Dec 26 2011
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Collective buying, Internet Television, New Digital Products

MTV into the online travel business


In a time of Social Media, Digital TV as the default device in all households, Volume Discount companies etc. the line between online and offline products and services is getting narrower by the hour.

For non digital native companies, it’s a challenge to leverage its Brand Equity and translate it into the digital world: new services and new ways of selling products need to be implemented. These also need to be adequately marketed elaborating a blended strategy between traditional methods and new digital marketing tools.

MTV, the music entertainment channel for youngsters has proven that they are looking to move forward with the current times and has partnered up with eDreams to create MTV travel. One could first imagine that they solely offer trips related to music (festivals or concert packages abroad, special or exclusive music events…). The truth is their offer starts with plain flights, flights+hotel packages and discounted deals.

But MTV has gone further than that and not only is offering thematic travel packages related to music but from a range of categories in line with its customer base tastes. Thus, they offer snowboard trips with classes imparted by a professional, all kinds of radical activities (very much in Red Bull’s line), sailing adventures… It is not an easy road ahead for the most famous music channel in the world. Adventure trips abound in just about every big commercial space shelf; volume discount companies offer, among others, similar products at very hard prices to beat and are already placed at top consumer’s top of mind.

I believe MTV should concentrate on what they know best which is music. I believe they have the know-how and the position in the market to offer a quite unique and differentiated product that could be very appealing to its fan base and beyond. Using its powerful and massively followed television channel and combining it with a well designed digital marketing strategy across the spectrum of possibilities (Social Media, affiliation, SEM/SEO,) MTV is in an impeccable position to strongly establish itself in this original market niche. Once there, they could expand their MTV experiences offer to other areas but I’m of the opinion that they should not do it the other way around.


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Nov 04 2011
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Apple, Cloud computing, Internet Television, New Digital Products, Telecommunications

REAL Internet TV: When?

Television has been THE entertainment center of all households for the past decades. Nowadays though, it’s going thru a transition phase. First of all, it is still something mostly local. Although it has undergone a profound change, notably in the European countries with the switch to Digital Television, the offer has been atomized but in no case bettered. It is still far from customer’s demands (in my opinion at least).

Then there is pay platforms that usually give access to more quality content with an occasional international twist. Yet, you don’t get the full array of content from just one platform. As a consequence, many people choose to jump to their computers and download or directly stream the content they want to watch simply because nobody is making it easy for them to access what they want. Products such as Apple TV for instance don’t get the full catalogue of products and is still not consistent from country to country. Same conclusion, the user can get it for free from the net without having to start making studies about which platform(s) he is going to invest in.

So, it seems that television as a device, has not yet been fully empowered by the access to the Internet. The closest thing I can come up with is Google TV, which, although I haven’t tried it (not available in Spain until 2012), seems similar to the experience of connecting to the Internet thru your TV as if it was a computer. I can get a similar kick just by plugging my computer to my home TV and probably a far better one if I plugged my iPad and control it remotely due to the array of applications available.

We often hear that advertising has ran away from television to the Internet, but I believe it’s Television that has not yet been able to leverage the Internet’s possibilities in order to maintain its audiences and thus its advertising levels.

My view of things is that there is a big change to come in the following years where someone would come up with a TV similar to a tablet or smartphone. It will run applications that will mainly provide Digital Content (TV series, movies, sports…). Maybe this is just dreaming, but I’m sure someone will materialize this dream. My obvious bet would have been Apple, but I can’t say that with the same level of confidence after Steve Jobs passed away although I suspect he probably has paved the road in that direction. My favorite example for this kind of market disruption is Spotify. Who could have thought a couple of years ago that there would be a platform where you could access all the music you could imagine instantly from a easy to use and well-presented interface? Add to that the ubiquity of doing so anywhere with a 3G connection thru a smartphone and you have an unbeatable product in terms of customer satisfaction.

TV is in a transitional point nowadays, but there are big changes ahead of us with an obvious result: to get customers the content they demand when they demand it. Otherwise, they will end up getting it, most probably illegally and for free. Which would content providers rather?

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Oct 13 2011
1 Comment
Apple, Cloud computing, New Digital Products

iCloud: A missed opportunity

I just installed iOS5 on my iPhone. It wasn´t as easy a process as one would have hoped it to be. Remember the “it just works” slogan that Jobs insisted upon in his last keynote? Well, I feared I lost everything from pictures to apps when my phone prompted me with a “an internal error occurred” message in the middle of the updating process, so it didn’t go as smooth as I would have liked it to. But, at the end of it all, I’m up and running with the new iOS5 and some minor losses along the way that I’ll omit for the purpose of this entry.

I’m sure Apple’s executives are not happy with the way these updates take place. The good news is that, supposedly, this is the last time we’re going to have to plug our telephone to our computer since with iOS5, all updates will be done wirelessly. On top of that, we now have iCloud, so, again, we won’t need to plug our iPhone to iTunes and go thru those scary synchronizations anymore. Or will we?

Well apparently unless you are a PC user or have your Mac OS and Mac software up to date, you will need to. Let’s take for instance iPhoto, one of the features many iPhoners will be seeking to use iCloud on. You take a picture from your phone, and it automatically wirelessly pushes it to all of your devices. If you want that picture in your computer, many people’s case, you need to own a mac running Mac OSX Lion (brand new!!) and have iPhoto 9.2 installed. In case you’re a PC user it’s easier since those photos will be pushed to your photo library provided you own a machine running on Windows Vista Service Pack 2 or Windows 7. That doesn’t make much sense to me. Are they penalizing Mac users for not being up to date?

 

I thought what Apple did with the launch of iTunes and the iPod ten years ago was pure genius strategy. You build an amazing product that requires all your users to open an account with thru a software that works for both Mac and PC. I’m not a super fan of iTunes, but with the equipment I have today, I’m still able to download the latest version of iTunes FOR FREE in order to enjoy all the benefits from my iPhone or iPad. On top of that, iTunes has been the tool to make PC users aware of how easy to use, functional, well designed and well engineered Mac products are. The catch was the iPod and the story has been building onto phones, tablets and surely computers.

I think iCloud could have been a turning point to keep demonstrating this to the world and continue with their path to become number one seller in all hardware categories, as Tim Cook clearly stated last week. Instead, they somehow keep their garden close, require the latest versions of products some of their clients might not even want, penalize Mac users for not being up to date and altogether miss the chance to create a platform where you easily manage all your digital content in the cloud.

I feel it’s in this kind of strategical decisions where Apple might miss the genius of Steve Jobs. In this case they might be leaving the door open for the cloud market, but in the future it could be products closer to Apple’s soul. I most certainly hope it won’t be the case.

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Oct 09 2011
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Cloud computing, New Digital Products, Social Networks

Spotify U.S., welcome to a mature market

When Steve Jobs addressed the world during the last WWDC on June 6th, he saved for last the presentation of one of his star products: iTunes Match; the only service iCloud will attach to a paid subscription. Of course, introducing his new product, he had to compare it to what’s out there in the market and to what is to be launched from the main market players.

With all due respect to Mr. jobs, I believe the situation looks a bit more crowded even leaving streaming radio services and some other players out of the equation. It is true that the latest entrant, sweedish based Spotify, hadn’t finalized its agreements with the major label companies just yet so it made sense not to include them in the Keynote, but Rhapsody and Rdio should have definitely had to be there. The following table attempts to summarize the situation.

Spotify launched in 2008 and has attracted 10 million users in Europe ever since, 1.6MM of which pay for the music service. Fundamentally it gives users instant streaming access to a catalogue of over 13 million titles. You can do so from a PC or from mobile devices for which you would have to pay a monthly subscription fee ($10 in the U.S). To me, it’s the definite digital music listening product in the market: It has a friendly user interface, it works seemlessly across devices with a true sense of cloud service, offers an almost infinite catalogue and is more than integrated in THE social network. It’s only weakness could be its premium membership price, almost six times iTunes’ Match.

So far Spotify has gained 400.000 new subscription members since it’s U.S lauch back in June. Will they keep this pace after iTunes Match’s launch next October 12th?

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Oct 04 2011
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Telecommunications

Smartphones, still outsmarted…

I still pay way too much in cell phone bills. It’s still very difficult in Spain to find a plan with which you end up paying a fixed amount without the usual unpleasant surprises (SMS were not included, you travel abroad, fixed plan time exceeded…).

Even as a smartphone user with free access to applications such as Skype, Viber, Tango, Talkatone… which, combined, should drastically bring my bill down to the data connection plan fee, I still have a hard time reducing the monthly €100 barrier. Why? Well, first, it has taken a while for these applications to become available or existent for smartphone platforms. Skype for instance existed already but was not initially available over 3G (blocked by phone carriers), drastically reducing the user availability and thus the mobile use interest altogether. Viber, on the other hand, had some launch problems. When it entered the market, it seemed to be the revolution and a big concern for carrier companies. Everybody with a smartphone started sharing the app and was eager to start using it as their main phone. Yet, they launched it a bit before having the platform running reliably which disappointed many. Yes, cell pone calls are expensive but they work 10 times out of 10 provided you have a network. That was not he case for Viber and even though they have fixed some of their issues today, they have lost that initial momentum which seems very hard to make up for.

¿So what is the situation today? As we can see in the table that follows, the regular mobile service is still unbeatable in quality, availability and reliability. Heck, that’s why many people as myself still make phone calls the traditional way.

Nevertheless, both Viber and Skype are now very competitive services and they’ll probably improve in the future. Their biggest weakness is both call placer and receiver needing to download an app and not being able to call directly. In Skype’s case, it’s possible to call a regular phone (cell or landline) thru skypeout, which, although not free, is very useful and competitive for international calls. Viber has the advantage to be linked to your phone making it very quick to import all your existing contacts using the platform.

But we have yet to see the phone service that combines all the advantages of the regular mobile service at a more competitive price (free??). That will surely shake things up and make carriers re-evalue their service plans. Will it be Facebook? Time will tell…

Jul 14 2011
2 Comments
Collective buying

Groupon: A first step towards the definite online/offline transactional bridge.

To be honest I’m not a particularly deal oriented person so I’ll try not to be biased by my condition and deliver an objective opinion across this post.

Groupon is one the latest phenomena in the world wide web. Its fast success has provoked an avalanche of collective buying, discount deals and coupon sites which add up to more than 500 different companies (200 in the U.S alone). As often happens in business in general and in the web industry in particular, few will stand at the end of the race. More so, one main key player will surely hold the majority of the market (e.g Google, Facebook, Amazon, eBay, Skype,…).

Even-thought Groupon is off to a very good start, new participants continuously enter the market attracted by a very well defined business model, something very scarce in the web. The idea is simple, Groupon provides a critical mass of users and its digital platform for the launch of particular deals from merchants who offer a juicy discount from which Groupon makes its profit. This model should yield happy customers, happy merchants and of course should suit Groupon’s interests.

Merchants

Yet, not everybody is as happy as we could think they are. For starts, merchants get paid 30% 5 days after the deal, 30% after 30 days and the remaining 30% 2 months later. It turns they are providing Groupon its operative cash flow to fund their working capital needs. Furthermore, deal providers are barely getting an economic profit form the operation if they end up getting one at all. Sure, it gives them notoriety over the web for that big announcement day, but time has proven that successful advertising highly relies on the frequency of impacts. And what about brand equity? It takes a lot of advertising impacts to enter the consumer’s mind but it doesn’t take as many to devaluate your brand’s perception. By offering such discount deals, you could be disappointing your loyal customers, traditionally willing to pay full price, and affect at the same time the initial marketing positioning of your products or services. So why are merchants contracting Groupon’s services if it seems in many ways inappropriate for their business? Well, There are some situations where Groupon proves itself to be a great tool, but they are often times circumstantial and don’t apply to every type of business.

Customers

I’ve been trying the tool for a couple weeks and quite frankly I’m a bit disappointed. I think it doesn’t fully utilise the potential of the web. Why am I getting offers on manicure if I’m never going to get one done? They’re wasting an impact and annoying me with irrelevant offers so next time I get a mail from Groupon, I’m going to be tempted to directly archive it. Groupon should definitely segment their offers, that’s basic when advertising in the web. Furthermore, even-though they do have a Mobile App, the medium where all this business is going to flow in the upcoming years, they’re not using it up to its potential. Yes, offers are city specific but they’re not “neighbourhoodtagged”. Personally, living in a big city like Madrid, I’m not going to go across the city to save €5 on a burger, the concept of cost of opportunity learned back in college quickly reminds me that I’m better off going down the street. It’s pretty simple, as a Groupon user, I want most or all the offers that impact me to be interesting, appealing and geographically close (for some kind of deals at least).

The business model 

The business model has proven that it can grow fast but it has yet to present a profit. Its structure, yet again, doesn’t leverage the web’s potential economies of potential, in particular when it comes to seal the deals with merchants. In fact, Groupon needs to have an important commercial force everywhere it operates to formalise the deals with the merchants. This greatly enhances the cost of goods sold and is one of the main reasons discounts have to be so aggressive.

More so, this business model and the daily deals industry in general are transmitting a distorted reality to the market that I don’t particularly find positive. It is true that with the expansion of the internet, some costs have been lowered or have disappeared from the income statement but not to the extent we’re seeing here. Plus, we’re talking about off-line  businesses that still have to pay the rent or the mortgage for their business premises even if they’re carrying their promotion over the web. I don’t personally see this business model growing at the current rates in the long run or in a period of economic bonanza.

Furthermore, these structural loopholes are fostering the appearance of local players with perhaps a better knowledge and connections in their particular markets. That added to the fact that there are never enough good deals, is leaving the door open for many. In Spain we have Groupalia, Buytheface, Letsbonus, Loockad,… They all try to bring something new to the market. For instance, Lookad, solely exists for mobile devices. It also combines push offers (uploadable by merchants themselves) with a pull system where fellow users can publish what they find interesting making it a much more democratic and believable platform. Bytheface.com, another new entrant rapidly gaining market share, is the first one to have started selling last minute airplane tickets at high discount rates.

The future? 

Companies like Google and Facebook have the user potential and financial muscle to set up a very successful and appealing collective buying platform. For Facebook, who already launched “Deals” early this year, it shouldn’t be hard to set up a system where merchants, who most probably already have a company profile in the network, can directly launch campaigns redeemable in the physical emplacement of their business. That could take away the salesforce costs Groupon faces and yield better deals for customers and/or better conditions for merchants. Google has a similar story with Offers (they already present a much better deal to the merchant than Groupon) but now has to prove its social network Google+ successful and team it up with its widely expanded Local Business Directory.

But, as Rakesh Agrawal puts it perfectly in his post Why I Want Google Offers And The Entire Daily Deals Business To Die, Google (and Facebook in my opinion) could do much more than just replicate Groupon’s model. I believe the truly interesting product would be one that combines offers with a well crafted listing of the businesses around you, geotagged and with the opinions of the people you trust (most probably your friends in social networks). This would construct the long awaited offline/online transactional bridge and would bring it to the palm of your hand (I don’t see this nowhere other than in mobile devices). Mmmh, let’s see what good Italians do I have around here… Oh!!, good prices, nice ambience and 5 of my connections really loved the food. Let’s go!!

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Jul 07 2011
1 Comment
Social Networks

LinkedIn: Great product, unfortunate practices.

The original intention of “Digital Ants” is to create a space to bring some in depth analysis on digital matters, something that I think is somehow lacking nowadays in the World Wide Web. But, I find myself postponing my next post on Groupon and the Online Deals Market due to what could be a five minute interruption and LinkedIn has decided to make a little bit of a tedious process.

I’m a big fan of LinkedIn and think it is, by far, the best professional network and market recruitment tool out there. In my opinion, no one comes even close to this product. Yet, as many companies in e-business, they seem to be struggling with their business model and are probably finding trouble monetizing their fantastic system, which in its premium modes I find completely overpriced. I haven´t plunged into their data since this post is unfortunately not intended to provide an analysis of the product but to point out a negligence which I sadly believe is completely deliberate.

It should come as no surprise that this omission comes once you enter the digits of your credit card account in their system. In fact the problem arises when you have already done so and wish to go back to the free services mode from a Premium Account model. Instead of making it easy for the user facilitating a quick opt out option, LinkedIn has decided to make it a hassle. The user has to send an email to customer service 3-5 days prior to the end of the monthly subscription, which, otherwise, will be automatically renewed.

If someone wants to cancel a service, especially in a technological advanced environment, they should be able to do so instantaneously and without having to give explanations or writing emails to no one. Furthermore, as I read in some forums, customers are often ignored in their queries and have to contact their bank and block payments as to put an end to their subscription.

Why???

First, you have those people who don’t want to go thru the trouble of contacting their bank for perhaps just one month they didn´t want to subscribe for. If you add to that LinkedIn’s last campaign to “invite” users (who have previously entered their card number) to try their premium services “for free” for a month who then, find themselves stuck for at least the next month (not free anymore..) it ads up to a big pile of cash.

 Hello?? Unhappy users!!!

One tends to think that things are done differently in the digital scene, that we’ve learned from mistakes made before the web was there for unhappy users to express themselves. Today is very different and digital companies, especially big companies such as LinkedIn should be the first to understand this. It could be that financial results pressure post-IPO could have more weight than customer satisfaction but frankly, it’s a model than I don’t foresee succeeding in the long run…

Luckily enough, not all renowned companies in the web are doing these kind of practices, so negative for the sector as a whole. The only online company to receive a recurring monthly payment from my part, Spotify, leaves the door wide open and positions you one click away to cancel your subscription and go back to their free service. I sincerely hope LinkedIn changes its attitude towards this issue, although, after 8 years in the market and with the new pressure of publishing its accounts periodically it doesn’t seem very likely. What a shame.

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Jun 22 2011
3 Comments
Social Networks

Facebook’s $100bn IPO. Bubble growth or market consolidation?

Not long ago, I attended a conference at IE Business School in Madrid. Bernardo Hernandez, Head of Emerging Products at Google was to talk about entrepreneurship in the Digital era. The event wasn’t that enlightening given the notoriety of the speaker and the position he holds at one of the most intriguing companies in the world. It became apparent the interest was going to fall on the attendee’s questions and on Hernandez’s level of commitment in his responses.

After a number of queries, the jackpot issue came up. It was to put in jeopardy the basis of Google’s business model: it’s advertising platform or where Google gets 96% of its revenue from. And who is to threaten this market defining model derived from being the number one search engine in the world? Well, the number one Social Network in the world: Facebook.

Facebook has pretty much replicated Google’s bid advertising model within their closed garden. Closed but huge. At almost 700 million users, Facebook has the strength to represent a real threat to Google. Furthermore, its system based on social interactions offers insights on people’s tastes, preferences, links between one another etc. Google’s algorithm, which works remarkably well when the user is actively searching for something specific, has more trouble figuring it out without being prompted.

So how much is this worth?

We can track the value of Google’s stock since it started fluctuating in the market back in 2004. A possible way to get an idea of how much Facebook is worth is to directly compare Google’s advertising revenues to Facebook’s, assume a similar cost structure and extrapolate to get a first figure. Google has nowadays a market capitalisation of around $156.16bn and reported advertising revenues of $28,24bn in 2010. Facebook is expected to generate 4 billion in advertising revenue by the end of 2011. In 2010, it accounted for $1.86bn. Making a direct comparison would yield a market value for Facebook of $10,29bn for its reported 2010 income and of $22,14bn for its predicted 2011 revenues. Still far from the 100 billion mark it is supposed to enter the market with .

Two questions come to mind: Will Facebook be capable of stealing Google’s market share in the relevance advertising? Up to what point? It’s true that Facebook’s system is improving fast, but they still have a lot of catch up to do. Provided its system becomes “capable”, they potentially could eat part of Google’s pie but surely both systems will continue coexisting; one centred in search related advertising and the other taking full advantage of the social knowledge of its user’s preferences and tastes.

The second big question arises from the rest of the business models Facebook could build up around its current customer base. One of its main ones is social gaming, something Facebook is already cashing through companies like Zinga; it’s main partner, responsible of blockbusters such as Farmville and Fish Tank among others. Part of this revenues come from Zynga promoting itself heavily on Facebook’s platform. But Facebook also makes a percentage of every dollar made by Zynga through the sale of virtual products and enhancements for their games. As Facebook’s customer base continues to increase, so will its income from Social Gaming and the strength of their partnership with Zynga.

Another area where Facebook could start monetizing could be VOIP. Facebook’s possible advantage would reside on having all your contacts within your platform, but VOIP operators such as Skype, recently acquired by Microsoft, integrate seamlessly with your smartphone making it very unlikely for facebook to follow this business path.

And then comes the latest big business in the internet; coupons. Key player and market leader Groupon has recently turned down Google’s offer for $6bn and is expected to go public for up to $25bn. Facebook has launched Facebook Social Deals to match “the fastest growing company ever”. But more than that, Facebook should start taking advantage of being by far the biggest virtual market place in the world. With just about 700 million users worldwide and virtually every company in the market present, Facebook is just one step away from becoming “the platform” where users formalise some or most of their transactions (provided the system is user friendly and works correctly) simply because it’s there already. Provided they accomplish this nonetheless complex task, they could easily surpass initial market valuations and even become the most valued tech company. Less than a year away from the marked date, most events are yet to be announced surely following a carefully planed schedule. I’m sure we’ll all, digital and not so digital ants, closely follow how this fascinating chapter of Digital Market history unfolds. Oh, and we never got a convincing answer or solution plan to Facebook’s threat from Mr Hernandez… Surely next time :)

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Jun 10 2011
2 Comments
Apple, Cloud computing, New Digital Products

Apple, “In the clouds” for too long or in the cloud to change the game?

In Spanish, when you say someone is “in the clouds” you mean that person is day dreaming, distracted in his own reveries, not paying attention to what’s happening around him.

Apple launched his first cloud service three years ago with Mobile Me. “it wasn´t our finest hour” as Mr Jobs admitted himself last Monday during his address in the WWDC 2011. But Mr. Jobs was making ground for the introduction of Apple’s new cloud service effort; iCloud.

Too late? Have competitors already filled the gaps Apple has been leaving void? Even though we all refer to a single cloud, it should be noted that the cloud is composed by many different smaller clouds. A cloud service provider is someone who offers his servers for users to store or retrieve information from an account to which they can access from any device with an internet connection. Cloud users; almost all of us internet users, generally use many cloud service providers. Facebook, Twitter, Flickr, Gmail, Drop Box, Spotify rank as some of the most popular cloud services.

So here comes Apple with iCloud pretending to take over all these individual clouds with the Almighty iCloud. Is that realistic? Is it going to change the rules of the market again? Well, foremost and combined with the launch of iOS5, it’s going to greatly enhance the communication between all of Apple’s portable devices which before had some very uncomfortable limitations (the synching over iTunes for instance offered a very “unapple” user experience). So all of Apple’s portable devices owners should see their usability greatly enhanced by the arrival of iCloud.

But are the rest of the Cloud services existing in the market going to perish after the launch of iCloud? Well maybe not all but iCloud definitely supposes a great threat to a lot of them, especially now that Apple is finally offering those services for free (except for iTunes Match but we’ll leave that for a future post). It provides a full range of services that users had to seek in external applications such as Drop Box, Gmail,.. under the same umbrella, or should I say, cloud. One cloud, the same cloud, iCloud. And this cloud, although it can be used with non Apple products, works best and is integrated with Apple’s applications, from computer applications to iPhone/iPad apps. This takes their already super competent hardware products even one notch higher and sets them apart from competition.

So, even though this launch might not get the same hype as for instance the launch of the first iPad, it represents the missing element that Apple products were necessitating to communicate with one another. On top of that, iCloud probably represents the most complete cloud service for leisure in the market. So I guess Apple wasn’t really “in the clouds” but in its own iCloud, a product that is definitely going to consolidate Apple products around the world at the time it will probably change the rules of another industry: The free Internet Services Providers Industry.

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