InnoWiser

Four hundred people –
The line snakes two blocks, at night
Still no iPhone

All night vigils
$300 down, activation fail
Really worth it all??

Tomorrow’s Friday the 11th. Nothing too significant about it, except it means it’s time to open up the wallet to the fine folks at Apple. Having already plonked down a couple of grand on a new Mac laptop, I am totally in the zone - the so-called "reality distortion field" whose rays are close enough at the local Apple store in Clarendon.

I am in the market for a smart, chic, mobile-web capable phone, and having held out for so long for the faster version of the iPhone, I think I will hold out just a little bit more. Not for me the midnight vigils, shivering in the cold, as some of the NZ folks did [via Kedrosky ]. Not for me the early adoption of iPhone 1.0 and the subsequent post-purchase dissonance anger at the $200 price drop. I like my hardware tried and tested, though I’m game for early software.

So.. as a result, I will not be in the line for iPhone tomorrow. However, I just might be in the store on the weekend. Let’s see the likes and dislikes.

Likes: Faster, cheaper, better. Lots of software. The AppStore is already open and folks have already downloaded, ahead of the release of the phone itself, plenty of games and applications. Super Monkey Ball? Hmm. Maybe worth buying. Facebook mobile and Google Mail? Definitely.

Dislikes: Total Cost of Ownership. Let’s see how this stacks up.

Phone: $300 (I like the 16 GB model)

AT&T Plan: an extra $30 for data (that’s 10 bucks/month more than iPhone 1.0)

Text PlN: $5 (for a paltry 200 texts), to $20 for unlimited. This is, as others have pointed out, an extortion, in which all carriers are quite happy to participate. At 20 cents/text, up from 15 cents/text, this would amount to almost $1500/Megabyte . Yikes!

In the US, texting has caught up in the last 2-3 years. And there is little alternative if you maintain a really mobile lifestyle. Which is why carriers have upped the prices in the past 2 years. Let’s hope some new apps will reduce the burden of (vastly expensive and inefficient) texting.

Total operational cost: $1,080/ year, not including taxes.

Here is more on what the iPhone will cost.

Most mass media have evolved on the backbone of advertising. Advertisers support the medium by buying ad space, inventory, etc.; consumers (readers, surfers, listeners, etc.) get their fix of the media’s message for free or by paying a small sum to the channels. Newspapers have used business model for years, and so has TV and radio. It’s a concept that is readily understood by all the parties.

The Web is no different. The evolution of Internet and advertising has shown, very clearly, that this ad-supported model is well entrenched. Internet advertising is about $24 billion a year market, and growing faster than you can say “Stop! Spam!”. Users / readers / listeners have consistently shown that they prefer “free” content on the web over over paid content, even if the cost of that “free” content is consuming ads. The New York Time has abandoned its paid subscription model (reportedly earning less than $10 million a year) in favor of an open, ad-supported business. Rumors are persistent that even the Wall St. Journal may offer free, ad-supported access to its content. Even the BBC has started displaying ads on its website for out-of-the-UK users. Perhaps the media are seeing the online message.

But the larger question is - who clicks on these online ads? And more relevantly for this post - who clicks on mobile ads?

BBC commentator Bill Thompson writes that that the writing is on the wall for ads.

“The growth of the internet, and the availability of content, services and even software, would seem to depend on the continuing stream of advertising revenue that flows across the network… This growing reliance on advertising over other forms of income carries with it the same dangers as any other dependency on a single source of revenue in business. While it is unlikely that Google, Microsoft or Yahoo will vanish, changes to their business models could threaten the deals which currently keep many sites alive.But the real problem is that the flow of funds into the advertising networks could diminish, especially if there is an economic downturn.”

And it indeed is. The downturn of 2000 - 2003 is a persistent reminder. It would seem that users who click on these ads are indeed serving an important purpose, namely, keeping the online content (mostly) free for the rest of us.

So who are the people who click on ads? I, personally, have only clicked-thru while doing a focused product / service search. Something like the Canon 800 IS, or Garmin Nuvi that I recently bought. I rarely click thru the banner ads largely because I don’t see them in the first place, thanks to AdBlock Plus, the super easy Firefox extension that blocks most visual ads. (Not being part of the MTV generation who were constantly fed the erratically moving images that I find utterly distracting, not to mention head-ache inducing, I have never gotten accustomed to these distracting, fast-moving images, even on shows like “24″ or movies like “Bourne Ultimatum”. So, no dancing people or annoying graphics for me. Wonder if NYT will now let me access their site? What about BBC?? Hmm…) And I’m pretty sure, I’m not the only one of the not-clicking kind.

Quoting dana boyd, one of the first people to research online communities and their social interactions and networks, Bill says the ‘heavy clickers’ form roughly 0.2% of web users and they are largely older folks, predominantly women, and predominantly mid-western, with some from New England and mid-Atlantic. They tend to click on sweepstakes more than any other content. (See danah’s interesting post here.) The results were part of an AOL study. (I’m assuming this study was US-based.) Danah goes on to add that these users are likely to be:-

• More representative of lower income households than the average user.
• Less educated than the average user (or from less-educated environments in the case of minors).
• More likely to live outside of the major metro regions.

In other words, these are “more likely to trend lower in both economic and social capital than the average user.”

Hmm… now if you are an average web advertiser, would this be your target market, broadly speaking? I thought so.

Now, it’s entirely possible that there are richer segments (financially speaking) that are heavy clickers, or that different sites would have different consumer characteristics and therefore varied click-thru concentration. The question, though, is still quite valid - who are the more frequent clickers?

I am looking for more research on this, and would appreciate any studies or links you may have come across. Thanks!

Mobile

In the mobile space, this question is even more relevant. Mobile advertising is still in its infancy, with roughly $870 million spent in 2006 (Informa estimate). Estimates of its growth vary dramatically, from $5 billion in US by 2011 (eMarketer estimate) to $11 billion globally by 2011 (Informa estimate) to beyond $14 billion globally by 2012 (Strategy Analytics estimate).

One mobile firm that is offering ad-subsidized mobile services is Blyk. Analysts and industry watchers have keenly followed the launch and rise of Blyk. Blyk offers 16-24 year olds (in the UK) free “217 text messages and 43 minutes” per month, in exchange for 6 SMS texts per day. Users fill out a questionnaire about their habits and the brands they like, and receive ads based on their taste. Blyk’s Timo Ahopelto writes about its business model:

First, the need to lower the phone bill is universal among young people. No matter where you go, young people are students or early in their careers, needing to save money for both necessity and fun. Second, Blyk links young people up with brands they like. Access to brand messages is social capital among young people. Third, advertising in traditional media is losing its power exactly like in Europe. Street corners are packed with billboards, and television programs are testing the limits of advertising per hour. A mobile media where themes, frequency, timing and pace of advertising are designed to deliver the best impact for brands and user experience for consumers does play very well in this environment.

Looks like Blyk has its bases covered. The youth market is a hot commodity in advertising, and if Blyk succeeds in targeting them, well, the industry will likely follow. All the best to Blyk, people are closely watching.

In other research, Mobile Marketing Association (MMA) has written that it’s not just the youth who may be clicking on mobile ads, but also the older, more professional crowd who form the bulk of the Blackberry crowd, paying $10 per month or more for email access. Indeed this segment would be a good catch, if the advertisers can entice them to click on the ads in the first place.

So, if you are a mobile user, have you clicked on ads? Which ones? What types (SMS texts, coupons, videos, etc.)? Let me know!

Also, I would love to see more non-vendor supported/sponsored studies on mobile advertising. If anyone has any links, please do share. Thanks!