Perfect storm of opportunity in mobile today

Editor's Notes

• #2 Thank you very much, it’s really great to be here.
• #3 I think that all of us here today are witnessing one of the greatest perfect storms of opportunity in history. I’d like to share with you why I think the opportunity is so big, and what I believe are going to be some of the special ways to take advantage of it.
• #4 There truly never has been a better time to be in the technology business.
• #5 The opportunity in mobile and local is just staggering.
• #6 Because the device we hold in our hands is like a “remote control to our lives…”
• #7 We use this device for directions, and for advice,
• #8 To figure out where to eat, where to play, where to shop, who to meet…
• #9 And I feel we are entering a transformative period.That period almost always happens about a decade into a new technology’s mass adoption.
• #10 Here’s ananalogy I will give you - one that’s happened again and again with each new revolutionary technology.Here’s George Eastman and Thomas Edison with the first movie camera. For almost the first decade of movies, they put the movie camera stationary in the back of the theater, and filmed a play. They didn’t have cuts, they didn’t have the idea of what we call today – continuity – they didn’t even have the idea of MOVING THE CAMERA. They just took the old medium, theater, and “ported” it over to film. That seems to have happened for the first number of years after every new medium. For film, once they figured out they could move the camera, and could have cuts, and it just changed EVERYTHING because a whole new form of storytelling came to be, & what’s so exciting, is that is where we are today with mobile & local.
• #11 So now, we have these super-computers on our bodies all day long…
• #12 I think of this time period as explosiveas the one that happened when the first film-maker took the still camera and moved it and re-invented storytelling.Today, right now, is mobile's 'moving of the camera' moment.
• #13 And this Mobile Revolution is Democratic.Notice that these are mostly NOT the GDP leaders!
• #14 Just last year, Mobile Internet Traffic in India surpassed Desktop traffic.Other countries will follow this trend, and that presents an incredible opportunity.
• #15 In addition to usage growth, we are seeing insane revenue growth, 2/3 apps, 1/3 ads.It’s always great to be in a business with a 129% compound annual growth rate wind at your back!
• #16 Now, I’d like to share some of my thoughts on the future of mobile monetization, and let me give you some context to my thinking.
• #17 In the last 17 years since starting Idealab, I’ve started more than 100 companies. Not all of them have been focused on monetization, but a few key ones have…
• #18 These 10 companies that we started each had an intense focus on local or mobile or monetization, so they’ve given me lots of perspective on this new mobile opportunity.
• #19 That perspective is that I don’t think this revolution is as much about mobile, or about local, it’s all about me, or in other words, extreme personalization.What the world wants now is the answer to this question, “what is relevant to me right where I am and what I am doing RIGHT in this minute.”Thinks about that, and what a big change, and what a big opportunity that is, that we have this device in our hands, on our bodies all the time now, that can immediately fill our needs, answer our questions, direct us to the next step in our life.Everything is now in service of better delivering that answer, that next step, and that’s extremely powerful.Here are some specific examples of how I view the future of monetization.
• #20 One of the most powerful ways to make ads that are “relevant to me” and to boost mobile monetization, is with dynamic advertising.At UberMedia, we have been creating ads like this with great success.In this example, we know you want to see the movie Lincoln because you shared that on Rotten Tomatoes and we know you are around the corner from your favorite theater from the GPS, and we dynamically create and ad with that movie and that theater and the number of minutes till showtime, counting down in real time, with a special offer.The Combination of intent, proximity, timing, and customization is too powerful to resist. And we have seen mobile coupons perform 10x over regular coupons. Ads like this have upped the clickthrough and purchase rate from 0.6% to over 6%.
• #21 Mobile advertising can work dramatically better and monetize higher when it takes strong advantage of the laws of Physics.Here’s how.Driving 5 miles to a store takes 2.5 MILLION times as much energy as walking 50 meters to a store! “Nudging” people costs orders of magnitudes less than relocating people.With hyper-local targeting and even in-store mobile marketing, the “nudging” cost is orders of magnitudes lower, because their “body” is already there, or nearby. That’s why I say proximity = probability.Mobile advertising for retail that doesn’t take advantage of the “energy cost” of nearby customers is just missing the boat.
• #22 Another example of the power of mobile/local/me is the power of conquesting customers. I believe that conquesting customers when they have already shifted themselves into a particular mindset is one of the biggest local opportunities of all time.In this example, someone is already on a car lot, so the BMW dealer across the street can offer you a white-glove test drive to cross the street and test out a different brand.
• #23 Here’s another example of conquesting. It’s another variation, that’s extremely successful. It’s 9 pm, and Ruth’s Chris can target people at nearby restaurants with an offer to come to their bar for a free dessert.
• #24 Here’s another ad type we’re super excited about.It’s a combination of intent targeting (craving pizza shared on social networks) and dynamic advertising.This is an ad unit that we created that actually has code in it. The code is looking at the GPS, and the compass, looking up a list of locations on our server, and dynamically creating an AD that rotates the pizza slice on the right to point to the Dominos, and there’s an actual counter that says you are 55 steps away, and as you walk closer, it says 54 steps, 53, and so on.We have found that people LOVE interactive ads that give them useful information that is relevant to them. As Henry said earlier, closing the mobile advertising gap is going to require more native experiences. Ads that use all the sensing devices of the phone will be one of the key tools to boost advertising performance.
• #25 Everything needs to be dynamic, and real time.It includes when you show your message, what the message is, who you show it to.Everything about the way messaging is done needs to be shaken up. It’s going to require new, speedy, clear approval processes. It’s going to require new ways to work with legal. It’s going to require more flexible budgeting. It’s going to require a re-structuring of the creative process.But to those who do all these things will be the reward of big prizes, and great performance. I believe that small nimble groups can beat big incumbents by adopting these practices. I believe that big groups that adopt these practices – although it will be difficult for them – will reap huge rewards.
• #26 Today is only Twitter’s 7th birthday. But now we already send nearly half a BILLION Tweets per day.What’s incredible about all this public information is how powerfully it can be used to predict intent.
• #27 When Jane broadcasts to the world that she’s thirsty, here’s Dr. Pepper to the rescue.Using every special signal that mobile can sense is what boost monetization by between a factor of 4x to 20x.
• #28 One of those signals we’re using very effectively is even whether people are moving or stationary.We have targeted certain campaigns to whether people are moving or stationary, and have found more than 2x uplift just by showing the right add to the right modality.
• #29 Another example where we have seen more than 3x uplift is real-time, local weather targeting.The right product, shown in the right conditions performs more than 3 times better!The new Samsung Galaxy 4 even has a temperature sensor built in, I think for the first time built-in in a mobile device. That too will lead to new opportunities to target to specific circumstances.
• #30 Another killer way to boost monetization is by giving people context-sensitive alerts, like this DirecTV alert box, that says, Do you want to record tonight’s Homeland Episode.Henry alluded earlier to “native advertising” and this is one form of using context and new formats to break through the performance of banner ads.We have run ads that are this targeted that have gotten up to 18% click-through rates.You know you are delivering what people want when nearly 20% of them say “yes” with their click, considering that’s so dramatically higher than when you show them something irrelevant to them.
• #31 Let me close with this thought on why this new frontier is so exciting. It’s about predicting or inferring intent, with all the new signals that are available.Run of network advertising, let’s say, is worth maybe $1.00 cpm, or just $1 per 1,000 impression. Take the other extreme, search traffic. People typing in what they want. That can be worth $100 cpm. The problem is, people are typing in their search terms less and less, and giving their signals about what their intent in new ways today.Here’s why I think mobile is the new holy grail of advertising.What this new mobile / local targeting can do, using all these creative techniques I’ve been talking about, is take $1 cpm and magically turn it into something that’s worth closer to search by essentially “reading the minds” of users and giving them what they would have typed.I’d like to close by saying, “Giving 5 billion mobile users what they “would have typed” is the biggest technology opportunity in history.”-----You’re never going to do as well as $500, however, by cleverly deducing intent from signals, you can do the geometric mean between $5 and $500, or $50 cpm. What that means is that by cleverly using the signals that people don’t explicitly tell us, but which they implicitly speak with their actions, there’s 100 to 1 uplift from run of network possible. That is just staggering, and when you combine this with the fact that the world usage is shifting to mobile so fast, that why this is just such an unbelievable opportunity, that I’m calling it a perfect storm.----------------Here’s an amazing new way to determine intent from the signals that people share publicly.The Beardo is a funny bearded hat that Fab.com sells. We are working on a campaign to target people who want to buy this. Of course you can buy the word beardo at Google, but that would only get the people who KNOW they want a beardo hat. There are only a few of those. But what about all the people who DON’T know they want a beardo had, but actually do!Well we can find them.Let me tell you what we do. We search for the term “beardo” on Twitter and other social networks. We find, say 4000 people who mention it. We sift through and find the 427 who actually love it or want to buy one. We then use big data techniques to decipher the attributes of those people, who they like, where they live, and more, and then use that to extrapolate to a set of 1.5 million people who don’t know what a beardo is but who want one. They we can target exactly those people on their mobile device.This is truly incredible that you can now figure out with extremely high probability, purchase intent that had no direct signal, but which is completely inferred from social and local signals.Here’s why I think this is the holy grail.Let’s say you are buying targeted users groups at $1.00 cpm. That’s trying to reach people by large demographic swath and since it has only moderate effectiveness, is priced very low. Take the other extreme, search traffic. People typing in the word beardo. That’s worth, say $100 cpm, and the only problem is, there are not enough people typing that word in. You would buy all of it you can get, but you can’t get enough.What this new mobile / local targeting can do, using all these creative techniques I’ve been talking about, is take $1 cpm and magically turn it into something that’s worth closer to search by essentially “reading the minds” of users and giving them what they would have typed.I’d like to close by saying, Giving 5 billion mobile users what they “would have typed” is the biggest technology opportunity in history.
• #32 I’d love to continue this conversation. Please feel free to email me, or follow me on Twitter where I’m constantly sharing what I learn in this space every day.Thank you very much, you’ve been a great audience.
• #33 I hope you liked some of the images in my presentation today. My presentation was created by Tom Hughes, and the images were taken by the artist Joseph Holmes.