Thursday, 24 May 2012

The Paradigm shift from Web to Mobile

Right now we are witnessing the paradigm shift from Web to Mobile with an abundance of apps for smartphones & tablets, and truly functional platforms for mobile web services. In the first stage of the Internet world, now more than 20 years of age, we mainly had companies aggregating data and presenting it in an easy to digest fashion. Some of these Web 1.0 companies have already disappeared or are in decline (like Netscape and Yahoo), whilst others have succeeded and become real Internet Giants in the world of search algorithms and eCommerce (like Amazon, Google and eBay). 

The Web 2.0 companies of today – or ‘Social’ as they are called – have done well thanks to the development of social networks for both personal and professional use (like Facebook, and LinkedIn). Now we are entering the third stage of the Internet with the rapid development of Mobile platforms. It will be interesting to see how the Internet companies will tackle the paradigm shift from the Web to Mobile. Judging by the recent Facebook IPO and its struggle with the mobile advertising platform this paradigm shift represents a new challenge to existing firms.

Smartphones and tablets are gaining ground everywhere in the world. Nearly a billion people now use mobile broadband across the globe and Ericsson forecasts it to be 1.4 by late 2012. Mobile usage of social media platforms is on the rise and time spent on Facebook’s mobile site has already surpassed usage of the website. In the Western world and Asia smartphones are selling like hotcakes – e.g. in Finland 77% of all mobile handsets sold in Q1/2012 were smartphones (compared with 50% in the previous year). And as I have written before on this blog tablets follow suit with sales forecasts topped each quarter.

If we look 4-5 years ahead into the future the forecast is that there will be more tablets than PC’s across the globe. And the smartphone penetration will be quite high. Perhaps the mobile handset – the powerful palm computer – will be the dominating device, from which we direct all our activities from personal communications to entertainment and media consumption. The smartphone will more than likely become a tool by which we can communicate with other screens at work and at home, and coupled with a second tablet screen literally everywhere we go. If you look at this development the smarpthone will become the ‘Mother of all devices’ and the hub of each individual’s communication with friends and peer groups. For an interesting futuristic view of this development and its relevance for media, please refer to the excellent piece of writing by Shawn Reigsecker.

No wonder the Internet companies of today are rethinking their future. Whilst many of the start-ups today have looked at the mobile service platform from the outset, the existing Internet companies may need to reinvent their business model. Easier said than done. For instance to date Facebook has made most of its money on the Advertising revenues on its traditional website. With increased mobile usage this is much harder to do, especially as banners are very disturbing on the smaller smartphone screen. Advertising needs to be more subtle, right now it is tested in the form of Sponsored Stories in your news feed. Another element Facebook has announced to add on to its business model is its own App Center, making it easier for developers to submit apps and for users to download apps. With this move Facebook wish to drive mobile app installs and reach more than 500 million people using Facebook on mobile devices.

For many social platforms like Pinterest mobile usage is an increased opportunity as people can pin interesting images on their smartphones and tablets. The more traffic the images shared on the social platform drive to commercial websites, the better for Pinterest. At the time of writing Pinterest is responsible for driving more sales to retail websites in the U.S. than Facebook.

The individual platforms are constantly evolving. Two or three years ago the mobile usage was marginal but has now boomed with new apps like Instagram, the already mentioned increased mobile usage of Facebook and the introduction of Google+. The latter may still have a lot less users than Facebook, but it boasts one of the most visual and easy to use mobile apps among the social media platforms. It remains to be seen how many active users Google+ will attract over time, however, this is of high interest as each new Google+ profile adds on to a database of individuals attractive to marketers.

A deeper understanding of the customer, their online habits whether web or mobile, and their purchasing habits have become essential. Retail companies need to make sure they are constantly learning about the new platforms as their customer live in an integrated online/offline world, where the geographic location of the individual adds opportunity to the offer. Both personal data, peer group recommendations and geolocation need to be taken into account when building a winning multichannel marketing strategy. 

There is a lot to learn for the retail marketer, and it’s nearly impossible to know which new platforms will become mainstream tomorrow. I would place my bet on those who can best solve the issue of a functional Mobile service platform: this is a combination of service design and great UI (User Interface) craftsmanship.

To my mind Amazon's smartphone app is absolutely one of the very best m-commerce applications. It makes searching easy, and the format of results is perfectly designed to fit the small touchscreen. You are never more than a tap away from a level of satisfying product or review detail. What Amazon offers the consumer is trust. Amazon gives me as a consumer a fair exchange of value. I like the recommendations and many of the business books or academic literature I purchase on Amazon are easy to read in the Kindle App on my iPad. This is a complete mobile service platform in my taste.

Friday, 11 May 2012

'A Breath of Fresh Air' - EDGE Media Seminar in May

Spring has arrived in Finland with a complete breath of fresh air. EDGE Media Seminar took place in Helsinki on May 4 with some 30 executives and experts from Media firms, as well as other corporate partners and researchers participating in the discussion. One thing was clear from the outset: there is an ongoing change in the media landscape, Yes Sir! as our moderator, Professor Alf Rehn put it.

Content is more frequently designed as a service, as the media audience is looking for a nice user experience, whether we're talking about news, business and lifestyle magazines or talk shows on TV. Traditionally media firms have been successful, however, it's good to remember the legendary words by Jack Welch: 'You have to argue with success'. There is no single formula for success in the digital age as the media audience continues to evolve. Pekka Soini, CEO of Sanoma News, made the point that competition in the media business is global today with actors like Amazon, Google and Facebook having entered the scene, and in Finland people are also looking for international content as linguistic skills is no longer a problem.

Malin Brännback, Professor and Vice Rector at Åbo Akademi University made a recap of how we arrived in the media landscape of today: from the introduction of the Internet and the World Wide Web, the subsequent boom and the new economy, where firms found the harsh fact of having to turn a profit. Then we had the second coming of Steve Jobs, iPod + iTunes = Product + Service, the iPad and the iYouNameIt. Today, 20+ years after the introduction of the Internet something is actually happening… 

EDGE research group has the task to work on research and development through three interrelated projects during 2012-2014:
  • Personal Media Day (PMD) = Consumers’ change in Media Behavior
  • Disruptive Business Models (DBM) = Media firms’ approach to find new sources of revenue and the process of open innovation
  •  Mobile Value Services (MVS) = new advertising solutions combined with a personalized media experience

Seminar topics followed these main themes.

Antti Hirvonen, Social Media Producer at YLE (National Broadcasting Company in Finland) talked about curating news and comments from the audience in connection with YLE News on Twitter @Suoralinja and the talk show @AstudioStream. The aim is to be present 24/7, to engage people in discussion and to find scoops for news. Antti also made the point that people are more likely to follow news reporters and talk show hosts rather than the profiles and Twitter streams of Media firms. Researcher Kim Holmberg commented that in today's world it is easy track down what people have done and watched in social media and on the website. He made the question - is there a shift from an information society towards the recommendation society? Next step - the 'intention economy' - as our moderator coyly added.

Masa Peura, Strategy Director of Sanoma News talked about new business models in media. He made the point of connecting with the customers through multiple touch points, i.e. the ability to offer a combination of different print and digital subscription combinations as well as bundling.  The latter means that the subscription of Helsingin Sanomat is bundled with a subsidized purchase of an iPad over 24 months. An interesting game opener by Sanoma News. Whilst there is pressure on traditional business models there are also new opportunities. Already some 140,000 subscribers of Helsingin Sanomat have opted for a 'Combo subscription', where print may be only a part of the package for certain weekdays, the weekend or only on Sundays. In fact 80% of all new subscriptions are 'Combos'. Also for the evening newspaper Ilta-Sanomat tablet subscriptions find a new audience with people interested to purchase a monthly subscription instead of single copies like in print.  

In his comments researcher Timo Ketonen pointed out the opportunity of personalized Mobile Advertising on tablets and smartphones, based on reader's interests and geolocation. Now a national newspaper can offer local advertising e.g. for a retail chain based on the location of the consumer. Print still fares well in Finland, but the management of Media firms need to manage the present at the same time as they create the future in order to make the business last. In a way that can be compared with the skills of the world famous Finnish rally drivers: steering the car through the bends, whilst using both the brake pedal and the accelerator. Crowd sourcing, reader engagement and open innovation may be a key to success in order to accelerate new media innovations.

Elina Yrjölä, Director of Magazine Business at Talentum Media, talked about ‘Content Strategy in Print and Digital channels’. Her key point was that 'Content is King' - and no king survives without proper infrastructure and clever counselors. Elina Yrjölä pointed out that all media companies struggle today with the fact that the print business is still a major part of the volumes and above all is quite profitable. The key question is when the turnaround towards digital channels will take place and how much of the market it can take and replace. She is optimistic because media firms know how to collect content, deliver it and present it. The challenge is that the competition from novel actors is getting harder. They know the game on the market and they have the advantage to be agile unlike the dinosaurs.

Hannu Olkinuora, an EDGE research fellow and editor-in-residence from several newspapers picked up three major parameters affecting the transformation of media. The first is a fundamental change of the communication paradigm: Mass communication will never reach same volumes as during the 1990’s. Mass communication is partly replaced by communication between individuals and small groups, which can be seen in social media. This erosion of mass communication has significant consequences for the media industry. The second parameter is the result of several major changes in the societies during the industrial and postindustrial periods. The change in the lives and values of people is affecting their media consumption fundamentally besides the fact that technology has been a key driver of change during the recent decennium for media. The third factor is that media should recognize the basic human need which can be seen as a fundament for communication. This has been the competitive edge at all times in history. Besides need for information there are several aspects like the need to belong to a community, which loves to communicate, and to laugh, cry and to be entertained. One should not either forget the human character of curiosity and the willingness to be a good citizen. 

'The Show Must Go On', and Media firms look fit for fight to meet future challenges. We will keep you posted on developments.

EDGE research group, School of Business and Economics, Åbo Akademi University.