizon, Please get your CS act together. Just because you provide the same services as cable companies does not mean you have to provide the same customer service experience! It takes your tech 8 hours to install your service, you need me to stick around for awhile to re-coup those kind of costs.

This afternoon I had an interesting debate with several colleagues about the roles and differences of brand and culture.

Can a product or service create a culture of customers?

Choose Wisely!

While creating its own culture is the holy grail of a brand manager, it is rarely if ever achieved. A well executed brand will have consumers associating positive qualities about the product or service. The brand will elicit emotional reactions and creat a self-branded consumer image through these positive traits.

For example the Mercedes brand denotes luxury, class, status, sophistication and wealth. Mercedes has invested heavily to create their brand. Their customers feed off this image. If you own a Mercedes you are …..fill in the blank. This is, however, an example of good branding, not a culture.

By the way, what I associate most about Mercedes is a significantly different Brand image.

Mercedes Branding?

Culture is anthropological. It is a collection of societal norms, behaviors, customs, beliefs and values. Culture requires human contact, communication and structure.

Cultures exist at many different levels. Nations, religions, regions, teams, and companies all have cultures. Any collection of humans that interact on a regular basis will develop a culture. Successful companies understand the importance of corporate culture and attempt to manage the culture to support their product/service creation and delivery process. Conservative companies such as utilities or financial institutions will have a conservative culture to match their conservative brand. Standard offices, boring office art, formal business attire, strict hierarchy and low risk taking would be a typical culture for these brands.

Emerging data service companies in Silicon Alley will likely be more progressive. Open office plans in a remodeled loft building, funky furniture, relaxed (but always stylish) office wear, and more ad-hoc communications would be the culture to support a more avant-garde Web product. Culture supports brand. Brand does not create external culture.

Companies that produce products have cultures, what they produce has a brand.

There is a hybrid concept put forth by marketing consultants called “Brand Culture”. My view is that this is pandering to brand managers who want their brand to become a culture. It also pads the wallets of those pandering consultants. Good market branding on their part!

Brands can however tap into cultural trends and capitalize and what exists in different cultural groups. Brands can even strengthen and reinforce cultural values.
Sometimes this connection between a brand and it cultural constituents is planned and intentional and sometimes it just happens. Axe body products have created products that tap into the young teen boys culture. This is a culture desperately wanting acceptance from the recently discovered females. capitalizes on their culture, their values, their fears and desires and created a brand image that with one quick spritz of their product, woman would fall at their feet. This sounds almost too ridiculous to be taken seriously.  Yet, from personal experience with a relative recently in that demographic, I can definitely say that the brand tapped into this culture as they doused themselves in Axe on a daily basis. Of course after several years of using the product and not having it deliver on its brand promise, the fantasy and the use vanishes.

Brands do not create culture.  Brands can capitalize on existing cultural trends and can even enhance pre-existing cultures.

Source:www.gaywheels.com

An unintentional example of a brand tapping into a culture is Subaru. In the 1990’s Subaru realized that their cars were very popular with Lesbians. Their brand had tapped into a culture without a targeted plan to do so. To Subaru’s credit they realized their strength in this segment and have attempted to enhance their brand as being gay-friendly. Subaru was a major corporate sponsor for the Showtime series, “The L word”.

This discussion leads to the title of this blog and one of this afternoon’s debate points. Is Facebook a culture? Do people who use Facebook form a culture?

My answer is no. Facebook is a reflection of the There are many diverse cultures that exist in our world. If you use Facebook try this exercise. List all of the cultures that you belong to outside of Facebook. My list would include: My immediate family, my extended family, my local friends, my life long friends, business associates, my religion, high school friends, college friends, etc. Each of these groups has a somewhat unique culture that is further encompassed by a New York Culture and an American culture. We live in many different cultural environments with some dominating others depending on any particular situation.

Do you have your list?

Log into Facebook and compare your Facebook network to your existing cultural groups. How many total strangers have you really met on Facebook that are outside of your pre-existing cultural groups? Do you associate Facebook membership at the same level as your religion? Your nationality? Your family?

Facebook is a service that is branded with qualities of worldwide reach, connections, communications, simplicity, etc. It may serve to connect existing cultures, strengthen and extend others, but a culture onto itself? Nope.

If you can think of a product or service that has manufactured and maintained an external culture that would stand shoulder to shoulder with any anthological culture, please post them in the comments of this blog.

The history of the original Bell Telephone patent for the telephone is thick with claims, lawsuits and races to the patent office. In the midst of all this, the information giant of the late 19th century had a perishable opportunity to become the information leader for another century. They blew it!

This has to be one of the biggest examples of “Innovators dilemma” in history.

Facing competing patents and an incomplete invention, in 1877, Bell and his supporters offered to sell the Patent for the telephone to Western Union for $100,000. The offer was refused.
In 1876, Alexander Graham Bell and his financial backer, Gardiner G. Hubbard, offered Bell’s brand new patent (No. 174,465) to the Telegraph Company – the ancestor of Western Union. The President of the Telegraph Company, Chauncey M. DePew, appointed a committee to investigate the offer. The committee report has often been quoted. It reads in part:
“The Telephone purports to transmit the speaking voice over telegraph wires. We found that the voice is very weak and indistinct, and grows even weaker when long wires are used between the transmitter and receiver. Technically, we do not see that this device will be ever capable of sending recognizable speech over a distance of several miles.
“Messer Hubbard and Bell want to install one of their “telephone devices” in every city. The idea is idiotic on the face of it. Furthermore, why would any person want to use this ungainly and impractical device when he can send a messenger to the telegraph office and have a clear written message sent to any large city in the United States?
“The electricians of our company have developed all the significant improvements in the telegraph art to date, and we see no reason why a group of outsiders, with extravagant and impractical ideas, should be entertained, when they have not the slightest idea of the true problems involved. Mr. G.G. Hubbard’s fanciful predictions, while they sound rosy, are based on wild-eyed imagination and lack of understanding of the technical and economic facts of the situation, and a posture of ignoring the obvious limitations of his device, which is hardly more than a toy… .
“In view of these facts, we feel that Mr. G.G. Hubbard’s request for $100,000 of the sale of this patent is utterly unreasonable, since this device is inherently of no use to us. We do not recommend its purchase”

Western Union quickly regretted this decision and hired Thomas Edison to invent and patent devices to gain control of telephony. These patent efforts must have made money for lawyers, but in the end Bell prevailed.

William Vanderbilt – the son of Commodore Vanderbilt, controlled Western Union. They made their fortune from the railroads The telegraph’s biggest use was as a mechanism to enable better train scheduling, and secondarily as a general communications device.

William Vanderbilt sold Western Union to fellow railroad tycoon, Jay Gould, in 1880 for $10,000,000. The Great-Great-Grandson of Jay Gould founded Upoc Networks in 1999 and served as CEO through 2004. Entrepreneurial genes must run in that family.

In 2004, I joined Upoc as CTO and was appointed CEO in 2006.

Dada S.P.A, an Italian based company, acquired Upoc. To the best of my knowledge Dada has no connection with railroads, but is a world leader in provider mobile media to cell phones, a distant relative to the original Bell Patent.

The rumor mill of possible suitors for Twitter blogs, buzzes and Tweets with different theories. The largest speculation, at least in terms of media attention, has Twitter pairing up with either Google or Apple. While these reports are officially unsubstantiated – they did get me to think about what Twitter would be like under new management, and what the significance would be for Internet Services.

The Internet has re-invented itself several times in its brief history. From a government funded cold war project, to an academic research vehicle, to a closed consumer oriented portal (AOL, Prodigy, Compuserve) product, to the World Wide Web (often referred to as Web 1.0), to an interactive, interrelated, multi-device user content environment of today (aka Web 2.0). Each of these transitions has left many companies in the dust; with some companies merely surviving the transitions and a small select group thriving through the changes. Web brands and services such as Amazon, Google, E-bay, Apple (iPhone, iTunes) are examples of those that have thus far thrived through transitions.

It’s the next transition that is presently underway that makes the Twitter rumors particularly interesting.

Web 2.0 was initially defined in terms of user-generated content. In a rough sense the social media giants of today would be in that category. The way I define Web 3.0 is the total social integration of the Internet. Facebook, MySpace, and a collection of second tier players, plus the media darling, Twitter, are leading this social integration. Web 3.0 is all about Social media.

While both Google and Apple have benefited from social media, they are not in themselves social media leaders. An acquisition of Twitter for either company would thrust them into a major Web 3.0 position.

Lets look at this from the viewpoint of “Fear” and “Greed”.
Fear is motivated by losing something you have. Greed is the motivation of obtaining something you want.

Which company needs Twitter more?

The answer to this question is neither.

Google could continue being Google, and benefit from the eventual ad placements and paid search on Twitter, just as it has in the general web. The strategic question for Google is can they continue to have unfettered access to ad inventory without owning the social networks? Do they have to be a social networking giant also?

The Facebook/Google dustups on ad placements and “connect” services must have sent alarm bells ringing in Mountain View.

Google went after the mobile industry with its on mobile device platform, why not social media with its own network? Since Google is the undisputed heavyweight champion in internet advertising, it is the motivation of “fear”, of losing what they have, that would drive them to a Twitter acquisition.

Apple, like Google, can derive benefits from Twitter without an acquisition. There are various methods to Tweet your iTunes selection(s) directly on Twitter. Twitter has many iPhone applications and is likely a driver (albeit modest) for iPhone sales.

Apple may have the most loyal clientele of any modern tech company. They have, however, not yet significantly leveraged this large, loyal, and generally satisfied customer base into a Web 3.0 style social network. Apple has tons of trade magazines and web sites on the virtues of Apple products, the product pipeline, self-help, and troubleshooting. The natural leveraging of this existing community into a social network must be on the strategic whiteboards at Apple HQ.

I do not think that it would be fear that would motivate Apple to acquire Twitter, but “greed”. Apple has ridden the waves of portable computing, rich media, digital music, handheld devices, smart phones, web services and the need for great user experiences across everything, to ever increasing prominence and success. Extending these competencies into the next wave of social networking is natural.

Would an acquisition of Twitter thrust Apple into social networking leadership? Or would it be a distraction from their core strengths of devices, software, digital content, and UI design?

There is another company that could be motivated by both fear and greed.

Microsoft

Microsoft has been playing catch-up to Google and Yahoo in paid search for a decade. They were late to the game for Web 1.0 and have been eclipsed in all of the major Web 2.0 services. They are an example of a company that has survived transitions in Internet services, but have not thrived. They leveraged their virtual monopoly in desktop operating systems to a dominant browser position (regardless of how the courts ruled). The browser position gave MSN and Microsoft search products critical web traffic.

Five years ago the market share of IE was 93%, it is now 65%. Both of these numbers are staggering high for any tech product. Despite, the dominance of their browser, Microsoft is a third rung player in search and ad revenue. This browser advantage, completely leveraged from their operating system position, is eroding at an accelerating rate. This market loss has to create a fear motivation within Microsoft.
While I believe that Microsoft managers are breed for greed, they suffer from Innovators Dilemma. They are so large and so dominate, that truly new ventures, new innovation is difficult when compared to protecting the core. But the greed is still present. It is for this reason that I expect a Microsoft play for Twitter. An acquisition that would thrust Microsoft ahead of Google and Apple in Web 3.0 social media Internet.

Give me Liberty and give me Death?

This past Sunday, as I enjoyed a bagel with a schmear, I caught up on the news of the week. I read the New York Times and the local Newark Star Ledger. It is no secret that the newspaper industry is in a real (not virtual) death spiral due to its continual loss of advertising revenue. The fact that some of these same papers have some of the most trafficked web and mobile sites has done little to stem this river of red ink from the nations presses.

The demise of the our nation’s traditional print media is all the more ironic since much of the thoughtful, original news reporting that the Internet so eagerly scoops up is created by the same companies that the Internet and digital media are destroying.

With this as our backdrop, I want to point out a significant problem with advertising, whether it’s printed in the Sunday Newspapers or published on the Web.

The problem is proper targeting. Getting your ad to the right audience, at the right time and in the right context.

Exhibit A:

Below are photos of the front page and page two of the Newark Star Ledger for Sunday April 26, 2009. The lead story is the ever-increasing Swine Flu epidemic that originated in Mexico. The page one story continues on page two with a large picture of Mexican Nuns wearing surgical masks. The second story on page two concerns the spread of the Mexican Swine Flu to New York.

The most prominent ad on this same page is………

Liberty Travel to Mexico.

Clearly, someone at the Star Ledger was going for context sensitive advertising and matched the words Mexico in the feature story to Mexican vacation travel. How effective do you think a Mexican travel ad is these days? How much damage was done to the Liberty Travel Agency by having its Mexican Travel advertisement associated with perhaps the worse Flu pandemic since 1918?

Whether this was a machine driven algorithm or a soon to be fired intern who determined the ad placement, an improperly targeted ad can be more than just a waste of valuable marketing dollars, it can actually injure a company’s reputation.

Exhibit B:
Since I did not want to unfairly single out the newspaper industry, I also searched the Internet with terms such as “Mexico Flu”, “Mexico Travel: and “New York Flu”

The first set of interesting results I got were on the website “How Stuff Works?”

The snapshots I show below are very interesting groupings for included Google AdWords advertisements. In both cases, a travel ad is intermingled with ads touting the flu breakout and flu prevention. How impactful will those travel ads be? While not quite as egregious as the Liberty Travel example, it is clear that the Google Adwords targeting algorithm does not exercise the important trait of common sense.

Exhibit C:
My next example comes from the New York Daily News website. Here we go again!
There are several stories highlighting the danger of traveling, especially by air. The Swine Flu epidemic is spreading worldwide and what are the major ads on this page?

Delta Airlines and worldwide travel.

Not only is this a waste of advertising budget, it is socially irresponsible.

In all three cases negative editorial content is supported by ads for companies, which are completely out of sync with that content. Touting travel in general, and especially travel to Mexico, in the midst of several stories demonstrating the severity of an epidemic in Mexico is ludicrous.

Exhibit D:
In case you thought I would not include the paper of “All the News that is fit to Print”, I also searched the New York Times website for articles on Mexico. The result of that search is shown below:

Once again we have travel ads to Mexico. I was actually wondering if there could be legal liability for promoting travel to a destination with a public health crisis and a deadly virus?

For advertising to be effective, and have a substantial ROI , AND not be destructive to a company’s image, the ad must be precisely targeted to the target audience.

This is true regardless of advertising medium.  Print, Web, Mobile – the same rules apply.

Advertise to your precise audience with a product they are presently interested in purchasing.

This is very simple. For the three cases I mentioned above, take out the travel ads and place ads for hand sanitizers, surgical masks and health services.

The key is getting the right ad to the right person, in the right context and at the right time. You do all of this and you have an Ad that should have a nice ROI.

If you don’t target your ad correctly who is the Swine?

The news is filled daring raids by pirates from the Gulf of Aden to a new breed of Pirates of the Caribbean.  While the World’s Naval powers grapple with a response, the blundering, ransoming and mayhem continues.  For the businesses in the digital content and application world, piracy is a constant companion.  Without the benefit of Nuclear Carriers, executives from the Music and Video industries have tried many different techniques to make digital pirates walk the plank, And to date, with equal success to the world’s efforts vs. Somalian  pirates. The Pirates are now setting their sites on mobile services.

I view digital piracy as a form of guerilla warfare.   If we examine it in these terms, perhaps some useful analogies can be drawn and some lessons derived. 

Real-World asymmetric guerilla warfare examples are the Vietcong and the U.S., the Mujahideen in Afghanistan fighting the Soviet Union, Iraqi “insurgents” fighting the U.S. and most recently Hamas and Israel.  In each of these cases the smaller force used unconventional warfare to fight a technologically and numerical superior power.  The superior force could prevail in any one engagement, but could only achieve at best a status quo stalemate (or worse) in a prolonged conflict.  Also, in each of these cases the so-called weaker party had a major (symmetric) support system.

Support Systems: For the Vietcong it was the Soviet Union and China, the Majatin had the U.S., Iraqi Insurgent and Hamas have Iran.   The supporter of the asymmetric force has a political motivation to destabilize or defeat the more power nation.

Back to the worlds of digital piracy:  The individual downloader’s are the guerilla fighters.  Each download of an mp3, ringtone, or video is a small razor slice to the content revenue streams of the IP owners. The support systems are the peer-to-peer networks, the pirate websites and to a lesser degree the ISP networks.  The question is what is the motivation of those providing the support to the download guerillas?  The answer has to be profit.  I am a firm believer in the strategy of “ follow the money”.

What sustains the supporters of Piracy?  The companies that provide Peer-to-Peer networks must have some profit motivation.  They want to either sell you authorized version of the content, charge you for downloading a copy (vs. streaming) or provide advertising.

The music industry (the analogous superpower) has been fighting a losing battle with piracy for years.  For a time their strategy was to legally intimidate and prosecute individual downloader’s.  This is equivalent to fighting insurgency with a few “public hangings” as a message to the others.  The cost of presecution far outweighed the damage actually created by any one downloading pirate.   Suing your customers does not seem like a great business model.

 Like in actual warfare, if you attack each grass hut with a $20M cruise missile, you will blow up a lot of huts at a great cost, and you find that huts are replaced faster than you can blow them up!  If the Music Industry had studied warfare they would not have made the same mistake.

To end an insurgency you have to satisfy and end the core motivation of the guerilla force to fight.  Intimidation threats, “blowing up huts” are as useful as mowing a lawn.  It might look good for a while, but the grass will continue to grow and you will need to mow it again in a week.

The television industry has taken a lesson from what has not worked in Music.  Instead of relaying solely on legal measures, each network has provided a full portfolio of free- ad supported- programming on the web.  The successful HULU portal provides greater viewer program discoverability by aggregating network content.

The ease of finding high quality, high definition, and high-bandwidth video entertainment through legitimate means has reduced the desire, and the need, to be a video programming pirate.  Why search through pirate Chinese websites when you can just go to NBC.com to watch “The Office?”    Why download a version of your favorite program if it is available online with a few short commercials?

It would surprise me if the Movie industry did not follow the TV industry example and provided branded portals with ad-supported movies.  These movies would have to timed to be after the lucrative HBO and DVD distribution windows,

In both video cases, the legitimate channels of distribution can have a profound impact on the traffic of the P-P networks and pirate websites. 

The next question is what does all this mean for the emerging threat of Mobile Piracy?  This will have to wait for my next article.

Next week I will be attending my 25th CTIA conference. This year’s Vegas show will occur with the twin backdrops of the overall economic mess coupled with the positive trends in mobile application use.

On Thursday April 21, I will be on a panel discussing the Off-Portal business models. The irony is that although I have made a living for the past several years in the Off-Portal marketplace, I believe that this model is not relevant to the future. Let me explain.

For those who are not familiar with the lingo for this segment of the mobile business, let me define a few terms. (If you know all of this you should skip down)

Mobile Carrier Portal – This is the homepage on a handset of a carrier’s wireless Internet service. The carrier determines what services are promoted and placed on the portal. This is also referred to as “on-deck” or “on-portal”

Off Portal – This is any service that is available to the subscribers of a carrier that is not linked to the carrier owned homepage and direct links. This service is usually promoted through use of a shortcode.

Shortcode- a five or six digit number that is used to provide information or other services via SMS

Premium Shortcode – A five or six digit number that is connected to a service that the subscriber will pay a one time or monthly payment.

The mobile value added service market has been divided for the past 5 years between “on-deck” providers and “off-portal” service. The services were predominately information and news services, coupled with fee based ringtone, wallpaper and games services. The advantage of being an on-deck provider was free promotion for your service by being within the captive (or semi-captive) carrier internet web service.

Alternatively, off-portal services were promoted with a mix of traditional web advertising and search engine optimization, coupled with television, radio and print. The off-portal application and content providers also promoted their services via premium shortcodes. To use an off-portal service the subscriber sends a message such as “join” to the code, goes through an opt-in process and gets subscribed to a service such as monthly ringtones. The billing of these services is provided by the carrier.

It seems that regardless of a company’s portal status, they had envy for the other model. On-deck providers wanted the “freedom” to promote their services and drive even greater traffic to their site, while off-portal services desired the free promotion model of the on-deck players.

This game is largely over. Just as the original AOL closed portal gave way to the general Internet, the protected closed gardens of the carriers are done. If their portals are “done”, then off-portal, as a concept is done.

The explosion of smart phones with powerful standard browsers, large screens, pointing devices and keyboards renders a pre-installed carrier bookmark almost valueless.

If you have a fee based service that is on a carrier’s portal, you will have to promote that service with investment that will eventually approach the advertising investment of the off-portal services. This trend is further accelerated by the 3rd party application store trend.

The application stores are filling the promotion void created by the reduction of prominence of the carrier portals.

So on Thursday I will sit on a panel to discuss the challenges and opportunities of the off-portal business model. This business model has made 100’s of millions of dollars for application and content providers and, of course, the carriers.

My opening comment will be that this model is in its end days.

My next article will be on what a carriers and application providers should do to manage this transition.

This past week the New York Times had an article about the convergence of contextual advertising and Smart phones. The potential for highly targeted advertising including the use of GPS is a trend I have been discussing in this blog for over a year.

The interesting angle in the NY Times piece , “Is this an invasion of privacy?”

Regardless of ones wishes, all consumers will continue to be bombarded with advertising, much of which is the Madison Avenue equivalent of carpet bombing. As with the military version, this is a technique whose time has come and gone.

For the purposes of this article I will focus on video advertising because like many consumers, I can not tell you the last Internet banner ad I paid any attention to or clicked on.

I watch most of my video entertainment on the Internet. I frequent the websites of the major networks, as well as Hulu and YouTube. All of these sites have various forms of advertisements.

Most of these (I would say 99.999%) have zero interest for me.

These are a wasted investment with no opportunity to drive a sale of anything.

Would I prefer to see ads that were actually targeted to my interests? Of course I would. I would prefer no advertisements at all, but that is not realistic.

For me this equation becomes very simple. If I want advertisements that I would care about, the advertisers must have knowledge specific to my interests through some mechanism. The advertisers can either try to derive my interests through various contextual techniques (location, click analysis, websites frequented, purchases made, etc) or they can simply ask me.

Both of these techniques run into privacy concerns. There are fear mongers claiming that “big brother” is watching us and will do some unmentioned evils with all of this data. The questions are: What is private? What should remain private? and What forms of personal information can be revealed for mutual benefit?

I believe that information that is your medical history , your financial status, your sexual orientation, your marital status, your status as a veteran and your religion should remain private unless you explicitly release it. Basic consumer desires are fair game in my opinion.

Any person in 2009, however, who has any expectation that their Internet use, whether on a PC or a Smartphone, cannot be monitored for commercial gain is living in a fantasy world. Perhaps it is for this reason that 10’s of millions of Facebook subscribers readily reveal the most intimate details about their lives. They are just not concerned about their privacy.

If you have an expectation of privacy then never use a credit card, or make a phone call, or shop in a store, or use the Internet, or send a text message, or stay at a hotel, or use an airline, or subscribe to anything. You cannot live in modern society without leaving a digital trail of breadcrumbs that can be used for commercial purposes.

Now back to my video entertainment.

When I watch any of my favorite shows I am subjected to commercials on trucks, beer, video games, grape juice (as a cure for everything!), tax services, an assortment of female oriented products, German cars, U.S. Army recruitment, fast food, etc. All of this investment is wasted on me.

To make my video watching more enjoyable and to help save advertisers millions of dollars, I offer the following open letter to those who want to advertise to me in the future:

Dear Advertisers

I will never buy a truck,a German car or an SUV. I am not interested in woman’s deodorant, and the last Budweiser Beer I drank was in High School. (Yes Mom, I did drink beer in high school) I don’t smoke, so telling me to stop is a waste of your breathe. I already have a subscription to the New York Times, so ads that try to get me to subscribe are also a waste, I only need one copy of your newspaper per day.

I am past the age of recruitment for the U.S. Army, Navy, Marines and Air Force. My kids are not interested in the military. We do support you and suggest you save the money that you use to advertise to me and use it to pay your soldiers more.

To Taco Bell, McDonalds, Wendys, and Dominos, we get it. You are fast, unhealthy and fattening. Please save the advertisements on me and work on your quality instead.

I have no interest in household cleaning products. I don’t know which one is for what mess.

I do like action movies, ice hockey (particularly the New York Rangers),baseball (Yankees), football (Jets), politics, and technology. I like the latest electronic gadgets, high definition television, anything made by Apple, and Japanese cars that last 15 years.

For Verizon, I would gladly consider switching my cable and Internet provider to your Fios service, if and when you get the one HD channel that I really care about. If you paid attention to this open letter you would know that it is MSG. Any advertising to me that does not have the words “We now have MSG in HD” is a waste of money.

I also find that a mob of guys in glasses and Verizon uniforms following me around to be creepy.

I like good wine and hand crafted microbrews. I prefer the anti-oxidants of grapes in my Chianti, not Welchs grape juice.

If you want to sell me diamonds and gold jewerly, then only send these ads to me a month before my wife’s birthday. You’ll have to get that information from her. But then, it is in her interest to tell you, isn’t it?

Now you have it. It would have taken millions in investment dollars to build the algorithm to derive this same information about me. This is a win-win. I get ads that I would at least find entertaining and focused on my interests, and you get a chance that is greater than zero of influencing a purchase decision.

I expect that the next time I watch something on Hulu, or “The Office” on NBC.com that the ads will be focused on my interests.

Regards,

Steve Spencer

A good ad targeted to my interests

The deluge of economic doom and gloom in the news would make Chicken Little seem like a wide-eyed optimist.

Headlines scream at consumers with news like:

-Auto Sales Plunge 45% to 27-Year Low

-Unemployment Rate hits 8.1%, Most Jobs lost in a short time period since they started keeping track in 1939

-Citicorp stock dips below $1

With all of this news you would expect that Eli Lilly, the manufacturer of the world’s leading anti-depression medication would be having huge profits. Their stock is down about 30% since the beginning of the year. I wonder if they hand out Prozac in their cafeteria?

In midst of all of these downward indicators, I saw several news stories in the last week about the forecast for Mobile Content Services.

The best the press could muster for a down beat story on the Mobile Content industry was “Under the worst case scenario, Mobile Content would grow by only 7% this year”. The worst case scenario for GM, GE, Chrysler, AIG, and the other former titans of American Industry is that they cease to exist, and for Mobile Content its only 7% growth. Wow!

Unfortunately the Mobile Content industry is not a trillion dollar industry and cannot impact the overall economy in a meaningful way. It can however serve to highlight what still works in our economic system.

When innovation is coupled with the right financial and human capital resources, true value is created for consumers, investors and employees. This has been the model for value creation in high tech for a generation.

During the worst economic carnage since the 1930’s, a new economic value chain has been created that is enabling unprecedented portfolios of mobile applications on a new generation of devices.

There are now over 15,000 Apple iPhone applications.

Twitter and Tweeting are accepted terms used on the nightly news.

Android (G1) is not science fiction and 10 year olds are carrying Blackberry’s.

I’ve been in the Mobile Content Industry for over a decade. The vibrancy of this new economic value creation system for mobile content is what we have been trying to achieve for a long time. Device technology, software, networks and courageous investors and management have finaly created the reality of what was once just a dream.

Despite the example of the mobile content industry, there are literally hundreds, if not thousands of successful value-creating entrepreneurs presently on the bench. These are the leaders who have started, managed and sold companies. In the process they created tens of thousands of jobs, made millions for their investors and providing valuable services for businesses and consumers. Of course not every business was successful, but enough were to make a well-managed portfolio a good return.

I have the honor to personally know many of these industry leaders. I find their forced bench sitting, due to a lack of investment capital, one of the most staggering aspects of our present economy. Our nation never needed their talent more than it does now.

The U.S. Economy is going through a fundamental re-structuring. We have lived beyond our means because we have not created enough products and services that are valued on a global scale. The economy for the goods and services of the last century will continue to shrink. In my view the financial debacles of junk mortgages and the Madoff Ponzi schemes are symptoms of the underlying problem with our economy. Money was created with schemes that were in the final analysis, valueless.

We need new innovation, new services, new products, and new industries. We need real value creation.

The mobile content industry is just one example of such a value creation industry.

So here’s a note to all of you investors out there who have run for the hills.

“If mobile content and applications can thrive in this environment, what do you think will happen when the general e conomy finally recovers?”

For those with the capacity and the courage to invest in the right opportunities now, the rewards should be extraordinary.