Jump, Tap, Exit. (Jumptap & Millennial)

by Gary Schwartz (14/08/2013)

Jumptap may be the last man standing of the incumbent mobile ad networks to have their exit. The acquisition by Millennial Media, its erstwhile competitor, in a predominantly stock transaction, may not be the glory finish that many had hoped.   What does consolidation mean to the mobile ad world?

Good things . . . in the long term.

Grooming a network

George Bell came on as the new Jumptap CEO in 2010 to ostensibly position the company for an exit.  Bell was the ideal candidate coming from General Catalyst and being an accomplish network deal maker. Back in 1996, Bell took Excite network public.  Apart from a few digital faux pas such as turning down the then two-year-old startup Google offer of $750,000 for their search engine, the Excite network continued to grow with impressive revenues through 1998.

Over the past two years, under Bell’s leadership Jumptap has grown its position in the crowded media market establishing global partnership into markets in Asia and vied for the budgets of digital agencies, direct response and brand advertisers and the inventory of publishers globally. And mobile budgets have grown for all mobile ad network stakeholders.

In Jumptap’s M&A prep this year, the company took in a $27.5 raise from WPP, Keating Capital and General Catalyst topping their raise to date at $121.5 million. A significant number. Key was Jumptap’s decision to bring on board John Hadl a mobile media veteran and rainmaker who advised Millennial Media, Admob and Quattro Wireless.

2013 was its make or break year.

Patents alone

On patents alone, Jumptap should hold significant market value. After the first patent was issued in June 2009, Jumptap has received 52 patents; at an impressive IP quota of one monthly. It has many more published patent applications in the pipe.

George Bell, has advocated from day one for IP differentiation and has continually stated that patents underscore the company’s commitment to ad targeting and smart ad solutions. The company holds a good spread of patents from ad targeting, coupon selection, bid optimization (realtime bidding) and the management of third-party data.

Augme Technology’s (a mobile media company) lawsuit against Millennial Media over ad targeting last year, patent mud-slinging seemed to be the first indication of a mobile ad war.

The Millennial Media acquisition may not vindicate the hard work and positioning on patents and network growth and may speak more to the general mobile ad market ennui.

Ups and Downs

The mega valuations that Admob and Quattro Wireless commanded from Google and Apple respectively four years ago soon rang hollow after Apple shelved Quattro’s platform and mobile ad sales showed halting growth.  It seemed that the online leviathans were just building a mobile ad network and waiting. Mobile buying remained challenging – there was not the scale and simplicity that is required to attract media dollars.

Then last year the market began to heat up with cool results: InMobi received strategic investment from Softbank,  Opera purchased AdMarvel  and Millennial Media, after trying for a Quattro-like exit, opted for an IPO which was surprisingly successful.

Markets results remained challenging. Velti and Augme, both of which had transitioned their business to mobile advertising away from their traditional higher margin mobile marketing business, showed slowing growth.

Of the ad networks, Millennial Media was the closest to turning a profit and generating consistent positive operating cash flow. Now with its expanded holdings what should the network focus on to grow?

“Cross Screen”

There is an oft-quoted line in technology that many are over optimistic in the short term and overly pessimistic about the long term.

In the short term mobile revenues will grow slowly and organically as budgets move into digital. However, in the long-term there is tremendous opportunity to accelerate these budgets if we can manage to simplify the mobile buy across all digital touch points.

Jumptap’s Unified Audience Exchange and their previous partnership with 24/7 (which has credibility on the PC side) was a sign of a multiscreen ad strategy. Networks like Jumptap and TapAd had begun touting the importance of a cross-channel ad buy.  Paul Palmieri, Millennial Media’s founder and CEO mentioned Jumptap’s expertise in cross-screen media a key asset to their network.

Brands want to follow their consumer across their many interactive screens. Google, Facebook and Pandora have made their mobile offering increasingly advertiser-friendly. Larry Page on his quarter call last month said that Google wants “ to make advertising super simple for customers. Online advertising had developed in very device specific ways with separate campaigns for desktop and mobile. This made arduous work for advertisers and agencies, and meant mobile opportunities often got missed.”

Digital consumer engagement has become a top priority for advertisers and publishers. There is a trend to make mobile advertising easier to buy. Online, mobile and offline media need to be seamlessly connected. Targeting across multiple screens (not just mobile) is essential for brands drive conversion and path-to-purchase.

Millennial will need to navigate through a rash of nimble new start ups in the space (App Nexus, Adelphic, Native, Nextage, Media Math). Consolidation, simplification and cross-screen budgets will help Millennial but it will be difficult for this public company to pivot.

The Washington Post: Bezos’ Legacy

by Gary Schwartz  (06/08/2013)

The newspaper business is tough.  Over the weekend the New York Times Company sold The Boston Globe and its other New England media properties to John W. Henry, principal owner of the Boston Red Sox for $70MM. It bought the asset in 1993 for 1.1BB.

When Jeff Bezos, the CEO of Amazon, agreed to purchase the Washington Post newspaper (affectionately called WaPo by its readers) for $250m, was he buying a viable business or and the glory of 80 years of traditional media leadership.

With a net value of 20BB, Jeff Bezos can buy many things. Does he see this as an extension of his internet empire or as a way this new-age business genius can secure an old-world trophy and a media legacy?

Amazon Publishing, Amazon Studios  . . .  but this is different

Bezos has taken on incumbent media business before. He has single-handedly changed the publishing world. Amazon Crossing, Amazon Publishing’s imprint acquired Pötzsch’s Hangman’s Daughter series and translated it from German into English and launched it in audio and print. The series became a #1 bestselling Kindle book and in June 2013, the book reached the platinum one million copies sold.

Amazon Studios is now developing movies and TV series, and recently announced five new video-on-demand program pilots. It has started a crowd sourcing campaign soliciting 2-15 minute long shorts to pitch a feature-length film idea. Amazon Studios evaluates each submission, and will seed some of the submissions with $10,000.  The studio then grooms the development funding successful scripts through to the theatrical release incentivizing film makers that get their ideas from paper to the silver screen $400,000.

White-Glove Legacy

But the Washington Post is different. He did not purchase the Post’s other online assets: Slate magazine, TheRoot.com, and Foreign Policy. The flagship Washington Post newspaper purchase seems more of a personal acquisition and less a vertical strategy. Bezos will become an owner taking over the Graham family title. Does Bezos what some old-world legacy to place on his media mantel?

Post chief executive, Donald Graham has known Bezos for about 15 years which most likely helped this transition easier. He told FT.com that “He [Bezo] is a very patient, long-term investor.” He will need to be. Despite the paper’s move into digital publishing, the Washington Post has seen a decline in circulation (6.5% in the last year alone) and the trick down pain of declining advertising sales.

Innovation?

What Bezos is buying is the paper’s white-glove media position only rivaled by The New York Times. The paper hold its place as the seventh most popular daily newspaper in the US. Many in the industry is watching closely and hoping Bezos can bring his magic to the ailing publishing business.

Journalist Carl Bernstein who broke the Watergate story with the Post, told Politico that this change of power is “recognition that a new kind of entrepreneurship and leadership, fashioned in the age of the new technology, is needed to lead not just The Post, but perhaps the news business itself”. Bernstein’s partner and Post associate editor Bob Woodward, said on MSNBC. “I think in some ways, this may be the Post’s last chance to survive, at least in some form of what it was.”

So with the world watching what will Bezos do? Will he launch 3D printing with this property? Will he connect one-click commerce to this new newspaper install base? Maybe he will simply use this blue-chip Washington company as entree to the DC Beltway and all the value of being a Washington insider.

While Bezos will surely add innovation to the paper, he will be careful not to vanquish Katharine Graham’s family-run papers legacy and maybe happy to simply keep the association with grit journalism at its best.

Starbucks: Helping Caffeinate and Juice Customers

by Gary Schwartz  (30/07/2013)

Starbucks Q3 2013 report is out: a 30 percent jump in My Starbucks Rewards spend and mobile app transactions in the US accounting for a whopping 10 percent of in-store US sales.

The only successful mobile wallet continues to grow market share

The one interesting development is the announcement that U.S.Starbucks is partnering with Duracell Power to provision in-store charging stations. With Starbucks’ success with its mobile wallet, the last thing the local Starbucks store wants is a dead phone at point-of-sale.

I have always said that wireless charging stations are honey to the wireless bee. Starbucks has already educated the consumer on the value of its retail network as a Wi-Fi network. Now it can it extend this utility to a charge-up affinity.

There are only two deleterious mobile states: a consumer with a lack of caffeine or lack of handset power. Starbucks in the natural brand to be associated with charging up.

 

Apple feels more gravity. What to do?

by Gary Schwartz  (24/07/2013)

In a post-Job’s era is Apple losing its innovation edge? While in Q3 ’13 results, Apple was upbeat on earnings, its revenue outlook dropped precipitously.

During a conference call with analysts to discuss its quarterly performance Apple’s CEO Tim Cook pointed to enterprise and horizontal product growth:

“From a growth point of view for Apple, our key catalyst will always be new products and new services in existing categories that we are in and in new categories. In addition to this, we have opportunities in distribution in terms of expanding our retail stores, expanding our online store.”

Apple continues to hold ground as an aspirational brand but the market for high-end devices is fast becoming saturated and the only growth window is low-cost devices in emerging markets.

Tim Cook tries to sound bullish: “I don’t subscribe to the common feeling that the high-end smartphone market is at its peak. I don’t believe that, but we’ll see.”

However, while some operators still are required to meet volume guarantees made to Apple, this will not continue. Consumers are no longer buying new phones based on glamorous launch campaigns that tout better cameras, higher-resolution displays or a reduction of a millimeter in its profile.

Apple’s needs to keep its loyalists buying across its portfolio of screens. Apple must focus on its multiscreen strategy with ‘Maverick’ and continue to expand its cloud and iTunes wallet positioning.

From Singapore to Moscow: Is OPEN a four-letter word?

by Gary Schwartz  (23/07/2013)

I recently returned from speaking in Singapore at the regional CommunicAsia conference and Rasia.com event in Moscow. Innovation was a central theme.

In Singapore I was in a discussion with Google, SingTel and Microsoft. I asked Doug Farber, managing director for Google in Asia-Pacific, if mobile innovation is stifled when there are only a few power brokers that control the mobile ecosystem.

Google has always had a “healthy disregard for the impossible,” Mr. Farber said. Agreed. However, while Google has a healthy internal innovation culture, is it allowing the ecosystem to do the same?

I recall Richard Kramer from Arete Research’s jab that in mobile O-P-E-N is a four-letter word.

There are only a few powers that are trying to lock the mobile ecosystem: Apple, Amazon, Google, Facebook, Microsoft and Du. And while Apple and carrier networks are unabashedly closed fiefdoms, Google’s Android empire may not be truly open.

“But,” Mr. Farber said, “I am the open guy.”

“Open only on the front end,” responded Bill Chang, CEO of group enterprise at SingTel.

Outside of a few global plenipotentiaries, mobile developers have had to pick from the crumbs at the table.

Twenty-five applications command 50 percent of the app store revenue. The billions in revenue do not feed many mouths. The average developer lives on $5,000 per month, which is a bread-and-water diet of $60,000 per year, said Richard Kramer. “Where are the developer’s yachts?”

Hardware innovation has flat-lined and power is exclusively in the hands of Apple and Samsung.

The yearly CES announcements have underwhelmed and recently left the Las Vegas melee altogether. Another handset release with faster “mega” screens does not excite the crowds. With $75 smartphones entering emerging markets, smart has become a commodity.

SingTel’s Mr. Chang said in a market where companies are “cost-cut to death, it is difficult to drive innovation forward. Mobile-first is a challenge.”

Mr. Chang talked about the importance of the CIO is this process. He plays the initialism game that we all do at public events: “The CTO is now the chief transformation officer and the CIO the chief innovation officer.”

But what does that really mean to companies trying to navigate the mobile marketplace?

The CIO never had power, said Michael Thatcher, chief technology officer of Asia for Microsoft. “It is only when something is broken they have power. How can we advance this and stop being tech centric? Stop being reactive. Follow the money.”

But is there money in mobile innovation?

Outside of the big six ecosystem players, there are few that command significant market share. We live in an “app store economy” where we all need to play the piper 30 percent and never own the customer. To make money on Apple’s SDKs or Google’s, dominant big data position is difficult.

The social leviathans are also closed.

Facebook has built a business on connecting people. With its post-IPO revenue focus, it has worked hard to create a media buying tollgate on the impressions and big data that it owns.

In social portals there is little big data sharing and little opportunity to make money as an outside developer. It is a bigger issue for the entire social ecosystem.

The more that these social portals try to leverage these assets to generate revenue, the less socially authentic they become to the consumer. Our social spaces have become more like driving down the public highway.

Social portals such as Tumblr and Instagram have generated such value in the market because they remain authentic – pre-revenue and pre-commercial, of course.

Everything is disintermediated. App stores and social portals are all controlled by Facebook, Amazon, Apple, Microsoft and Google, and somewhere we all have to pay the piper.

Telecommunications is the history of open and then closed systems, from RCA closing down FM Radio and early television.

It is the same recent history of Apple disintermediating the wireless carriers with an “Internet device” and then turning around and using the same iPhone to shut down the mobile Web with a closed App Store.

Are we entering another closed loop where innovation becomes stifled? What does this mean for business?

Google sponsors the ship, “Unreasonable at Sea,” to sail around the world evangelizing entrepreneurism and innovation. How can we make the power brokers more unreasonable at home?

From NYC NASDAQ discussing Apple, 9-1-1 and MultiScreens

10 minutes from NYC Nasdaq on Apple’s multiscreen announcements, next generation 9-1-1 (NG911) and the MultiScreen Summit. 

MultiScreen not Omniscreens or Second-Screen

I strongly believe that the space between the screens that allows the brand to connect their consumer experience is critical. I call this “digital Velcro”.  Connecting your consumer screens seamlessly throughout their day is one of the most important challenges we face.

Additionally, one media experience plus other media screen experience equals a multiple of value to the brand: “1+1=3”  This is not a second screen debate. It is a consumer journey challenge that impacts all brands and retailers in their media buying and engaging. That is why we focus on the MultiScreen not the Omniscreens or Second-Screen discussion.

Next week on Tuesday and Wednesday in NYC I will be hosting the MultiScreen Summit. We incubated this event concept in Los Angeles, last year and have expanded the MultiScreen Summit to include Abu Dhabi and Berlin (which will be held in October). Our goal is to establish a global platform to address the growing needs of business to create a seamless digital experiences across their customers, fans, audiences, shoppers . . . screens.

So who owns this? CIO, CMO and CDO? CIO needs to get together with the CMO and the Chief Digital Officer (CDO) needs to become the Chief Disruptive Office (CDO) making backend process screens work with marketing engagement on the consumer screens.

Data has always been important. In a connect device world with location and behavioral
MultiScreen economy and media strategy will become the most important element tying a brands strategy in place.

The question is: How can buyers think horizontally across their consumer screens and add value to their vertical investments? We need to buy media both vertically and horizontally. Small screen buys need to have native mobile strategy attached that go beyond CPMs and drive mobile conversion goal into the cloud and into the mall.data, this consumer journey is more complex than we had assumed. We now know that we need to work harder to drive real shopper insights and shopper marketing goals. Data tools we can use now include location, screen insights and digital relationship building.

As the MultiScreen Summit Chair, I am so grateful to have such an remarkable group of media thought leaders onstage next week at the MultiScreen Summit, June 11th and 12th.  www.thescreensummit.com.

SCREEN WARS (Digital Media Forum Keynote 2013)

In Dubai talking to agencies and brands about “digital velcro”. How linking content seamlessly between one screen plus other consumer screen equals a multiple of value for a brand.  20  mins – view here.

SuperBrands and the Unreasonable Screen

I was speaking with David Epstein, the founder of The Unreasonable Institute, the brainchild of Unreasonable at Sea, the Google sponsored innovation ship that is presently sailing from port to port globally.

Mr. Epstein’s  mission statement is borrowed from George Bernard Shaw who in 1903 wrote in Man and Superman:

“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.”

The Unreasonable Institute, based in Boulder, Colorado and is working to bring entrepreneurs, innovators, thinkers, and investors together for social change. He now has these same folk on a ship sailing the world with that disruptive mandate.

What Mr. Epstein is championing, and what Mr. Shaw posited over 100 years ago is applicable, if not essential, across all verticals today. In the 2010’s, when industry after industry is being rudely disrupted, we may need to be more unreasonable about our search for solutions and our adaptation to the new status quo. We have to become superbrands.

Man and Superman

Music, retail, media buying, broadcast, publishing are all incumbent industries that have, or are, about to pivot in a profound and irreversible way. Many extant business models will dry up. Many old revenue streams will become commodity channels or be circumvented over-the-top by new technologies or new business models.

Telecommunications, more than any other industry, has profoundly impacted businesses. Some bemoan that “mobile” innovation has horizontally cut many companies at the knees.

Telecommunication innovation and disruption is not new. The history of telecommunications is the history of open systems and the invisible hand that attempted to close these systems: From RCA closing down FM Radio and early television. It is the same recent history of Apple disintermediating the wireless carriers with an “internet device” and then turning around and using the same iPhone to shut down the Mobile Web with a closed App Store.

What is new about telecommunications in the 2010s is the pervasive nature of the technology, the democratization of information and access, and the liberation of the consumer.

The new entrepreneurs, innovators, thinkers, and investors that are sailing on Epstein’s ship are the crew of innovators that needed to rethink the way we communicate with this new consumer.

And this requires a motley crew.

Chief Unreasonable Officer

Labels, Retailers, brands, publishers, and broadcasters cannot simply open innovation labs in the vain hope that they can reinvent their business from within. Forces are at play in the mall and in the media houses that will require some unreasonable thought. The walls of our store are porous (Mike Duke) and the internet cloud is in our malls to stay.

To paraphrase Mr. Shaw: The reasonable person adapts to the world; the unreasonable person proactively turns the tables.

How do new-age brands become unreasonable?

  1. Industries need to understand their new world and their new consumer. This world is made up of consumer moments across their connected-screens during the course of the day. Ten years ago, you never needed to follow these consumers; now you need to plot their screen journey in minute detail.
  2. The value may not lie exclusively on the screen but in connecting these screens. In a world where (according to Google’s Multiscreen Report) over 90% of people use more than one screen to accomplish a single task, brands need to focus on the “digital Velcro” to connect these screen experiences. One screen + another screen = a multiple of value: (1+1=3)
  3. Stop relying exclusively on third parties and social networks to find your consumer. “Dating services” are important . . . but you need to get out more. Forge a direct relationship with this new connected consumer.
  4. Be unreasonable. Believe that your consumers can love your product and can share a common dialogue with your brand on their private and personal screen.
  • This maybe simply the ability to shop for a brand seamlessly across their screens understanding the needs of the consumer at that moment of the day on a particular screen form factor.
  • This maybe establishing a common interest (wellness, nightlife, etc.) and become part of their multiscreen narrative.

The new Chief Digital Officer needs to create superbrands, and to do that she needs to be unreasonable across all her consumers’ connected screens.

I am content chair of the MultiScreen Summit in NYC, June 11th and 12th.

MultiScreen Summit
www.thescreensummit.com
June 11-12, 2013
Metropolitan Pavilion
125 West 18th Street
New York City

Samsung Abandoning Android? Tis Tizen?

The elephant in the room at the Galaxy S4 launch in New York last week was Android. Not one word about the Google OS. Is all well in Camelot?

Some industry pundits such as ABI Research analyst Aapo Markkanen say there is a clear and intentional distancing of Samsung from its existing OS partner, Android.  Does Samsung want to reduce its almost total dependence on the platform over the next few years? Samsung seems to quietly be building independently on top of the Android OS and may make a jump to a more neutral industry partner by 2016.

Window’s has not offered a compelling alternative to Android. What are other options?

Mozilla (Firefox) and Linux (Tizen) are going head to head to capture next generation developers with their web-based operating system. The Firefox and Tizen SDK and API allow developers to use web-based HTML5.

Tis Tizen

Tizen (a Linux Foundation initiative) may have the edge. Tizen is an open source, standards-based software platform for multiscreen devices (smartphones, tablets, netbooks, in-vehicle devices, and smart TVs). Like Firefox, it provides a cross-screen environment for application developers, based on HTML5.

Samsung abandoned its homegrown smartphone OS,  Bada, early this year and announced that it would start developing Tizen-based devices: ”We plan to release new, competitive Tizen devices within this year and will keep expanding the lineup depending on market conditions.”

The implications are significant to the connected screen economy and place application development in a more mature web main-frame on the device. The application store now can exist in a more manageable web environment with bookmark apps and not get lost in widget-design interface promoted by Apple.